For First-Time Home Buyers: First Things First

So, you’ve finally made the decision to join the ranks of America’s homeowners. Congratulations! Home ownership can be very rewarding and satisfying. But it’s a long and winding road to get from that decision to actual ownership. And it can be filled with unknown twists, bends and potholes that can hinder and discourage you along the way. We're here to help you get started on that road to your new home in as safe and efficient a manner as possible.

Contrary to what you may be thinking, the first step to buying your dream home is not rushing out and finding a house that you love. In actuality, the first step to a smooth and successful first-time home purchase is to study. Gather as much information as you can about the home-buying process. Take some time to become familiar with what you will be required to do, how the process will proceed, what sellers and lenders are looking for in a prospective buyer, etc. Knowing what to expect will make you much less uncomfortable and anxious as you move along the road toward the actual purchase. Besides, having good information will always pave the way to making good decisions.

The second thing you’ll want to do is to take stock of your credit health. Know your credit score and what’s in your credit file. If you have some negative entries, as many people do, don’t panic or give up. Do what you can to clear them up. One of the very best ways to keep your home ownership costs down is to have good credit. If it takes some time for you to repair your credit profile, that’s okay. The money that you’ll save in the long run will be well worth the time and effort that you make in this area. If you can’t wait, don’t worry; there are many home-buying programs for people with less-than-perfect credit too.

Once you’re comfortable with your credit record, begin talking to lenders about pre-qualifying for a mortgage loan. Have you noticed that we haven’t even begun to look for your new home yet? There’s really no point in finding a house that you love, only to be hit with the realization that you can’t qualify for the loan that it would take to purchase it. When you pre-qualify, you’ll know exactly what your financial situation is, what your target price range should be, the amount of down-payment money you’ll need, and the monthly payments that you can afford. This can save lots of time and unnecessary effort when shopping for your new home and can also help keep you focused during negotiations. Our How Much Income do I Need in Order to Qualify Calculator can also help you to gauge your financial position.

Now that you’ve arranged financing, you’ll need to determine the size and type of home that will fulfill your needs and be affordable to you. If you’re not familiar with your local area, contact a Realtor. They can give you valuable information about local neighborhoods, schools, shopping, churches and hospitals. You may even want to hire a Realtor as your representative. This is called having a buyer’s agent. Many people, and not just first-time buyers, are under the impression that the nice real estate agent who drove them around to look at various houses represents them. Nothing could be further from the truth. That agent (who owns those real estate listings) has a fiduciary responsibility to the home seller, not the buyer. He or she is legally bound to act in the best interests of the seller, and the seller’s best interests are not always going to align with your own. Finding your own agent to contractually represent your interests is something you should consider.

There’s plenty of available information to further guide you along the path to home ownership. One good source is The First-Time Homebuyer’s Guide. Take a look at it and do your homework, because the next step in the home-buying process is where the real fun begins: making your first offer. Good luck!