How To Buy a House: An In-Depth Guide for Soon-To-Be Homeowners

Introduction

Whether you’re ready to finally move out of the barracks or you’re PCSing to a installation where buying a house is a great investment, you need to know how to buy a house — and SOON. That’s easy to say, though. If you’ve tried doing research on how to buy a house already, you know it’s anything BUT easy. Our in-depth guide is here to shed a little light on the process to help you understand how to buy a house with confidence.

Jump right to a specific section using the links below, or just keep scrolling through to read it all!

How To Research a Home Before You Buy
Home Buying Process Timeline
Different Types of Home Loans
Incentive Programs for First-Time Homebuyers
First Time Home Buyer Tips

How To Research a Home Before You Buy

To properly research a home takes more than just a few keystrokes in Google search. You need to know what exactly you’re looking for, what monthly mortgage you can afford, and how much of a loan you’re going to be able to take out. Sure, we make it easy to search based on what you’re looking for here at AHRN, but all this means nothing if you don’t know what you can (or cannot) buy with your income and savings.

All things considered, researching your home is about researching MUCH more than just your potential new home.

Know What You Want

So how hard is it to buy a house? It can be made easier when you know what you want. Do it the old-fashioned way. Get out a pen and paper and write down the simple things you’re looking for in a home. Not a fan of carpet? Make a note that you’d love to look for hardwood floors in your new home. Down for a little DIY? Write down that you’re open to looking at fixer-uppers and buying a house as-is. Planning on having kids soon? Make sure to look for homes that are situated close to a local school.

Questions like these can help you narrow down your home search to only the best fits for you. Mind you! Don’t get too specific. If you say that you’re looking for a home with a stone and brick combination exterior, clawfoot bathtub, and hardwood floors that’s move-in ready and situated exactly 12 miles from the closest school, you’re going to set yourself up for disappointment. Writing down smaller, more generalized wants can help your realtor really understand what you’re looking for.

Know What You Can Pay

Knowing what you can pay can be tricky, and it takes a lot of math. But, hey. You’ve budgeted before, so this is nothing new to you!

Calculate your net monthly income, your BAH rate, and that of any other person contributing to household finances. Then, add up your current debts, thinking of car payments or credit cards you’re currently paying on. Next, take into account the amount you spend on groceries, subscriptions (like Netflix or Spotify), WiFi, phone service, cable, and other entertainment. Finally, subtract these debts and expenses from your net monthly income.

Once you have that final amount, calculate how much you’d be able to comfortably pay on a home loan once all other debts have been paid. If you have $2,500 left over per month after expenses, you’re not going to be able to afford a $2,500 mortgage payment, but something a bit less may be perfect for you. This will also make getting your pre-approval letter a lot smoother.

Don’t have the best credit? Check out tips for researching and buying a home with bad credit on our trending blog Buying a House With Bad Credit: What Are My Options?

Know the Location

Chances are good that other military families have told you all about the area around your upcoming, new installation. But just how closely have you really looked at it? What is the traffic like on your road? Will it take you over an hour to get to the front gate? How about the crime rate in the neighborhood you’re looking at? Is the commissary within a good distance of your home? How close are you to your work?

Besides looking up all of this information via maps or through separate searches, there are a ton of websites that can help you find out all the important information about the place you’re looking to move to. Stats America has a lot of great resources; all you need to do is type your city’s name into the search bar and go!

Home Buying Process Timeline

You can’t exactly ask, “How long does it take to buy a house?” and expect a straightforward answer. There are many steps to the process, and considering what type of home you’re buying, where you’re buying, and more, the process length can vastly differ from person to person.

So, yes. The home buying process can seem overwhelming. With our home buying process timeline, however, we’re going to make it as simple and straightforward as possible. Take notes or bookmark this page for later!

1. Pre-Approval (A Few Minutes – 3 Days)

Before you do anything in the actual process, you have to get pre-approval for a loan. Without pre-approval, the process will come to a dead halt. A pre-approval letter acts as proven documentation that you will be able to receive financial assistance and pay for the home once you find the one.

Getting pre-approval is a pretty simple, painless, and quick process. Some companies let you file for pre-approval online and get a letter in just a few minutes. Others may take a few days to process and send you back your letter.

