Home Buying Process

Home buying isn’t a process that you can just blindly do though; you need a plan. Having a plan will make your home buying process less stressful, keep you from being overwhelmed and prevent you from heart break when you find out you can’t buy a house that would have been perfect.

There are 4 important steps you need to take to go from wanting to buy a home to actually achieving your goal of being a home owner.

Step 1 – Down Payment

If you’re looking for a lecture about how you need to cut out your daily coffee or how guilty you should feel about treating yourself to a nice dinner with friends (like this article does), you’ll be disappointed.

You already know that in order to get something you have to pay for it. In order to buy a home (because I’m assuming you’re like 99% of people buying a home) you’ll need to barrow from the bank.

A mortgage is the loan you get from the bank in order to buy the house.

Without a down payment, the bank will not give you a mortgage. They want to know that you are responsible enough to make regular payments to pay the loan back.

Mortgage lenders will also look at your credit rating, income and other things to decide if they’ll give you a mortgage.

You can learn about that in the next step below.

Step 2 – Mortgage Pre-Approval

Now that you’ve shown you are responsible enough to save for a down payment, the bank will now look through your credit rating to see how much consumer debt you have and if you make your payments on time.

Click here to see how debt affects how much you can afford when buying a home.

Some things that may surprise you about credit cards; if you have several credit cards in your name, even if all of them are at zero balance, the bank may not lend to you.

The reason is because having so many credit cards may allow you to run up too much debt in the future. They may ask you to close some of those credit cards and provide proof you’ve closed them.

Car loans are another mortgage killer. It happened to me when I was qualifying for my first mortgage way back in 2006.

I had a monthly lease payment of $440 and the lease term was up in 7 months.

The bank had me pay off the lease in order to free up the extra money.

Now that you have the mortgage pre-approval explained, it’s time to start looking at houses.



Step 3 – Find Out Where You Can Afford

With the way the market is these days, it’s not only about what you can afford, it’s also about where you can afford.

In previous posts, I talk about choosing the best living situation that you can based on 3 criteria: Location. Size. Condition.

Your mortgage pre-approval will tell you where and what you can afford, the size of the house or condo and, in what condition.

The old real estate mantra still holds true. Out of the 3 criteria, I always suggest choosing the best neighbourhood that you can afford and make a compromise on either the size of the place or the condition.

You can find out more about these criteria in this post here.

Now you’ll need someone to help you put it all together.

Step 4 – Find a Real Estate Agent

A real estate agent will help you find the best house that you can afford in the best location.

Full stop.

What you need to decide is which one you want to work with.

You can find one online.

Ask friends and family if they have one they recommend working with.

Visit open houses and see if you like them.

The only thing I caution with is to make sure the agent you decide to work with has your best interests in mind and not just chasing a commission.

There is a handy real estate agent review checklist for you to download at the end of the post.

In Conclusion

There you have it. After years of experience and seeing a few hearts broken, those are the steps needed in the home buying process to make sure you are buying the best home possible.

Skipping any of these steps puts your chances to buy a home at nearly zero.

Don’t skip any of them.

Download buyer real estate agent interview questions.