I dove into the world of purchasing my first home this year. I want to share the process that I took so you have a clear path to buying your first home. If you’re considering buying a house, you probably heard the horror stories about how long and difficult the process is. Sure, buying a house isn’t exactly a walk in the park, but there is nothing to be afraid of. If you take some basic steps, the purchase is a breeze. The hardest part of the deal is just choosing what home you want, and making sure not to drift outside your budget. Trust me, I know those can be hard, especially with HGTV on nonstop during the search.
I separated this post into sections to make everything more manageable for you. Working in bite-sized chunks is the best way to go when buying your first home. By following through this process and making sure to do things in the right order, you will be miles ahead.
To make sure you see every step I took during my process, you can download a free checklist for buying your first home at the bottom of this post. Combine that checklist with the knowledge here, and you will be a pro-buyer in no time. Even better, you learned how to do it yourself!
Research, then research some more. Got it? Seriously, if you want to avoid surprises, learn them before you even start. If you don’t have a timeline on when you want to purchase yet, take your time to get the basics in line. Right off the bat, you should pull your credit reports and see where you stand. If you aren’t in a position to get a good loan, or don’t qualify for grants that might help you through the process, take the time and put some work into your score. Most banks happily help with this. I’d suggest seeing if any friends or family have someone they recommend working with at the bank. I started here, and it made life so much easier.
In my case, I already followed my credit for a few years to bring it up in case I ever decided to make a larger purchase. It wasn’t perfect, but it got the job done.
If your credit looks good to go, you will want to start learning about how these loans work. You will want to set a budget of how much you can afford to pay monthly for your home, and also start saving for costs associated with buying a house. Then start looking at the different loan types available and talk to your bank about any grants you may qualify for. Each loan requires different down payments, and that can help you figure out how to estimate what you need to save. Already worried about saving enough money for a down payment? Don’t. If this is your first home, you may qualify for a grant that significantly helps with this. In my case, a $7500 grant was available in my area. This is how much it can pay off to do just a little bit of research.
So what happens if it all works? You’ve looked at your credit score, figured out how much house you can responsibly afford, and found a loan type that seems to fit. Plus, you could reasonably pay the down payment and continue saving for your additional closing costs. When it all works, always double check. Don’t forget to figure in maintenance and repair expenses into your budget. If you stretched your money to 100% spending, you’re not leaving room for emergencies. Needing to replace a furnace or roof could cause a world of hurt.
If you’re still with me, it’s time to go back to the bank and get a pre-approval. There is no commitment here. This just gives you an idea of how much house you can get a loan for, and lets sellers know you are serious. Once you have a pre-approval letter, you can put down offers on homes and move fast from there.
Finding Your Home
If you haven’t been sucked into the black hole that is home renovation TV, blogs, videos, etc… Welcome. If you’re already soaking up all that content, you’ve made it to the really fun part of buying your first home! When watching HGTV style shows, you will typically see celebrity realtors taking buyers to a few properties. The buyers will look, dream, and weigh the options before picking one home to make their own. Here is how to make all the fun a little more manageable:
Right out of the gate, determine your lifestyle. Are you looking for that cozy quiet neighborhood where you can relax and have room for a family? Maybe you want the chic city bungalow just a couple blocks away from your favorite hangs. The options are endless. You’ll want to know who you are and make sure you look in areas that suit your lifestyle.
Pick your must-haves. If you need three bedrooms and an office, no exceptions, then make sure to write that down. Whatever it is, you will want to have this list ready so a realtor can take some work off your plate. For me, I wanted a decent-sized functional backyard for gardening, BBQs, homebrewing, and entertaining. We all have our own needs. If you know your must-haves, do some quick research on the neighborhoods you are looking at. How are crime rates? What do the tax rates look like? Sometimes they’re the same thing if you get into the wrong tax zone, and it always hurts to find a dream home and learn your monthly taxes cost more than the loan itself. Once you gather your must-haves and potential neighborhoods, you’re ready for a realtor.
Again, I always suggest going with a referral from someone else that went through the process, but a new realtor is great too. Let them know your must-haves, your budget, and where you hope to buy. They will email you new properties that fit while you look on your own, and whenever you see one or more you like, schedule them to go take a look. It will take a few trips unless you get lucky, so don’t be discouraged if the first few properties you view aren’t a fit. Keep looking until you find the right one, and get ready to try and buy.
