Here are the basic steps that you should follow when it is time to buy a house.

Determine If You Are Ready to Buy a House

You should determine if you are ready to buy a home. Home ownership is more expensive than renting because you are responsible for paying for all the repairs as well as added utility costs, such as garbage and water. In addition, you will need to pay for taxes and insurance related to your home. These costs add up quickly and if not financially prepared, you may end up in a very negative position. You should first eliminate all debt and then save up an emergency fund, before you purchase your first home to keep your finances in a positive position.
You may be feel pressure from friends and family to buy a home, but you should wait until you have a financial plan in place and you’re ready to settle down in a particular area before making a big home purchase.

Start Shopping for a Loan

Take the time to shop for a loan. You will need to get pre-approved before you shop for a home. This pre-approval will allow you to set a realistic budget and allow you to look for homes within of your price range. You should contact at least three people before you decide which loan to take. A mortgage broker will look at several different loan companies to find you the best rates. However, your local bank or your credit union may have options that will save you money as well. Once you find a loan with the correct terms you can begin shopping.

Find the Best Payment Options and Loan Types

When it comes to your mortgage you may be surprised at the different loan types and payment options available to you. It can be baffling when you think about Adjustable-Rate Mortgage (ARMS) and Private Mortgage Insurance (PMI). Usually a fixed rate 15- or 20-year loan is the best option. This can help you lock in a low rate. You may be considering creative financing to cover the down payment, but you should be careful when you make these choices. You want to build wealth with your home purchase. If you make the wrong choice, then you may end up burdening financially.
If the market drops or if you need to move sooner than you planned, you may find that you are underwater on your mortgage and you owe more than your home is worth. A down payment can help you avoid this problem and makes it easier to resell.

Be Honest About What You Can Afford

You also need to determine how much home you can really afford. A good rule of thumb is to keep your mortgage along with your taxes and insurance between 25 and 30 percent of your income. Other experts advise that your home cost be limited to two and half times your annual salary. It can be crippling if you are house poor. If you spend too much on your mortgage you may not be able to meet your daily obligations let alone save for retirement. A smaller house is worth the peace of mind. If you are carrying debt (credit card or student loan debt), you should keep your house payments on the lower end of that amount.
Find a good realtor once you have determined how much you can really spend and are pre-approved. Your realtor should listen to your wants and needs carefully. Your realtor should explain the market to help you find a home that suits your needs and that you can afford. Once you make an offer, your realtor should work to negotiate terms that you are happy with. A good way to find a realtor is through the recommendations of friends, family and colleagues.

Request a Home Inspection

Another important step is a thorough home inspection. This is different from an appraisal. You should pay for an independent home inspection in addition to the one provided by the homeowners. The home inspector will look for hidden problems with the home. Through the home inspection you can learn about any issues that may prevent you from buying the home. This may include mold problems, termites, foundation problems and a bad roof. The inspection can save you thousands in repairs later on. For example, you may be able to negotiate a lower price if you know the home needs a new roof.
Take the time to find a highly recommended home inspector since this can save you a lot of money later one.

Be Patient During Escrow

Once you have bid on your home and the offer is accepted, you will go into escrow. The escrow holder will work to make sure that all the documents, money and other necessary information is in order before you close. Escrow is set up to protect the buyer, the seller and the lender and can take time to complete escrow (put average time in take to complete escrow in this sentence).

Once everything is completed for escrow, you will sign the closing papers. You may or may not sign your mortgage papers at escrow.
If you do, you can request that the bank send a representative to help you fully understand your loan.

Close and Move In

Once you have closed on your home, it is time to move in. You can paint, unpack and enjoy your new home. Be sure that you change your address with your bank, and other accounts. You can set up your utilities and cancel your old ones as well. This will save you time and money, because you will avoid late fees. Some companies will waive installation fees if you transfer your old account to your new address.

Tips:
1. It is important to realize that you need to include the cost of taxes and homeowner’s insurance into your monthly housing cost. With the insurance and taxes your monthly housing costs should not be more than thirty percent of your monthly salary.

2. You should be prepared to pay for all of your closing costs out of pocket. This will save you money over time. If you are finding it difficult to save up for closing costs you may not be ready to purchase a home.

3. Be sure that you can afford your home payments. Do not stretch yourself because you may end up losing your home, which can destroy any good memories you have in your home. If you are not sure you can afford a home, try sticking to a budget with what you expect your home payment will be and put extra money in your savings. This can build your confidence and your savings so you can move forward with the home purchase.