10 First-Time Homebuyer Tips

How I define a home-buying “tip”.

Homeownership is a rewarding experience, and being prepared for the buying process and life as a homeowner will only enhance it.

After scanning the countless articles offering first-time homebuyer tips that are found all over the internet, it’s surprising how few actually provide meaningful insights into becoming a homeowner. The last thing you need is another website telling you to get a home inspection before you close (you should in most cases), so this page will focus on the primary reason this website exists: long-term success and happiness as a homeowner. If you’re wondering what that means, it’s simple.

Buying a home is literally something you do over the course of three decades. Think about that. Very few people buy their house by writing a check. Most of us save for a while, make a modest down payment, and spend the next thirty years making monthly payments. Long-term success as a homeowner means covering your bases from the very beginning by planning and understanding the consequences of not being prepared.

Start by following these 3 tips for budgeting for your first house.

By now, because you have found your way to What's My Payment, you have probably spent time on your favorite listing site browsing through what seems like an endless inventory of houses.

Searching for homes online is fun. You might begin by looking up a home you drove by, perhaps on your way to work or near your kids’ school. It looked nice so you searched it up online to learn more about it. The next thing you know you have browsed twenty-five different homes that now have seven bedrooms, a pool, two kitchens, and a guesthouse. This is a good place for a tip...

Tip 1: Know your budget and STAY WITHIN IT!

Our home affordability calculator will help, but almost every first-time buyer will begin by asking themself, “Can I afford a house?”. While most new buyers will focus on a monthly payment, they must account for a down payment, closing costs, moving expenses, deposits, and/or many other possible expenses.

“Budget” and “Affordability” can be defined and mean different things to different people. The following resources will help make sense of what it means to “afford a house”.

Once you’ve determined your budget and what you can afford, exceeding these benchmarks will be tempting, especially if you begin your search at the top of your price range. Start your search with some space between home prices and your maximum spend. Ideally, you’ll find a wonderful home at a price well below your ceiling. However, if you need to expand your search to more expensive homes, you’ll have planned for it and will avoid getting in over your head.

Taking on a payment larger than you can handle is something you must absolutely avoid in order to be a happy, successful homeowner. If the only thing you take away from visiting our website is “keep your payment manageable”, we have done our job.

And if you’re thinking: “My lender will tell me what I can afford”, NO!

Tip 2: Get pre-approved, but do NOT let your lender tell you what you can “afford”.

It is more important than ever to get pre-approved for your home loan. It will save you time and allow you to move quickly when you find a home and want to make an offer. In fact, many real estate agents won’t even show you a home without a pre-approval.

When you contact a lender for pre-approval, be receptive to their requests for documents and information. The more they know upfront the less likely you are to encounter surprises along the way. One surprise that is often unavoidable is expecting to hear you qualify for the amount you’ve budgeted for and instead being told you qualify for much more.

The lender world uses terms like debt-to-income and front-end ratio to determine if you qualify for a loan. However, lenders take no account of your lifestyle and expenses outside of your monthly debt payments. That’s why it is so important to use the references mentioned earlier to determine what YOU are comfortable paying monthly. Just because a lender says you can have a monthly payment that’s twice what you’re paying in rent now, that doesn’t mean you should.

It will be tempting. You might look at a few homes in the “new” price range your lender gave you and fall in love with what you find. Be resilient in adhering to the budget you calculated for your family. While the extra square footage and amenities might equate to short-term joy, the long-term stress caused by overextending will eventually take its toll.

Stick to your guns.

No really. Stick to your guns.

The temptation to go above and beyond the price you meticulously calculated and are excited about pursuing will come from many directions. The thing about real estate is the two primary contacts a homebuyer has throughout the buying process, their loan officer and real estate agent, both work on commission. That is not to be construed as criticism or anything negative. It is simply a fact.

And the larger the purchase price and/or loan amount, the larger the commission. That doesn’t mean anything nefarious is going on. Who wouldn’t want to make more money? It just means that you are being offered more because you qualify for more. Communicate with your loan officer and real estate agent and be clear what your expectations are regarding the price of your future home. Like everything else in life, communication in the beginning eliminates unnecessary headaches down the road.

Too Long; Didn’t Read

Spend as much time as needed to establish a payment and purchase price you can comfortably afford. Get pre-approved for this amount and communicate clearly with your lender and real estate agent that you have worked hard to determine a budget and it is firm. The professionals you work with throughout the buying process will guide you and answer important questions as you proceed. The most important thing you can do as an aspiring homeowner beforehand is to think ahead, plan, and stick to it.

10 Tips for Buying Your First Home

1. Know your budget and STAY WITHIN IT!
2. Get pre-approved, but do NOT let your lender tell you what you can “afford”.
3. Keep your credit card balances below 30% of your card limits. This should boost your credit score.
4. Beef up your savings accounts with at least 3% for a down payment PLUS...
5. ...closing costs. They vary wildly by location, so talk to your agent and loan officer.
6. Choose a neighborhood that fits your lifestyle (amenities, traffic, schools, property taxes—whatever is important to you).
7. Be prepared to go in with your best and strongest offer.
8. Write a letter to the seller to submit with your offer. It’s cheesy, but it works.
9. Know your non-negotiables.
10. Be willing to walk away.