10 Must-Haves for Your House-Hunting Checklist
A good house-hunting checklist can prepare you to spot potential issues with a seller, neighborhood or home — or nab a diamond in the rough. Here are 10 essential items for your house-hunting checklist that’ll set you up to search with confidence.
1. Get a mortgage preapproval letter
Unless you’re ready to buy a home with cash, you’ll need mortgage financing. A preapproval letter from a lender will give you an idea of how much you can spend on a house. Plus, in this competitive housing market, many sellers won’t even consider a purchase offer that doesn’t include a preapproval.
You’ll typically have to meet the following minimum mortgage requirements to get preapproved for a mortgage:
- Credit score: Most lenders require a 500 to 620 minimum score.
- Income: Stable income with two years of verifiable, consistent earnings is a common requirement.
- Down payment: Expect to put down at least 3% if you’re borrowing a conventional loan (although there are no-money-down programs).
- Debt: No more than 50% of your gross monthly income should cover your debt payments. Lenders measure this with a number called your debt-to-income (DTI) ratio.
- Cash savings: Closing costs typically range from 2% to 6% of your loan amount.
2. Create a homebuying wish list
You probably have your picture-perfect house in mind — but what parts of that vision are non-negotiable? You’ll need to get clear on your list of “needs” versus “wants.”
Consider the following:
- Which part of town you want to live in
- What price range you want to stay in
- The home’s school district
- Whether you want a new home or an older home
- Which type of house you want (e.g., one-story, two-story, townhouse, mobile home)
- Which style of home (e.g., contemporary, traditional, southwestern, colonial)
- Whether you’d be willing to make renovations, and if so, what your budget is for repairs
- Transportation needs (buses, trains or distance from work)
- Special needs, such as wheelchair access
- The lot and yard size
- How many bedrooms you need
- How many bathrooms you need
- The home’s size
- Home systems (like A/C, security systems)
- The home’s age
- Whether you want a garage
- Whether you want a fenced yard
- Whether you want a home office
- Whether you want to live in a neighborhood with a homeowners association
Your list may also include items like swimming pools, home theater rooms or a fireplace. What you can’t live without is totally up to you — the important thing is to decide what your priorities are, so you can confidently rule out potential homes when you begin shopping.
Read more about first-time homebuyer questions to ask.
3. Check online house-hunting apps
Before you start falling for the tall and handsome homes you’re sure to meet on the open house circuit, you can use online tools to tweak and perfect your plan. You may need to adjust your loan amount or some of the factors on your house-hunting wish list, depending on what you find out.
Pay special attention to:
→ How long houses are on the market: In a seller’s market, there are more buyers than available homes, which means you have to act fast. With a buyer’s market, you’ll have more homes to choose from, which also gives you more power to negotiate a home’s price.
→ How much prices are going up every month: In hot housing markets, bidding wars are common and you may have to offer more than the seller’s asking price to get your offer accepted. With a soft market, you can offer less than the asking price and ask the seller to pay some of your closing costs or pay for home repairs or upgrades.
Read our study about the latest average mortgage loan sizes.
4. Find a real estate agent
An experienced real estate agent may make the difference between getting the home you want or settling for something less. The agent’s job is to help you find a home at the best price by keeping track of market conditions, preparing competitive offers and haggling until the offer is accepted.
There are three factors that determine the best agent for you:
- Local market expertise. Top agents know the neighborhoods you’re interested in and can give you fast and accurate information about everything from school trends and local homeowners association requirements to recent price trends.
- Personal touch. Buying a home is an emotional and often stressful experience, and you don’t want to spend entire weekends of your life house hunting with someone you don’t get along with. If you don’t trust — or even like — the agent you’re dealing with, it’s best to move on and find a better match.
- Communication skills. The homebuying process involves lots of legal and real estate terms, with strict deadlines that must be met along the way. Set expectations for your preferred contact method and how often you want to be contacted and hold your agent to those standards.
Tips for dealing with real estate agents
Buyer’s agents sometimes ask you to sign an agreement with details about the services they’ll provide. This can be a good way to hold the agent accountable for acting in your best interests. However, look out for “exclusive” agreements, which limit you to using a single agent. You may end up paying them a commission if the relationship goes sour and you find a home before the exclusive agreement timeline expires.
5. Do an in-person neighborhood ‘checkup’
Once you’ve looked at some houses with your real estate agent, take a trip on your own to check out the neighborhood and surrounding areas. You want to get a feel for the area during different times of the day and night.
Drive around and check out each home’s proximity to grocery stores, pharmacies, parks, schools and restaurants. Pick up a local paper if you’re not from the area. Striking up a conversation with a neighbor may reveal details that seal the deal or raise red flags.
