Buying a house is one of the biggest financial steps you will ever take. There are many steps involved in the process and as such, it is important to know what you are signing up for. This website recounts the process of buying a house and what to expect on each step.

The Process of Buying a House

The first step in buying a house is getting pre-approved for financing or refinancing by your lender before making an offer. There is a lot involved in this step and it is a good idea to consult a financial professional. After you have pre-approved then you can make an offer on the house that you are interested in.

Step 01 – Get Pre-Approved for Financing

Before making an offer you need to get pre-approved from your lender. This is the first thing that you need to do before even starting to look at houses. Your lender will want to make sure you have enough income and credit history to meet their loan covenants so they can assess your credit quality.

Buying A House

Step 02 – Make an Offer

After getting pre-approved, you can make an offer on the house that you are interested in. Your offer will be based on how much money you want to contribute and how much the seller of the house is asking for the house. This is all dependent on how much your lender is willing to lend you. On a side note, if you have no financial backing from your lender (other than a down payment) then banks will draft your loan agreement before they assign it to their lending department.

Step 03 – Getting the Loan Approved

Once you have made an offer and your lender has reviewed the loan, they will send you a document called a loan commitment letter. This is actually the same document they will send to the seller of the house. They will also require you to send back a non-refundable Origination Fee before they finalize your loan.

Step 04 – Closing

After closing on the property, your lender is supposed to update their records. This includes updating your monthly payment, your interest rate and the total balance due of the loan. They will also send you a statement with all these details at the end of each month. Your lender will not report anything to the credit bureaus until your loan is 30 days past due.