Buying a Home 

Moving More Confidently Through 

the Homebuying Process 

Brought to you by 
Buying a Home 

Purchasing a home can be exciting, but it can also be an intimidating 

process. Taking the time to understand the entire homebuying process 

will help you gain a stronger foundation for a new beginning. 

Educate Yourself 

If you’re thinking of purchasing a home, the first thing 

you should do is to arm yourself with information. 

Research has shown that educated homebuyers are 

more likely to be successful throughout the life of their 

mortgages, so before you get serious about any house 

in particular, educate yourself on the homebuying process and the responsibilities of homeownership. You’ll 

be better equipped to purchase a home that suits your 

needs and is well within your financial means. 

Get Help to Make Smart 

Decisions 

Nonprofit housing and credit counseling agencies 

are always good resources. They can work with you 

to help organize your budget, improve your credit, 

and understand your mortgage options. To find a 

HUD-approved counseling agency near you, visit 

www.hud.gov. Ask for help identifying legitimate local 

services and programs that could also provide financial 

assistance or local homebuyer incentives. 

Determine How Much 

You Can Afford 

Evaluate your financial situation and how much you can 

afford. For a general idea of your homebuying power, 

work with a lender to get pre-qualified. Your lender will 

use your credit, financial, and employment information 

to come up with an estimate of a mortgage that you 

can afford. While a pre-qualification may be a good 

guide, you will need to decide for yourself if you can 

live comfortably with the amount of your suggested 

monthly mortgage payment. Consider your particular 

circumstances and your future financial needs and goals. 

How Much Can You Bring 

to the Table? 

Determine how much of your savings plus any 

monetary gifts you will have to help with the down 

payment and closing costs. If you pay less than 20 

percent for your down payment, you’ll be required to 

pay private mortgage insurance (PMI) each month as 

part of your mortgage payment. Closing costs generally 

range from three to seven percent of the mortgage 

amount, but some sellers may agree to contribute to 

your closing costs. 

Shop Around for the Best 

Mortgage 

Compare options from at least three lenders. While 

getting a competitive mortgage rate is important, the 

lowest mortgage rate may not always be the best 

choice for you. You must also consider the entire 

cost of the loan. Be sure to ask your lender for those 

details. In particular, you’ll need to ask about the annual 

percentage rate (APR), which is the total cost of the 

loan expressed as a yearly rate. The APR includes the 

interest rate, points, broker fee, and any other charges 

you’re required to pay. Look for this information on the 

Good Faith Estimate, which your lender is required to 

give you. 

Apply for a Mortgage 

To complete your application, your lender will need 

information about your credit reputation, capacity to 

pay, and any collateral. They will pull your credit report 

to determine your total debt and score. With this 

information, they will determine if you are pre-approved 

for a loan. Your lender is required by law to provide 

you with a Good Faith Estimate in writing. This written 

estimate will itemize the approximate costs and fees for 

the mortgage, including your total monthly payment. 
Make An Offer 

Once you have found a home that you want to 

purchase, you and your real estate professional will 

discuss what your initial offer should be, given the 

condition of the property and the current market 

conditions. Discuss what contingencies or special 

requests, such as repairs, you want made prior to 

closing. The real estate professional will work with you 

to schedule an appointment with a home inspector 

who can tell you about the condition of your home and 

determine what repairs are needed. Although it is not 

required, you should always include a home inspection 

contingency in your offer. You will typically be required 

to pay an earnest money deposit, or a good faith 

deposit — usually between 3.5 and 5 percent of the 

purchase price — to show that you are a serious buyer. 

Prepare for Closing 

Work with your lender to finalize your loan documents, 

have your home appraised, and lock in your interest 

rate. During this time, you will also need to obtain 

homeowner’s insurance, provide documentation 

to your lender, and prepare for your move. Stay 

in constant communication with your real estate 

professional and lender to help ensure a smooth 

transaction. Most importantly, if you have questions, 

don’t be afraid to ask. 

Sign the Final Documents 

Prior to closing day, ask the closing agent to provide 

you with a copy of all the documents so you can 

review them at your own pace and have your questions 

prepared. At the closing table, you’ll be asked to sign 

the documents you reviewed, including the closing 

statement, mortgage note, and truth-in-lending 

statement. Your down payment and closing costs (e.g., 

homeowner’s insurance, homeowner’s association 

fees, etc.) will be collected as well. Before you leave, 

you will receive a settlement sheet, known as a HUD-1, 

which itemizes all of the final closing costs. Then, you’ll 

receive the keys to your new home! 

Own Your Own Home 

The day you close on your first home will be one of the 

most exciting days of your life. While homeownership 

does come with responsibility, you’ll take pride in the 

fact that you have a new home for you and your family 

to enjoy now and into the future. 

For More Information 

 The Freddie Mac CreditSmart® curriculum is a

consumer guide to better credit, money

management, and responsible homeownership.

Visit FreddieMac.com/creditsmart to download

consumer resources, available in five languages.

 “About Homeownership” is the Freddie Mac online

guide to the homebuying process and successful

homeownership. Visit FreddieMac.com/

homeownership for help estimating how much

home you can afford.

 To find a HUD-approved housing counseling agency

near you, visit www.hud.gov or call 800-569-4287.

 Avoid scam artists! Learn about common scams in

your area, and get advice before you enter into your

next loan agreement. Read more about common

fraud schemes at FreddieMac.com/avoidfraud.

 Your Step-by-Step Mortgage Guide helps homebuyers navigate the entire mortgage process from

loan application to closing. Visit FreddieMac.com/

homeownership/pdf/step-by-step_mortgage_

guide.pdf to download this easy-to-use resource.

Source 

Content adapted from the following: 

 Freddie Mac’s award-winning CreditSmart®, a multilingual financial education curriculum designed to help consumers build and

maintain better credit, make sound financial decisions, and understand the steps to sustainable homeownership

 “About Homeownership,” Freddie Mac’s online guide to the homebuying process and successful homeownership
Brought to you by 

Publication Number 824 n © Freddie Mac, December 2016