Millennial's Guide to Buying a Home: The Confusing Steps
- David Knorr
- Feb 16, 2025
- 4 min read
Updated: Feb 23, 2025
Scrolling Zillow at 2 AM is fun, but if you don’t handle the boring and confusing (but necessary) parts correctly, you won't be in a position to grab that dream home- and could actually find yourself losing time and money.
Let’s break down the unsexy but crucial parts of home buying, so you don’t get blindsided.
Step 1: Get Pre-Approved So You Look Like a Serious Buyer 🏦💰
Getting pre-approved is all about showing you have the cash all lined up to get your offer accepted.
If you’re not pre-approved, sellers (and agents) won’t take your offer seriously. In a competitive seller's housing market this will matter even more.
What You Need to Do:
✔ Shop for a Mortgage Lender Early – Compare rates from banks, credit unions, and online lenders before choosing. Even a 0.5% lower interest rate can save you thousands over the life of your loan.
✔ Get Pre-Approved, Not Just Pre-Qualified – A pre-qualification is a rough estimate; a pre-approval is an official document stating you’re financially ready to buy. This makes sellers more likely to accept your offer.
✔ Understand Loan Types – First-time buyers often go with:
Conventional Loan (2-5% down payment, good credit required)
FHA Loan (3.5% down, lower credit scores allowed)
VA Loan (0% down, military benefits)
🚀 Pro Tip: Avoid big purchases (like a car or new credit card) during this time—it can mess up your mortgage approval.
Step 2: Earnest Money—What It Is and Why It Matters 💸
This may be the most surprising aspect of home buying that honestly sounds like a scam at first. Earnest money can surprise a lot of first-time buyers, so let's get you up to ludicrous speed.
What is Earnest Money?
Think of it as a security deposit for your home purchase. It’s 1-3% of the home price, paid upfront to show you’re serious about buying. If you back out without a valid reason, the seller keeps your money.
In a seller's market where homes are moving quickly, earnest money can make your offer stand out and show the seller that you're a serious buyer.
How It Works:
✔ If you buy the home, the earnest money goes toward your down payment.
✔ If you back out for a valid reason (bad inspection, financing falls through), you get it back.
✔ If you flake for invalid reasons, the seller keeps your money as compensation. Invalid reasons could include:
Missing Contract Deadlines
Waiving inspections or other contingencies without a backup plan.
Changing your financial situations before closing (don't buy a new car during this period, please!)
Buyer's remorse, cold feet, or finding a better deal elsewhere
🚀 Pro Tip: Your contract contingencies (like financing or inspection) protect your earnest money—so never waive them unless you’re 100% sure!
Step 3: The Due Diligence Period—Your Get Out of Jail Free Window? ⏳
What is the Due Diligence Period?
The due diligence period is a set number of days (typically 7-14 days) after your offer is accepted where you can inspect the home, negotiate repairs, or back out without penalty.
What Happens During This Time?
✔ Home Inspection – A professional checks for hidden issues (roof leaks, radon, foundation problems, mold, etc.).
✔ Appraisal – The lender ensures the home isn’t overpriced. If it appraises low, you might need to renegotiate the price or pay the difference.
✔ HOA & Title Review – If the home is in an HOA, read the rules carefully to avoid surprise fees or restrictions. A title search ensures the seller actually owns the property and there are no legal claims against it.
✔ Final Decision – If major problems show up, you can renegotiate, ask for seller repairs, or walk away without losing your earnest money.
🚀 Pro Tip: Schedule your home inspection ASAP so you have enough time to process the results and make a decision before the due diligence period ends.
Step 4: Stay on top of the Paperwork and Deadlines 📑
At this point, you’re in contract, but you’re not home-free yet. The lender, inspectors, and title company will all be checking different parts of your home purchase.
✔ Title Search & Home Insurance – This ensures no ownership disputes and your home is protected from disasters.
✔ Final Mortgage Approval – The lender re-checks your finances before officially approving the loan.
✔ Final Walkthrough – Your last chance to check repairs and ensure the home is in the same condition as when you made your offer.
✔ Closing Day (a.k.a. Signing Day) – Expect 1-2 hours of paperwork before finally getting the keys.
🚀 Pro Tip: Set calendar reminders for inspection, financing, and closing deadlines so you don’t miss anything important.
Final Thoughts: Is It Worth It?
Buying a home is exciting, but the paperwork, deadlines, and financial details can be a real headache.
That’s why knowing the boring but crucial steps—like earnest money, due diligence, and mortgage pre-approval—can save you money and protect you from bad deals.
Bottom line? Handle these not-so-fun steps correctly, and soon you’ll be moving into a home you love—without surprises.
Here at BuyWise Home, our mission is to empower millennial purchasing decisions with comprehensive home information, ensuring every step you take towards home ownership is confident and informed.
We hope you consider the BuyWise Home and Neighborhood Due Diligence report to streamline the home buying process for you.
This comprehensive report includes a radon risk assessment as well as several other aspects of necessary home research including:
Other environmental risk assessments (flood, hurricane, wildfire, tornado, and other climate change hazards)
Human Health Hazards (cancer index, air quality index, lead paint index, nearby hazardous sites)
Crime (sex offenders, local crime hotspots, violent crime incidents)
Internet Speed
Access to shopping/groceries
Access to entertainment, gyms, coffee shops, nail salons and other lifestyle amenities
Home owner association reviews
School/daycare system access and quality
Property maps and images
Historical property record search (tax, deed, and liens)
🚀 Happy Home Hunting! 🏡
BuyWise Home
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