How it Works

Get your finances in order

  • Pay down your debt. Pay down your debt as much as possible to increase your borrowing power. Pay down the highest-interest debt first (credit cards) before lower interest debt (car loans, student loans).
  • Set a budget. The standard rule is to aim for a home that costs no more than 2.5 times your gross annual salary
  • Get the down payment together.  If you don't already have down payment money saved, start saving now.  Having a down payment is crucial for being able to qualify for a loan, especially being able to qualify for a bigger loan.
  • Clean up your credit report.  Good credit not only helps you qualify for a loan in the first place, it helps you get a better deal when you do get a loan.

Contact a local lender to get pre-approved

The pre-approval process will  determine two things. First, the lender will determine if you're even qualified for a home loan. You must meet their minimum criteria for credit score, debt ratios, income, etc. If you meet these requirements, the lender will give you a maximum loan amount. They may also give you a pre-approval letter to use during the house-hunting process.

Here's a more complete list of benefits:

  • Getting pre-approved for a mortgage helps you identify any problems you have (too much debt, a low credit score, etc.). The sooner you can find about these issues, the better. It gives you more time to correct them.
  • Real estate agents will be more willing to work with you. Most agents will only work with buyers who have been pre-approved.
  • Sellers will take you seriously.  This is especially important in an active market, where multiple offers are a reality.
  • It also helps you narrow the field when house hunting. Once you know how much the lender is willing to offer, you can shop within that price range. This is the sensible approach to house hunting.

Find a realtor that fits you

Finding the right agent takes balancing credentials and chemistry. Not all real estate agents are Realtors. The term Realtor is a registered trademark of the National Association of Realtors (NAR). You want somebody trustworthy who you can rely on. NAR members pledge to abide by the association’s code of ethics.  A good agent will listen carefully to your priorities and won’t waste time on properties that don’t fit the bill. Experience is important, but sometimes less experience means a smaller client base, which translates into more attention for you. Real estate is a local game, and to win you need someone who plays in the areas where you’re looking to buy. Not only will they be up on market trends, they’ll know about local schools, commute times, and under-the-radar red flags.

Determine your needs and wants

Carefully considering your wants and needs is a key early step. You’re not likely to get everything you want in a home, unless you’re building it from the ground up (with the budget to match). Your home search could be a frustrating experience unless you separate the things you truly need from the amenities and features you’d love to have but can live without.

Consider “needs” to be true essentials that aren’t easy (or possible) to change. These are genuine must-haves that leave little room for compromise. Your “wants” are the kind of non-essential things ready-made for a wish list. One approach is to compile a list that can help you set initial priorities.

For first-time buyers, it can be tough to get started. Consider what you like and what you don’t like about your current living situation. Think about the features and amenities you like in other people’s homes. Think about your plans, your goals and your life trajectory in the coming years and how that might affect both your wants and needs.

Tour many homes to see what's available

Look at lots of houses! When home-shopping, take your time with your decision and find a house that you really love, one that gets you excited when you imagine living there and think of the possibilities. You're unlikely to find a home you love right away, so unless you find your dream home sooner, give yourself at least a few months to find it.  The extra time dramatically increases your chances of success. Take a camera to every house you visit and take lots of pictures of each property.  After each visit write down everything you like and dislike about the house, and the neighborhood, in as much detail as you can. Don't discount a home because you don't like superficial things like the paint color or flooring.  Once the home is yours, you can do anything you want to it.  Consider the home's potential, not its present state. Check out the neighborhood (schools, demographics, crime, etc.) and check out how walkable the area is. Once you've found the home you want, visit the neighborhood several times, day and night, weekday and weekend.  Much of your comfort is going to come from the neighborhood itself and not just the house, so make sure you like the area as well as the property.

Make an Offer

If there's a good chance you want to buy the house, then you'll make an offer to the seller. You can make the offer even if you're not 100% sure you want to buy the house, and even if you're not sure exactly how much you want to pay. Things to consider: Price - Finding the balance between being house poor and living a comfortable lifestyle Closing costs – Will you be splitting closing costs with the seller Closing date – Do you need to sell your home to purchase this one? Is there a specific date you need to close by? When you’re ready, deliver the offer to the seller or to the seller’s real estate agent. The seller might reject your offer and give a counteroffer of a price a little higher than yours.  You can agree to that or counteroffer again, offering slightly less.  The process continues until you've either both agreed or neither side will budge, in which case the deal has fallen through.  

Accepted Offer

When your offer has just been accepted — congratulations! — you are fired up and ready to move into your new home. But  don't neglect the steps that protect both the buyer and the seller. After an offer is accepted, prepare for a home inspection and appraisal before reaching the closing table.

Your real estate agent's help and guidance really pays off for you after the purchase offer is accepted. You might think that you need your agent solely to help with the initial negotiations, but there are often challenges that can crop up all the way to closing that require finessing. You might not even notice what your agent is doing behind the scenes or how your agent is helping you if your agent doesn't point it out. The good news is competent agents deal with these issues every single day. You should be able to rely on your agent to help you get through the things that can go wrong after your purchase offer is accepted. Then, when it closes, you truly have reason to celebrate.