10 Steps to Finding Your Dream Home

Finding and buying a home can be an exciting adventure. But if you aren’t careful, you can make mistakes that will quickly turn your dream home into a nightmare.

So, before you start shopping, build a roadmap that leads to the home you want. Here are 10 steps to get you there.

1. Get your head on straight

Cameron Whitman / Shutterstock.com
Cameron Whitman / Shutterstock.com

It’s easy to see something you can’t afford — a bigger home, grander kitchen, better neighborhood, more bedrooms, fabulous design — and start rationalizing why you need it and how you can get it. This is normal.

These intense desires, though, can cloud your judgment — maybe just momentarily, but sometimes long enough to cause mistakes with long-lasting consequences. This is why savvy home shoppers nail down financing before shopping for homes. Know exactly what you can comfortably afford so you aren’t tempted to stretch to pay more than you should.

2. Pull your credit reports

danielfela / Shutterstock.com
danielfela / Shutterstock.com

The first step in applying for a mortgage is to make sure your credit reports have no errors. These could cost you money, because a lower credit score usually results in a higher interest rate than you’d otherwise get.

You can get a free credit report each year from each of the major credit-reporting agencies — TransUnion, Experian and Equifax. Apply for a report from all three, making sure each is error-free. Do it as much as a year before applying for a mortgage so you have time to correct any errors you find.

For more tips, read “How to Get Your Free Credit Report in 6 Easy Steps.”

3. Learn your credit score

garagestock / Shutterstock.com
garagestock / Shutterstock.com

Mortgage lenders use your credit score — usually a FICO score — in deciding what interest rate they’ll offer you.

Check your score long before home shopping so there’s time to raise your score if you discover it’s low. There are a number of ways to get your FICO score for free. If you find you need to improve it, try these “7 Quick Ways to Raise Your Credit Score.”

4. Consider renting versus buying

Africa Rising / Shutterstock.com
Africa Rising / Shutterstock.com

Owning a home is not always better than renting. Many factors are involved — including whether you are likely to move, how much upkeep will cost, what you will have to pay in interest. Take a good look at the pros and cons of each before deciding to be a homeowner.

5. Save for a down payment

staras / Shutterstock.com
staras / Shutterstock.com

You can’t borrow the entire cost of a home. You’ll need to put your own money into the purchase — get some “skin in the game,” as real estate agents like to say — with a down payment.

The more cash you contribute, the more affordable the home purchase becomes. For example, putting in at least 20 percent of the home’s price lets you avoid paying for mortgage insurance. Also, the more cash you bring to the deal, the less you need to borrow, and the smaller your monthly mortgage payments will be.

6. Get preapproved for a mortgage

Turhan / Shutterstock.com
Turhan / Shutterstock.com

Getting preapproved for a mortgage is not the same thing as being “pre-qualified.” Pre-qualification is an initial screening that lenders typically offer home shoppers. It’s a cursory process: Prospective lenders ask about your debts, assets and income, and quote you a rate that you’d probably get if your answers turn out to be accurate.

Preapproval, however, requires you to complete an official mortgage application. You let a lender pull your credit score and check deeply into your financials. You’ll learn exactly how much you can borrow and roughly what your interest rate will be.

With a preapproval, you’ll get a letter from the lender saying that you’ve been approved for a mortgage up to a certain amount. When you make an offer on a home, this letter gives you an edge over buyers who have not yet applied for financing.

You may have to shop around to find a lender that preapproves borrowers. A great place to start comparing what lenders have to offer is here, in our Solutions Center.

7. Make a list of must-haves

Alexander Raths / Shutterstock.com
Alexander Raths / Shutterstock.com

Before the excitement of home shopping hijacks your brain, make a list of the bare minimum features that your new home must have. It must have at least two bedrooms, for example. Or, it must be on one level. Or it must have a yard.

You’ll need to pull this list out again and again as you consider homes for sale.

8. Get to know the neighborhoods

Oksana Tysovska / Shutterstock.com
Oksana Tysovska / Shutterstock.com

You’re not just buying a home, you’re buying a neighborhood — and all of its sights, smells, noises, architecture, conveniences and drawbacks. It’s a good idea to find a few neighborhoods that you can afford and that roughly meet your requirements. When you choose an agent, you’ll want one who has expertise in those areas.

For more on finding the ideal neighborhood, check out “20 Tips for Buying a Home in the Best Location, Location, Location.”

9. Find a real estate agent

g-stockstudio / Shutterstock.com
g-stockstudio / Shutterstock.com

Now, shop for the agent who will help you find a home. Talk with several of them and interview them carefully, asking about their backgrounds, and properties they’ve helped buy and sell.

Choose someone who knows your particular market inside out and who has helped buy and sell a lot of properties in the neighborhoods where you want to live. Chemistry matters, so listen to your gut. Find someone who is sought-after by clients but who is not too busy to make time for you.

For more details, read “How to Find the Right Pros When Buying a House.”

10. Shop for homes

Andy Dean Photography / Shutterstock.com
Andy Dean Photography / Shutterstock.com

Finally! You’ve arrived at the fun part. It also can be the grueling, heart-wrenching, exhausting and confusing hard part. But now you are well-prepared for your search. Good luck in finding a new home that suits you to a T.

We’d love to hear about your home-shopping experiences. Post a comment below or at our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
How to Achieve Your Financial Goals in 2020
How to Achieve Your Financial Goals in 2020

New year, new you. Get your finances on track with the help of these tools for investing, saving, budgeting and earning.

11 ‘Disposable’ Items You Should Be Reusing
8 Award-Winning Products That Impressed 40,000 Shoppers
8 Award-Winning Products That Impressed 40,000 Shoppers

The Product of the Year awards help shoppers find the best pet products, personal care items and everything in between.

3 Good Things About Recessions
3 Good Things About Recessions

We don’t wish difficulty on anyone, but there can be an upside to a down cycle.

5 Ways to Save at Dollar Tree
5 Ways to Save at Dollar Tree

Yes, it’s possible to pay less than a buck for items from a dollar store.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

The 16 Cars Most Likely to Last 200,000 Miles
The 16 Cars Most Likely to Last 200,000 Miles

One automaker takes half the spots on a list of the longest-lasting vehicles.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.