Home buying:
the next steps

1. Prepare your finances

Start with spending that reflects your actual life, including irregular bills. Separate the cash you expect to spend on the purchase from the reserve you want to retain. Review your credit reports for errors before shopping; checking your own credit does not hurt your scores. A lender’s credit check is a different request. [1]

Do next: Compare your expected housing costs with your full monthly budget. List the expenses still missing from your estimate. Keep account numbers, credit reports and identity documents out of calculator fields and public website forms.

2. Understand the preapproval

A preapproval expresses a lender’s tentative willingness to lend, based on assumptions and further checks. It is not a guaranteed loan offer. Lenders use “prequalification” and “preapproval” differently, so ask what was verified, what remains conditional and when the letter expires. A preapproval does not commit you to that lender. [2]

Ask the lender: Which documents are still needed? What could change the amount, rate or costs? Keep your own comfortable spending limit separate from the amount a lender is willing to consider.

3. Compare written loan offers

Request Loan Estimates from multiple lenders. Compare the same purchase assumptions and record each quote’s date and rate-lock status. Look at the loan type and term, interest rate, points or credits, lender charges, mortgage insurance, total monthly payment and estimated cash to close. Check for taxes, insurance or assessments you must pay outside escrow. [3]

Use the planner carefully: Its fixed-rate calculation uses the mortgage interest rate, not APR. Keep points and other upfront charges in the relevant closing-cost estimate. Adjustable-rate, balloon and interest-only loans need a different model. A smaller displayed payment does not establish the lowest total cost.

4. Check the property and insurance

A home inspection evaluates the property’s condition; it is different from an appraisal used in the lending process. Arrange an independent inspection early enough to understand the findings and any further specialist work. Your ability to negotiate repairs or cancel depends on your purchase contract and applicable rules. Ask your agent or attorney to explain the deadlines and contingencies. [4]

Get written insurance quotes and compare coverage, exclusions and deductibles as well as premiums. Ask whether the coverage meets your lender’s requirements. Standard homeowners insurance typically excludes flood damage; discuss the property’s risks and any separate coverage with the insurer. [5]

Update your estimates: Use actual insurance quotes and documented repair estimates when available. Identify association dues or assessments and confirm what they cover. Keep unknown costs visible instead of entering zero to make the budget look complete.

5. Reconcile the closing figures

For mortgages subject to the standard Closing Disclosure requirement, the lender must ensure you receive it at least three business days before closing. Ask your lender how the rule applies to your loan and schedule. Compare the disclosure with your most recent Loan Estimate; question changed terms, charges, credits and cash-to-close figures before signing. Request the other closing documents in advance too. [6]

Check the cash calculation: Enter the full down payment and gross closing costs, including prepaid items and the initial escrow deposit. Enter closing-cost credits and the deposit already paid in their separate fields. The planner subtracts that paid deposit once automatically; do not reduce the down-payment or closing-cost inputs by it. Enter available cash after paying the deposit. Moving costs, initial repairs and the reserve you retain are separate from the settlement amount. Reconcile the estimate with the final closing documents.

Closing-fund scams can impersonate real estate or settlement professionals and announce last-minute wire changes. Verify payment instructions directly with the closing professional through a contact method you independently trust before sending money. [6]

6. Turn the estimate into an ownership budget

Keep the signed Closing Disclosure, promissory note, mortgage or deed of trust, deed and supporting budget records securely. Mail that includes your lender’s name or loan details is not necessarily from your lender; some information becomes part of public records after closing. [7]

For your first months: Confirm the first payment instructions and due date through your lender or servicer. Replace estimates with actual bills, keep track of insurance renewals and property-tax payments, and plan for maintenance and repairs. Revisit the amount reserved for unexpected costs as you learn the property’s needs.

Keep your next step small

Choose the stage you are in and complete its next action. Use the Home Buying Planner to revise your cash and monthly-cost estimates, or the Budget Planner and retirement workbook for your wider plan. Explore more at Money & Budgeting.

Choosing a section does not save a subscriber preference or create a newsletter subscription. Read about The Next Dollar. Keep sensitive buyer documents out of public website forms.