Tips for First-Time Homebuyers

Buying a home is a life-changing decision. If you’re close to making the American dream a reality, it’s wise to conduct a little research first. Put yourself in a position to succeed by following these first-time homebuyer tips. 

Homebuyer Tips – Preparing to Buy 

Ask Yourself if You’re Ready to Own a Home 

Now could be the right time to buy if you can answer “yes” to each of these questions: 

• Do you have a stable job and steady income? 
• Do you have adequate savings? 
• Is your credit score strong? 
• Do you plan to live in your new home for at least five years? 

Know the Costs 

Buying a house has several upfront and ongoing costs. Here’s what to expect: 

• Down payment: starting as low as 3% for conventional loans and 0% for USDA and VA loans 
• Closing costs: equaling roughly 2% to 6% of the home’s purchase price 
• Move-in expenses: including immediate upgrades, repairs, and furnishings 
• Mortgage principal and interest: paid to your lender each month 
• Property taxes ranging from 1% to 2% of your home’s value each year 
• Homeowner’s insurance: to cover repair costs if your property or belongings are damaged 
• Private mortgage insurance, required if you put less than 20% down  
• HOA fees: a monthly payment that applies in some neighborhoods 
• Maintenance: which often amounts to 1% of the home’s value each year 

Determine What You Can Afford 

Comparing rent to a mortgage can be difficult. Use our mortgage calculator to break down the purchase price — minus the down payment — into monthly payments based on the term length and interest rate. Remember to consider any of the above factors that also apply to your monthly or yearly homeownership costs. 

Work on Your Credit Score 

Having good credit may help you qualify for a low-interest mortgage, helping your budget go further. But even if you don’t have an “excellent” score of 720 or higher, you still have options. Most first-time homebuyer programs require credit scores in the low 600s or higher to qualify. 

Start monitoring your credit about a year before you plan to buy a house. If it needs improvement, this will give you time to catch up on credit card bills, make car payments on time, and take other steps to improve your credit. 

Homebuyer Tips – Selecting a Mortgage 

Explore Your Mortgage Options 

There’s no such thing as a one-size-fits-all mortgage. That’s why lenders like Financial Concepts Mortgage offer numerous home loan options, including: 

• Conventional loans 
• Down payment assistance loans 
• FHA home loans 
• USDA/RHS home loans 
• Section 184 Native American home loans 
• VA home loans 

Get Pre-Approval Letters from Multiple Lenders 

Being pre-approved is critical, especially if you end up competing with multiple buyers. It shows the seller you’re serious and gives you more negotiating power. Interest rates and payment terms aren’t the same everywhere, so it’s wise to get pre-approved by multiple lenders. 

Homebuyer Tips – Shopping for a Home 

Hire a Real Estate Agent 

Real estate agents are “free” for homebuyers — the seller typically pays their commission — so there’s no reason to go it alone. To help you find a qualified agent, seek referrals from friends and neighbors, consider their years of experience, and ask questions about how they’ll help you find the right house to call home. 

Stick to Your Budget 

It’s tempting to shop above your budget, but you’re liable to fall in love with a house that’s out of reach financially. Get pre-approved to find out how much a lender is willing to loan you, and then shop at or below that dollar amount. 

Visit Open Houses 

While HD photos and 3D tours can tell you a lot about a house, nothing compares to walking around inside. An in-person visit allows you to test the faucets, smell the carpet, listen for strange noises, and get a sense of the neighborhood before deciding if this house is right for you. 

Homebuyer Tips – Purchasing a Home 

Schedule a Home Inspection 

Even an open house can’t reveal hidden structural or mechanical problems. Once you’re serious about a particular home, it pays to have an inspector take a look. Some mortgage programs even require it. Understand what’s included in the inspection and what you might need to schedule separately, such as testing for radon, pests, or mold. 

Negotiate with the Seller 

It never hurts to negotiate the purchase price, ask the seller to help with closing costs, or request that certain repairs be made before you move in. Your negotiating power depends on the market, so ask your real estate agent for help strategizing. 

Protect Your Investment with Homeowner’s Insurance 

Your lender will require you to obtain homeowner’s insurance before closing the deal. Buy enough coverage to pay for rebuilding costs if your home is destroyed in a catastrophic event.