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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Buying a house can be an exciting and emotional process. Before starting your home search, you’ll want to understand the ins and outs of homebuying. This will empower you to make decisions that are the best for your family — and your wallet. What to consider
Is now a good time to buy a house
Yes and no. reached record lows in early 2021 but jumped in 2022. Meanwhile, strong demand for homes pushed prices up and frustrated many potential homebuyers. According to the CoreLogic Case-Shiller Home Price Index, property prices rose by nearly 20 percent between May 2021 and May 2022. However, the record-breaking . Realtors report slowing price gains and rising inventories, and housing economists foresee a retreat in mortgage rates. That’s all good news for buyers. “Mortgage rates may have already peaked, and could stay between 5 percent and 5.5 percent through the remainder of 2022,” says Mike Fratantoni, chief economist at the Mortgage Bankers Association. “If that were to be the case, potential buyers, who had been scared off by the rate spike, might find their way back to the housing market.” The price boom has created inevitable concerns about buying at the peak. Home values go up over time, but there is a possibility that prices in some places have hit a plateau. “I would be careful about buying near the top of the market, especially if I want to be in the home for only a few years,” says Ken H. Johnson, a real estate economist at Florida Atlantic University and co-author of the Beracha, Hardin & Johnson . “If you look to buy, bargain aggressively and be willing to walk away. Real estate most definitely is a good investment, but don’t just buy now because that’s what everybody else is doing.” Should I buy a house
Taking the leap to homeownership can provide a feeling of pride while boosting your long-term financial outlook, if you go in well-prepared and with your eyes open. When thinking about buying a home, consider whether you want to put down roots or maintain flexibility with your living situation. How secure is your job, and can you comfortably budget for home repairs and maintenance on top of monthly housing payments? Are you ready to stay in one place, and do you have kids or family members to consider? When should I buy a house
In normal times, spring is the traditional start of the , with many listings typically hitting the market. The market still hasn’t quite returned to normal since the coronavirus upended that schedule, however. This winter should be relatively slow for buying, but with low housing inventory, it will still feel competitive compared to pre-pandemic off-seasons. At any rate, your own financial readiness is more important than the time of year. This means having your finances organized and your credit in order so that you’ll be able to smoothly secure a reasonable mortgage. In addition to a down payment, potential homebuyers should have enough money set aside to cover , which can range from 2 percent to 4 percent of the purchase price. When budgeting for your monthly mortgage payment, factor in not only the principal amount and interest, but also property taxes, homeowners insurance, homeowners association fees (if applicable), plus if you’re putting down less than 20 percent. Don’t forget to set aside money for ongoing maintenance and those unexpected repairs that are bound to pop up, too. Here s a step-by-step guide for buying a house
Understand why you want to buy a house Check your credit score Create a housing budget Save for a down payment Shop for a mortgage Hire a real estate agent See multiple homes Make an offer Get a home inspection Negotiate repairs and credits Secure your financing Do a final walk-through Close on your house 1 Understand why you want to buy a house
Purchasing a home is a major decision that shouldn’t be taken lightly. If you’re not clear on , you could end up regretting your decision. How to get started: Define your personal and financial goals. “Buyers should think about things like and what they want in a home — amenities, ideal location and how long it could take them to save for a down payment,” says Edwence Georges, a sales associate with RE/MAX in Westfield, New Jersey. “These are all important to help define the goals they would like to meet.” Key takeaways: Make a list of . Are you craving stability? Is location the top priority? Any must-have amenities? Does it make sense for you financially? Would improve your financial standing? Are you prepared for the responsibility of maintaining a home? 2 Check your credit score
will help you determine your financing options; lenders use it () to set your loan pricing and see if you’re able to repay your mortgage. The better your credit history, the better the chances you’ll have of securing financing with the best terms and rates. How to get started: You can get your credit report and score from each of the three major credit reporting agencies, Equifax, Experian and TransUnion, for free once a year. Your bank or credit card company might offer free access to your score or credit report, too. Key takeaways: Consider how different credit score ranges impact your interest rate, monthly payments and total interest. In general, the lower your credit score, the more expensive your mortgage will be. Pull your credit reports from each of the credit bureaus for free every 12 months at . If you discover any discrepancies, contact each agency and report the error. Learn other ways to from Bankrate. 3 Create a housing budget
