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The Ultimate Guide To First-Time Home Buying

Now that you have made the decision to become a homeowner, what can you do to educate yourself on the process and take the right steps to ensure your goal of homeownership is accomplished? This comprehensive guide will walk you through the essential steps of the home buying process - from where to start to selecting the right lender and real estate agent. Buying your first home is an exciting milestone, but it can also be overwhelming so get ready!


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What’s Your Budget?

Before you start searching for your first home, it's imperative to determine how much you can afford. Consider your current income, monthly expenses, and any existing debts. You can start by using online mortgage calculators to estimate your potential monthly mortgage payments based on different loan amounts and interest rates. But remember, that this will be an estimate and only give you a starting point. Additional monthly costs that need to be taken into consideration are taxes, home insurance and HOA fees.

As a general rule for first-time home buying, you should aim to save at least 20% of the home's purchase price for a down payment to avoid private mortgage insurance (PMI). If you put down a lower amount, you would incur the monthly payment of PMI until you have 80% equity in your home.  Additionally, closing costs, which typically range from 2% to 5% of the home's purchase price, are in addition to your down payment, not part of it.  Saving for a larger down payment and having extra funds for closing costs can help you secure a better mortgage rate and reduce your monthly payments.

Check Your Credit Score and Improve Your Credit

Your credit score plays a significant role in determining your eligibility for a mortgage and the interest rate you'll qualify for. Obtain a copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) and review them for any errors or discrepancies. Take steps to improve your credit score by paying bills on time, reducing credit card balances, and avoiding opening new lines of credit.

Get Pre-Approved for a Mortgage

Before you start house hunting, it's absolutely necessary to get pre-approved for a mortgage. This involves submitting an application to a reputable lender who will assess your creditworthiness and determine the maximum loan amount you qualify for.  This will give you an idea of the price range of homes you should be looking at and what type of loan you qualify for.  Also, in order to submit an offer on any property, a pre-approval is required to go along with your offer. 

Choose the Right Lender

When selecting a lender, consider factors such as interest rates, loan options, closing costs, and customer service. You may also want to contact a mortgage broker since they are able to shop around and compare offers from multiple lenders to find the best deal for your financial situation. Make sure they have a good reputation, transparent fees, and excellent communication skills. As a first-time home buyer, based on your income and credit score, you may have access to state programs, tax breaks, and federally backed loans.  Be sure to ask them if they have access to any that would suit your situation.

Find a Knowledgeable Real Estate Agent

A qualified real estate agent can guide you through the home buying process, provide valuable insights into the housing market, and help you find properties that meet your criteria. When choosing an agent, look for one who is willing to sit down with you and do a buyer consultation. This will allow them to get a deep understanding of what is important to you and give you a chance to get to know how they work as well.  As a first-time buyer, you will need an agent that is thorough, patient and educates you every step of the way. The best agents come from recommendations from friends, family, or colleagues, so make sure you ask around.  It is also good practice to interview multiple agents before making a decision.

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Start Your Home Search

Once you have your budget, pre-approval letter, and real estate agent in place, it's time to start searching for your ideal home. Make a list of your must-have features and preferences, such as location, size, amenities, and school districts (be sure to share them with your agent when you have the consultation). Attend open houses, schedule private showings with your agent, and explore different neighborhoods to get a feel for what's available within your budget.

Make an Offer and Negotiate

When you find a home that you love, work with your agent to submit a competitive offer. Your agent will help you determine an appropriate offer price based on market conditions, comparable sales, and the home's condition. Depending on what market you are in, if there is low inventory, there may be multiple offers on the table. As of lately, homes that are priced right, in a good location and updated will have a lot of interest.  In most cases, they will not only be looking at the best price but will take into consideration financing, inspection contingencies, potential appraisal gap coverage and closing date.  Based on what you are comfortable with, your agent will advocate for your best interests and work you through the negotiation process.

Complete the Home Inspection and Appraisal

Once your offer is accepted, inspections are the next step to assess the property's condition and identify any potential issues or repairs. Typically the inspections necessary are home, termite and radon.

During the inspection period, you may order other types based on the age of the home and what materials were used in construction.  You will want to review this thoroughly with your agent to understand what items are more necessary than others.  Additionally, your lender will order an appraisal to determine the home's value and ensure it meets the loan requirements. Once you review the inspection report and appraisal carefully, work with your agent to address any concerns with the seller and determine potential negotiating factors and next steps.

Finalize the Mortgage and Closing

Once the home inspection and appraisal are completed satisfactorily, finalize your mortgage with your lender. Provide any additional documentation requested (even if they ask for it multiple times), review the loan terms and closing costs, and sign the necessary paperwork. Before closing, conduct a final walkthrough of the property to ensure that any agreed-upon repairs have been completed, and the home is in the expected condition.

Close on Your New Home

On the day of closing, bring two forms of id, funds for closing costs and down payment, and any required paperwork. Sign the closing documents, pay any remaining fees, and receive the keys to your new home! 


Buying your first home is a significant milestone and with careful planning, research, and the guidance of knowledgeable professionals, it can be a smooth and rewarding experience. Good luck on your journey to homeownership!

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