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  • Alexander Wissel

Homeownership Guide: What are the Steps to Buying Your First Home?

You Can Do This... We've got You

  • Learn how to save for a down payment and closing costs, including different loan programs and options.

  • Find a reliable real estate agent and understand the importance of communication and signing agency paperwork.

  • Determine your budget, assess your financial situation, and get pre-approved for a mortgage to establish your purchasing power.

Take Your First Steps to Buying Your First Home - Source:
Take Your First Steps to Buying Your First Home

Buying your first home is an exciting and significant milestone in life. It's a decision that requires careful consideration and planning.

This article aims to guide you through the first steps of the home-buying process, providing valuable insights and tips to help make your journey smoother. Whether you're a recent graduate, a young professional, or a family looking for a place to call your own, these steps will set you on the right path towards achieving your dream of homeownership.

The first steps in buying a home include saving for a down payment and closing costs, finding a reliable real estate agent, and determining your budget by assessing your financial situation and getting pre-approved for a mortgage.

Save for a Down Payment and Closing Costs

Hopefully, you have some savings that you are looking to use for your home purchase. If not you need to start saving for a down payment and closing costs. A down payment is typically a percentage of the home's purchase price used for your loan. But you’ll also have closing costs that includes fees associated with the purchase – like transfer taxes and title recording costs.

It's advisable to aim for a down payment of at least 20% of the home's price, as it can help you avoid private mortgage insurance (PMI) and secure better loan terms. However, that amount can be prohibitively expensive and isn’t required to buy. There are different loan programs that require smaller loan down payments.

Different loan programs require different down payments – as low as 10%, 5%, and even 3%. Some go even lower. Your loan officer can go over options for you. It’s might be a smart idea to set up a separate savings account to keep your home funds in. Contribute regularly and as much as possible to your home fund as you get ready to buy.

Find a Reliable Real Estate Agent

Working with an experienced and local real estate agent can make the home-buying process much smoother. It’s the reason we move this up the list. A good agent can connect you to the right professionals and help you build your team. Seek recommendations from friends and family or conduct online research to find an agent with experience in your desired area.

A good agent will assist you in finding suitable properties, negotiating offers, and guiding you through the paperwork. It isn’t crucial, but try to find an agent that works with first-time home buyers. They may be better at explaining parts of the process and walking you through the steps.

An agent isn’t ‘your agent’ unless you sign paperwork that authorizes and identifies them as your agent. If they don’t offer this information, ask them what their cancellation policy is. If you aren’t happy with your agent, or if you feel like you aren’t connecting, you can get another agent. This is a relationship business and not all relationships work perfectly – so understand early that if it’s not working out you don’t have to stick with them forever.

Also ask about communication: how often and how they can connect with you. If you have a difficult work schedule you might need to talk with your agent at unique times. Personally I’m a night owl, so I tell my clients that I accept calls until 10, and texts until midnight. But unless we have an outstanding offer, I don’t pick up my phone until 9am.

It’s important to have good communication with your agent.

Determine Your Budget

Before you start home shopping, it’s crucial to establish your budget. Assess your financial situation, including your income, savings, and any outstanding debts. Consider consulting with your financial advisor beforehand. Before you start creating your home budget, you should ask yourself how much you feel comfortable spending on a mortgage each month.

Sit down and list all of your monthly expenses and outlays. Then list all of your income. This step will give you a clear idea of your purchasing power and help narrow down your search.

Get Pre-Approved for a Mortgage

A mortgage broker or loan officer will be the most important person who can help you determine how much you can afford to spend on a home. A loan officer generally works for a single bank. Typically a mortgage broker has multiple banks or funding sources they can get a loan through. The titles are generally synonymous and we use both to mean the same thing.

Getting pre-approved for a mortgage is a crucial step in the home-buying process. It involves submitting your financial information to a lender who will assess your creditworthiness and provide a pre-approval letter stating the amount you're qualified to borrow.

This step helps you determine your budget more precisely and strengthens your position as a serious buyer when making an offer on a home.

If you are thinking of buying a home in 6 months to a year or more, now is the time to check in with a loan officer. They can check your credit, and offer suggestions on what you need to do. You might have some credit repair to do, or need to save more to buy the home you want.

I know of a lot of stories where someone has pulled their own credit and decided they were qualified for a mortgage - only to get a few weeks out from in their search to discover they didn’t know what they were doing. Get. A. Loan. Officer. – They are the ones who will be funding your loan, so get them onboard sooner than later.

Pro Tip: If you are ready to buy your home, ask your loan officer about getting fully underwritten. A pre-approval is a cursory pull of your credit and rough check on income. To get fully underwritten, they will ask you for a lot more information like pay stubs and tax statements.

The benefit is that you are fully approved for a loan – with only a few additional pieces of info like latest pay stubs needed. You just need to find the house. When your offer is reviewed by the listing agent, they will see you are fully qualified to buy that home. Listing agents like certainty and a simple pre-approval doesn’t cut it.

Research and Identify Your Ideal Location

Start researching different neighborhoods and consider factors such as your work commutes and school systems. Check out the local amenities, transportation options and if there is a community hub. Think about your lifestyle preferences and long-term goals.

I always tell clients to condor school districts when buying. You might not have children or plan on having children. But if you are going to sell your home, school systems are important to other buyers. You also don’t want to find the perfect home and belatedly realize when your first-born arrives – that you need to get a new school district.

Identifying your ideal location will help narrow down your search and focus on areas that align with your needs.

Start House Hunting

With your budget, pre-approval, and location preferences in mind, it's time to start house hunting! Attend open houses, schedule viewings, and explore various properties that meet your criteria.

Take notes, ask questions, and pay attention to details such as the condition of the property, layout, and potential for future improvements. I alway say that home shopping is a lot like antiquing: the more you do it, the more you understand what is a fair value, what is overpriced, and what is a diamond in the rough.

Understand that you need to get out and see homes in your preferred area to know what’s out there. My worst fear is a homebuyer who sees their dream home in their first showing. The fear is they haven’t seen enough homes to recognize how amazing this home is. It might be gone by the time they realize it.

Don't rush into a decision—take your time to find a home that truly fits your needs. But on the other side, be ready to move fast. A few years ago, clients would have up to 2 weeks to view, consider, and revisit a home. Today homes are selling fast enough that you don’t have the luxury of time.

Take Steps to Buying Your First Home

Remember, the journey only starts here. Moving forward, you'll need to craft an offer and negotiate to get under contract. If you’ve started your search being qualified by a good loan officer, and have a great Realtor to guide you, you should be ready to buy your dream home.

You new home search can feel overwhelming at times. We get it. Embrace the excitement and challenges of buying a new home.


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