Our Ultimate First-time Home Buyer Guide

Jul 27, 2021

When you decide that it’s the right moment to purchase your first house, it’s wise to do some research. By reviewing a first-time home buyer guide, you can gain insights into the process. It will make moving forward easier, as well as reduce the likelihood of any surprises. Plus, it allows you to make sure that buying is actually the best choice.

If you want to make sure you’re ready for what’s ahead, here’s our ultimate first-time home buyer guide to help you achieve your goals.

First-time Home Buyer Checklist

First-Time Home Buyer Checklist

When aspiring homeowners are trying to figure out how to buy a house for the first time, they are often surprised by the overall process. There are many steps between thinking about becoming a homeowner and finally moving into a house of your own. In many cases, at least a few of them catch buyers off-guard.

If you aren’t knowledgeable about what’s to come, your odds of facing something unexpected go up dramatically, making the entire process more stressful.

Luckily, it is possible to prepare for the road ahead. Here is a step-by-step first-time home buyer checklist to help you navigate the journey:

  • Make Sure Buying Is Right for You
  • Review Your Finances
  • Explore Loan Options
  • Prepare a Down Payment
  • Gather Funds for Upfront Costs
  • Choose a Lender
  • Get a Preapproval Letter
  • Pick a Real Estate Agent
  • Check Out Properties
  • Make an Offer
  • Schedule Inspections
  • Negotiate the Price
  • Handle Closing
  • Move In

In-Depth First-time Home Buyer Guide

Each of those steps in the first-time home buyer checklist covers a typical part of the first-time home buyer process. Here is a closer look at what those steps entail.

Make Sure Buying Is Right for You

There are plenty of first-time home buyer benefits that make purchasing a house an attractive option. Having ownership of your space is a big one, but that’s just part of the equation. A first-time home buyer tax break might be incredibly attractive, as well as other types of first-time home buyer incentives.

However, that doesn’t mean buying is right for you personally. There are expenses that come with homeownership, as well as decreased flexibility.

Additionally, renting comes with its own set of benefits. You aren’t responsible for maintenance, property taxes, and certain other expenses. Plus, you’ll have more flexibility, especially if you need to relocate.

Ultimately, it’s wise to weigh the pros and cons of buying a house before you start touring properties. That way, you can make sure that buying is the best choice for you.

The Ultimate First-Time Home Buyer Guide review your finances

Review Your Finances

Before you start searching for a house, take some time to square away your finances. First, you want to review your budget and determine how much you can afford to spend. That way, you can ballpark a purchase price range in advance.

After that, check your credit report to look for errors and dispute any mistakes you find. Review your credit score, pay down debt, or take other steps that make you an attractive borrower.

You also want to gather tax returns from the past two years and pay statements and other forms that prove your income. Those documents are usually required when you apply for a mortgage, so it’s smart to have them ready. You may want to download bank statements for the past three months, as those might be needed as well.

Explore Loan Options

There are several different kinds of home loans, each with its own benefits, drawbacks, and requirements. Take the time to research each mortgage type to see which ones are available to you and would be the best fit.

Here is a list of common mortgage types:

  • Conventional
  • FHA
  • VA
  • USDA
  • Adjustable-Rate
  • Fixed-Rate
  • Jumbo

It’s important to note that some first-time home buyer mortgage programs may be available to you. These are typically run by state housing authorities or similar agencies and are designed to make homeownership accessible.

For example, if you’re looking for first-time home buyer programs in NY, research options available through the State of NY Mortgage Agency (SONYMA).

Prepare a Down Payment

Many – but not all – mortgages require a down payment. The minimum amount can range from 3 to 20 percent for those that do, which is an incredibly large window.

Research your preferred loan types to learn about down payment requirements. That way, you can make sure that you have enough to qualify.

Additionally, take a look at first-time home buyer down payment programs. You may be eligible for different types of assistance. For example, there are down payment assistance loans that could help. Additionally, first-time home buyer grants may let you cover down payment costs without incurring more debt.

Gather Funds for Upfront Costs

One thing that catches many aspiring homeowners off-guard is the upfront costs.

