Young couple getting the keys to their first home after following first time home buyer tips

The process of buying a home can be overwhelming—especially if it’s your first time. You want to make sure you’re getting the right house for you at the best value, but without prior experience, how can you really know?

Take a look at these 13 helpful tips for buying a first home so you’re prepared to take the leap when it’s your time.

Avoid making large purchases before you apply for your loan

If you’re in the market for a new home, avoid buying any big-ticket items. Instead, keep your credit profile clean and steady. Lenders might hesitate to give you a loan if they see you’ve recently accumulated a lot of debt or moved money around.

This includes applying for loans or credit cards or even doing balance transfers. Eliminate any reason for a lender to question your mortgage approval.

Don’t obsess about buying at the perfect time

Trying to predict the housing market is difficult at best. Values go up and down… and up and down again. The best move is to simply focus on finding the right home that you like and can afford. If you hesitate on a great opportunity because you’ve heard you might get a better deal later when interest rates drop or home prices decline, you may miss out on your dream home.

Secondary costs add up

When it comes to purchasing a home, new buyers tend to focus only on the mortgage. But don’t forget all those other secondary costs: property taxes, private mortgage insurance (PMI), HOA dues, maintenance—you’ll need to budget for those as well.

Hire an inspector

Hiring a home inspector may be the most worthwhile $300 you’ll ever spend. Once you’re serious about a home, a home inspector will evaluate it for any issues relating to structure, electrical, and much more. A home inspection can reassure you on your decision to buy, or let you avoid a potential money pit.

Scope the area

Before you buy, make sure that you like the neighborhood. Drive by the house at different times of the day and time routes to the nearest supermarket, schools, or other locations that you frequent. The key is to feel confident that the area is comfortable and enjoyable for you and your family.

Apply for a loan first

Before you start looking for your dream home, apply for a home loan, and see what the bank offers you. Now with this information, you can make an informed decision regarding the homes you consider.

There’s nothing worse than looking for homes that are out of your budget before applying for a mortgage and having to scale back to what you can afford. It might even tempt you to try to get into a home with mortgage payments beyond what you’re comfortable with. Applying first also allows you to compare offers and choose the best one that fits your needs.

Research grants and first time home buyer loans

There are a plethora of grants and first time home buyer loans that you can take advantage of. Research your options and take advantage of opportunities to pay less in out of pocket costs. You can then use the extra cash you’ve put aside for moving expenses, saved it, or handle any other financial responsibilities.

Don’t make a 20% down payment

If you have the extra funds to make a 20% down payment, doing so can help you in the long run by giving you more equity in your home upfront, however, if you don’t have the money, or could use that money for something else in your life, you can save big time.

There are loan options that allow you to finance 100% of your home purchase or pay a smaller down payment as low as 3.5%. Making a more modest downpayment can save you tens of thousands of dollars in upfront costs.

Hire a qualified agent

Your real estate agent can have a significant impact on your home buying process. You want to find an agent who is skilled in finding the type of home you’re looking for in your desired area. Often, the best way to find a qualified real estate agent is to get a referral from someone who has gone through the home buying process.

Stick to a budget

The amount you pay for your home shouldn’t be based solely on what you qualify for from your lender and what you feel comfortable paying based on your budget.

If you qualify for a $2,000 monthly mortgage, but you only feel comfortable paying $1,500 per month because you’re planning to have your first child in the next year, then don’t purchase a home outside of your $1,500/mo price range. You’re not required to buy a home at the max purchase price offered by your lender.

Evaluate the house

Just as you ensure the neighborhood is right for you, you also want to look at the house to make sure it’s the right fit. You should be able to tell the condition based on hiring an inspector. Then, think about how long you plan to be in your home and if it will still fit your lifestyle throughout your time there. Does it have the features you want, or will you have the money to add on what you’re looking for down the line?

Budget for moving and post-moving expenses

Moving can be costly, so you want to consider moving and post-moving expenses such as

  • Boxes or moving containers
  • Moving vehicle
  • Moving company
  • Home cleaning service
  • Carpet cleaning service
  • Costs to connect new services and utilities

As you’re planning to purchase your home, start putting money aside for your moving expenses, so you’re not hit with unexpected costs.

Plan for the future

Purchasing a home is a significant investment that requires you to think about how your home will fit into your life now and years down the road. You want to prepare financially for your purchase and, in general, ensure that you’ve made the best purchase for you and your family.

At Chartway Credit Union, we’re here to help you navigate the process of buying your first home.

Ready to buy? Here's a First Mortgage Checklist with everything you'll need to apply.

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