Your essential home buying checklist for 2024

If owning a home is one of your goals, you’ve probably thought about the amenities you want. Maybe you’re looking at listings online. Perhaps you’ve started saving for a down payment. Wherever you are in your home buying journey, the process doesn’t have to be complicated.

Yes, it’s a BIG financial goal to buy a home. But once you’ve determined you’re financially ready, there’s a series of steps you can follow to achieve your homeownership ambition. Read on to learn how to turn your home dreams from dormant to doormat.

1. Check your credit score

Your credit score impacts your loan’s interest rate, monthly payments and may even impact your ability to be approved for a mortgage loan. Get a free copy of your credit report from the three main credit reporting agencies by visiting annualcreditreport.com and contact each agency to alert them of any errors you see. Pay your bills on time and keep your credit card balances low to improve your credit score.

2. Create a budget

When figuring out how much you’ll need and calculating your monthly mortgage, factor in not only the purchase price of the home but also closing costs (typically 2-5% of the purchase price), homeowners’ insurance, private mortgage insurance (PMI) and homeowner association fees (if applicable), plus property taxes. A payment equaling no more than 25 percent of your monthly take-home pay is recommended.

Use the calculator below to estimate your monthly payment on a home. Just enter the loan amount and use the sliders to add your loan term (number of months/years) and interest rate.

3. Save for a down payment

Once you’ve determined you’re ready to buy a house, it’s time to plan for a down payment. For most traditional home loans, lenders typically require a down payment of at least 20% of the home's purchase price to avoid private mortgage insurance (PMI). PMI is an additional cost that protects the lender if the borrower defaults on the loan. If you put down less than 20%, PMI is usually required to mitigate the lender's risk.

4. Shop for a mortgage

Calculate how much you can borrow based on your income, debt, down payment, credit score, and desired home location. There are a number of financing options, including banks, mortgage lenders/brokers and credit unions. Shop around for interest rates, but also consider fees and quality of service. Common mortgage term options include a 30-year loan or a 15-year loan, the latter of which typically comes with a lower interest rate and larger monthly payments.

5. Get pre-approved

Getting pre-qualified or pre-approved from a lender shows sellers and real estate agents you’re serious about buying, and also outlines how much you are able to borrow. Lenders will review your credit report and documents to verify your assets and debt before pre-approving the loan.

6. Hire a real estate agent

Research real estate agents, brokers and Realtors^® to find one that best fits your needs. Look into their track record and familiarity with your desired neighborhood, request references and consider their current workload. Your ideal agent should have specific experience assisting homebuyers like you and possess knowledge of your local market.

Did you know? On August 17, 2024, a new requirement was implemented for prospective home buyers nationwide. Before touring any home, all potential homebuyers must sign a contract with a licensed real estate agent. This contract outlines the compensation and duration of the agreement with the agent. All terms, including the duration, commission and scope (e.g., single property viewing), should be negotiable. This new requirement aims to help buyers clearly understand their agent's commission. Written agreements are required for both in-person and live virtual home tours; however, they are not required when attending an open-house.¹

7. Look around

Drive through neighborhoods you’re interested in to see what’s for sale and attend open houses. Keep notes on each property and leave your schedule open so you can move faster when a desirable property is listed.

8. Make an offer

When you’re ready, your agent will help prepare an offer package that includes your offer, pre-approval letter, proof of down payment funds, and terms or contingencies (contingency clauses typically include an appraisal, financing and home inspection). If your offer is accepted, you’ll sign a purchase agreement that includes the price of the home and closing date, and you’ll pay an earnest deposit (usually 1-2% of the purchase price).

9. Get a home inspection

Home inspections generally need to be completed 10 to 14 days after signing a purchase agreement. Your agent can refer you to a home inspector, but it’s also a good idea to research them yourself. Peruse the home inspection checklist so you know what is and isn’t covered (like checking for mold or pests). Attend the inspection if possible, to ask questions. Inspect the report carefully.

10. Negotiate with the seller

If the home inspection reveals issues, have your real estate agent help you negotiate with the seller to either make the repairs or give you a credit at closing. If there are hazards like faulty electrical wiring or structural damage, the lender might decline your loan. A contingency gives you protection to back out of the deal if the seller refuses extensive repairs.

11. Finalize your mortgage

Be ready to work with the lender to submit all necessary documentation, which might include bank statements, tax returns and additional proof of income. To secure your financing, keep your credit good through closing (avoid changing jobs if possible, and don’t run up credit cards, take out a new loan, or close any accounts).

12. Close! Home sweet home.

Do a final walk-through with your real estate agent and bring your home inspection checklist to ensure any issues have been addressed. Your lender will give you a closing disclosure with your loan details before your closing date. Compare it with your estimate to make sure the closing fees and loan terms are identical.

At the closing, you will be joined by your agent, the seller and seller’s agent, and sometimes, the closing agent. Review all documents carefully before signing. Then, you’ll pay your closing costs and down payment, along with prorated property tax, homeowners’ insurance and HOA fees (if applicable).

Finally, it’s time to take possession of your new home. You’ve completed all of the steps in the homebuying process and are ready to get your keys and step over the threshold. Happy housewarming!