Countdown to your home purchase

Buying a house isn't a spur-of-the-moment decision. Here's how you should plan. – Mary Vanac

AS SOON AS POSSIBLE

Save money: Starting to save as soon as you get your first “real job” is not too early, says Ken Robinson, the certified financial planner who owns Practical Financial Planning in Rocky River. In the old days – before the advent of “nothing down” mortgages – bankers liked to see 20 percent down payments. For instance, a conventional loan for a $200,000 house would have required a down payment of $40,000. If you want to avoid paying private mortgage insurance, known as PMI, you'll still have to put down 20 percent, Robinson said. (Government-backed loans, such as those guaranteed by Veterans Affairs or the Federal Housing Administration, often require very low or no down payments.) What percentage of your take-home pay should you save for big events, such as buying a house? Work your way up to 15 percent, Robinson says.

A YEAR TO SIX MONTHS

Look at houses for sale: “By the time you're making an offer, you will really know the market,” Robinson says. Don't just look at random. Ask yourself questions: In what city do you want to live? What kind of house do you want to buy? What else is important enough to you that it would influence where you buy – a school system, for instance? You can search nationwide for homes at the National Association of Realtors Web site, realtor.org.

SIX MONTHS

Find an agent or a banker: The professional you choose first can refer you to the other, says Tom Hlavin, Ohio loan production manager for AmTrust Bank in Cleveland. You can get referrals to either professional from family, friends and neighbors. A banker can get you started on a mortgage or credit counseling, if that's what you need before you get a mortgage. Real estate brokers, agents and other professionals also can help you find a home. Line up financing: Get a mortgage pre-approval letter from your lender. A mortgage pre-approval is a bank's commitment to lend you so much money at certain terms to buy your home. Having a pre-approval in your pocket when you approach a home seller can help you shave $1,000 or more from the asking price. The wait for a mortgage pre-approval has shortened considerably, mostly because lenders use underwriting software to make their pre-approval decisions, so you may be able to put this off until you're closer to a decision.

THREE MONTHS

Narrow your choices: Attend open houses in the areas you've targeted, and work with your real estate agent to see houses by appointment. Get recent sale prices on homes that compare with your ideal in these areas. (Ask your real estate agent or county auditor's office.) Start shopping for other professionals, such as a home inspector. Again, start with referrals from friends and family. You'll need to call on these professionals quickly during the home stretch.

ONE MONTH OR LESS

Make your offer: Normally, you do this by presenting your seller with a formal purchase agreement or contract. “Your Realtor will be the one to recommend a price for your offer,” said Mike Fanous, chairman of the Greater Cleveland Board of Realtors. “Usually, the offer is accepted in a few hours to a day.” Your offer is a contract that usually contains conditions, such as a satisfactory report from a home inspector. Get all inspections: One inspection that homebuyers rarely consider is a survey of the lines that bound the property they're buying. Others to consider are those for radon gas and lead paint, Fanous said. Some cities, such as Cleveland, require point-of-sale inspections by the seller, he said. Complete loan work: Your lender will finalize your mortgage. “Depending on your up-front documentation, loans can be closed in 10 days,” Hlavin, of AmTrust, said, “but the typical closing period is 30 days.” Check the title: The title company does research to find out whether there are liens on your property. Liens are unsatisfied debts, such as unpaid property tax bills. Title companies also usually handle the escrow account for transferring your money to the seller. Pay the money: The last step is a “round table closing” during which you and your seller exchange money for the house.