How to Buy a House: A Step-By-Step Guide

Step 5. Finalize Your Loan Application

With an accepted offer, you’ll begin completing your mortgage application and working toward final loan approval. Some lenders now offer digital-first mortgage applications, allowing borrowers to get started online, where permitted by law.

During this stage, your lender will review your financial information, verify your documents, and prepare your loan for closing. At this point in the homebuying process, you can expect to take these key steps:

●    Provide financial documentation and complete your loan application: The full loan application will include details about your income, employment, assets, and debts. Your lender will likely ask you to provide pay stubs, tax returns, and bank statements. The more you prepare in advance, the less risk there is for delays.

●    Go through underwriting: During underwriting, the lender reviews your financial information to determine whether you qualify for the loan and under what terms. You may be asked for additional information or clarification before issuing final approval.

●    Your future home will be appraised: Lenders require home appraisals to make sure your home is worth enough to serve as collateral for the loan. If your house doesn’t appraise for what you’re paying, you may have to bring more money to the table, negotiate a lower price, or walk away from the deal.
Once the loan processing and underwriting are done, you can move even closer toward closing.

Step 6: Conduct an Inspection and Final Walkthrough

While your loan is being finalized, you’ll also need to verify the condition and value of the home before moving forward with closing. These steps help protect both you and your lender by ensuring there are no unexpected issues with the property:

●    The title company will perform a title search: The title shows who owns a home. Lenders require a title search to confirm that the seller is the legal owner and that there are no financial claims on the property.

●    Your future home will be inspected: Professional home inspectors will conduct a careful review of your home to make sure there are no unexpected problems. If issues are found during home inspections, you can ask the seller to fix the problem or reduce the price, or you can walk away from the purchase if you made your offer contingent on inspection results.

●    You’ll do a final walkthrough: Right before closing, you’ll get a chance to do a final walkthrough to make sure there were no major unexpected changes or deferred maintenance issues that you didn’t know about.

●    You’ll receive final approval (clear to close): Once all requirements are satisfied, your lender will approve your loan and confirm that you’re ready to move forward with closing. There is a closing disclosure waiting period that follows the clear-to-close, which is at least 3 business days.

You’ll also need to shop for homeowners insurance, since your lender will probably require you to have a policy in place before closing to protect the collateral.

Step 7. Close on Your Home

After going through all these steps, the big day will finally arrive. You’ll arrange the closing, and the official transfer of ownership will take place.

Shortly before your closing day, you’ll receive a statement that summarizes all the costs and credits involved in the transaction. You’ll find out exactly how much you need on hand for the down payment, closing costs, and escrow deposits.

You’ll need to send a wire transfer to the title company, attorney, or other professional handling the closing process. Once you sign the paperwork, the money will change hands, and you’ll get the keys to your new home.

Usually, your first mortgage payment will be due the following month after buying a house, so you’ll also want to get ready to send in your payment to start building equity in your new dream home.

Buying a House FAQs

Still want to know more about how to buy a house? Here are answers to some common homebuying questions you may have.

How Long Does It Take to Buy a House?

It typically takes several months to buy a house. You need to get prequalified or preapproved for a mortgage, find a property you like, and complete certain steps before closing, such as a home inspection. The specific time this takes will depend on general market conditions, how selective you are in finding your home, and how long it takes a seller to accept your offer.

What Do I Need to Buy a House?

You need good credit, a low debt-to-income ratio (DTI), and reliable income or substantial assets to get approved for a mortgage loan and buy a house. You’ll also need money for a down payment and closing costs, and you might have to meet your lender’s requirements for having some cash on hand.

How Much Money Do I Need to Buy a House?

The amount of money you need to buy a house varies depending on many factors, including home prices in your area. You’ll typically need money for a down payment as well as closing costs that usually total 2% to 5% of the home’s purchase price.

Final Thoughts: Starting the Homebuying Process

Now that you know how to buy a house, you’re ready to begin your own journey to becoming a homeowner.
You can get a jump start by getting prequalified with Freedom Mortgage today so you can explore your mortgage options and find the loan—and the home—that’s right for you.

Freedom Mortgage Corporation is not, nor is it affiliated with, any governmental agency or organization. This article is for informational purposes only. Not a commitment to lend. Loans subject to eligibility, credit approval and property requirements. We do not provide legal, tax or investment advice.