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Things to Consider For the First-Time Home Buyer

Deciding to buy after you have been renting for a while can be one of the most daunting tasks of your life. There is so much to consider and paperwork that you need to have ready it can all feel so overwhelming. Having an experienced realtor will come in handy especially one that you are comfortable with. If for any reason at any moment you don’t feel comfortable, get a new realtor. Getting things together early is the key to make buying your first home easy. I would suggest that you start getting things together as early as possible. At least six months in advance if not the moment you decide to buy. There may be a little work on your part that you need to do.

Lifestyle and Market

Knowing where you are wanting to live is super important. Maybe you are wanting to have the farmhouse lifestyle and head out west somewhere. Of course living the low-country lifestyle is always popular and with the Charleston real estate market you will certainly find several homes that meet your needs. Whatever you decide is the best lifestyle for you make sure you discuss it with your realtor. They have the knowledge and tools to help you have that lifestyle.

Your Credit Score

You need to know what your credit score is. All three credit bureaus are required by law to give you a free report once a year. Make sure you get a report from each one; Equifax, Experian, and TransUnion. There are some online programs that you can use who will give you a report from each one.  Having these reports will help you see what a potential lender will be looking at. Are there loans on there that need to be paid off first? Your lender can help give you advice on things you need to clean up on your reports or even ways to help increase your score.

A Budget

Understanding your income and debt-to-income ration will help you determine how much home you can afford. I would suggest that you figure up what your mortgage would be each month and add it to your other regular monthly bills. While a lender doesn’t calculate your phone bill, electrical bill or even your cable bill I would suggest you do. The reason is that you will see your total monthly bills versus your income and know better what you can afford. Having a budget will help you see things in black and white about what you can and can’t afford.

A Down Payment and Closing Costs

You will need to save for a down payment. A good rule of thumb is to save 5-10% which is what most conventional loans require. Of course you also need the closing costs. While you may can negotiate to have them paid by the seller chances are you will be responsible for them. Having the money saved for home owners insurance and inspections is always helpful. Any money saved that you don’t need can be added to your down payment thus possibly lower your monthly payments or used in making the actual move.

Organize Your Paperwork

Having all the paperwork you need ready at a moment’s notice will help not only you but your lender as well. You won’t have to waste time searching if you have already done the search. Assemble and organize the following:

  • W-2s or Business Tax Returns if Self Employed: Government loans require two years worth of returns while conventional loans require one. I would suggest have two years at least of everything regardless.
  • Personal Tax Returns: Again I would recommend two years of returns
  • Recent Pay Stubs: If you have six months of these great.
  • Credit Card and Loan Statements: The last two or three (again six months is always better)
  • Bank Statements: The last two or three (again six months is always better)
  • Previous and Current Addresses: You need at least two years so this is where your bills will come in handy
  • Retirement Account Statements: if you have any

Shop Around

You don’t have to settle on the first lender that you come to. Shop around for interest rates. You may be surprised as to where you end up getting your low. Talk with the loan officers, get an understanding of what they can and can’t do for you. Ask questions! When you finally decide on your lender you need to know that you are confident in your choice. That you did all the research you needed. If you don’t understand something ask them. Trust me you will be glad you did.

Buying your first home is a lot of work but you will learn so much. In fact after your first one it will get much easier. Having everything prepared will make the process easier. You can get pre-approved from your lender and then use the letter they provide to help your realtor show you homes only within your price range. Take your time, look at all the homes that interest you, then enjoy the new home that buy.

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39 Comments

  1. These are great tips to remember. We are looking to buy a home in the next year or so. Super helpful information!

  2. I’m still solidly in the renting bucket of acquiring shelter, but someday i’ll consider buying a home. this is a useful article – particularly the list of documents to gather.

  3. shopping around is so important!! we made the mistake of not doing that with our first home and were only there for 2 years because it was everything we didn’t want in a home we kinda just jumped on the first thing we saw

  4. We bought a home twenty years ago, but now live in California. Its our dream to own a homw here, but the market is crazy right now. We have everything ready to go if we find a place. This is a great list of stePs to take before buying.

  5. GETTING YOUR CREDIT IN ORDER SHOULD BE FIRST, DOING SO WILL GIVE YOU MANY MORE OPTIONS AND LENDERS.gOOD SOLID ADVICE, THANK YOU!

  6. Good tips. Getting pre-approved for a mortgage is imperative. you need to find out how much you can afford and it will save time once you find a home.

  7. Really Great tips!! I actually prepared myself with most of these including my credit report years ago when we bought our first house!

  8. Good tips, however, one thing, if you have small debts like medical bills, etc that may be on your credit report, speak with a mortgage lender before paying them off within month os purchasing. Once they are paid off, it does affect your score initially and sometimes not in a way that helps intially.

  9. Those are some solid tips. Being organized- and having this knowledge beforehand- makes the entire process easier and less stressful.

  10. Id never knew how much a credit score could effect you until I wanted to purchase my first home. My advice is to always be cautious of it!

  11. This is good advice.People can be overwhelmed by all the unexpected details, paperwork, etc., when it comes to buying a home.

  12. These are GREAt tips! i agree that shopping around is important because when you spend that kind of money you don’t want to settle for something you won’t be happy with.

  13. These tips are great!! I wish we had these when making the decisions on buying a home a few years ago.

  14. We own our home now, but we are looking again and it’s been 25 years since we purchased. Thanks for the information.

  15. I have a daughter who is going through this now, wish it was me, But as a mom, i’m super happy for her and her family, I can see its taking a bit, almost a year now, but she won’t settle for anything until it captures her heart and needs. Great information here and shared.
    @tisonlyme143

  16. This is good information. It has been decades that as fairly young people we had bought a property, and didn’t know the best way to go about it. Lessons don’t need to be learned the hard way, and you don’t want to have to spend more than you have to, either!

  17. These are good suggestions. I like that you bring up adding in all the other monthly expenses to see how you feel about how much it can actually cost on a regular basis, more than what you might think!

  18. These are all important tips to follow. The one that really was a big help to me was having all of my paperwork organized.

  19. I really appreciate you taking the time to write this post. I’m going to pin it to pinterest !
    This post is super helpful, you have things listed I hadn’t even thought of .
    This should be a must for anyone getting ready to house shop.

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