How To Buy A House In 2024: Step-By-Step (2024)

Providing a down payment greater than the minimum required does come with certain advantages. Typically, it means you’ll have more mortgage options. It also usually means you’ll have a smaller monthly payment and a lower interest rate. Plus, if you put at least 20% down on a conventional loan, you won’t need to pay for private mortgage insurance (PMI).

Many states offer down payment assistance programs to qualified buyers, so research whether any assistance is available to make your home purchase more affordable.

Closing Costs

You’ll also need to save money to cover closing costs – the fees you pay to get the loan. Several factors determine how much you’ll pay in closing costs, but it’s best to prepare for 3% – 6% of the loan amount. This means if you’re borrowing $200,000 for your purchase, you might pay $6,000 – $12,000 in closing costs.

The specific closing costs will depend on your loan type, your lender and where you live. Most homeowners will pay for items like appraisal fees and title insurance. If you take out a government-backed loan, you’ll typically need to pay an insurance premium or funding fee upfront.

Before you close on your loan, your lender will give you a document called a Closing Disclosure, which specifies the closing costs you’ll be responsible for and how much you’ll need to pay. Look over your Closing Disclosure carefully to know what to expect and catch any errors.

Step 4: Decide What Type Of Mortgage Is Right For You

Before you can apply for a mortgage, you’ll need to decide on the best type of loan for you and which one you’ll qualify for. Let’s take a look at some common loan types:

Step 5: Get Preapproved For A Mortgage

When you’re ready to start house hunting or if you’ve found a home you want to buy, it’s time to get preapproved for a mortgage. After you apply, your lender will evaluate your credit, assets and income and give you a preapproval letter stating how much you’re approved for. Based on your preapproval letter, your real estate agent can help you find homes within your budget.

Rocket Mortgage offers a Verified Approval¹ so you can make an offer confidently because you’ll know how much home you can afford. We verify your credit, income and assets with documentation you provide, such as W-2s, pay stubs and account statements. This can help strengthen your standing in a competitive bidding war with other buyers who don’t have an approval.

Step 6: Find The Right Real Estate Agent For You

Multiple people are involved when getting a mortgage and buying a house. As your representative in the home purchase transaction, your real estate agent will look out for your best interests by finding homes that meet your criteria. These local market experts also get you showings, help you write offers and negotiate on your behalf.

As a buyer, you can usually work with a real estate agent for free. In most cases, the seller will pay the buyer’s real estate agent’s commission. The buyer’s agent commission is usually 3% of the purchase price.

Can You Buy A House Without An Agent?

It’s possible to buy a house without a real estate agent. But this isn’t recommended, especially for first-time buyers. Working with an agent can help you navigate the real estate market, submit a legally sound offer and avoid overpaying for your property.

How Do You Find A Real Estate Agent?

Begin by asking family members and friends for recommendations to find a good real estate agent. Direct referrals are often the best way to get unbiased information on agents in your area.

Consider working with a Rocket Homes℠ Verified Partner Agent . Rocket Homes agents have proven track records of success and are at the top of their field, so you know you’ll get expert information.

Step 7: Begin House Hunting

Your real estate agent will help you hunt for houses within your budget. It’s a good idea to make a list of your top priorities, some of which might depend on the type of house you’re looking for and whether you’re in search of a starter home or a forever home.

What To Look For When House Hunting

Here are some factors to consider when shopping for a house:

Price
Square footage
Home condition and possible need for repairs
Access to public transportation
Number of bedrooms
Backyard/swimming pool
Local entertainment options
Local school district ranking
Property value trends
Property/real estate taxes

Rank your priorities from most to least important and show your agent this list. Your agent will then show you homes that fit your criteria. Searching for the perfect home may take time, so don’t get discouraged if your hunt takes longer than you expected.

Step 8: Make An Offer On A House

When you decide to make an offer on a home, you must submit an offer letter. Your agent will almost always write the offer letter on your behalf, but you can write it yourself if you choose. Your offer letter will include details about you (like your name and current address) and the price you’re willing to pay for the home. It may also include your earnest money deposit.

What Is An Earnest Money Deposit?

Most offers also contain an earnest money deposit, typically 1% – 3% of the purchase price, which shows the seller you’re serious about purchasing. Your real estate agent can tell you what’s common in your market. Your earnest money deposit goes toward your down payment and closing costs if you buy the home. If you agree to the home sale and later cancel, you’ll typically lose your deposit.

Once your offer letter is finalized, your agent will contact the seller or the seller’s agent to submit the offer. Your letter will include a deadline for the seller to respond to your offer.

