Skip to main content

Homeowners

First-time buyers

Must-know advice before you buy! If you're feeling overwhelmed, don't be. There is plenty of help available for first time homebuyers.

If you’re planning to take the plunge into home ownership for the first time this year – congratulations! It’s an exciting step and one that many first-time home buyers are taking as younger buyers return to the real estate market. Before you start the process of actually looking at homes, there are some things you’ll want to consider:

Get Your Finances in Order

  • Know your credit score and take steps to improve it if necessary.
  • Determine how much you can comfortably afford to spend on a house, and stick to your budget. Most lenders use a debt-to-income ratio that includes your mortgage, property taxes, and homeowner insurance, representing roughly a third of your monthly gross income. Most home loans are made in 30-year and 15-year increments.
  • Decide how much of a down payment you can afford to make. Requirements vary, but about 10 to 20 percent of the home’s price is generally needed as a down payment to qualify for the best mortgage rates (Federal Housing Authority loans require less). For a $150,000 home, a 10 to 20 percent down payment would be $15,000 to $30,000.
  • Consider getting pre-approval from your lender. This helps you understand exactly how much you have to spend, and shows sellers that you are a serious buyer.

Location is key

  • Narrow your search to particular areas and neighborhoods that appeal to you.
  • Consider housing prices, school districts, work commuting times, and proximity to activities that you enjoy.
  • Spend some time in the areas you are considering by shopping, dining, or visiting nearby attractions to see if you feel comfortable and “at home” there.

Find the right real estate professional

  • The right real estate agent can help you with your home search and can offer invaluable information and guidance along the way. If you don’t know a real estate professional, ask friends and family for referrals.
  • Meet with potential agents in person and tell them your budget and goals. Ask them what level of service you can expect to receive from them, and how often they plan to communicate with you. Find out if they like working with first-time buyers, and if they are willing to spend the extra time that you may require.
  • Make sure the agent you choose has experience in the geographic areas that interest you.

What's your type?

  • After you've determined your budget, decide what type of home you want. Do you want a single-family home with a yard, a condominium, or a mobile home? Do you want new construction or an older home?
  • Decide how much work you are willing to put into your home. Are you interested in renovating or redecorating an existing home, or do you want your home to be move-in ready?
  • What home styles do you like? If you prefer a traditional home over modern architecture, be sure to tell your real estate professional this on the front end to save time. Do you have a preference of single-story or two-story homes?
  • In addition to knowing how many bedrooms and bathrooms you’d like to have, think about other needs and preferences, such as a fenced-in yard for pets, whether you need a separate dining room, or if you’ll require a garage or outside storage.

Additional Smart Moves

  • Getting a home inspection is a wise move to help uncover any home system repairs or problems that may be evident and to help you become familiar with your property and its components.
  • Adding a home warranty can also be especially beneficial for first-time buyers who may be stretching themselves financially to afford the down payment, monthly mortgage payments, and moving costs. A home warranty is a renewable service contract that covers the repair or replacement of many valuable home system components and appliances that are usually not covered by homeowner insurance. Having a home warranty can help protect you from being hit with high costs of covered home system and appliance breakdowns soon after moving into your new home.

This helpful, easy to use First Time Homebuyer Guide from American Home Shield answers many questions about purchasing your first home, and even has a useful glossary of basic terminology in the back. You can also learn more about their home warranty protection here. Good luck, and good house hunting.

COUNTRY Financial® has partnered with American Home Shield® to offer customers Home Warranty coverage for their house or condo. This article originally appeared on the AHS Home Matters Blog. Check out the original post here. Republished with permission from AHS and available here for informational purposes only.