Century 21 – Blackwell & Co.

5 Important Steps- Buying A Home For The First Time

June 19th, 2023

A first-time home buyer is defined as someone who has:

1) Never owned a home

2) Has not owned a home in 3+ years. 

Buying a home can be an exciting, but overwhelming experience. To make sure you are prepared for this milestone, here are five important steps to consider when buying a home for the first time:

 

  1. Determine Your Budget. Before you start searching for a home, it is very important that you evaluate your financial situation and determine how much “home” you can afford. Consider your income, expenses, savings, and existing debts. Use an online mortgage calculator to estimate your monthly payments, including principal, interest, taxes, and insurance (known as PITI). This will help you set a realistic budget for your home purchase. Become familiar with the real estate and mortgage terminology as well. 
  2. SAVE, SAVE, and SAVE. Save for a down payment and closing costs. Saving for a down payment is an essential part of buying a home. Most lenders will generally require a down payment, which is typically a percentage of the home’s purchase price. Aim to save at least 10% of the purchase price, to help reduce monthly payments and rates. However, to avoid private mortgage insurance (PMI), strive to save 20%. Keep in mind that some loans and programs offer different options for down payment, as well as down payment assistance. Additionally, remember that there will be closing costs involved in the home purchase. This includes things such as appraisal fees, attorney fees, and title insurance, HOA fees (if applicable), prorated taxes, etc. Plan to have funds set aside for these costs as well. Down payments and closing costs are the two biggest costs for home buyers. 
  3. Get Pre-Approved For A Mortgage. Do not wait until the last minute to get pre-approved for a mortgage. It is always advisable to speak to a mortgage broker or lender, prior to house-hunting. This involves providing your financial information to a lender who will evaluate your creditworthiness and provide you with a pre-approval letter stating the loan amount for which you qualify. Having a pre-approval will help you narrow down your search, make competitive offers, and demonstrate to sellers that you’re a serious buyer. Even if your lender determines that you are not quite ready for homeownership, meeting with a lender first, can help create a budget plan to get you on a path to owning your own house.
  4. Find A Trusted Real Estate Agent. Working with a knowledgeable real estate agent can simplify the homebuying process, especially for first-time buyers. Seek recommendations from friends or family, or research reputable agents in your area. An experienced agent can help you find suitable properties, negotiate offers, and guide you through the paperwork and legalities of the transaction. A good agent will educate you, provide you with materials to help you make the best decisions for your path to homeownership. 
  5. Conduct A Thorough Research Of the Property. Once you have identified several properties you like, it is always a good idea to thoroughly research the properties before visiting them. This can include driving by the homes at different times of the day. Not only will this give you an idea of commuting times, but this will allow you to see how busy the neighborhood and surrounding area is, at different times of the day. Research the neighborhood, surrounding schools, and local amenities. If you are searching in an area where there are residents nearby, stop and talk to them! Meet the neighbors, and make sure the property is one you want to invest in! Ask questions! 

 

Buying a home for the first time is a huge financial commitment. Remember to ask questions, seek advice and support from professionals, and TAKE YOUR TIME.