The Ultimate First Time Home Buyer’s Guide

by | Mar 24, 2020

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There’s nothing quite like taking the giant leap into adulthood with buying your first home. As a first time home buyer, it’s simultaneously exciting and terrifying to make such a big long term purchase.  

As a potential new homeowner, there’s so much to think about and plan for. Sure you want to think about paint colors for your future kitchen and barbecues in your new backyard. But the truth is there are a few things to get in order before you start inviting your friends for burger night. 

Home buying, especially a first home, can be overwhelming and scary. Approach the process armed with knowledge and a plan and before you know it, you’ll be recruiting those same friends for moving day. 

Read on for all you need to know about the home buying process so you can become a new homeowner in the near future.

How to Buy a House for the First Time

Before you start house hunting, packing boxes and arranging furniture in your head, there are a few things to do first. First time home buyers need to get their financial house in order before jumping into the actual home-buying process. 

There are several things to do with your finances before the actual house hunt. 

Take a close look at your financial health. Keep your finances in order. Know your credit score. Monitor it closely. 

It’s a good idea to get a full credit report and see what potential lenders will see. Be prepared to answer questions about things on your credit report. 

Before taking on this big debt, first, work to reduce your other debts. Be sure to not apply for or open any new lines of credit or credit cards. This can count against you in the mortgage application process. 

Make a detailed budget so you know where all your money goes each month. This will help you to see how much you can save for the down payment and eventually afford in mortgage payments

Starting to save for the down payment will be where your process slows down. Remember, the more you have to pay as a down payment, the lower your monthly payments will be. You can also avoid paying for private mortgage insurance or PMI insurance if you can put a down payment of 20% down. 

Prepare for First Time Home Buying

Once your financial house is in order, you can continue to save for your down payment. Then you can also start to prepare for homeownership. 

While you may already have an area in mind because of where you currently live, you want to start to think about neighborhoods for house hunting. Keep an open mind here. While you might have an ideal location picked out, working with an agent and looking around, you might find you get more house for your money in a nearby area. 

You are now ready to start to look for a real estate agent. This will be your buyer’s agent and someone who is an expert and guide you through the homebuying process. They will also have much knowledge about the real estate market in your area, homebuyer programs, and experts you need as part of the purchasing process. 

Once you have an agent you can begin to shop for lenders to get your mortgage preapproval. While getting a mortgage can be intimidating, you want to find a lender who will guide you through the process. This part of the new homeowner process where you want to do your homework and shop around. 

First Time Home Buyer Programs

While being a first-time homeowner can come with some stressors, there are some real financing options for you that can be positive. Have your mortgage broker talk to you about first-time homebuyer programs. 

As a first time buyer, you might qualify for an FHA or VA loan. FHA loans and VA loans help many get into the housing market for the first time by allowing smaller down payments or having a lower income. If you don’t qualify for one of these loan options, then you will need to look at conventional mortgage options.

Shop around with mortgage lenders. They are not all the same. You want someone who will not only find you the best mortgage rate but will work with you and your financial situation to help get you a monthly mortgage payment you can afford. 

Before you begin looking for your home, you want to have the preapproval in place and know what you can afford for the new home purchase. 

When is the Right Time to Buy

You have nailed down your budget and saved for the down payment. You have a pre-approval in place with a mortgage company. You might be ready to buy a house. 

This is a good time to meet with your real estate agent.  Let the real estate agent know you have been prequalified and the budget amount.

Go over your wish list of items you would like in a house. Be realistic about that list. Remember. you have a budget and need to stick to it.

The flip side is to not go into this purchase thinking of only your immediate situation. Don’t buy the house while already thinking about selling it in the near future. Try to imagine the future and think about your long term goals for a house. 

You might not have pets now, but do you hope to have a dog and want a yard with a fence. You might not need more than a few bedrooms now, but what happens in a few years when you have some kids that are part of your family?

Then have your real estate agent do their job and start to look for the perfect first home for you. You might be feeling impatient at this point but be smart and methodical in your search. Look at lots of homes to compare what you can get from many options in the same price range. 

If you hope to do some fixing up, be practical about this too. While as new homeowners, it might be fun to tackle a few home improvement projects, they also cost money. 

So, be mindful that tearing out the ugly tile in the master bath is something you could do. It will also eat into your budget to redo it too. Sometimes new homeowners, in their excitement, overlook how those little fixes can quickly add up. 

Once you have found a home, have your real estate agent help you negotiate a price and lock in a purchase agreement. Let your mortgage company know so you can lock in your interest rate. Don’t forget to factor in closing costs as you prepare for the closing.

Make sure you check on the property taxes so you are prepared for that bill in the future. You want to ask if the house has a homeowner’s association and what the HOA fees are and what they cover. 

Get Your Home Loan Quote From Top Lenders Today!

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Mistakes to Avoid as a First Time Home Buyer

No matter how deliberate and careful you are bound to make a few mistakes along the way. Here are some of the most common ones to avoid as a first time home buyer.

Home Inspection

There are two mistakes that first time home buyers often make related to a home inspection. The first is to skip the home inspection. While home inspector costs money you want to not spend, the information you get about your house is very valuable. 

The other mistake is to assume the home inspector will find everything. While they can be very knowledgeable, they can’t see everything or predict the future. They can estimate the life of a furnace but may or may not be correct. 

In this spirit, new homeowners need to have an emergency fund in place for those unexpected surprises that come with homeownership.

Savings

While you might have been saving for a while and you want to get the most house you can, avoid draining your savings account for the down payment and closing costs. 

There will be moving expenses. There will be expenses you did not have to cover as a renter. You might need to buy things like a shovel and a lawnmower. As you tackle your first DIY project, you might be surprised how quickly a painting project adds up when you need a ladder, brushes and all the materials beyond paint. 

More House Than You Can Afford Realistically

While you get prequalified for UP TO a certain amount, it might not be a good idea to stretch to the maximum you qualify for. If you buy a house that is at the absolute top of your budget, you might not have wiggle room when unexpected expenses arise. 

Buy a house you know you can afford and still have some cushion in your budget

Tips to Become a New Homeowner

Are you ready to take the leap and become a new homeowner? Follow these steps to help make your first home buying experience a successful one. 

Interested in our home financing information? Click here to get started with our mortgage calculator.

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