Buying a home is one of the most significant financial and personal decisions you’ll make. For first-time buyers, the process can seem complex and overwhelming. This comprehensive, step-by-step guide demystifies each stage, helping you move from initial planning to unlocking the door to your new home.
Steps To Follow When Buying A Home
Step 1:
Assess Your Readiness And Set Your Goals
Before you start browsing listings or attending open houses, take time to reflect on your motivations and long-term goals. Ask yourself:
Why do I want to buy a home now?
Am I financially stable enough for this commitment?
What are my must-haves and deal-breakers in a property?
Am I planning to stay in the area for at least several years?
Clarifying your intentions will help guide your decisions throughout the process.
Step 2:
Review Your Financial Health
You need to analyze your finances thoroughly before taking the next step in property buying. The various finances you need to analyze include the following:
Income and expenses: You should calculate your monthly income and track all expenses to determine how much you can comfortably allocate to housing.
Savings: You need to ensure you have enough for a down payment, closing costs, and an emergency fund.
Debts: Also, review your outstanding loans and credit card balances before going further with the purchase since lenders will look at your debt-to-income ratio.
Step 3:
Check And Improve Your Credit Score
Your credit score is very important in determining the mortgage rates and loan options available to you. Lenders will not want to have any dealings with you if your credit score is low.
You need to first obtain your credit report and review it for errors or outdated information. If your credit score is low, you should improve your score by paying down debts, avoiding new credit inquiries, and correcting any discrepancies. A higher score can give you access to lower interest rates and better loan terms from lenders, including Nigerian banks.
Step 4:
Determine Your Budget
You must first figure out how much house you can afford before you begin the process. You can use online mortgage calculators to easily estimate monthly payments on the property based on different home prices, down payments, and interest rates on each type of house.
In addition, you must not forget to factor in some other expenses like the property taxes, homeowner’s insurance, utilities, and maintenance costs. Also, you must consider upfront costs, including down payment, closing costs, and ongoing expenses, like mortgage, utilities, and repair on the property.
Step 5:
Save For A Down Payment And Other Costs
The down payment is usually from 3% to 20% of the home’s price, depending on loan type and lender requirements, as well as the property you are interested in. The closing price on the other hand is usually 2% to 5% of the purchase price, and it covers fees like appraisal, title insurance, and attorney fees. Some other costs worthy of note are moving expenses, immediate repairs, and new furnishings for the home. While it may be possible to avoid the other two costs, the moving cost is a must.
Step 6:
Get Pre-Approved For A Mortgage
When you get pre-approved for a mortgage, it shows the sellers that you are a serious buyer and this will give you a clear idea of your price range. You are required to get ready certain documents, like tax returns, bank statements, and proof of assets. After that, you should shop around for different mortgage offers. Most of the conventional banks in Nigeria offer mortgages, but the offers can differ. Take time to compare the various offers from the lenders to find the best rates and terms that will work for you. I’m addition, you should not overlook the pre-approval letter, which can be drafted by your lawyer to help strengthen your position when making your discount offers.
Step 7:
Find A Real Estate Agent
A knowledgeable agent can guide you through the process, negotiate on your behalf, and help you avoid common pitfalls. So, you should look for a highly experienced local expert that offers good communication. Make sure also that you are clear about your budget, preferred locations, and must-have featured before taking the next step.
Step 8:
Start House Hunting
After the preparations described above, it is now time to start the fun of searching for your ideal home in your preferred environment. To guide you in the process, you can create a wish list, which should prioritize important features like location, number of bedrooms, yard size, and proximity to work or schools. You should also make time to attend showings and open houses, not forgetting to take notes and photos to compare properties. Don’t forget to evaluate the neighborhoods, where the property is located before you pay for it. Consider the environmental safety and closeness to social amenities, without overlooking the future resale value of the property.
Step 9:
Make An Offer
Once you find the right home for you, you can now work with your agent to submit a competitive offer, provided there is no fixed amount on the property already. You should also research comparable sales and go for any that costs less but have better or equal quality. Your agent can help you to determine a fair price based on recent sales in the area and how the property meets your specific need. In addition, do not forget to include contingencies when making your offer. Some of the common contingencies worthy of note are financing, inspection, and appraisal. It is in your best interest to make earnest money deposit when making an offer as this will act as a good-faith deposit that makes the seller see you as being committed to purchasing the property. The good-faith deposit can range between 1% and 3% of the property’s purchase price.
Step 10:
Hire A Solicitor Or Real Estate Attorney
A solicitor or attorney can be trusted to handle all the legal aspects of the transaction to put you on the right side of the law while the process lasts. The attorney will help you in reviewing the contracts and making sure you are not at a disadvantage in any way. The professional can also conduct title searches on your behalf, as well as ensure all paperwork is in order. It is not advisable to purchase a property in Nigeria without going through an attorney; they have the experience required to make the transaction sail through hassle-free. Before hiring any of the solicitors out there, it is advisable to read reviews about them. If any of your friends or acquaintances have purchased a property in recent times, you can ask them to recommend a good solicitor to you for the property purchase.
Step 11.
Schedule A Home Inspection
You must never buy that property until you have carried out a home inspection. It is better to see the property by yourself lest you end up getting disappointed after you have paid. Visual property inspection helps you to assess the property and determine if it actually meets your expectations and if the property is worth the cost. If you cannot spare time to inspect the property, you can always hire a professional to help out. The professional inspection agent will help you evaluate the property’s condition and identify potential issues. Nevertheless, it is better that you attend the inspection in person since you will be the one to reside in it or use it. While the inspection is underway, you should not hold back from asking questions and learning about the home’s systems. Once the inspection is concluded, take some time to review the report. You can now use the findings in the report to negotiate repairs or credits with the seller.
