home buyers

15 Essential Tips for First-Time Home Buyers

Buying a new home can be an exciting, nervewracking, and overwhelming process. And these feelings are magnified for first time home buyers!

There’s credit score monitoring to worry about, endless Zillow searches to conduct, piles of paperwork to fill out, and endless other menial tasks you need to do to. Pretty soon, buying your new home may feel like a full-time job.

Luckily, for first-time home buyers, the complicated process of buying a new home can be made a lot easier with the right preparation.

But with so much to do, where do you even start? In this article, we’re going to discuss 15 essential tips for first-time home buyers.

Read on to find out what they are!

1. Know Your Financial Limits (And Stick to Them!)

At some point, you will get caught up in the thrill of house hunting and your common sense will get thrown out the window.

Therefore, the first thing new home buyers should do before they do anything else is getting their finances in order.

First things first, you need to figure out how much you can afford to spend on your new home. You can use this home affordability calculator to help you out.

2. Figure out Your Down Payment

Once you know this information, you then need to start saving for your down payment.

First time home buyers are in luck when it comes to the down payment. Oftentimes, they’re only expected to put down as little as three percent (for non-first-timers, it’s closer to 20 percent).

Regardless of how much you’re expected to pay, start saving early and try to save more than the bare minimum. The higher down payment you make, the less your monthly mortgage rates and interest rates are.

3. Speak With a Mortgage Broker

Don’t forget, when shopping for your first home, you’re also shopping for your first mortgage.

They will help you figure out what you can afford and can answer lots of questions about finances that realtors can’t.

Once you know how much you can afford, what you’re down payment will be, and have spoken with a mortgage broker, it’ll be a lot easier to stay on track with your finances.

4. Compare Mortgage Rates

Speaking of meeting with a mortgage broker, it’s also a good idea to meet with more than one so you can compare rates.

By meeting with at least three lenders and comparing rates, you could save thousands of dollars!

5. Monitor Your Credit

Your credit score is an important number for first-time home buyers.

A good credit score could mean scoring the house of your dreams with low monthly payments. A bad credit score? You may end up with a shack in a sketchy neighborhood that costs you more in monthly payments than the apartment you’re currently renting. Or, even worse, a bad score could mean no new home at all.

There are a lot of free resources for monitoring your credit.

For example, the Credit Karma app gives you free ongoing access to your credit scores and credit reports. Of course, the numbers they give are not 100 percent accurate, but they give pretty close estimates that should help you stay on track.

6. Explore Various Down Payment Options

As we stated earlier, it’s very important to start saving for your down payment asap.

But, if you’re struggling to come up with the money, don’t freak out yet.

There are a few different options worth exploring. These include:

  • Veterans Affairs Loans: Sometimes these require no down payment at all.
  • Federal Housing Administration Loans: Could help knock your down payment to as low as 3.5 percent
  • Local and State Assistance Programs: Sometimes offer low down payments and tax credits

7. Keep Closing Costs in Mind

Remember, you’re down payment isn’t the only thing you’ll be saving for.

You also need to set aside money to close your current mortgage. Closing costs are between 2 and 5 percent of your original loan amount.

If the closing costs seem like they’re going to be another expense that’s difficult to save for, there are ways you can negotiate for a lower amount.

You can either ask the seller to pay for a portion of it or negotiate with your real estate agent on their commission.

8. Set Money Aside for After the Move-In

Ok, there’s one more thing you need to save up for before your home shopping can commence.

In addition to saving for your down payment and your closing costs, you also need to save for new move-in appliances and furnishings. This may include a new paint touch up, new rugs, new light fixtures, or any other touch-ups you see fit.

It may not seem like a lot if you only have a couple touch-ups in mind. But these can add up so you should prepare.

9. Consider the Type of Property

When many first-time home buyers picture their dream home, they picture a single-family house.

While single-family homes are ideal if you want a lot of space, there are other property types worth considering if you’re willing to sacrifice space for some fancier amenities. You should also add condos and townhomes to your list of options.

And we know- a townhouse or a condo may not be your dream home, but guess what? Your first home doesn’t have to be your perfect dream home. It can be your stepping stone until you’re ready for that investment.

10. Don’t Make Any Big Purchases

You have a lot of ideas for furnishing your new home.

Try to resist hitting up IKEA a little bit longer. Any major purchases will put a ding on your credit report, as it raises your debt-to-income ratio. This raise can cause your interest rates to go up and may even result in your loan application to be rejected.

Fantasize all you want, but wait to pull the trigger on any big purchases until your loans and other finances are finalized.

11. Pick the Right Realtor

Your realtor is going to be with you every step of the way.

As first-time home buyers, it’s crucial you pick a realtor who is not only trustworthy and experienced but is someone you can get along with.

Don’t go with the first name that pops up on your Google search. You need to do some thorough research when choosing a real estate agent.

Ask for recommendations from friends, look for reviews online, and meet with them in person before you hire them. When you meet, make sure you ask in-depth questions about how they’re going to help you during the process.

The right agent will be enthusiastic and energetic to help first-time home buyers, not annoyed and rushed. Be sure to also ask them for referrals from previous clients so you can vet their work.

12. Know Your Market

You have a few ideas for the areas you’d like to purchase in.

As new home buyers, you should know this area inside and out. You should know what other homes are selling for in this area in order to be more informed during the negotiation process.

13. Don’t Expect Every Little Thing to Be Fixed

Before signing anything, you’re going to want to get an inspection done on your soon-to-be new home.

After you get the results of the inspection, you’re going to want to ask the sellers to fix some things. Don’t expect them to be willing to fix everything.

Many first-time home buyers make the mistake of going a little crazy on their requests for improvements. Remember, you don’t hold all the cards as the buyer.

The seller always has the option to back out before signing. And if you’re putting in too many renovation requests, you might be unknowingly pushing them to back out.

14. Make the Most of Open Houses

Don’t use an open house as an opportunity to casually browse the property.

During every open house you attend, you should be paying very close attention to home’s overall condition. Look out for anything broken or any out-of-place smells or stains.

And don’t be afraid to ask the sellers lots of questions. Ask when the home was built, when appliances were last replaced, what the neighborhood is like, etc.

If you don’t get all of your questions answered, don’t be afraid to schedule another one-on-one appointment with the sellers to learn more.

15. Be Patient if Buying With a Partner

Buying your first home with your partner is a monumental event.

As exciting as buying a first home can be, keep in mind that things could get tense during the process.

Before you do any searching, make sure you and your partner sit down and talk about what you’re willing to compromise on. Make a list of everything you like about your current space and a list of everything that your current space falls short on.

Then, take these lists and decide what are actually needs and what are wants. See where you overlap and make these features a priority.

First-Time Home Buyers: Wrap Up

By following these essential tips, your first-time home buying experiencing will go smoothly.

Of course, there are going to be some hiccups and frustrating times along the way, but it’s all apart of the process and it’ll make finding your dream home that much sweeter!

If you have any questions on these tips, drop us a comment below!

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