7 Tips for First-Time Homebuyers

If you’re a first-time homebuyer, you may be feeling excited and overwhelmed about the homebuying process. Purchasing a home can be complex, but you can ensure a smooth journey to homeownership by doing the right research ahead of time. Here are seven tips for first-time homebuyers to set you up for success.

#1: Get preapproved before home shopping

The excitement of buying a new home leads many first-time homebuyers to jump right into looking at homes before meeting with a lender and getting preapproved for a mortgage loan.

Choosing a lender and getting preapproved should be one of your first steps in the homebuying process. In fact, some real estate agents and sellers won’t meet with you before you have a mortgage preapproval. Once you’re preapproved, you’ll also have a better idea of the price range you can afford.

#2: Determine your home-buying budget

Once you’re preapproved for a mortgage loan, you’ll need to determine a home buying budget. Your lender will approve you for the maximum total you can afford; however, that’s not necessarily the number you should take as your target home price.

Purchasing a home at the maximum end of a budget often requires a homebuyer to empty their savings on a down payment and dedicate most of their monthly income to mortgage payments – leaving little opportunity for other investments. Be sure to speak with your lender about what you can expect at different home price points, and take advantage of our mortgage affordability and debt-to-income ratio calculators to help you determine what price range is affordable for you.

Additionally, your mortgage won’t be your only home expense. Keep in mind the other expenses or hidden costs that come along with owning a home, such as property taxes, utilities, homeowners and mortgage insurance, maintenance and repair costs, and more.

#3: Work with a Realtor®

Realtors® are experts in the home market. While you’re not required to work with a Realtor®, having an expert guide you through your first homebuying experience typically helps alleviate stress and anxiety, instills confidence throughout the homebuying journey, and makes the overall process smoother.

#4: Make a timely offer

Once you find the home of your dreams, it’s time to make an offer! While buying a home is a big decision that shouldn’t be rushed, remember the market is competitive and homes aren’t staying on the market very long. Don’t wait too long to make an offer once you think you’ve found “the one.”

#5: Conduct a home inspection and calculate maintenance costs

A home inspection is a crucial step in the homebuying process as it will point out any large repairs that need to be done before closing. Depending on the results of the home inspection, you may even have the opportunity to negotiate price reductions or needed repairs.

Additionally, it’s important to keep in mind older and larger homes usually require more repair and maintenance costs. On the other hand, smaller homes, newer homes, condominiums and town homes often require less maintenance.

#6: Learn about alternative down payment options

Saving for down payments often holds people back from buying a home right away. However, there are financial options that require little or no money down. First-time homebuyers are often unaware that a 20 percent down payment isn’t always needed. Talk to your lender about other down payment options to consider.

#7: Check your credit report and be mindful of your credit

Your credit report will likely be reviewed as part of the mortgage preapproval process; and, it may also be reviewed again before closing. Any changes to your credit score, such as opening new lines of credit or failing to make payments on existing credit cards, could result in changes to your loan.

Be sure to review your credit score throughout the homebuying process to avoid unexpected changes that could influence your ability to close on your loan or lead to less favorable loan rates and terms.

By following these steps, learning more about the homebuying process and what to expect, you’ll likely be on your way to homeownership in no time.