This letter will tell you exactly how much you’re qualified to borrow for your home loan, setting the stage for step two in the home buying process timeline.

If you’re not comfortable with doing this process on your own, you can ask your real estate agent for help. Login or register (FOR FREE) to your AHRN account and search for a military trusted realtor around your new installation!

2. The House Hunt (1-3 Months)

Your pre-approval letter is in, and you know how to narrow down your search to just the homes you can afford. Great! Now it’s time to bring out some of the other research you did on the location and your wants from a new home.

If you’ve learned anything from HGTV, it’s that you’re probably going to have to make some concessions when you’re getting ready to buy a house. Learning how to buy a house is also a process of learning when to let go of some things that you were looking or hoping for in a new home.

Don’t be discouraged if this part of the process takes a while. An offer may fall through. Someone may make a better offer before you could. It can be disheartening, but it’s an unavoidable part of the process.

You may find something that better matches your desires and needs in two weeks than what you’re seeing right now. You may even find it at a better price!

Given that you’re likely busy working and running errands, it’s going to be hard to find the time to go out and see houses that you’re interested in. That’s the biggest reason why this part of the process is usually the longest. So stay patient and keep looking through those listings in the meantime! New homes come on the market and leave it every day, so you’ll always have something to look at.

3. Putting in an Offer (1-5 Days)

The stars have aligned at last, and you’ve found a great house that’s in your budget and has a few of your favorite elements, too. Your real estate agent will work with you to come up with an offer for the house. Then, they’ll submit that offer to the seller’s agent.

After that, it’s in the hands of fate! This step is a waiting game — and an anxious one at that. Usually, you’ll hear a response from the seller via your real estate agent within two days. However, there is no specific time by which sellers are legally required to respond to your offer, so it could take up to five days, especially if they’ve received a lot of other offers.

The good thing about this part is that you’re pretty much just waiting on word from your agent, as there isn’t much for you to do.

An offer could come back to you as accepted, rejected, or as a counteroffer. A counteroffer is essentially haggling for the house. They’re interested but trying to get you to pay slightly higher while you’re trying to save as much money as possible. You’ll usually also negotiate a closing date during this step.

4. Apply for Your Mortgage (1-2 Hours)

You never actually thought this day would come, but someone has finally accepted your offer! Hooray! Now, you can officially apply for your home loan via the lender you applied for pre-approval with. The application usually doesn’t take much time at all.

5. Home Appraisal (3-7 Days)

Once you finish your loan application, your lender will usually order an appraisal for your home (not to be confused with an inspection). An appraisal vs inspection is the process by which the lender reviews the house and determines the home’s actual value. We’ll cover the inspection later on.

6. Loan Processing (3-5 Weeks)

While your home appraisal is underway, your lender will be working to process your loan application. They’ll usually send you a pretty daunting checklist of documents that they need to approve the loan and verify your personal and financial information.

You’ll want to get these documents in ASAP so that you can move along in the process a little bit quicker.

7. Inspection (5-7 Days)

We’re entering the final leg of the journey with the home inspection. As we discussed earlier, an appraisal vs inspection is very different. An appraisal deals with the value of the home. An inspection is a much more in-depth look at the home to make sure it’s functioning properly and is suitable for living.

If there are major problems within the home, these will fall on the seller to fix before the closing day unless an alternative agreement is reached between buyer and seller. Some of the most common problems that arise during home inspections are incorrect or faulty electrical wiring, leaky plumbing, roof damage, foundation issues, and mold.

An inspection on its own usually doesn’t take more than 3-4 hours, but it could be up to a week before an inspector is able to make it out to the home.

8. Loan Approval (10-20 Days)

As the inspection is underway, your lender will be reviewing your loan application and calculating your debts, income, and credit to make sure everything you’ve given them is accurate. After everything has been evaluated and drawn up by underwriters, you’ll receive conditional approval, which will move to full approval once closing day arrives.

9. The Closing Disclosure (1 Day)

You’ll receive what is called a “closing disclosure” from your lender AT LEAST three days before your agreed-upon closing date. This is a five-page document that outlines everything you need to know about your mortgage loan. All the tiny details and important information will be in this form.

