Guide to Homebuying: How to Buy a House

Katie DuncanJanuary 2, 2023


Cartoon homes

Purchasing a home is never just one feeling—there might be days when it’s overwhelming, and other days when your excitement can’t be held back. It can be joyous and stressful and everything in between.

If you’re a first-time home buyer, this rollercoaster might make the paperwork and the deadlines and the constant communication seem completely overwhelming. You’re not alone in this feeling, nor will you be alone in the process!

It may be helpful to look at becoming a homeowner as a step-by-step process. This guide will provide an overview of how to buy a house, from your initial research all the way through to closing. (Check out our First-Time Homebuyers section for more resources!)

Some context here: we’re talking about the process in Texas because that’s where we’re based! Real estate regulations in Texas are pretty unique, so if you live in a different state, chances are high that your specific process will be different.

From Mortgages to Home Equity Loans

Our local, award-winning lending team is ready to help you begin today.

How to Buy A House

There are quite a few small steps involved in buying a house, but we’ve broken it down into five main phases: research and planning, house hunting, placing an offer, mortgage application, and closing.

1. Research and Planning

Buying a home may seem like a daunting task, but if you break it down into smaller steps and prioritize research and planning in the beginning, it can make the entire process much easier.

Start off on the right foot by exploring these key things.

Where You Want to Live

You may already know exactly where you want to live. But if you don’t, ask yourself questions like:

  • What type of neighborhood do I prefer— urban or suburban?
  • How long is my commute from work?
  • Are there any schools nearby that I would send my children?
  • Is this an area with potential for growth?

The Housing Market

Familiarize yourself with current housing trends, including median home prices, inventory levels, and mortgage rates. Taking time to comprehend what is happening in the market can help guide your decision-making and help you set realistic expectations. Additionally, this knowledge will help give you an idea of what type of house fits within your budget and how flexible that budget needs to be.

Your Budget and Finances

This might be the most important step, and it’s often underestimated. Approaching house hunting with a good idea of your homebuying finances—including your down payment savings, credit history, and budget— can go a long way toward actually finding a house you’re happy in. It’s critical to understand what you can afford now and in the future, so you can avoid the disappointment of finding your perfect house—and figuring out you can’t afford it. Keep in mind that your budget should factor in closing costs, taxes, and insurance costs.

One key budgeting step is loan prequalification. To get prequalified, a lender will look at your financial basics and credit history to determine how much you can borrow when it comes time to apply for a mortgage. Without getting prequalified, you won’t actually know your true budget for a home. You could find a home, put in an offer, be accepted, and then find out you’re not approved for the mortgage. A good lender will meet with you and talk everything over, helping you find the budget, loan payment, and other financial terms that will work best for you and your future.

2. The House Hunting Process

Next is the part that many people love— house hunting!

For this, you’ll want to find a reliable real estate agent. Real estate agents are trained and licensed professionals that can help you find the house that meets most, if not all, of your needs. They can also set your expectations on how long it will take, what kinds of houses you might be most interested in, locations that are popular or out of your price range, and the general outlook for real estate for other folks in your same price range.

A great agent can also set you up with their recommendations for contractors: from house inspectors to expert electricians.

3. Placing an Offer

You’ve found a home—great! Now your agent will help you place an offer and walk you through all of the necessary paperwork.

The offer process is unique in Texas. You won’t put in a separate offer: you’ll send a purchase contract for the home, signed by you and prepared for the seller to sign. This acts as your offer. Your real estate agent will send this contract to the seller’s agent, and they will pass it on to the seller.

The purchase contract will explain any requirements or actions that need to happen before the contract can become legally binding and may include financial, inspection, or appraisal requirements.

The purchase contract also sets the closing deadline (also known as the settlement deadline). If the seller takes your offer, they may negotiate terms with you or simply sign the contract. When the seller signs, your real estate agent will let you know. Your agent will then coordinate with you to send your earnest money and option fee.

Pro tip: in a hot market, you’ll be going up against other offers. This is another way prequalification comes in handy; when you submit an offer with a prequalification letter, you’re signaling to the seller that you are likely to get approved for the mortgage—making the sale that much more likely. In some hot markets, prequalification is a must to get an offer accepted.

4. Offer Acceptance and Mortgage Application

If the seller accepts your offer, your real estate agent will let you know. Your agent will then coordinate with you to send your earnest money and option fee.

The next step is to apply for your mortgage. If you’ve been prequalified, the process should go smoothly. Your experienced mortgage lender should be helping you every step of the way during the application process, making sure everything is in order. Your mortgage application will be sent through the entire lending process, from initial review to underwriting. Your lending team will let you know what documents they need to underwrite your mortgage, including proof of income and bank account information.

During the approval process, a few other things will also be happening:

  • Your lender will order an appraisal
  • You’ll have an opportunity to get the house inspected (which is always a good idea)
  • Your lender and title company will work to ensure the title to the house is free and clear
  • You’ll get your homeowners insurance set up

If you’re approved, you move on to the next and final process— closing!

5. Mortgage Approval and Closing

Your lender will help you complete any last steps before the contract becomes official, and your real estate agent will communicate with the seller’s agent to make sure everything is ready to go.

The very last step is closing on your house, or signing all of the official paperwork to complete the transaction. This typically takes place at the title company’s office. During closing, you’ll pay final fees and expenses, such as title insurance, attorney fees, appraisal, taxes, and more. The deed and title will be transferred to you, making your homeowner status official. And yes—this is when you get your keys!

Buy A Home with Confidence

Purchasing a home is no small feat. There may be many steps, but a good team— from lender to real estate agent— can guide you every step of the way. With the right preparation, knowledge, and experts, first-time homebuyers can feel empowered as they open the door to homebuying!

Ready to get prequalified?

Apply today and start your journey toward your new home.

Katie Duncan

Katie Duncan is a financial writer based in Austin, Texas. Her articles include financial advice for freelancers, homebuyers, and more. When she’s not writing, Katie loves traveling and exploring the outdoors with her friends and her dog, Poe.