Search
  • Jessica Brown

Top 10 Tips for Buying Your First Home


Noisy neighbors upstairs? Sick of living in mom and dad's basement? Or just want to take part in the American Dream? Whatever your reason for wanting your own home, taking the leap can be both exciting and daunting. Yet, according to a National Association of Realtors survey, you're not alone; the number of first-time homebuyers was about 47 percent of all home sales in 2009

[source: National Association of Realtors].

While thoughts of white picket fences and granite countertops might be dancing in your head, you don't want to be carried off by a dream and left holding a serious bill. This is probably one of the biggest purchases you'll ever make, so instead of making an impulse buy (like that pair of designer jeans you just bought), arm yourself with research and a few quality advisers. It can be the difference between years of loving the home you're in versus wondering how long until you can look for your next one.

10. Attend a First-time Home Buyer's Seminar

You can ask important questions and get great tips at first-time home buyer seminars, and they're often free, too. You had to study up to learn how to drive before you got behind the wheel. It's the same with buying a house. Making the wrong decision on your first house can come back to haunt you, so why not take a little time to learn from the pros and go straight to the head of the class with your investment knowledge?

First-time home buyer seminars are offered by a range of organizations, including city housing departments and non-profit organizations. You'll get tips on shopping for a home, financing a purchase and even maintaining your home once you've bought it. Plus, many of the seminars are free.

9. Know How Much You Can Afford

Setting your heart set on the beautiful five-bedroom, three-and-a-half-bath estate on the hill could set you up for disappointment if you don't know what you can afford.

Instead of just leaving a cushion in your bank account so your next check won't bounce, you want to sit down and look seriously at your average monthly budget. Take a hard look at what you're spending your money on -- everything from your restaurant bills to your dry cleaning bill (but not your rent). Then, figure out what you have left after you pay all of those bills. That's what you'll have left to spend on your monthly mortgage and home expenses [source: Bray, Schroeder and Stewart]. Don't forget to factor in all new home-related expenses such as insurance, possibly increased utility bills, taxes and even the occasional plumber visit [source: Bray, Schroeder and Stewart].

8. Prioritize Your Needs and Wants

Face it -- when working within a budget, sometimes you have to make some compromises. Knowing what you really need can help narrow your home options and also make decisions easier when it comes to making an offer.

Create a checklist of your needs and wants. Don't forget to include things that aren't actually a part of the house, but important, such as the neighborhood, commute, school system and even proximity to entertainment [source: The Better Business Bureau with Alice LaPlante].

7. Explore Mortgage Options

Since most people aren't going to pay for their house with cash at the closing table, you're probably going to have to take out some type of loan or mortgage. A mortgage is simply a loan that uses a piece of property, like your new home, as collateral, giving the bank the right to take the home if the person taking out the mortgage doesn't hold up his or her end of the bargain [source: The Federal Reserve Board].

Think about your long-term plan when you're exploring your mortgage options. You might be one of those people who never plans to buy another home, so maybe you're more interested in a 30-year, fixed-rate mortgage. However, another couple might look at this home as a starter property that they only want to own until their second child is born. They might want an adjustable rate mortgage.

6. Look into First-time Home Buyer Programs

Recently, there's been a lot of media attention around the tax credit that was offered to qualified first-time homebuyers [source: Internal Revenue Service]. Even if you're too late to get on the bandwagon for that incentive, being a first-time home buyer can have its perks. Some banks and governmental organizations offer first-time home buyers who meet certain criteria lower interest rate loans, low down payment options and even down payment assistance programs.

One particular program through the federal government that's popular with many first-time home buyers is the Federal Housing Administration (FHA) loan program, which usually offers smaller down payments and can be more accessible to those without perfect credit [source: U.S. Department of Housing and Urban Development].

5. Get Pre-approved for a Loan

Getting pre-approved for a loan is kind of like getting engaged. You have a commitment, but you still have to make it to the altar -- or, in this case, the closing table. Just like picking that special someone you want to spend the rest your life with, lenders like to know a little bit about you and have it backed up with facts.

Pre-approval will help you to understand how much you can expect to borrow from your lender. Knowing your spending range can help to narrow your home search to properties within your price range. It can also give sellers a little more confidence in your seriousness when making an offer [source: Brown and Tyson].

4. Find the Right Real Es