will help inform what you can afford and how much your all-in costs will be. How to get started: The purchase price isn’t the whole picture. Carefully factor in other expenses to determine what you can afford. “Buyers tend to forget to factor in other costs like (homeowners association) fees and setting money aside for maintenance costs. Just because you can afford a mortgage and a down payment doesn’t mean you can afford those long-term costs after you move.” – Paige Kruger, Realtor, Founder, Signal Real Estate, Jacksonville Beach, Florida Key takeaways: Determine the maximum loan you qualify for. Decide how much you can set aside for a , plus a buffer fund for ongoing or unexpected maintenance costs. See if your monthly budget can handle the mortgage payment along with other bills such as day care, tuition, utilities, groceries and more. 4 Save for a down payment
To avoid private mortgage insurance, or PMI, you’ll need to save at least 20 percent of the home’s purchase price . Some lenders offer mortgages without PMI with lower down payments, but expect to pay a higher interest rate. How to get started: Research the for the loan you want so you know exactly how much you’ll need. If a friend, relative or employer has offered to provide a down payment gift, initiate a conversation early on to learn how much they plan to contribute and if there’s any shortfall you’ll need to cover — and secure a from them well in advance, too. Key takeaways: If you don’t have much saved for a down payment, consider options backed by the federal government. , insured by the Federal Housing Administration, require just 3.5 percent down, while and have no down payment requirement. backed by Fannie Mae and Freddie Mac require just 3 percent down. Look into a local or state first-time to help with closing costs or your down payment. 5 Shop for a mortgage
Getting is helpful when you make an offer on a house, and it gives you a firmer handle on how much you can afford. How to get started: Shop around with at least three lenders or a to increase your chances of getting a low interest rate. Key takeaways: Work with an experienced who can walk you through all of the options and overall costs. Ask what or other incentives are available to you. to determine the right time to strike on your mortgage with our daily rate trends. 6 Hire a real estate agent
An can save you time and money by helping you find your dream home and by negotiating with the seller on your behalf. How to get started: Contact several real estate agents and ask to meet with them for a conversation about your needs before choosing one. “Someone with knowledge of an area can also tell if your budget is realistic or not, depending on the features you desire in a home,” Kruger says. “They can also point you to adjacent areas in your desired neighborhood or other types of considerations to help you find a house.” Key takeaways: Before hiring a real estate agent, find out about their track record, knowledge of your desired neighborhood and what their workload is like. You don’t want someone who is over-scheduled. Agents can refer you to other professionals like home inspectors, contractors, appraisers and title companies; however, you should still shop around and compare fees from other professionals. 7 See multiple homes
Simply viewing listing photos isn’t a substitute for — with appropriate precautions in the pandemic — and getting to know the neighborhood and its amenities. How to get started: Let your real estate agent know what specific kinds of homes you want to see, or . Your agent can create your profile in the local multiple listing service (MLS), a database of homes for sale, and set up automatic searches for those that meet your criteria. You may not be able to check off everything on your home amenity wish list, so you’ll want to prioritize what’s most important to you aside from location. Key takeaways: Drive through neighborhoods you like to see what’s for sale, and attend open houses for homes that pique your interest. Remember to keep notes on each property you visit. After a few showings, it’s easy to forget which homes you liked and why. Keep your schedule open so you can pounce when a great home is listed, especially in a . You could gain an edge over other buyers the sooner you see it and put your offer in. 8 Make an offer
Understanding can help increase your chances the seller will accept it, putting you one step closer to getting those coveted house keys. How to get started: Once you find “the one,” your real estate agent will help you prepare a complete offer package, including your offer price, your preapproval letter, proof of funds for a down payment (this helps in competitive markets) and terms or contingencies. Key takeaways: Sellers might counteroffer on your price, terms or contingencies. You can respond to the counteroffer if you wish, or reject it and move on. Once an offer is accepted, you’ll sign a purchase agreement that includes the price of the home and estimated closing date. You’ll need to pay an , typically 1 percent to 2 percent of the purchase price. The seller may have a right to keep the money if you . are designed to protect the buyer and typically include , financing and home inspection. If a home inspection report shows major problems, you can often back out of the contract and get a refund. 9 Get a home inspection
