Buying your first home is an exciting milestone — one that can come with a mix of emotions from excitement to uncertainty. With so many steps involved, it’s easy to feel overwhelmed. Where do you start? How do you find the right home? What about financing?
While the home-buying process can be complex, breaking it down into key steps will help you approach it with confidence. This guide covers key things you need to know as a first-time buyer.
Step 1: Check Your Financial Health
Before you start browsing home listings, it’s important to understand where you stand financially. A house is likely the biggest purchase you’ll ever make, so knowing what you can afford is the first step.
Here’s what to do:
- Assess your budget. Take a look at your income, expenses, savings, and any outstanding debt. Online mortgage calculators can help you estimate a comfortable monthly payment.
- Check your credit score. Your credit score plays a major role in determining your mortgage rate. A higher score means better loan terms. If your score is below 700, consider taking a few months to improve it by paying down debt and making payments on time.
- Save for a down payment. Many first-time buyers believe they need to put 20% down, but some loan programs allow for as little as 3-5%. However, the more you put down, the lower your monthly payments will be.
- Don’t forget closing costs. These can range from 2-5% of the home’s price. Be sure to budget for them along with your down payment.
Step 2: Get Pre-Approved for a Mortgage
Getting pre-approved before you start to house hunt gives you a realistic price range and shows sellers that you’re a serious buyer. A pre-approval involves:
- A credit check. Lenders will review your credit history to determine your eligibility.
- Income & employment verification. Expect to provide W-2s, tax returns, and recent pay stubs.
- Debt-to-income ratio calculation. Lenders want to see that your monthly debt obligations don’t exceed a certain percentage of your income.
Once pre-approved, you’ll typically receive a letter stating how much you can borrow. This letter is crucial when making an offer, as it gives sellers confidence that you have the financing to back up your bid. Pre-approvals usually expire after 90 days, but this varies by lender.
Step 3: Find the Right Home
With your budget and pre-approval in hand, it’s time for the fun part — house hunting! Here’s how to make the most of your search:
1. Define Your Priorities
Make a list of your must-haves and nice-to-haves. Consider factors like:
- Location. How close is it to work, schools, shopping, and entertainment?
- Size & Layout. How many bedrooms and bathrooms do you need?
- Condition. Do you want a move-in-ready home, or are you open to doing some renovations?
2. Work with a Real Estate Agent
An experienced agent can:
- Help you navigate the market and schedule showings
- Negotiate on your behalf
- Provide insights on neighborhoods and home values
3. Attend Open Houses & Showings
Don’t be afraid to take your time. Ask questions, test faucets, check for signs of damage, and visualize yourself living there.
Step 4: Make an Offer & Negotiate
Once you find a home you love, it’s time to make an offer. Your real estate agent will help you determine a competitive bid based on the home’s market value and competing offers.
What Happens After You Submit an Offer?
- Seller responds. They may accept, reject, or counter your offer.
- