First-Time Home Buyer Tips

(July 2024)

First-Time-Home-Buyer-Tips

In This Article

Embarking on the journey of becoming a first-time home buyer is an exciting yet complex process. It is exciting because of the prospect of achieving a significant life goal and gaining a place to call your own.

On the other hand, it can be complex considering the multifaceted nature of the process such as budgeting, mortgage approval, neighborhood research, property inspections…the list goes on.

Balancing this excitement with a systematic approach and thorough understanding of the steps involved is key to successfully navigating the complexities of the home-buying process.

Don’t worry…as you go through this article, you’re unfolding the buyer tips from knowing who to buy from, things to look out for when buying a home, and more.
So, make sure you read this article till the very end to get all the information you need.

To purchase a home for the first time:
1. Assess Your Budget
2. Get Pre-approved
3. Research Neighborhoods
4. Work with a Realtor
5. Inspect Available Home Options
6. Understand Closing Costs
7. Explore Mortgage Options
8. Plan for Additional Expenses
9. Choose Your Desired Home-type
Recap

Ready? Let’s dive in.

1. Assess Your Budget

To make the right home-purchasing decision, assess your budget. Your budget is like a compass that helps you navigate the path to buying a home.

First off, get a pen and paper, and write down the list of expenses that come with home purchasing. For instance, know how much you’re allocating for a down payment, property insurance, registration and transfer fees, and so on.

Don’t forget to keep extra funds for emergencies or miscellaneous. You never can tell…inflation does affect the prices of items in the market, including real estate.

A common example of fund allocation in a budget is the 50/30/20 rule. What’s that? You ask…

It’s simple…

You keep 50% of your budget for necessities, 30% for eventualities, and 20% for saving or debt repayment. Mind you, this fund allocation blueprint can be adjusted depending on your circumstances and financial goals.

If you’re not sure about how to plan your budget, you can use budgeting tools such as Google Sheets, Goodbudget, and Empower to get things done seamlessly. 

Or still, still professional help. 

2. Get Pre-approved

To make an informed home-purchasing decision, get pre-approved. Oftentimes, home sellers require that you write a mortgage pre-approval letter.

The pre-approval process is crucial to help you know the maximum loan amount which can also aid you set the price range for the home you’re purchasing. 

When going for pre-approval, make sure your proof of employment, income tax returns, declaration of assets, and a qualifying credit score are handy.

Speaking of credit score…if you’re seeking a conventional loan, then a FICO score of 620 or above is good. But, if you’re going for a Federal Housing Administration (FHA) loan, 580 and above can do.

Three possible outcomes are expected from your pre-approval process. Either you’re pre-approved, denied, or pre-approved with conditions. Whichever the case may be, it is worth the pain.

3. Research Neighborhoods

To get the right home for you even as a first-time home buyer, do thorough research on the neighborhoods before diving into the purchasing process.

Mind you, where your dream home is situated could be as significant as the house itself.

Start by defining your priorities and preferences regarding the kind of neighborhood you envision. Do you like your neighborhood quiet, or loud? Is the home close to the town or down in the suburbs?

Do you have kids? Can you afford to stay far from school?

Answering some of these questions can help you make the best decision that aligns with your lifestyle and needs.

Also, take note of the safety, amenities, property value, cost of living, resale value, and local services that are available.

You can seek help from a few friends to navigate the entire process, or still, meet professionals to provide you with sound counsel.

4. Work with a Realtor

To buy a home as a first-timer, work with a realtor. The truth is that you’re looking for the “best” home with the most “affordable” rate so you can cut costs by all means.

However, hiring a realtor doesn’t seem like cutting costs. You mumble…

Well, on the surface, you’re right, it’s additional expenses. But in the long run, it is worth every dime. You’ll get to discover that working with a real estate agent is actually an investment.

When you hire a professional, a competent realtor, they help you know whether the house you’re buying is overpriced or underpriced.

A good real estate agent also helps you to set a competitive price for the home you’re purchasing, so you don’t overspend. So you see?

How do I know a trusted realtor? You ask…

Seek recommendations from friends and family. You can also use sites such as Realtor.com, or Yelp to get some good recommendations.

5. Inspect Available Home Options

To buy a home as a first-timer, do a thorough inspection of the house you’re purchasing.

Again, mark the word, THOROUGH.

Your investigation must be thorough because you’re investing so much in it. You should be sure of what you’re purchasing.

As you investigate, you identify issues concerning the house, the negotiation power, the level of legal protection, and insurance considerations.

Make sure the house is government-approved.

Be aware of any statutory and association-imposed charges that must be paid on the property. Are the charges recurrent or one-off? Get things cleared in that regard.

Again, don’t forget to investigate the price of the property so that you’re not overpriced. Your realtor should help you in this regard but don’t keep a closed eye just because you’re working with a realtor.

6. Understand Closing Costs

To get the right home for you even as a first-time home buyer, familiarize yourself with the closing costs.

Note that closing costs are those extra expenses you pay that are not part of the property’s price. You incur them to finish up a real estate transaction.

When it comes to home purchasing, there are associated expenses you should know that will keep you prepared ahead of time.

Understand costs such as origination fees, appraisal fees, credit report fees, mortgage insurance, and discount points. These are loan-related costs you should know about.

While it is impossible to avoid all closing costs, you can take some approaches, such as hiring a professional, asking about loyalty incentives, or considering non-closing-cost loans—to reduce the amount of money you spend in the process.

7. Explore Mortgage Options

To buy a home as a first-timer, explore different mortgage options and check which one is the most suitable for you.

Start by familiarizing yourself with the different kinds of home loans in the market, and understanding how loan costs work.

Just in case you don’t know the kinds of mortgage loans available…they’re conventional loans, government-backed loans, jumbo loans, fixed-rate loans, and adjustable-rate loans.

Another smart move you should make is to taste different waters—get in touch with multiple lenders.

Get prequalification or preapproval so you can know the kind of loan you’re qualifying for.

When choosing the loan, make sure it aligns with your needs.

8. Plan for Additional Expenses

To purchase a home as a first-time home buyer, reserve some extra funds for eventualities.

Beyond the down payment and mortgage, there are various additional expenses you need to carefully consider. For instance, closing costs, property taxes, homeowner’s insurance, and potential maintenance or repairs.

Do you want to save yourself from financial strain? Plan way before purchasing your desired home. This is why you must spend enough time preparing a thorough budget that not only includes the initial investment but also ongoing expenditure.

Don’t neglect the need to seek help from professionals. Seeking guidance from financial experts and real estate professionals can provide valuable insights into hidden costs and help you in crafting a realistic budget.

9. Choose Your Desired Home-type

To get the right home for you even as a first-time home buyer, pick your preferred home type.

At this point, you should assess your needs and preferences to choose the most appropriate one for you.

Are you single or married? Do you like space or privacy? Are you planning on raising kids anytime soon?

Whether it’s a single-family house, condominium, townhouse, or apartment, each option comes with distinct advantages and considerations.

Providing answers to some of these questions can help you make an informed purchasing decision.

You must also assess factors like location, space requirements, and maintenance responsibilities.

🌐 Bottom line: Choose a home that aligns with your needs and preferences.

Recap

Buying a home as a first-timer involves some crucial steps. Begin by assessing your budget and get pre-approved.

Conduct research around neighborhoods and work with a realtor who would help you make the right choice when it comes to picking your desired home.

Conduct a thorough inspection of the available home options and understand the closing costs. Explore mortgage options, plan for additional expenses, and choose your desired home type.

Become a

S'witty Kiwi Credit Insider!

Get the latest credit tips and hacks in your inbox!