And if you have any concerns about safety, it’s easy to do a little extra digging. For instance, you can check local crime statistics and neighborhood watch reports.
6. Keep an open mind about for-sale-by-owner deals
If you drive by a “for sale by owner” sign in an area you like, it may be worth a call just to see what price the owner is offering. If it’s competitive with other homes for sale in the area, owner financing could be an opportunity to get your dream home at a good price. Home sellers often choose this option to avoid paying real estate commission fees, which can save you money on a home purchase.
Be forewarned, though: You’re on your own when it comes to negotiating the price and closing costs with the seller. And don’t skimp on title insurance — it’ll protect you from buying a home with judgments, tax liens or other ownership issues that could cause major headaches later.
7. Compare home inspection companies
A home inspection is a written report by a professional home inspector that details a home’s condition. Real estate agents typically have referral relationships with home inspection companies, but you can search for your own home inspector through the American Society of Home Inspectors or the National Association of Home Inspectors.
You’ll usually pay $300 to $1,000 for the inspection, and if any issues pop up, a purchase contract typically gives you a set time period to back out of the deal if the seller isn’t willing to fix them.
Home inspection vs. appraisal: What's the difference?
Homebuyers often confuse the home inspection with a home appraisal. A home appraisal’s purpose is to determine a home’s market value; a home inspection is meant to evaluate the home’s overall condition. Obvious problems (like a leaky roof or broken window) can reduce a home’s value, but you’ll need an inspector to get to the root of a home’s problems.
8. Make a list of home warranty companies
If a home inspector finds any issues, the seller may offer to pay for a home warranty, which covers the cost to repair or replace your home’s systems and appliances. Ask the following questions about the home warranty:
- What does the warranty cover?
- How long does the warranty last?
- Will I have to pay any fees for filing a claim?
The average annual cost for a home warranty ranges from $450 to $600, according to Consumer Affairs. It’s also common for home warranties to charge a service fee between $75 and $150 every time you need something fixed.
Before committing, though, compare home warranty companies. You may get better coverage if you shop around.
9. Consider how a home makes you feel
Buyers often get a “vibe” about a home. They may even have superstitions about anything from the street name to the mailbox number. In fact, nearly half of homebuyers are willing to go over budget for a house that feels “lucky,” according to a LendingTree survey. And while it’s best to take these feelings with a grain of salt, you shouldn’t toss them out altogether. Instead, consider what underlying issues could be causing them.
Your other senses, especially smell, may offer you more concrete clues. You can often smell water, mold or pet damage to floors or carpets. Ultimately, you should follow your instincts — you don’t want to move into a home that gives you the heebie-jeebies.
10. Be aware of scam warning signs
Real estate fraud is a very real problem, and scammers take advantage of homebuying’s emotional pull to trick people into parting with their hard-earned money.
Be wary of any of the following warning signs of real estate fraud:
You can’t look at the house. This may seem obvious, but there’s no reason any seller or agent should refuse your request to see the inside of a home.
You’re asked to wire funds directly to the seller or agent. There should always be a third-party attorney or escrow company involved in any legitimate home purchase transaction. Wire instructions should identify the law firm’s or escrow company’s name, and should never go to the seller or real estate agent.
The home is sold with “rent-to-own” terms. Rent-to-own homes aren’t always a scam, but it’s a common cover for scammers. They may try to convince you to pay upfront money and a monthly payment that’s higher than market rent, all with the promise that a portion of it will go toward a down payment to ultimately buy the home. But rent-to-own fraudsters often don’t own the home, haven’t paid property taxes, avoid promised repairs on a dilapidated home or don’t disclose that the home is in foreclosure.
Mistakes to avoid as you search for houses
The following are some of the most common house-hunting mistakes that could turn your homebuying dream into a nightmare:
- Changing jobs. Lenders verify your employment and income several times during the mortgage process, and any change could stall your approval or even result in a loan denial.
- Depositing large chunks of cash. Lenders need a paper trail of any funds used for a home purchase. Make sure you have paperwork for any cash you plan to use or discuss strategies for how to handle the deposits with your loan officer.
- Paying credit late. The house-hunting process can take months, and mortgage lenders typically pull a new credit report after 120 days. Any payments made 30 to 60 days late (or more) could drop your score and kill your mortgage approval, so make sure you maintain on-time payments throughout the mortgage process.
- Running up credit card balances. It may be tempting to buy things for your future home or use credit to save up for a down payment, but doing so could increase your total debt to the point that your mortgage approval is overturned.
- Financing furniture or household items on “same-as-cash” terms. Even if a credit offer says you don’t have any payments for six months, a mortgage lender will still count the projected payments against you. Wait until the keys are in your hands to make any purchases for your home with credit.