Tips for First-Time Home Buyers

Buying a new home is a big decision – probably the biggest financial decision of your life! If you’re a first-timer, the whole process can seem especially overwhelming. To help you get through this, we have listed below strategies for everything from pre-approval to closing.

Follow our tips for a stress-free and rewarding home-buying experience. Your dream home is just a few steps away!

9 first-time homebuyer tips

1. Start saving – now!

To get a mortgage on your house, you have to make a down payment. The general goal is to pay 20% of the house’s value upfront, and this is what you should aim for.

With taxes, loan origination fees, legal fees, closing costs, and maintenance, the small costs can add up to a lot in the end. It can be challenging to save for all these payments. For this reason, you should start now – bring home food to your office or take the bus in the morning. Each dollar counts!

With that being said, you don’t have to feel pressured to spend any more than you can afford! Consider your comfort level, know your finances, set a realistic budget, and then stick to it.

2. Keep your status quo

Pull out your credit history, income reports, and cash assets to see where you stand and what you can afford. Consider all your debt and savings to see what mortgages, loans, housing schemes you can qualify for.

A good credit score can get you lower interest rates in most cases. Don’t invest in anything major before getting a mortgage or this could reduce your loanable amount.

Just before the closing, sellers check everything from income and employment to credit and bank statements to make sure you are still able to afford it. So, the ideal goal is a good credit score, no debt, and adequate cash flow for monthly expenses.

3. Keep the paperwork handy

Mortgage lenders require all kinds of financial documents. So, get ahead of the game and print out multiple copies of all your bank statements for the last two months. Keep the financial paperwork ready and handy for a stress-free home buying experience.

Avoid piling up debt or opening up new credit accounts once you are near to your mortgage payment or this could significantly delay your closing. After all the hard work, you don’t want your loan to be declined at the last moment!

4. Research and compare your mortgage options

When it comes to mortgages, there is a wealth of options available out there from conventional mortgages to FHA and USDA loans, 15-year loan plans to 30-year ones, and fixed-rate mortgage to adjustable-rate ones. Don’t just go for the first mortgage you find – get the same mortgage options from various lenders and then make a list to compare.

Find out your eligibility criteria and compare the down payments, interest rates, time limit, and loan estimates of all your options. First-time homebuyers can also reach out to state programs and federally backed loans for assistance.

5. Pick a real estate agent carefully

Choosing a real estate agent is the most important step. The agent will guide you through the entire home-buying process from looking for a house to closing the deal. They will provide advice on the current market conditions, trends, and prices, etc.

Reach out to all your friends/family/colleagues who have recently bought houses and get agent referrals. For every potential agent you meet, take your time interviewing them and ask for qualifications, experience, and references.

You’ll come across various lenders and various mortgages. Layout your priorities – whether it’s money or experience - and shortlist accordingly

Also, make sure your real estate agent is trustworthy and you have good communication with them since you’ll be consulting them throughout your journey.

6. Visit open sites

Are you looking for a townhouse or a family home? Do you want a house in a quiet place by the forest or in the central location of the city? Are you open to gated communities and guarded neighborhoods? What are your deal breakers? Ask yourself these questions to decide your ideal house and know what exactly you are looking for.

Exploring the neighborhood is also just as important! Check out what amenities are provided and how it fits in with your lifestyle (think long-term!).

Here we could help you. NewHomesMate not only has one of the largest new homes databases, but we help our buyers along the entire buying journey.

7. Negotiate

Do all your research on the current local market before you close a deal with the builders. Your real estate agent will be able to help you in this domain to draft strategies. They will help you navigate through how much you should ask for, how much you should bargain, and what conditions to ask for.

Renew the builder agreement carefully. When you’re clear about what you can afford and what you will need in the house, you can be confident enough to negotiate for its worth. Constructing a home from the ground is an important life decision so think it through thoroughly and make an informed decision.

8. Prepare for closing

The hustle doesn’t end once you’ve bought your ideal house. There are a number of essential facilities and services you have to opt for to ensure a good living in the new home.

Closing costs are compulsory to finalize and confirm the mortgage. They are usually 2% - 5% of the loan payment amount. Other costs include appraisal fees, title search fees, and insurance, etc.

If you have already spent a fortune on the house, why not spend a hundred more to maintain it? Get a professional home inspection done to make sure the house is in perfect condition and in case of any damages, you know what to work on. Home insurance is also important for the repair of any belonging that may be damaged by accident. Try keeping a regular maintenance check to minimize major repair costs.

Pro tip: Buy enough insurance that it can cover the cost if you have to rebuild your house from scratch!

9. Be patient

As a first-time homebuyer, the whole process from the logistics of purchasing to closing the deals can be too much to handle. It is essential that you do your research and stay prepared – the more knowledge you have about the home-buying process beforehand, the easier your house hunting journey will be.

Take your time and be mindful of all the major and minor decisions you make. Thoroughly review your decisions with your agent every step of the way to avoid any last-minute stresses.  And never make an irrational decision out of emotion - the last thing you want is an expensive mistake that could cost you billions!

With these few handy tips and tricks, you can now carefully craft your way to the American Dream!