Buying a home (especially your first home) can be a very intimidating process, but it’s an incredibly rewarding one! Since buying a home will more than likely be the largest purchase of your life, you want to make sure every step you take is one in the right direction.

Here are some useful tips for first time home buyers that will help make the home buying process a little easier.

Know What You Can Afford

There’s no way to ease into how vital finances are for buying a home. This is especially important for first-time home buyers, as it’s easy to overlook potential costs. Buying a home costs more than a home’s list price or your offer. Other important costs to consider are your down payment, closing costs, and moving expenses. If a house needs any repairs or upgrades, you also need to factor that into your budget.

Typically, 20% of the home’s purchase price is considered ideal for a down payment, although many (if not most) can put down less. Depending on your lender and mortgage type, you may be able to put as little as 3% down. Keep in mind, though, that the less you put down upfront, the more your monthly payments will be.

Another factor to consider is closing costs, which will vary depending on where you live, the home you’re buying, and your loan. Closing costs include several fees, which may include but are not limited to transfer taxes, title search/title insurance, credit report, origination fee, homeowner’s insurance, and prepaid interest.

Knowing the costs of buying a home upfront will help you determine how much you can afford to spend on a home or if you need to save more before starting to house hunt. Having an in-depth conversation with your lender or financial advisor is always a good idea.

Contact Lenders Early

If you are serious about buying a home, we always recommend getting a pre-approval letter (or a pre-qualification letter) from a lender before you even begin attending open houses or viewing properties.

To be pre-qualified means a lender has determined your eligibility and produces a rough estimate for what you can afford. This information is based on your current finances and credit history. Your lender will also be able to determine if you qualify for any loan programs.

The pre-approval process is more thorough and will allow you to find out exactly how much a lender will give you. Lenders consider a few factors, including your income and debt-to-income ratio. Pre-approval will also take into consideration the money you will have for a down payment. It’s important to remember closing costs, as they may impact your available funds for a down payment.  

Find a Reliable Buyer’s Agent

Once you’ve determined that you have enough money saved to move forward and know your loan options, you should find a reliable agent. When buying a home, you want to look for a realtor who understands the buying process (look for one who specializes in first-time home buyers), knows the local market, and is part of a firm with a reputation for results. At Lewith & Freeman, we have over 90 agents experienced with buying and selling.

When looking for and interviewing potential agents, you also want to look for someone with strong interpersonal skills and who is able to meet your individual needs. When it comes to real estate, there is no one size fits all approach. Work with an agent who understands your individual needs and wants including your budget, preferred neighborhood, and anything else on your list.

Don’t be afraid to ask your realtor questions! A quality agent will be able to thoroughly guide you through the entire process, from open houses to closing. In addition to answering your real estate questions, your realtor can save you time when it comes to home searches. Your agent can send you listings from the MLS that meet your parameters and can help you determine whether a home you’re interested in is overpriced or a great deal.

Be an Active Buyer & Be Quick

We are currently still in a seller’s market with a relatively low inventory of homes. This means that more people are looking to buy a home than sell, which can lead to a very competitive market. If there is a home you like, don’t wait too long to schedule a showing, as some homes are pending in just a matter of days.

There is no set time or day of the week when homes are listed, so it’s essential to be an active buyer, especially if you’re under a time crunch for moving. If you find a home that you love, your realtor may advise you to make an offer immediately, especially if there are other buyers interested in the property. This is another reason why we recommend getting pre-approved early: if multiple offers come in for one property, but you can already prove a lender will be willing to give you a mortgage, it can put you ahead of the competition.

Be Patient

This may seem like conflicting advice, but home buying often calls for a lot of patience. While you might not find your perfect home the first time, the fifth time, or even the tenth time, it will happen. The best way to remain positive through disappointing listings, denied offers, and low inventory is to have a checklist of your needs and wants.

What are the factors that are must-haves for you to be happy in a home? What are items that would be nice to have but are not make-or-break? Don’t be afraid to look at listings that don’t have everything you want, because it might offer something better. Another way to look at is every house you look at and don’t like can further solidify what you are looking for in your first home.