A helps you get an overall picture of the property’s mechanical and structural issues. The home inspection will help you determine how to proceed with the closing process. You might need to ask the seller for repairs, or you might decide to back out of the deal if you have a contingency in the contract. How to get started: You can get recommendations for home inspectors from your real estate agent, but also be sure to do your own homework before choosing one. Depending on your contract and state of residence, you’ll generally need to complete a home inspection 10 to 14 days after you sign a purchase agreement. As a buyer, you’re usually responsible for paying the home inspector, and while the fees can vary, you’ll pay an average of $270 to $400, according to HomeAdvisor by Angi. Key takeaways: To make sure the home inspector has enough experience, read online reviews, ask for past client references and look at their credentials. Look at the home inspection checklist to understand what is and isn’t covered. 10 Negotiate repairs and credits
Your home inspection report may reveal . Major problems will likely need to be dealt with before your mortgage lender will finalize your loan, while minor issues can often wait till you take possession of the home. How to get started: Enlist your agent’s help to negotiate with the seller. Ask for the seller to either do the repairs or give you a credit at closing. Key takeaways: If there are hazards like structural damage or improper electrical wiring, your lender might not approve your loan. Likewise, you might not have the budget or desire to handle such repairs after buying the home. Some sellers won’t agree to extensive repairs, and that’s why a home inspection contingency is a good idea — to give you a way out of the purchase if the home isn’t in ideal shape. 11 Secure your financing
Getting final loan approval means you need to keep your finances and credit in line during . Once you’re ready to close, you won’t want to open new credit lines or make other major purchases until the paperwork is signed. How to get started: Respond promptly to requests for more documentation and double-check your to ensure all the details are correct so there are no hiccups later. You may need to submit additional paperwork as your lender completes the underwriting process, such as: Bank statements Tax returns Additional proof of income Gift letter or written statements explaining major deposits into your bank account Key takeaways: A preapproval doesn’t mean you’re in the clear until a lender has given the final stamp of approval. Keep your finances and credit in good shape from preapproval until closing day. If you can, avoid changing jobs before closing on your new home, too. Also, avoid running up credit cards, taking out new loans or closing credit accounts. Doing any of these things can hurt your credit score or impact your debt-to-income ratio, and that can . 12 Do a final walk-through
A is an opportunity to view the property before it becomes yours. This is your last chance to view the home, ask questions and address any outstanding issues before the house becomes your responsibility. How to get started: Come with your home inspection checklist and other documents, like repair invoices and receipts for any work the owner conducted, to ensure everything was done as agreed upon and that the home is in move-in ready condition. Key takeaways: Ask your real estate agent to be there so they can act as a witness and help answer any questions you may have. If repairs or issues haven’t been addressed, have your agent communicate immediately with the seller and your lender. Your closing date might have to be delayed to ensure those issues are remedied first. 13 Close on your house
Once all contingencies have been met, you’re happy with the final walk-through and the closing agent has given the green light to close, it’s time to make it official and . In this final step, your lender will issue you a “clear to close” status on your loan. How to get started: Three business days before your closing date, the lender will provide you with a that outlines all of your loan details, such as the monthly payment, loan type and term, interest rate, annual percentage rate (APR), loan fees and how much money you must bring to closing. At the closing, you (the buyer) will attend, along with your real estate agent, possibly the seller’s agent, the seller, in some cases, and the closing agent, who may be a representative from the escrow or title company or a real estate attorney. This is also the time where you’ll wire your closing costs and down payment, depending on the escrow company’s procedures. Key takeaways: Before closing, review the closing disclosure carefully and compare it to the loan estimate to ensure closing fees and loan terms are the same. Ask questions about your loan and correct any errors (like your name or personal details) before you sign closing paperwork. On closing day, review all of the documents you sign carefully, and ask for clarification on anything you don’t understand. Make sure you’ve been provided all house keys, entry codes and garage door openers before leaving closing. You’ll leave closing with copies of the paperwork (or a digital file) and your new house keys. Be sure to store your paperwork in a safe place for future reference. Once all of the paperwork has been signed, the home is officially yours and you’ll get those house keys. Congratulations! Now comes the fun part: moving in and making the house your home. Bottom line
Buying a home involves a lot of moving parts and complex steps, but this guide — along with the professional expertise of your real estate agent and mortgage lender — can help you navigate the process smoothly. By doing your homework ahead of time, you’ll have more confidence in your decision and relish getting those coveted house keys on closing day. How to buy a house summary
SHARE: Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles