First Time Home Buyer Tips


Now that the wedding is over, you may be looking towards buying a home. For many couples, this is the first time they will purchase a home, and it will be the first big financial commitment they make together. 


You’re Married… now what?


1. Pay Off All Debt and Build an Emergency Fund

Owning a home is expensive—much more expensive than renting, even if your monthly house payment will be similar or cheaper than your current rent amount. That’s because when you own a home, you’re responsible for all the maintenance and upkeep costs. And those can add up fast! So, before you even think about buying your first home, make sure you’re debt-free and have an emergency fund of three to six months of expenses in place.


2. Determine How Much House You Can Afford

Before you get emotionally attached to a beautiful house, check your monthly budget to determine how much house you can afford. You need to leave room in your budget for other things, so make sure your monthly housing costs (including HOA fees, taxes, insurance, etc.) are going to be no more than 25% of your monthly take-home pay.


3. Save a Down Payment

If saving up to pay cash for the total price of a house isn’t reasonable for your family’s timeline, at least save for a down payment of 20% or more. Then you won’t have to pay for private mortgage insurance (PMI), which protects the mortgage company in case you can’t make your payments and end up in foreclosure. PMI usually costs 1% of the total loan value, and it’s added to your monthly payment.


4. Save for Closing Costs

Along with your down payment, you’ll also need to pay for closing costs. If you’re a first-time homebuyer, you may be wondering how much it costs to close on a house. On average, closing costs are about 3–4% of the purchase price of your home. Your lender will give you a specific number so you know exactly what to bring on the closing day. These fees pay for important steps in the home-buying process, including appraisal, home inspection, credit report, attorney and homeowner’s insurance


5. Get Preapproved for a Loan

Once you’re confident you have enough cash saved to pay for closing costs and 20% of your home, you’re ready to handle the other 80% by talking to a mortgage lender.

Get pre-qualified for a loan and take the extra time to get a preapproval letter before starting your home search. Pre-approval shows sellers that you’re a serious buyer, which is an excellent way for first-time homebuyers to get ahead in a competitive market.


6. Find a Home for Sale in Your Price Range

According to recent data reported by the National Association of Realtors (NAR), most buyers either found the home they purchased online or through a real estate agent. Doing both sets you up for success!


7. Research Neighborhoods for Best Fit

After you’ve found some homes for sale in your price range, be careful not to make a decision based on the property alone. According to a NAR survey, home buyers are more willing to compromise on a home’s condition and size than on the quality of its neighborhood and distance from a school. So make sure you factor neighborhood quality and location into your decision.


8. Attend Open Houses and Think Long Term

Once you’ve narrowed down the neighborhoods, attend a few open houses. Looking at homes that are for sale—even if they’re not a perfect fit for you—is a great way to learn more about the area. When you eventually find a house you love, you’ll know how your place compares to better or worse homes in that neighborhood.

When it comes to buying, a good strategy is to find the most affordable house in the best neighborhood. If you buy at the bottom of the price range in a good neighborhood, you’ll have more room to build home value.


9. Make a Competitive Offer (That’s Within Your Budget!)

Let’s say you found the home you want and can afford. Since you’re already pre-approved for a loan, you’re ready to make an offer. If you’re a first-time homebuyer, it may be hard to know how much you should offer. That’s when you can rely on the expertise of your real estate agent.

Ask your agent to help you make sure your offer is competitive and within your budget and the home’s value. Be careful not to make an impulsive offer that’s higher than you can afford just to knock out the competition. A personalized letter might help your offer stand out among multiple bids in a hot market.


10. Prepare for Closing

Once a seller accepts your offer, the closing process will begin. Keep things running smoothly by knowing what to expect when closing on a house. The average closing process takes 43 days, which gives you plenty of time to tackle closing items. A real estate agent will schedule the remaining steps from the home inspection to the final walkthrough, and they’ll keep you informed about any roadblocks.

Buying a home is an exciting and potentially stressful time for anyone. Be sure to involve a realtor you trust early on in the process. They are there to walk you through every step of the process, and you can truly rely on their expertise.