Buying a home can be nerve-racking, especially if you're a first-time home buyer.
These step-by-step guide will help you navigate the process, save money and avoid common mistakes.
Step 1: Start gathering a down payment
One of the first things you’ll need to prepare when buying your first home is the down payment. Ideally, you should have at least 20% of the total price of the house you’re planning to buy. If you think that’s too steep, though, you can always get a lender to cover the costs for you by granting you a loan and you can simply pay it back later.
Step 2: Check your credit score
One of the first things you’ll need to prepare when buying your first home is the down payment. Ideally, you should have at least 20% of the total price of the house you’re planning to buy. If you think that’s too steep, though, you can always get a lender to cover the costs for you by granting you a loan and you can simply pay it back later.
Step 3: Get pre-approved for a mortgage
Getting pre-approved for a mortgage is a long painstaking process. You’ll need to submit tons of paperwork, especially if you’re looking to do it with multiple lenders, but it will make things easier and simpler for you further down the road. Once you get your pre-approval, you’ll have a better estimate of how much you can borrow, giving you a good ballpark figure for the homes you can afford to look at.
Mortgage application tips:
- Determine how much home you can afford
Before you start looking for your dream home, you need to know what’s actually within your price range. - Check your credit and pause any new activity
So check your credit before you begin the homebuying process. Dispute any errors that could be dragging down your credit score and look for opportunities to improve your credit, such as making a dent in any outstanding debts. - Compare mortgage rates
Comparing mortgage rates from at least three lenders can save you more than $3,500 over the first five years of your loan, according to the Consumer Financial Protection Bureau. Get at least three quotes and compare both rates and fees. - Get a pre-approval letter
Having a pre-approval letter in hand makes you look much more serious to a seller and can give you an upper hand over buyers who haven’t taken this step.
Step 4: Find a real estate agent
Now that you have a lender and you know how much loan you qualify for, how does sitting back and relaxing while someone else does the majority of the groundwork for you sound? Real estate agents take the guesswork out of buying your first home for you. They can show you the best houses for your budget, get you a great deal on the property you want, and more.
Step 5: Go shop for a home!
It’s not the last step, but it’s definitely the best part of the whole process. Let your real estate agent set showings up for you and feel free to look at as many homes as you like (as long as they’re within your budget, of course).
Step 6: Make an offer
Making an offer for a home that you like brings you one step closer to owning it. Let your agent know that you’ve made a decision and they should be able to help you make the best offer.
Step 7: Get a home inspection
Imagine falling in love with a house, buying it, and then discovering, weeks after moving in, that it’s been rotting from the inside all along. This is the reason why getting a home inspection is important. Hiring a home inspector will help you find out what kinds of problems there are in the home you want to buy.
Step 8: Get a home appraisal
You’re not the only one who decides whether you should buy that home you’ve been eyeing; there’s one other person who has a say and that’s your lender. A home appraisal will help your lender decide whether or not the house you’re about to buy is a good investment.
Step 9: Head to closing
Closing is one the most exciting days of your life as a first-time home buyer. It’s the day when you finally get the keys to your new home and everyone involved in the transaction is paid. Yes, it comes with a cost and that’s normally around 2% to 7% of the property’s total price.
Step 10: Move in!
If everything goes well during closing, then you’re officially a homeowner and there’s only one thing left to do: move in!