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First Time Home Buyer's Guide

Ten simple steps to the home of your dreams!

Buying your first home is a major investment. But it doesn’t have to be a major headache. By arming yourself with the information in this guide, you can create a rewarding, stress-free purchasing process.

Step One: Choose a mortgage (and a mortgage partner) that fits.

What kind of mortgage best suits your needs? For instance, adjustable rate mortgage payments can fluctuate while a fixed rate mortgage is locked in for the life of the loan. And multiple mortgage varieties are available - from loans specifically designed for entry level buyers to jumbo and construction loans.

The mortgage you choose impacts how much home you can buy and whether you have to pay Private Mortgage Insurance (PMI), which is normally required when the down payment is less than 20%. A mortgage specialist can help you understand your options and select an approach that fits your lifestyle and budget.

Step Two: Determine what you can afford.

As a general rule, your mortgage should not exceed 28% of your gross monthly income or 36% of your total monthly debt. But there are many factors that affect these percentages, and your best approach is to work with a mortgage specialist to determine how much you can afford.

Step Three: Get pre-qualified.

Mortgage lenders can pre-qualify you for a home loan before you start looking at homes. Our lenders will help you determine what type of home loans best suit your situation and will describe the features and benefits associated with each mortgage option. The process is quick and easy with an answer in minutes. Once you are pre-qualified for a mortgage:

  • Your spending limit is clearly defined
  • You’re a more attractive buyer to sellers
  • You’ll have increased bargaining power

Step Four: Define your dream home.

Do you prefer a two-story or a ranch? Can you make do without a garage? And if you’re shopping as a couple, are you really in agreement? It’s rare to find a house that has everything you want, so a smart approach is to make a list of “must-haves” and “like-to-haves.”

Step Five: Define your dream neighborhood.

Follow the same basic process as Step Four. How important is being near a good school? What about commute time? Do you mind a bustling neighborhood or do you prefer privacy? Again, it’s difficult to find everything you desire, so it’s crucial to prioritize.

Step Six: Hire a real estate professional.

Now that you’ve been pre-qualified and have defined your ideal home and neighborhood, you’re ready to hire a real estate professional. If possible, have your agent sign a buyer’s agent contract. Without such a contract, the agent technically represents the seller.

How do you find a good real estate agent? Ask around. Also consider the reputation and resources of each real estate company in your market. How aggressively do they advertise listings? How many clients does each agent typically represent at one time?

Step Seven: Know what you’re looking for.

When you’re touring prospective homes, don’t get sidetracked by paint color, wallpaper patterns, decorations and furniture. Instead, focus on things that cannot be easily or inexpensively changed, like:

  • The floorplan – make sure it’s what you want
  • The roofline and condition of the roof
  • Heating, AC and electrical systems
  • Closets, cabinets and attic space
  • The ceiling – look for dips, cracks and water stains
  • The yard - does it slope away from the house?

Step Eight: Hire a home inspector.

No matter how much you love a house, don’t make an offer without first paying for a professional inspection. A licensed home inspector is trained to look for the things you might miss – like faulty wiring or building code violations. An inspection might cost you several hundred dollars, but you could be avoiding a much more costly mistake.

Step Nine: Make an offer.

A good agent can help you understand conditions in your market (are homes selling fast or slowly) and help you determine an appropriate dollar figure for your initial offer. In general, the seller expects to receive an offer less than the asking price. Such negotiations are a healthy part of the buying process.

Step Ten: Close the deal!

Once your offer is accepted, it’s time to schedule a closing date. Here are a few things to consider:

  • Set a date before your pre-qualification terms expire
  • Give yourself time – don’t try to squeeze closing into a lunch break
  • Expect to pay at least some closing costs and fees along with any applicable down payment
  • Avoid moving on the same day - you’ll wear yourself out
  • Your closing costs are due on the closing date and depending on your state's requirements, you'll need to use a certified check or wire transfer (your mortgage specialist will help you determine the dollar figure and method of payment)

Calculators

Use our online mortgage calculators.

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How much of a payment can you afford? Use our simple online mortgage calculators to find out.