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The Ultimate Home Buying Checklist

house buying checklist
Homeowner July 1, 2019
Arthur Brodskiy
Arthur Brodskiy

Our 10-Step Guide to Navigating the Biggest Purchase of Your Life


If you’re a first-time home buyer, chances are you’re a little overwhelmed on where to start. Do you talk to your bank first, or start looking at listings? What sort of credit score do you need? What does the home inspection process look like? There’s a lot to consider. 


We’ve set out to demystify the home buying process for you. What you’ll find here is a 10-step checklist to buying a home, from finding out your credit score all the way through to closing the deal. 


#1. Get a hold of your credit score. 


Your credit score is one of the most important things lenders will consider when approving you for a mortgage loan. A score over 700 is ideal, and should allow you to get a low interest rate with a low down payment. 


If your score is in the 600’s or lower, you still might be approved, but you’ll be paying more over the lifetime of the loan with higher interest. Lenders might also ask you for a higher down payment. 


If your credit score isn’t over 700, consider spending some time building it up before trying to secure a loan. 


#2. Decide on your budget. 


viewing a house checklist


Just because a bank will approve a loan amount doesn’t mean you can afford it. Some lenders will issue loans with payments that are almost half your pre-tax monthly income. While it might be exciting to have that level of home purchasing power, think about how big of a chunk that loan payment will take out of your monthly budget. 


Take the time to sit down and really figure out how much you can afford in monthly mortgage payments. Depending on where you live, you’re likely to have property tax bills too. Don’t forget your down payment, which will likely be between 3.5-20% of the cost of the home. 


#3. Find a mortgage lender.


Finding a mortgage lender can be a lengthy process, but doing a little extra legwork here can save you some money at the end of the day. One thing to keep in mind is not all mortgage lenders are created equal. It helps to know the difference. 


Most major banks offer mortgage lending. Many home buyers prefer to keep all of their financial transactions with one institution, which is understandable. One of the drawbacks of going with a bank is that it could take longer to close on the loan. 


Credit unions are similar to banks except they’re owned by the members. If you’re a member of a credit union, you might end up getting a more friendly rate than you would at one of the bigger banks. But those long close times are still a factor with credit unions. 


Dedicated mortgage lenders and brokers are different from banks in that they deal specifically with mortgages. The closing process tends to go faster with mortgage lenders. They also take on more risk than traditional banks and credit unions, so if you have a credit score on the low side or don’t have much in the way of a down payment, this might be your best option.  


Which direction you go depends on your situation. Ask around for recommendations. And remember if you’re comparing rates, compare on the same day since mortgage rates change on a daily basis. Once you find a lender you like, it’s time to start the pre-approval process. 


#4. Get pre-approved.


questions for first time home buyers to ask


Determining your budget and getting a hold of your credit score is only half the battle. Before you really know what you can spend, you need to get pre-approved. Getting a pre-approval letter from a lender is something you absolutely must have before meeting with a realtor and making an offer on a home. 


Why is a pre-approval letter so important? First off, it shows realtors and sellers you’re not wasting their time. It assures them you can actually purchase the home if you’re interested. Not only that, it also gives you a firm idea of your purchasing power and what your financial picture will look like once you’re making mortgage payments. 


To get a pre-approval letter, you’ll have to fill out a mortgage application from one of the lenders you scouted out. They’ll ask you for a bunch of paperwork, including pay stubs, W2’s bank statements, and retirement or investment account statements. Keep in mind that getting a pre-approval letter from a lender doesn’t mean you can’t shop around for a better rate later on when you’re ready to make an offer. 


#5. Save up for lump-sum costs.


Unless you managed to get pre-approved for a zero-down loan, you’re going to need to come up with a down payment. This could be as little as 3.5% or as high as 20% of the price of the home.


The down payment isn’t the only lump-sum cost you’re going to be dealing with. There are also closing fees, which are all the little administrative fees involved with the home-buying transaction, including underwriting, processing, application and lock-in fees. 


#6. Hire a real estate agent.


Choosing a real estate agent can seem like a daunting task. And it’s a task you’ll want to take seriously. There are plenty of horrible agents out there that definitely don’t have your best interests in mind. 


That’s why it’s good to know what to look for in a real estate agent. An agent who has several years of experience (and success) under their belts will be a great asset. Ask around for recommendations and look for someone with plenty of local knowledge. It’s also good to hire someone who works with a team for extra support. 


#7. Create your dream home wishlist.


home inspection checklist


Take some time to figure out exactly what you want in a home. How many bedrooms do you need? How many bathrooms? Do you want a huge kitchen with dual ovens so you can host Thanksgiving dinner?


Consider the neighborhood you want to live in. How are the schools there? What’s the parking situation like. If you use public transportation, how far away is the train station? 


Make a list of all the qualities you want in your home. Write down anything you can think of, and any questions you may want to ask at the viewing. At the same time, keep in mind your budget. That inground pool might sound amazing, but it might not be realistic for you.   


#8. Make an offer. 


When you finally find that dream home (and it might take awhile), make an offer immediately. The housing market has been taking off in America in the last few years, and if you really like the home, chances are you’re not the only one interested. Now’s not the time to hesitate.


Get advice from your real estate agent and make a good first offer. Don’t go too low or you might kill the deal. At the same time, don’t offer your entire pre-approval amount. Leave some room to negotiate and be prepared for a counter-offer. 


The more research you do, the better equipped you’ll be to make a competitive offer that matches the current market. If you get lucky and your offer is accepted, it’s time to move on to closing. But first, you’re going to want to get a professional home inspection. 


#9. Get a professional home inspection. 


home inspection tips


The few hundred dollars it costs to hire a professional home inspector can save you from making the worst purchase of your life. 


Homes, especially those on the older side, are subject to wear and tear. And while we like to think that everyone has our best interests at heart, the truth is sometimes sellers won’t be so forthcoming with every little thing that’s wrong with their home. 


That’s where the inspector comes in. A professional home inspection will cover all the potential problem areas in the home. The heating and air conditioning systems, the roof, the plumbing infrastructure, the foundation, the electrical system, fireplaces, basements and attics are all inspected. 


After the three or four hour inspection, the home inspector will prepare a written report with all their findings. Based on the report, you can decide whether you want to proceed with or back out of the deal. 


#10. Closing time.


After you’ve finished all of the above, it’s time to close on the house. Now’s the time to shop around lenders and seek out the best possible rate you can get. You certainly don’t have to go with the lender you got your pre-approval letter from. 


Once you settle on a mortgage lender, you’ll need to gather cash to cover all the closing costs. You might need to bring in an escrow officer or real estate lawyer depending on where you live. Closing is all about paperwork, more paperwork and waiting for everything to process and go through. It typically takes about a month for your loan to close.

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