For example, if you make an initial offer and the seller accepts, you’ll need to provide earnest money. This deposit is typically near 1 to 2 percent of the property’s price, and the funds are held in an escrow account until the sale goes through. Once that happens, the cash is disbursed, usually becoming part of the down payment or being used to cover some of the closing costs.

Typically, home buyers also need to pay for a home inspection and a property appraisal. These are upfront costs above and beyond the earnest money and home purchase.

On average, a home appraisal costs $341, and a home inspection costs $339. However, the exact price can vary depending on several factors, including your location, the size of the property, the home’s features, and more.

Closing costs aren’t necessarily upfront expenses, but it’s crucial to consider them early. In some cases, home buyers can ask the seller to handle the closing costs, usually in exchange for a higher purchase price. However, not all sellers are willing. As a result, you may want to prepare for that expense now. Otherwise, focus your property search on houses with motivated sellers.

Choose a Lender

After you have the down payment and funds for upfront costs handled, you’ll need to choose a lender. Often, it’s best to explore several options, allowing you to compare rates, terms, and fee structures.

Get a Preapproval Letter

Once you select a lender, you’ll go through the preapproval process. During the review, the lender determines how much you could potentially borrow, giving you a maximum mortgage amount. Additionally, you’ll receive a letter that you can show sellers, proving that you’ve completed some initial vetting.

Pick a Real Estate Agent

With your preapproval letter in hand, it’s time to select a real estate agent. When you have the right agent, you’ll get a guide who can help you navigate the local market, schedule viewings, tackle the offer process, and complete the various steps.

If you’ve never purchased a house before, using a real estate agent gives you a kind of first-time home buyer assistance that you won’t receive otherwise. They’ll make sure that you understand everything, making sure your experience is as seamless and stress-free as possible.

Check Out Properties

First-Time Home Buyers - do your research

Once you’ve selected a real estate agent, it’s time to check out properties. Speak with your agent about your must-haves and preferences. Be open about your budget, as well as any dealbreakers regarding properties.

After you’ve done that, your real estate agent can identify properties that potentially match your needs. Review the listings to see which ones may be the best fits. Then, work with your real estate agent to schedule tours.

Provide feedback to your real estate agent during and after each tour. Discuss what you liked about the property, as well as any questions, concerns, or hesitations you’re having. By doing so, you’re helping your real estate agent dial in on the right property for you, increasing the likelihood that the next set of homes are stronger matches.

Make an Offer

When you find the right house for you, it’s time to make an offer. Your real estate agent will handle most of the paperwork. However, you’ll want to discuss the price you want to list in the offer, as well as any contingencies that need to be in place.

When it comes to price, you want to make a competitive but fair offer. If you aim too low, you run the risk of insulting the seller. If the seller feels your offer is out of line, they may choose not to counter. Instead, they’ll simply decline, moving on to another potential buyer.

In some cases, if your price is reasonable, the seller will accept your offer immediately. If that occurs, you can move onto the next step.

However, it’s more common for sellers to send a counteroffer. If the seller wants to counter, they’ll formally outline the terms, giving you a chance to review them before either accepting, countering their offer, or declining.

Schedule Appraisals and Inspections

If you and the seller come to an initial agreement, it’s time for appraisals and inspections. For the appraisal, you’ll usually coordinate with your lender to get one booked.

For the inspection, the ball is typically in your court. Not only will you need to handle the scheduling, but you’ll also have to choose your inspector. Make sure to research local inspectors carefully. That way, you can pick a reputable inspector for the job.

Negotiate the Price (and Repairs)

After the appraisal and inspection, you typically get a chance to update your offer based on the results. Review the appraisal and inspection reports to determine if a price adjustment is warranted or repair requests are justified. Then, update your offer accordingly.

The seller will then review the proposal and may make a counteroffer. Work with your real estate agent as negotiations proceed. Once you and the seller agree on a price and any other terms, you can move forward.

Handle Closing

Once the final price and other details are agreed upon, you’ll need to handle closing. You’ll need to sign up for homeowners insurance in advance, ensuring you can provide proof of coverage on the closing day. After that, you’ll meet with legal representatives on a specific date, finalize the purchase contract, provide any required funds, and otherwise become the formal owner.

