How to Buy a House home
Learn the basics
1.The Basics
2.How much home can you afford?
3.The Monthly Payment
 (w/Taxes & Insurance)
4.The Down Payment
5.The Loan
-Assuming a Loan
-Owner Financing
6.Qualifying for a loan
7.Understand Closing Costs
Do the groundwork
8.Get your finances in order
9.Check Your Credit Report
9a.Repair bad credit
9b.Establish Credit if you don't have any
The Process
10.Find a Lender
11.Evaluate the bank's offer
12.Decide whether to use an agent
13.Learn about the suburb penalty
14.Start looking at houses
15.Get the Disclosure
16.Make an offer / Sign a Contract
17.Have the House Inspected
18.Problems on the Inspection?
19.Renegotiate the terms
20.Appraisal & Insurance
After the purchase
Avoding scams
More about Mortgages
How much loan can you get?
15- vs. 30-year loans
Prepaying your mortgage
How to figure mortgage interest
Private Mortgage Insurance
Paying Points
If you won't live long enough to pay off the mortgage
Other Topics
Renting vs. Buying: Which is better?
Glossary of Real Estate terms
Homebuyer Tax Credit
Buying is an investment
Paying cash vs. getting a loan
The Debt Ratio
Tax breaks are actually welfare for the rich
Links to helpful sites
Fan Mail
Michael Bluejay's home page
Email Me

This site is used as a homework reference in: Stoughton High School (Pat Schneider's economics class)

How to Buy a House

As seen in BusinessWeek and Realtor Magazine
a free 39-page guide by Michael Bluejay

Start looking at houses

If you engaged a real estate agent, their job will be to find houses that meet your criteria (size, location, price), but don't let that stop you from doing your own search.  After all, you know what you like better than your agent does.  Find the online MLS or home-search site in your area and use it.

Basic advice

Look at lots of houses!  You're not shopping for socks.  You're going to be pretty much married to this house.  I can't stress enough that you should take your time with your decision.  When home-shopping, the wrong question to ask yourself is, "Is this house acceptable to me/us?"  Instead, find a house that you really love, one that gets you excited when you imagine living there and think of the possibilities.

You're unlikely to find a home you love right away, so unless you find your dream home sooner, give yourself at least three months to find it.  The extra time dramatically increases your chances of success.  And if you can't find something you love after three months, you can at least know that it wasn't for lack of trying, and you won't beat yourself up later for not trying harder.  If you can't find something perfect after three months, then at that point you can settle for a house that's merely acceptable.

Take a camera to every house you visit and take lots of pictures (the first one being the house address, so you know for sure later which house the following pictures are from).  After each visit write down everything you like and dislike about the house, and the neighborhood, in as much detail as you can.  You're going to be looking at lots of houses, and if you don't take pictures and notes then they're all going to start to blur together.

Don't discount a home because you don't like superficial things like the paint color or flooring.  Once the home is yours, you can do anything you want to it.  Paint is relatively cheap.  Redoing the flooring is a little pricier, but not out of reach for most.  Consider the home's potential, not its present state.

Check out the neighborhood (schools, demographics, crime, etc.) with a site like City Data.  And check out how walkable the area is with Walk Score.

Once you've found the home you want, visit the neighborhood several times, day and night, weekday and weekend.  Much of your comfort is going to come from the neighborhood itself and not just the house, so make sure you like the area as well as the property.

Meet the neighbors.  Knock on at least a couple of doors, explain that you're thinking of moving into the neighborhood, and ask what's good and bad about the neighborhood.

You probably wouldn't marry someone after a first date, and you shouldn't jump into a home-buying decision that quickly either!

Is the property part of a Homeowners Association?

Certain properties are governed by a homeowners association (HOA), which makes certain rules, charges certain fees (perhaps $200-400/mo.), and sometimes provides some actual services.  For example, in a condo-type property, HOA fees pay for maintenance for to things like the common roof or common foundation.  HOA fees add to the cost of ownership, but if the HOA provides some maintenance then that offsets some of the maintenance cost you'd have otherwise.  HOA rules limit what you can do with your property.  For a standalone house, HOA's are only really a benefit if you like the fact that all your neighbors will be subject to the same rules (e.g., no pink flamingoes on the lawn).  With all that in mind, here's your HOA strategy:
  1. Find out if the property you're looking at is part of an HOA.  If it's a condo or in a planned/gated community then it probably is, otherwise it's probably not.  Ask your agent (or if you don't have one, then ask the seller's agent).  If there's no HOA, then skip the rest of this section and go on to the next page.
  2. Contact the HOA and get a copy of their rules.  They might be available on the HOA's website.  You don't want to buy the property and then discover that something you'd counted on is prohibited.  And even the rules don't disallow your planned use, remember that HOA rules can change in the future.  Common rules regulate exterior paint color, and what kind of pets you can have.  Many HOA's are eco-hostile, banning line-drying of clothes, low-water lawnscapes, compost piles, and solar panels; and requiring chemical fertilizers use of a sprinkler system.  By the way, some HOA rules are called covenants.
  3. Find out how much the fees are.  Budget for them when figuring your monthly payment and comparing the cost of owning to renting.  Remember that fees can go up in the future.

Amount spent so far.   Red items apply towards the purchase. Amounts are typical, not exact.


Credit Check

To the Lender



Last update: October 2013