There are 6 primary steps related to buying a home. A real estate agent or realtor helps guide you through the process and advocates with the seller or seller’s agent on your behalf.

Step 1) Get Mortgage Pre-approval Letter for a Home Loan

Having a Pre-approval Letter in hand by getting pre-approved for a home loan by a mortgage lender should be the first step for any person who is serious about buying a home. Getting pre-approved is necessary so that no time is wasted looking at homes that do not qualify for your loan program or loan amount. Mortgage lenders look through a variety of financial documents to determine buying power or amount of home loan a person can afford. Most home sellers require that a homebuyer submit a pre-approval letter along with their offer to show that they qualify for the loan and are serious about buying.

Step 2) Find a Home and Write an Offer

You should have a real estate agent during this process. It is part of his / her job to help you find properties that meet your requirements and give you proper access to view the inside of homes that are for sale. When you find the property that you like at a price you think you can afford, it is the job of the real estate agent to help you write an offer to the seller on your behalf and advocate / negotiate for you. Once you have an accepted agreement to buy a home, it is usually expected that you submit a payment of Earnest Money which acts as a deposit towards the home purchase to secure the contract. This signals to the home seller that you are serious about your intent to buy the home because the seller gets to keep the earnest money if you decide not to purchase the home only because you had buyers remorse or cold feet. The earnest money amount could be up to 1% of the price of the house, but the real estate agent negotiates the amount and it can often be negotiated lower than 1%. For buyers who are buying with all cash instead of a loan, it can be expected that a much larger earnest money deposit is given. A buyer typically can receive their earnest money back even if they walk away from a home transaction if their financing falls through or there is a major defect / problem with the home that the the seller refuses to repair.

Step 3) Home Inspection Cost, Checklist, and Certification

A home inspector has a variety of services, including: general house inspection, wood destroying insect, mold, radon, and water inspections. Each service has its own checklist of criteria that protects you from buying a home that has major problems. Depending on your objectives and the type of property you are purchasing, a home inspection could cost between $300-$1000. Work with your realtor to find a qualified inspector and to determine which services are best for you. Once the home inspection reports are back, you now move to the next step in contract negotiations which often includes asking the seller to repair any major defects found during the inspection. Under Indiana law a defect means a condition that would have a significant adverse effect on the value of the property, would significantly impair the health or safety of future occupants of the property, or if not removed, repaired, or replaced would significantly shorten or adversely affect the normal expected life of the property.

Step 4) Get a Home Appraisal Report

Should you decide to move forward in contract negotiations, the next step is to obtain a home appraisal or residential property appraisal report. A home appraisal report is generated by a certified professional and determines the market value of the house. This usually costs approximately $500. The appraisal report can at times cause challenges / opportunities in a transaction if the appraised value is lower than the agreed upon purchase price. This can cause an issue with your mortgage loan because the loan will only cover the appraised value of the home less your required down payment. If an appraisal comes in low, your real estate agent can help you negotiate with the seller so that you have the highest probability to still purchase the home.

Step 5) Get Homeowner’s Insurance and more

If you are getting a home loan, your lender will require you to carry homeowner’s insurance on your home. This not only protects you, but it also protects the mortgage lender from major losses due to fire, storms, and other hazards that could damage the home. Work with your insurance agent to get the best insurance package for you.

Step 6) Close the Deal

You are now ready to seal the deal and finally become an owner of your new home. The realtor has assisted you with negotiating the terms, price, and repair items of the transaction. The final step is sitting down with the seller and signing all the paperwork necessary to finalize the deal. From the time that you have an accepted offer to the time that you close, the typical home buying process can take 45-60 days. This time period can be shorter or longer depending on your personal circumstance and the circumstances of the home seller.