4 Ways to Buy a House

. Obtain Pre-Approval

The first step in buying a new home is always getting pre-approval from a lender if you will need a loan to buy the house. You fill out paperwork with a bank or mortgage lending company to the point of receiving the loan as soon as an exact dollar amount is determined. You give permission for your credit scores, your work history and actual income and IRS tax forms to be checked. After all of these factors have been reviewed, the lender's loan officer will specify the maximum loan amount you are likely to receive.

Keep in mind that pre-qualification is different than pre-approval. With a pre-qualification, you provide the lender with some general information through a short application. However, this does not mean you are approved for a loan, no matter what the potential lender says. It just indicates what you might be able to pay based on unverified data. You might be approved for the home loan in the future after you successfully complete the application process. Conversely, pre-approval indicates that the lender has verified your personal data to some extent and has tentatively agreed to loan you a specified amount of money.
2. Save Time by Using a REALTOR®

First-time home buyers need to know a realtor does not charge the buyer any fees when purchasing a home. The individual selling the home is responsible for paying the realtors, both the seller's and the buyer's, a commission for the home sale--an amount that is usually 6 or 7 percent, split equally.

Prepare yourself to answer questions about the type and style of house you are looking for, must-have features and your projected budget. The realtor takes your information and looks through the local MLS, or Multiple Listing Service, which has information on all of the houses in the area. You will spend time visiting homes that have been pre-screened by your realtor instead of spending endless hours sorting through housing information. The realtor represents you throughout the buying process.
3. Buy a Foreclosed House

If you are ready to work hard looking at properties and possibly making minor or major repairs, you may want to purchase a foreclosed house. When someone defaults on a home loan, the lender is stuck with a property it wants to get rid of to avoid paying taxes and the expense and hassle of taking care of the property. You can buy the property from the lender for less than the market price of the home. You should buy a bank-owned property on your first attempt, because it is the safest way to protect your investment and make the purchase, as bank-owned properties usually come with clear titles.
4. Win a Home Auction

You can find homes auctioned off at estate, tax and bankruptcy sales, among others. Usually, you must bring enough cash to pay for the property at the end of the auction and homes are purchased "as-is," without exceptions. While you can purchase homes for a fraction of the market value at an auction, it is possible for the price to approach and even pass full market value, especially in what is considered a "seller's market."
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Last Updated: May 30, 2008

James Kitchens has over 15 years of experience counseling individuals and families struggling with relationships, money management, personal well-being, career choice and other life issues through seminars and one-on-one consulting. In addition to his work as a freelance writer, Kitchens is an ordained minister and co-founder of Clear Vision Ministries.