Buying a House in 2024: A Step-by-Step Guide

Buying a House in 2024: A Step-by-Step Guide

This article will provide a step-by-step guide on the process of buying a home in 2024.

Buying a house is a significant milestone in many people’s lives.  The process can be daunting, especially for first-timers.

Here’s your comprehensive guide to buying a house in 2024, designed to help you make informed decisions every step of the way.

Buying a House in 2024: A Step-by-Step Guide

STEP 1 – Save for Your Downpayment

The first step in buying a house should be saving for a downpayment. Typically, this ranges from 5% to 20% of the home’s purchase price, though the exact amount can vary. Start by setting a budget and a savings goal. Consider opening a dedicated savings account or exploring investment options that can help your downpayment grow faster. Here are actionable tips to help you save for that pivotal investment in your future home.

  • Start with a clear goal – The first step is to determine how much you need to save. This will depend on the price range of homes you’re considering and the downpayment percentage you’re aiming for, typically between 5% and 20%. Once you have a target amount, set a timeline for when you’d like to purchase your home.
  • Create a Budget – A well-structured budget is crucial for effective saving. Track your income and expenses to understand where your money is going. Identify non-essential spending that you can reduce or eliminate. Remember, even small savings can add up over time.
  • Automate Your Savings – Set up automatic transfers from your checking account to your downpayment savings account. Scheduling these transfers right after payday ensures that you save before you have a chance to spend.
  • Cut major and unnecessary expenses – Look for opportunities to significantly reduce your monthly expenses. This might include downsizing your current living space, getting a roommate, or cutting expensive memberships and subscriptions. Redirecting these funds toward your downpayment can make a big difference.
  • Increase your income – If possible, look for ways to increase your income. This could be through picking up extra shifts at work, starting a side hustle, or selling items you no longer need. Every extra dollar earned can be put directly into your downpayment savings.
  • Save windfalls – Any unexpected windfalls such as tax refunds, bonuses, or gifts should go straight into your downpayment savings.

STEP 2 – Finding a Good Real Estate Agent

A knowledgeable real estate agent is invaluable in navigating the complex market. Look for an agent with an understanding of the local market, strong negotiation skills, and positive reviews from past clients. Your agent will be your guide, from finding homes that meet your criteria to helping you make competitive offers.  Here are some things to look out for when hiring a real estate agent:

  • ReputationCheck online reviews for your agent to see what others thought of your agent
  • Communication – See how you vibe with the agent.  Did your initial conversation go well? Did they listen to your needs? Were they patient with your questions? Strong communication with your agent will be imperative, especially regarding the nitty and gritty of a home purchase.
  • Market Knowledge – Ask your agent how many transactions they have had in the area you are looking to buy.  How familiar are they with the area, homes, prices, neighborhoods, schools, etc.
  • Cost – Discuss compensation with your agent.  See how much they intend to be paid, how, and when.

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Finding a real estate agent that understands your needs is the first step to a successful real estate transaction. Here at SquareFootHomes we take extra care to make sure our clients are completely satisfied.

Connect with one of our agents today so we can get to know one another.

STEP 3 – Distinguish Between Needs & Wants For Your Home

Distinguishing between needs and wants is a crucial part of buying a home, ensuring you focus on what truly matters to your lifestyle and financial well-being.

Here’s a breakdown of common needs versus wants in a home, which can help guide your decision-making process.

Needs: Essential for Livability and Long-Term Satisfaction

  1. Affordability: A home that fits within your budget, taking into account mortgage, taxes, insurance, and maintenance costs, is essential. This prevents financial stress and ensures you can comfortably afford your home over the long term.
  2. Size and Layout: Enough space to accommodate your family’s current and near-future size. This includes an adequate number of bedrooms and bathrooms and a layout that suits your lifestyle (e.g., home office space if you work remotely).
  3. Location: Location is important for easy access to work, schools, healthcare, and public transportation. It’s good for families with kids or those who need to commute. Safety and neighborhood quality also fall under location needs.
  4. Basic Functionalities and Safety: A home that is structurally sound, with essential utilities in working order (plumbing, electrical, heating, and cooling systems), and meets safety standards. Accessibility features may also be a need for individuals with disabilities.
  5. Legal Aspects: The property must have clear ownership, without legal entanglements that could complicate the purchase or your future ownership.

Wants: Nice to Have but Not Essential

  1. Aesthetic Features: Paint colors, flooring types, and other decor elements are typical wants. These aspects are easily changeable and should not be deal-breakers when choosing a home.
  2. High-end Appliances and Finishes: Stainless steel appliances, granite countertops, and hardwood floors are desirable but not essential. These features can be upgraded over time as your budget allows.
  3. Extra Amenities: Things like a swimming pool, a large garden, or a home theater are luxury features that can enhance your living experience but are not necessary for a functional and satisfying home life.
  4. Perfect Condition: While a move-in-ready home is ideal, don’t discount properties that need minor updates or cosmetic fixes. These homes can often be purchased at a lower price point, allowing for customization to your tastes over time.
  5. Brand or Style Preference: Preferring a specific style of home (e.g., modern, craftsman) or brand of fixtures and appliances is a matter of personal taste and falls into the category of wants.