What Happens After You Submit An Offer?

From here, the seller can respond in one of three ways:

Accept the offer: If the seller accepts the offer, you can move on to the next step.
Reject the offer: If the seller rejects your offer, you can choose to submit another offer or move on to another home.
Send back a counteroffer: The seller’s counteroffer may include a change in the purchase price or to the terms of the sale. You can accept the counteroffer, reject it or make another counteroffer.

Negotiations may continue for some time after you submit your offer. Let your real estate agent help you manage negotiations – and don’t be afraid to walk away if you can’t reach an agreement. Once you and the seller agree to an offer, it’s time to get ready for the inspection and appraisal.

Step 9: Get A Home Inspection

Lenders usually don’t require a home inspection to get a loan, but you should still get an inspection before buying a property.

During a home inspection, an inspector will go through the home and look for specific problems. They’ll test electrical systems, make sure the roofing is safe, ensure appliances are working and more. After the inspection, the inspector will give you a list of problems they found in the home.

What Do You Do With Your Inspection Report?

When you receive your inspection results, review each item line by line and look for major issues. If a home has a serious health hazard (like lead paint or mold), ask the seller to correct the problem before you close. If you can’t reach an agreement, you may want to move on and consider other properties. Read over your inspection results with your agent and ask whether they noticed any major red flags.

Remember that you’ll be liable for any major repairs after your sale closes. A clogged toilet or a sink isn’t a major issue. However, if your home inspection reveals an expensive problem (like cracks in the foundation or poorly installed windows), you may want to reconsider the purchase.

How Does An Inspection Contingency Work?

It’s common for home buyers to include a home inspection contingency in their purchase offer. A contingency gives buyers the option to back out of a purchase (or negotiate repairs) without losing their earnest money deposit if the home inspection reveals major issues.

Step 10: Get A Home Appraisal

A home appraisal is a review that gives the current value of the property you want to buy. You will typically need an appraisal before buying a home with a mortgage loan.

Lenders require appraisals because they can’t lend out more money than a home is worth. If the appraised value comes back lower than your offer, you might have to consider different options such as increasing your down payment or re-negotiating your offer. Talk to your real estate agent to determine if you should contest the appraisal results. Your agent will have additional comparable homes for your consideration when appealing the value from the appraisal.

How Does An Appraisal Contingency Work?

Home buyers should also include an appraisal contingency in their offer. Appraisal contingencies are often drawn up to allow buyers to back out of a purchase (or negotiate a lower price) without losing their earnest money deposit if the home appraises for less than the offer amount. As with inspection contingencies, appraisal contingencies vary, so make sure you understand the nature of your agreement.

Step 11: Ask For Repairs Or Credits

After viewing your appraisal and inspection results, you might want to ask your seller to address some issues that were found. You can do this in one of three ways:

Ask for a discounted purchase
Request the seller give you credits to cover some of your closing costs.
Ask that the seller have the problems fixed before you close.

Your real estate agent will submit your requests to the seller’s agent. If you’re buying a house that’s for sale by owner (FSBO), your agent will negotiate with the seller directly. The seller might accept your request or reject it. If your seller rejects your request, it’s up to you to decide how to proceed. If you have an inspection contingency in your offer letter, you can walk away from the sale and keep your earnest money deposit.

Step 12: Do A Final Walk-through

You should do a final walk-through of your new home before you close, even if you’re 100% committed to the property. This time allows you to check and make sure the seller has everything as it should be.

Walk through the home and make sure the seller hasn’t left any belongings. Check your repair areas if you requested them and keep an eye out for pests. You may also want to double-check your home’s systems one final time to make sure everything is in working order. If everything looks good, you can confidently move toward closing.

Step 13: Close On Your New Home

Three business days before closing, your lender is required to provide you with your Closing Disclosure, which tells you what you need to pay at closing and summarizes your loan details. Read through your Closing Disclosure and make sure the numbers don’t vary too much from your Loan Estimate, which you should’ve received no more than 3 business days after your initial application.

Once you’ve reviewed your Closing Disclosure, it’s time to attend your closing meeting. Bring your ID, a copy of your Closing Disclosure and proof of funds for your closing costs.

You’ll sign a settlement statement listing all costs related to the home sale. This is when you pay your down payment and closing costs. You’ll also sign the mortgage note, which states that you promise to repay the loan. Finally, you’ll sign the mortgage or deed of trust to secure the mortgage note. After the closing finishes, you’re officially a homeowner.