9 Handy Tips for First-Time Homebuyers

You Can Save Time, Money, and Worry with This Practical Advice

Buying your first home is exciting. It can also be a little stressful sometimes, too. Finding the right house, figuring out how to pay for it, understanding how to get a mortgage, and closing the sale can all be overwhelming. Luckily, we have handy tips that will help you make good decisions along your homebuying journey.

1. Check Your Credit Score

Before you start looking for a new home to buy, check out your credit score. It's a good idea to check for errors and work with credit agencies to get them fixed or removed from your report. From a mortgage company’s perspective, your credit score provides a snapshot of how well you manage your finances and how likely you are to repay a loan.

The higher your credit score, the better. Credit scores help determine if you qualify for a loan, as well as your interest rate. Higher credit scores can sometimes mean lower interest rates.

2. Shop Around for the Right Mortgage

Homebuyers have lots of mortgage options. One popular choice for first-time homebuyers is an FHA loan, which has lower credit score and down payment requirements, compared to some other loans. If you are an active-duty member of the military or a Veteran, a VA loan might be the right choice. Learn more about the types of mortgages you can use to buy your first home.

3. Get Pre-qualified for a Mortgage

Once you find a loan, get pre-qualified with Freedom Mortgage. Getting pre-qualified will help you understand how much money you can afford to spend on a house. It can also make your offer on a house more attractive to the seller. That's because a pre-qualification gives the seller more confidence you can afford their house and will be approved for a mortgage to buy it. It will help familiarize you with some of the things you need to do to apply for a mortgage, too. Learn more about how to get pre-qualified for a mortgage.

4. Make a Budget

When you buy a home, you will typically pay closing costs, and you will probably have some moving expenses. Once you buy the house, your monthly payment includes the monthly principal and interest payment on your mortgage, mortgage insurance (if applicable), and escrow for property taxes and homeowners insurance. You’ll also have utility bills and maintenance costs when you own a home. Don’t forget to factor in other bills, such as gas, food, clothing, and so on.

Sit down and make a budget for all your expenses before you buy. This will make you more comfortable with your estimate of how much house you can afford. Many financial professionals recommend not spending more than one-third of your budget on house expenses.

5. Make a "Need to Have, Nice to Have" List

It's fun to dream about the perfect house. After setting a homebuying budget, you may realize that you can't afford everything you’d like for your first home. Write down everything you want, then prioritize items on the list. Choose things you need to have (like enough bedrooms and bathrooms), things that are nice to have (like a finished basement), and deal breakers (like a long commute to work). This will help you find houses that are right for you. Going to open houses can help you make your list.

6. Think About the Future

While you are thinking about what you need in a house today, also think about what you might need from your house tomorrow. If you don't have children right now, but think you might want them in the future, look at the school system in your community. Also, think about the resale value of the house. You never know where life will take you (like a new job in a new town). You may think about buying a home that another buyer will want at some point in the future.

7. Consider Hiring a Real Estate Agent Who Works for You

When you are buying your first house, think about hiring a buyer's agent. A buyer's agent works for you, rather than the person selling the house. A good buyer's agent will work hard to show you houses that meet your needs and budget. They will return your calls and take the time to answer your questions and explain the homebuying process. Shop around for the right agent, just like you’ll shop for the right mortgage. You can also learn more about what real estate agents do.

8. Get a Home Inspection

If you’ve found a house, made an offer, and the offer has been accepted, it can feel like there are a hundred things to do. Make sure getting a home inspection is at the top of your list. A home inspection is different than a home appraisal. A home appraisal estimates the market value of the house (which can be different than the sale price) and is usually required by the lender.

A home inspection is requested by the buyer. A home inspector looks at the home's condition and identifies problems that need to be fixed. Sometimes, the seller fixes these problems before the sale of the house is complete. Sometimes, the price of the house can be reduced, and the buyer makes the repairs after the sale closes. Don't be afraid to ask the seller to make repairs or drop their price after you get the inspection report! Learn more about home inspections.

9. Wait Until the Sale Closes to Buy Big Stuff

Mortgage companies take another look at your credit right before the sale of the house closes, so avoid making any big purchases on credit until after you've bought the house. You might be excited to furnish your new home, for example, but wait until after the deal is done. That way, you won't complicate getting final approval for your mortgage right before you are ready to close on the house.

Freedom Mortgage is not a financial advisor. The ideas outlined above are for informational purposes only and are not investment or financial advice. Consult a financial advisor before making important personal financial decisions, and consult a tax advisor for information regarding the deductibility of interest and charges.

Last reviewed and updated March 2024 by Freedom Mortgage.