What Every First Time Homebuyer Should Know

Are you buying a home for the first time? Purchasing a home can be complicated and intimidating, but there are some steps you can follow to help prepare you for homeownership. There are many things to consider and prepare in advance before finding the perfect home for you.

Get your financials in order

A mortgage is likely to be the largest financial obligation you undertake, and you should make sure you have a good credit report, a high credit score, and an appropriate down payment. Order copies of your free annual credit reports and review them carefully to ensure that all of the data is accurate. You should also make sure that you have saved an appropriate amount for not only a down payment, but also for closing costs, legal fees, and home inspection costs. During this process, you should also determine how much money you can truly afford for a mortgage payment, keeping in mind that there are some hidden costs to homeownership. Once you decide what you can afford as a down payment and monthly payment, you’ll know how much house you can afford.

Find highly-qualified and well recommended housing professionals

Next, find a highly recommended real estate lawyer, a real estate agent, a home inspector, and a mortgage company, prior to making an offer on your home. The best recommendations are likely to come from co-workers, neighbors, and friends. Usually, the time frame from making an offer to closing is very fast, and having the best team on your side will likely make things move much more smoothly. Once you have a few recommendations for mortgage brokers, call them to see what rates they can offer. Make sure that you ask if they have a first time buyers program.

Learn all about the home buying process

Learning more about the home buying process will also help. Each state has different processes and rules, so do some research online, or talk to your lawyer or Realtor to find out more about the process. There are some standard steps that occur during the home buying process – such as the home inspection, purchase and sale agreement, and closing. Understanding how the process works will make you feel much more comfortable.

Also learn about the type of things that you’ll need to purchase prior to your closing. Most home lenders require you to repay a full year of homeowner's insurance, and depending upon where you live, you may also need to purchase hurricane, tornado, or flood insurance. Closing costs can also add to the total costs, and inquiring about them in advance will help you prepare for them.

Once you have prepared these financial steps, you’ll be ready to visit open houses and look at for sale homes, knowing that you are ready to buy when you find just the right place. 

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.