What to Know About Buying a Home For The First Time

After the chaos of the pandemic and a booming seller’s market, 2023 might be a better time to buy a house.

Buying a house is exciting, especially when doing it for the first time. However, understanding how to buy a house is crucial. Understanding the steps to buy a house before you begin is better and lowers the chances of mistakes.

Having the knowledge will help you make the right decisions during the buying process. Let’s dig into what all first-time home buyers should know.

How to Buy a House Step by Step

Why do you want to buy a house?

Buying a home is a big decision; you must be sure this is right for you now.

• What are your personal and financial goals right now and moving forward?
• Where do you want to live, and what amenities would you like in your home?
• What are your must-have amenities, and what could you do without?
• Are your finances ready to buy a home, or will you be better off renting for a few more years?

You need to have these questions answered before beginning to buy a home.

Your Credit Score

With a better credit score, you will find it easier to get a mortgage and with better terms from the lender. A mortgage lender will check your credit score and financial history to decide how much they can lend to you.

Before you begin looking for a new home, check your credit reports. You can get a credit report for free from each major credit bureau: Experian, Equifax, and TransUnion.

The AnnualCreditReport.com website allows you to check your reports from these bureaus once a year at no cost. This lets you check for errors that can be fixed and show you what changes to make to improve your credit score.

Having the minimum credit score will get you in the door, but you’ll get better terms and conditions with improvement.

Your Housing Budget

The purchase price of the home shouldn’t be your only consideration. How much can you afford to spend each month?

There are ongoing costs when you own a home, and it’s easy to overlook utility bills, HOA fees, and maintenance expenses. While you might be confident you can afford your mortgage payments, you will still need to pay these other expenses.

You need a large enough monthly budget to cover your mortgage payments and other home and life expenses.

Saving a Down Payment

While many home loan options allow low down payments, this will mean additional costs. But if you have a down payment of 20% or more of the purchase price, you can avoid expenses like private mortgage insurance and should benefit from a lower interest rate.

While a 20% down payment is a lot of money to save, making this easier with a gift from a relative or even your employer is possible.

If you get help with your down payment, a gift letter must be written for the lender.

Comparing Mortgages

If you are preapproved for a mortgage, you will better understand how much you can afford to spend. Compare what at least 3 lenders offer or go to a mortgage broker to find a lower interest rate.

Also, ask about first-time buyer programs that you might benefit from.

Hiring a Real Estate Agent

When buying a property, the right buyer’s agent will save you time and, perhaps more importantly, money.

Before you hire a real estate agent, meet with them to discuss your requirements before you choose. You will want someone experienced and knowledgeable about the area you want to buy in.

They should be able to tell you if you have a realistic budget for the home you hope to buy and offer other advice you may not be aware of. You should also find out a bit about their track record and what their current workload looks like.

Visit Potential Properties

While it is easy to look at listings online, visiting these homes in person will give you much more information about the area and what the home offers.

Your real estate agent will look for suitable homes in the multiple listing service database and set up showings. Though you might have the ideal home in mind, you may have to compromise on things you can do without.

Making an Offer

When you find a home you want to buy, your agent will help you with the offer. A pre-approval letter must be included, and proof of funds can also help in a seller’s market.

The seller might return with a counteroffer based on your offer’s price, contingencies, or other terms. If your offer is accepted, you will sign a purchase agreement and pay an earnest money deposit.

Home Inspection

The home inspection will show if this is a property you want to buy. If major issues are highlighted in the inspection report, you can negotiate with the seller over repairs, or they could credit you.

If you have an inspection contingency, you can back out of your purchase if serious problems are found.

Final Loan Approval

Before you close on the home, avoid making any changes to your finances that could undermine your approval. Don’t apply for new credit that might make your debt-to-income ratio worse before you close on the home.

You don’t want to be denied the loan after being approved.

Your lender will ask for documents from you; make sure you supply them quickly to avoid delaying approval.

Final Walk Through

A final walk-through is your final opportunity to view the home before you become the owner. It is your chance to deal with outstanding issues and ask questions before it becomes your responsibility.

Have an inspection checklist and ensure that any agreed repairs have been completed satisfactorily. The home should be in a good condition so you can move in without problems.

Closing Day

You are ready for closing with all the purchase agreement terms completed and with no problems during the walkthrough.

Your lender will give you the closing disclosure 3 days before the closing date, outlining all the loan details. This will also tell you the money that needs to be paid on closing day. You will attend the closing to review and sign documents, your real estate agent and the seller’s agent might also attend.

With all the documents signed, you will become the homeowner and be given the keys. Now you must deal with moving in and making the home your own.

Final Thoughts on Buying Your First House

The more you know about buying a house, the better off you will be. Hopefully, our first-time home buyer guide has been useful. If you have any questions about buying a home, feel free to reach out.

About the author: The above article on “What to Know About Buying a Home For The First Time?“ was written by Bill Gassett. Bill has been working in the real estate industry for the past thirty-seven years. He works for RE/MAX Executive Realty in Hopkinton Massachusetts. Bill loves providing trustworthy information to buyers, sellers, and fellow real estate agents to make the best possible decisions. His writing has been featured on RIS Media, National Association of Realtors, Inman News, Placester, Today.com, Credit Sesame, and others.

About Rochester’s Real Estate Blog: Rochester’s Real Estate Blog is owned and operated by Kyle Hiscock of the Hiscock Sold Team at RE/MAX Realty Group.

Since being launched in 2013, Kyle has published more than 150 quality, in-depth, and unique real estate related articles on the Rochester Real Estate Blog pertaining to topics varying from home selling to mortgages and everything in between!  In addition to quality real estate related content, there are also many quality articles pertaining to the Greater Rochester NY area.

The Rochester Real Estate Blog has been recognized by many reputable websites as one of the best real estate blogs to visit and follow!  In addition to being recognized as one of the best real estate blogs, Kyle has been recognized as one of the top Realtors on social media by several organizations and websites.

The Hiscock Sold Team has almost 50 years of combined experience, so if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.

We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.