Buying Your Home
I hope you had fun in the last stage. It was easily my favorite part of buying, and I still just want to go look at homes to see what they offer. If you’re like me, you started putting together color palettes and setting plans for how you will modify the house. This is all wonderful, and a good sign! But, make sure to reign it in enough to actually buy your first home. And remember, keep saving! It will be tempting to start lining up new purchases for the house. Make sure to buy your house first.
Things are pretty exciting at this stage. You are considering making an offer and it feels so close to being done. I have just a few things to recommend taking care of before putting an offer in:
- Get a home insurance quote and make sure it is affordable
- Don’t forget to check property taxes
- Look for past problems. Ask the realtor to dig up some information.
- Send the property to your lender and make sure it meets loan requirements.
Those are all free steps, and save you money. You don’t want to pay for an inspection to find out the loan wouldn’t work in the first place. Once you make it through that short list, it is time to make an offer. Endless theories exist on how much you should offer, so I’m not going to get into that here. The biggest lesson I learned was that each market and neighborhood sell at different percentages of the listed price, and your realtor will be the best person to talk to.
Negotiation and wrap-up
Next up, negotiation. If you don’t like the idea of negotiating prices, this is less daunting than it sounds. The realtors communicate to the buyer and seller so they aren’t in contact, and also provide you with advice about what to do. Assuming it is all smooth sailing, you will send in your offer and most likely be presented a counter offer. You can either agree or counter back, and continue this until both parties agree. It took three tries to get it right for me, and all happened within a few days.
Now it is just inspections and paperwork. Here is where all that saving is going to come into play. You will need to pay for a home inspection, termite inspection, etc. The lender will let you know what is needed, and what is suggested. If you find something during the inspection after the offer was accepted, you can add more conditions based on inspection findings. My house had a bad roof, so I requested that the seller replace it and they did. Sometimes a seller may counter this as well, just like in the offer phase. If the deal falls through, you should be able to get your earnest money back that you gave to secure your offer, and be on your way to try elsewhere.
Once inspections wrap up and both parties are in agreement on what will be fixed by the seller, it is pure paperwork. If you want to be ahead of the game, start pulling a few years back worth of tax returns and W2s. Those are the most commonly lost items, so locating them early isn’t a bad idea. The lender will tell you what they need, and have you come in and sign your initial paperwork. Yes, the dreaded paperwork everyone claims takes forever. It was quick and easy to get through. The lender will walk you through each step, and you can ask questions as you go. I spent hours pulling my hair out trying to learn everything about the loan on my own, and my lender had me fully caught up in under an hour. Trust your lender and use them as a resource to get knowledge.
The Home Stretch
I’ve had a few people ask me how long it took to get to this point. It took a couple months, but that was mainly because the property available around me didn’t fit my must-haves. If I found my house in the first week, I could have been here in 3-4 weeks easy.
The lender takes your paperwork, and passes it off to someone else to verify all of your information. They will contact you asking for more documents if needed, and you pass those along. Usually account statements, pay stubs, and the like. Go ahead and double check your numbers to make sure you didn’t dream outside of your budget by mistake. It is a good time to start preparing for a move here too. Within 4-5 weeks, closing should be at your doorstep. The bank will have walked you through how much you pay out of pocket during closing, and will give you instructions on setting up a wire or getting certified funds, so you can knock that out as well.
At this point, just line yourself up to get into your first home and wait for closing.
You made it! Remember all those nightmare scenarios you heard about when buying a house? Well, if they would have happened, it would have been somewhere in the earlier steps. You already did the bulk of your paperwork, so you’re all set there. Closing day should just be a final walkthrough of the home to make sure everything looks as it should, and then off to get the money in the right hands, sign off on a few more items, and grab your keys. Then, your first home is yours! Now get back to watching all those renovation shows for ideas, and of course come back here to learn how you can grow a beautiful DIY household.
As promised, I put this entire process into a checklist that you can have for free. When I researched buying my first home, I found different pieces of the whole process but never everything in one place. This checklist of over 40 items is all yours!