For example, you’ll see your estimated monthly mortgage payment as well as other loan-related costs, such as PMI. This gives you another chance to make sure everything is on the up-and-up with your loan. If you notice there’s something off in your closing disclosure, DO NOT WAIT. Get in contact with your lender immediately. Issues rarely arise this late in the process, but you’re better off safe than sorry.

10. Final Walkthrough (1 Day)

Can you believe you’re finally here? It will seem like a decade has gone by since you got your pre-approval letter to the time you’re doing your final walkthrough. During the final walkthrough, you have one final opportunity to make sure the house is up to snuff with the terms you agreed upon. The walkthrough itself should only take a few hours, depending on how thorough you’re being.

11. Closing Day (1 Day)

The very last step in how to buy a house is reaching closing day. This is the moment that all prospective home buyers dream of for years. On closing day, you’ll sign a few final pieces of paperwork, your lender will transfer funds to the home seller and start your loan, and you’ll get the keys to your new house at last.

Different Types of Home Loans

Depending on your financial status, you may want to go for a different type of loan. Here are some of the most common types that you should look into.

1. Conventional

Conventional loans are the most common loan type. They usually have slightly higher interest rates but lower overall borrowing costs. If you get a loan backed by Freddie Mac or Fannie Mae, you could be allowed to put as little as 3% down on your home, which is a great option for first-time homebuyers.

2. FHA Loan

It’ll come as no surprise that these loans are backed by the FHA, or Federal Housing Administration. These make homeownership more accessible for first-time buyers or people who don’t have enough savings for a large down payment. With an FHA loan, the seller may also contribute to some of the closing costs.

3. VA Loan

If you’re a Veteran or a Veteran’s spouse, this is definitely the option for you. VA loans offer tons of benefits, like no required down payment, no PMI, and better rates.

Learn more about VA home loans in our latest blog Military Home Loans: A Comprehensive Guide for Active Duty

4. USDA Loans

If you’re buying in a rural area, a USDA loan may be a good option. Many of these do not require a downpayment, but they all require certain income limits for qualification. This is a fantastic loan option for people with a moderate or low income.

Incentive Programs for First-Time Homebuyers

There are a few programs and grants designed specifically to help first-time homebuyers out on their journey. If you’re struggling with the cost of homeownership, some of these options may be able to alleviate the stress that comes along with researching how to buy a house.

First Time Home Buyer Tips

1. Know All Potential Homeownership Costs

There’s more to buying your home than just the downpayment and monthly payment. You’ll also have to deal with the closing costs, moving costs, possibly PMI, upkeep (like lawn, plumbing, and HVAC), furniture, possible renovation, utilities, and property taxes.

Research the averages for these expenses in the area you want to move to so you’re not faced with sticker shock. If you’re starting from scratch, it can be a good idea to buy new items for your home three or four times a month in the year leading up to your purchase so you can spread out your expenses. To prep for these, pay close attention to item #3.

2. Set a Budget (And Stick With It)

Whether or not you’ve actually had to set a budget for yourself until now, it’s officially a necessity to do so. Sticking to a pre-made budget will help you find more wiggle room in the event of unforeseen costs that come up relating to your home.

3. Save Up & Build Your Credit

If you think you’ve saved up enough money, you’re wrong. You can never save up enough money for a house, so keep on saving until closing day. This is where a budget will also come in handy. The more you can put down on the house, the better your terms will be. Never overlook savings.

While you’re saving, try to build your credit, too. Get a secured card and pay it off. Stay on top of your current debts or pay those off, too. The less debt you have before you go to buy a home, the better. Paying off your debts can go a long way in helping you build your credit.

Need more tips on building your credit? Read more on our blog How To Increase Your Credit Score To Buy a House (2022 Edition)

4. Use All the Tools at Your Disposal

There are tons of tools on the internet that can help you prepare to buy a home. You can look at budget-setting tools, savings calculators, and even a home equity loan payment calculator, like this one from Bankrate. This will help you answer the age-old question, “How much house can I afford?” There’s never a shortage of tools to help you. You just have to look for them.

Conclusion

We’d say you’re officially prepared to buy a home near your new installation. Now that you know how to buy a house, it’s just a matter of starting the process. Go find your real estate agent, get your pre-approval letter, and get to the fun part: actually SEARCHING for your new home on AHRN.com! With this plethora of knowledge at your disposal, you can get a new home with confidence at every step.