Move In

Once closing is complete, you officially own the house. At that point, you can move in, turning that house into your home.

Tips for First-time Home Buyers

Here is some extra advice for first-time home buyers that can help you on your journey.

Know the Difference Between Must-Haves and Nice-to-Haves

When you start the homebuying process, it’s normal to envision everything you’d like to find. However, depending on your budget, that picture may not be realistic.

Make sure you take the time to identify your actual must-haves and separate them from the nice-to-haves. That way, you can focus on what you need above all else.

Shop Around

Whether you’re looking for a mortgage lender or the right property, one of the most important tips for first-time home buyers is to shop around. The odds are good that the first option you see isn’t going to be the best choice, so don’t settle if the fit isn’t there.

Don’t Push Your Budget Too Far

Homeownership is expensive. Along with the mortgage, you’ll need to cover homeowners insurance, property taxes, maintenance, and repairs. Plus, you might see changes in your utility costs, auto insurance rates, commuting costs, and many other expenses.

Make sure you account for all of the costs you’ll incur, as well as other changes to your budget. That way, you don’t bite off more than you can chew.

Assume It Will Take More Time

The home buying process is lengthy, even if it goes perfectly. When you factor in that some kind of delay is almost guaranteed to happen, it can stretch out for weeks past your initial expectations.

Often, it’s best to assume that the process will take longer than the original timeline suggests. That way, if a delay occurs, you aren’t hindered by the change.

Be Cautious About “Falling in Love” with a Home

Once you get emotionally attached to a house, the process is far more stressful. You may overlook issues because you’re not seeing the negatives through the positives. There could be problems during the inspection, turning what looks like a beautiful home into a money pit. You might even have issues negotiating, causing your fear of losing the property to take the reins.

Try to remain unemotional during the process. By being fact-oriented, you’ll be able to stay focused, see the situation for what it is, and avoid heartache if things don’t turn out as you’d hoped.

Don’t Be Afraid to Ask Questions

Working with a real estate agent - don't be afraid to ask questions

Many first-time home buyers worry about asking too many questions. The thing is, purchasing a house is a complex process, and it’s okay if you don’t know everything.

Whether you’re speaking with your real estate agent or your lender, if a question comes to mind, ask it. That way, you can be well-informed as the process moves forward.

Walking Away Is Okay

There are several points in the home buying process where you may want to walk away. If you put in an initial offer and you and the seller can’t agree on a price or terms, you can choose not to move forward. Similarly, if an inspection or appraisal reveals an issue that you don’t want to deal with – or negotiations at this phase leave you dissatisfied – you can stop the process there.

As long as you’re acting in accordance with any written agreements, you can walk away if the deal isn’t right for you. Just make sure that you speak with your real estate agent to confirm you’re acting within your rights. If you are, then you’re free to end the process.

Be Quick, But Don’t Rush

When you buy a house, you want to move relatively quickly. In-demand properties don’t stay on the market for long, so some speed is a necessity.

However, you don’t want to move so fast that you’re acting rashly. Buying a home is a big deal. So, while you want to make offers, negotiate, and handle certain steps in a timely manner, don’t speed things up so much that you make a mistake.

Think Long-Term

Most homeowners don’t stay in the first house they purchase forever. As a result, it’s wise to consider how the resale value may change over the next few years. Consider how changes in the neighborhood and economy could alter the property’s long-term value. That way, if you do decide to relocate later, you’ll be in good shape.

Don’t Cut Corners

While not working with a real estate agent or skipping a home inspection might save you money, those aren’t corners you want to cut. Home inspections help you learn more about the property’s condition, identifying issues that could cost hundreds if not thousands of dollars to address.

Real estate agents ensure you navigate the process correctly. They can help you avoid costly mistakes and ensure you negotiate effectively. As a result, they often save you money in the end.

If you’re a first-time home buyer and want an ally during the process, the team at Global Property Systems is here to make your experience a positive one. Contact our team today, and we’ll get you on the path toward homeownership.


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