Our Agents’ Top 10 Tips for Buying Your First Home

When it comes to life’s milestones, buying your first home is right up there with getting married, having a child, or starting a new career. It’s an exciting time that often comes with a large dose of stress and anxiety. As a first-time buyer, it’s easy to start second-guessing yourself, wondering if you’re making the right decisions. 

It’s not a decision you’ll want to approach without some solid, common-sense advice. We’ve compiled a list of our 10 favorite tips to make the transition to owning your first house as smooth as possible. 

1. Know When the Time Is Right

Leaving Mom and Dad’s house or giving up apartment life to buy your first home is tempting: No one calling the shots about what you can and can’t do with the property and a chance for payments to go toward building equity. But are you really ready?

Buying a house is the most expensive purchase most people will make in their lives. You’ll need a steady income, good credit, and a substantial down payment—and that’s just for the purchase. After the move, all maintenance, repairs, and improvements are your responsibility too. 

First-time buyers need to be realistic about whether or not it’s the right time to buy. Depending on the housing market in the region where you live, and current mortgage rates, it could make more economic sense to rent a while longer. There are a number of online calculators that can help clarify the rent vs. buy decision.

2. Be Clear About Your Needs, Wants, and Deal Breakers

When shopping for houses, needing a certain number of bedrooms is quite different than wanting a big lot with room for a swimming pool. Buying your first home (or your second or fifth, for that matter) is often about compromise. Rarely will you find something that checks every single box. 

Don’t confuse things that would be nice to have with necessities and deal breakers. For example, someone who loves mid-century modern architecture might swoon over a 1960s bungalow, while ignoring the fact that it will require a long commute or that the bathrooms and kitchen need extensive—and expensive—upgrades.

3. Decide on Your Line in the Sand

Once you’ve found a house that meets most of your requirements, it’s important to know when to walk away. It may not match every single must-have we discussed in #2 above. Or the house and location might be perfect but the price stretches your budget too far. Buyers can get caught up by a sense of urgency or fear that they’ll never find something to compare to the house they’re considering. 

Perhaps you’re fine with street parking instead of a garage or with just one bathroom. But what about paying so much for a house that you’ll worry about going into foreclosure? Being flexible is a good thing, but it’s not wise to overextend yourself financially or to ignore a home’s flaws. Ask yourself the hard questions about what you can live with and afford, and stick to your guns.

4. Be Aware of Hidden Costs

Saving up for a downpayment is just the first step in buying your first home. Once you find a house, there are home inspections, closing costs, and moving expenses to budget for. 

Then there are the costs of homeownership itself: regular upkeep, emergency repairs, remodeling, utilities, insurance, and property taxes. Be sure you’re prepared not only for the expense of buying your first home but also for the cost of living in it.

5. Have a Substantial Down Payment

The higher the down payment, the better. Buyers who can put down 20% of a home’s purchase price are able to get a better mortgage rate and can avoid the added expense of private mortgage insurance (PMI). 

Even without 20% saved up, there are programs available for first-time homebuyers that can help them get into a home. The Missouri Housing and Development Commission has a down payment assistance program called the First Place Program. Illinois HFA1 is a similar assistance program that gives an interest-free loan with deferred payments until the new buyer sells, refinances, or pays off the mortgage.

FHA, VA, and USDA loans and assistance are also available for those who qualify. Still, every little bit saved toward a down payment can make buying your first home easier.

6. Work to Lower Your Debt and Boost Your Credit Score

It’s possible to buy a home with bad credit, but it’s not ideal. Lenders look at credit scores and debt-to-income ratios to determine if a buyer will be able to pay back what they borrow. If these numbers aren’t favorable, it will result in higher interest rates and the addition of personal mortgage insurance. 

For the best chance at securing a mortgage—and one with an affordable rate:

• begin paying down debt as much as possible
• consider debt consolidation
• stick to a realistic price range and don’t offer more than the house is worth
• don’t take on any additional debt while house-hunting.

7. Have Your Financing Ready

The housing market in recent years has been extremely hot, meaning that houses are going fast. Buyers need to be ready to make an offer as soon as they find something they’re serious about, so it’s best to have a lender lined up first. 

Start the process by visiting banks or mortgage lenders with a price range in mind. They can pre qualify you for a ballpark mortgage amount by looking at some of your basic financial information. A more extensive assessment including a credit check can get you pre approved for the actual amount they’re willing to lend. 

Having a preapproval letter in hand will show buyers you have the means to go through with your offer.

8. Don’t Fall In Love With the First House You See

While the very first home on your list may be “the one,” it’s just as likely that something else out there is better suited to your needs. Buyers who are in a hurry to change their current living situation or who haven’t taken the time to consider their needs and budget could make a hasty decision they’ll regret. 

9. Consider How Long You Plan to Stay

One aspect of buying a home to consider is how long you think you’ll own the house before moving again. It isn’t just a matter of possibly outgrowing the space or wanting something different, it’s a matter of economics. 

The upfront costs of buying your first home are considerable. It will take some time to reach a point where you break even with what you would have paid had you continued to rent instead. Just how much time depends on the region. In St. Louis, the break-even point is approximately 3.6 years. This means if you plan to sell before that time, you are unlikely to recoup those costs. Other parts of the country are vastly different. For example, you’d need to stay put for 18.3 years to break even in New York City!

10. Find a Realtor You Can Trust

How can you keep track of all of these tips for buying your first home? The best way is to find a qualified real estate agent. 

Sure, sites like Zillow make house hunting accessible to everyone, but nothing beats professional experience, especially for first-time buyers. The right agent will walk buyers through the process of finding the right home without worrying that they’re forgetting an important detail or making a mistake. 

Buying Your First Home? We’re Here to Help!

Are you ready to take the plunge into homeownership? At Berkshire Hathaway HomeServices Select Properties, our agents are ready to make buying your first home an enjoyable experience. Contact us today.

Cover Image by  LightFieldStudios purchased on Envato Elements