Step 12:
Secure Your Mortgage
After your offer is accepted by the seller and the inspection is completed, it is time to submit a formal mortgage application for the property. Lenders will expect you to provide updated financial documents as needed for the loan processing. As a part of the lending process, the lender will carry out home appraisal; this is required to help them to confirm the home’s value. The lender will also review all information you have submitted and compare it with their personal findings when finalizing the loan approval.
Step 13:
Finalize The Sale And Exchange Contracts
At this step, it is time to review the closing disclosure for the property. The closing disclosure is the document detailing all the costs associated with the property purchase and final terms. Both parties also need to sign contracts, especially the purchase agreement. It is not until the document is signed that the sale becomes legally binding. Once the necessary documents are signed, it is time for you to pay the deposit; the deposit is usually at least 5% of the home’s price.
Step 14:
Process Completion
To complete the process, you need to pay the left-over cost. If you have been approved for a mortgage by a lender, the lender is required to transfer the mortgage funds directly to the seller. Once this is done, it is time to sign all the final documents to complete all legal paperwork for the property. After this is done, you can now be given the keys to the property. Once the funds are transferred, the seller will first confirm a successful receipt before handing the key over to you. It is now that the home officially belongs to you, and you are free to move in when you desire.
Step 15:
Move In And Settle
The keys are now in your possession and it is time to move into the property. But before you move in, you should start arranging utilities, like setting up electricity, water, gas, and internet. You should also not forget to set up all other essential services. Once the utilities are set up, you should take steps to change your address where necessary. Let your bank know your new address so that bank documents requiring your attention can be forwarded to the right address. You should also let your employers and other important contacts know about your new address, including friends and family. To make the moving process a lot easier for you and remove stress, you can hire movers. If you will like to do the moving by yourself, simply rent a truck, and start making your new house a home.
Step 16:
Prepare For Unexpected Delays
Bear in mind that delays can happen while purchasing the property and this can be from any angle. Delays are even more common if you are part of a chain of buyers and sellers. If the particular type of property up need is not common, you may have to wait for a longer time before you can find something suitable for you. You should always have a backup plan for temporary accommodation if needed.
Common Pitfalls and How to Avoid Them
Skipping proper research
Many buyers rush into deals without fully understanding the property, neighborhood, or market conditions. This can lead to buying in problematic areas or overpaying for a property. You can avoid this by conducting thorough research on the property’s location, check market trends, and compare prices. Visit the area, consult multiple sources, and don’t rely solely on agents or relatives for information.
Ignoring title verification and legal documentation
Failure to verify the property’s title or ensure the seller has the legal right to sell can result in disputes, loss of investment, or buying government-acquired land. You should always demand to see and verify key documents like the C of O, Deed of Assignment, and Governor’s Consent. Do not also forget the Survey Plan. Engage a property lawyer to conduct a title search and confirm there are no encumbrances or litigation on the property.
Not engaging a property lawyer
Attempting to handle transactions without professional legal guidance increases the risk of fraud, invalid agreements, or missing critical legal steps. You should hire a qualified property lawyer from the outset to review documents, verify ownership, and ensure compliance with all legal requirements.
Relying on verbal agreements
Verbal promises or handshake deals are not legally binding in Nigeria and can leave you vulnerable if disputes arise. So, you should ensure all agreements, including price, payment terms, and conditions, are documented in a legally binding contract signed by all parties.
Overlooking due diligence on the seller
Fraud is common, with cases of fake sellers or multiple sales of the same property.
Verify the identity and authority of the seller. Meet the property owner in person and request valid government-issued identification. Check with the Land Registry and other relevant agencies.
Not inspecting the property
Relying on photos or third-party reports can lead to buying properties with structural defects or poor infrastructure. You should always physically inspect the property. Assess the building’s condition, infrastructure, drainage, and neighborhood amenities before committing.
Underestimating additional costs
Buyers often overlook expenses beyond the purchase price, such as legal fees, agency fees, taxes, and renovation costs. You can save yourself from this by budgeting for all associated costs and clarify payment terms upfront. Get a breakdown of all fees and ensure you have sufficient funds for post-purchase expenses.
Rushing the process
Pressure from sellers or agents to make quick decisions can result in costly mistakes, such as buying disputed land. Take your time, resist pressure, and allow your lawyer to investigate the property’s history and legal status thoroughly.
Not using trusted professionals
Trying to save money by avoiding professional help can lead to bigger losses through fraud or poor advice. It is in your best interest to work with reputable real estate agents, surveyors, and lawyers with proven track records.
Ignoring zoning and land use regulations
Purchasing land without confirming its designated use can result in legal challenges or demolition. You can avoid this by checking zoning laws and land use designations with relevant government authorities. Consult a town planner or property lawyer to ensure your intended use is permitted.
Making cash payments
Cash transactions leave no proof and increase the risk of fraud. To avoid it, you should always pay into official bank accounts and obtain receipts for all payments.
Overstretching your budget
Committing to a property beyond your financial means can lead to future stress or default. To avoid it, you should assess your finances realistically and ensure your purchase aligns with your budget and long-term plans.
Conclusion
The home buying process can be lengthy and sometimes stressful especially if this is the first time you will be attempting home purchase, but with preparation and the right support, you will find it to be entirely manageable. The information we have provided above can assist you in the process and make the entire thing very easy for you. Bear in mind the importance of working with professionals when buying a home as this will make the process a lot easier for you. Hiring professionals like estate agents and solicitors will cost you something extra but it will save you from headaches and disappointments; it can also save you from losing money. By following these steps, you will be well-equipped to make informed decisions, avoid common mistakes, and confidently navigate your journey to homeownership.