STEP 4 – Get a Bank Pre-approval

A bank preapproval is an important step when buying a home. It helps buyers understand how much they can borrow based on their finances. It is essentially a lender’s conditional commitment to loan you a specific amount of money for the purchase of a home before you find a property and make an offer. Here’s a detailed look at what it involves and why it’s important:

How Pre-Approval Works

  1. Application: To get preapproved, you’ll need to apply with a bank or mortgage lender. This involves submitting financial information, including details about your income, assets, debts, and credit history.
  2. Credit Check: The lender will perform a thorough check of your credit report to assess your creditworthiness. Your credit score and history play a crucial role in determining the loan amount for which you can be preapproved and the interest rate you will be offered.
  3. Verification: The lender verifies the information you’ve provided by checking your employment status, income, assets (like bank accounts and investments), and liabilities (such as outstanding loans and credit card debt).
  4. Preapproval Letter: If the lender is satisfied with your financial standing, they will issue a preapproval letter stating the amount they are willing to lend you. This letter typically has an expiration date, usually 60 to 90 days from issuance.

Pre-approval Importance

Obtaining a pre-approval is a crucial step prior to touring homes. It’s common for both the seller’s and buyer’s agents to verify that you have the financial capability to purchase the homes you’re interested in. This process ensures that all involved parties recognize you as a serious buyer.

STEP 5 – Start Touring Homes

With your pre-approval in hand and a clear idea of what you’re looking for, it’s time to start touring homes. Your real estate agent will schedule visits to homes that match your criteria. Keep an open mind and take notes on each property’s pros and cons.

The more homes you can see (within reason) the better.  It will help give you a better idea of what you need, what prices look like on various homes, and will help your real estate agent understand your needs better as well.

The average home-buyer will typically tour ten homes before making a purchase.  If you go well beyond that, it may be time to rethink your requirements or budget.

STEP 6 – Make Offers

Found a home you love? It’s time to make an offer. Your agent will help you determine a competitive yet reasonable offer based on market conditions and comparable sales. Be prepared for counteroffers, and stay flexible.  Here are some tips to making a strong offer:

  • Make sure you are pre-approved
  • Make your first offer as strong as possible
  • Consider an escalation clause
  • Reduce the number of contingencies in your offer
  • Ask about the seller’s needs and try to fulfill them

STEP 7 – Get a Home Inspection & Negotiate Repairs Needed

Once your offer is accepted, arrange for a home inspection to uncover any hidden issues with the property. This can include structural problems, electrical or plumbing issues, and more. Use the inspection report to renegotiate the price or request repairs if necessary.

Understand What’s Negotiable

  • Safety and Structural Issues: Focus on significant problems like structural defects, safety hazards, or building code violations. These are usually the most important to negotiate.
  • Major Systems: Issues with major home systems such as the roof, HVAC, plumbing, and electrical systems can be expensive to fix and should be prioritized.
  • Water Damage and Mold: These issues can lead to significant health and structural problems and should be addressed immediately.

Don’t Sweat the Small Stuff

  • Avoid nitpicking minor issues that are inexpensive and easy to fix. Concentrating on trivial defects can make negotiations more difficult and may turn sellers off.

 Get Estimates for Repairs

  • Before negotiating, obtain estimates from contractors for any necessary repairs. This will give you a solid foundation for requesting a price reduction or repairs before closing.

Consider Asking for a Credit

  • Instead of asking the seller to make repairs, consider requesting a credit at closing. This gives you control over the work done and ensures it’s completed to your satisfaction.

Be Prepared to Compromise

  • Understand that negotiation is a two-way street. Be prepared to prioritize your repair requests and know what you are willing to compromise on.

Use a Professional

  • Leverage your real estate agent’s experience in negotiating repairs. They can advise you on what’s reasonable to expect and can communicate effectively with the seller’s agent.

Highlight Legal and Safety Issues

  • Sellers are more likely to address problems that are legal requirements or pose safety hazards. Emphasizing these issues can strengthen your negotiating position.

Consider the Market

  • Your ability to negotiate repairs often depends on the market. In a seller’s market, you may have less leverage to ask for repairs or concessions.

Stay Objective

  • Keep emotions out of the negotiation. Focus on the facts and the importance of ensuring the home is safe, functional, and valued appropriately.

Be Ready to Walk Away

  • If the inspection reveals major issues that the seller refuses to address, be prepared to walk away from the deal, especially if the problems are beyond your capacity to manage financially or physically.

STEP 8 -Perform a Final Walkthrough

Before closing, perform a final walkthrough of the property with your real estate agent to ensure all agreed-upon repairs have been made and that the house is in the expected condition.

STEP 9 – Close

Closing is the final step in the home-buying process. This involves signing a mountain of paperwork, paying closing costs, and finally, receiving the keys to your new home. Congratulations, you’re now a homeowner!

Home Buying FAQ

I’m single, should I buy a house?

Absolutely, if it aligns with your financial goals and lifestyle. Single homeowners can enjoy the benefits of equity, privacy, and the freedom to personalize their space.

How can a single person afford to buy a home?

By saving diligently for a downpayment, keeping credit in good standing, and possibly exploring first-time homebuyer programs or smaller, more affordable properties.

Should my first property be a multi-family or single home?

This depends on your investment strategy and personal preferences. A multi-family home can provide rental income but comes with the responsibility of being a landlord. A single-family home might be better suited for those looking for simplicity and privacy.

Why is buying a house not a good idea?

In some circumstances, such as a highly volatile market, uncertain job security, or if you plan to move within a few years, buying might not be the best choice due to the costs and commitments involved.

Should I rent or buy a home?

This depends on your financial situation, lifestyle, and how long you plan to stay in an area. Renting offers flexibility and less responsibility for maintenance, while buying can build equity and offer stability. Here are some pros and cons of renting .vs buying.

What are Hidden Costs of Homeownership?

Beyond the mortgage, homeownership comes with several hidden costs, including property taxes, insurance, maintenance and repairs, and potential homeowners’ association fees. Budgeting for these expenses is crucial.

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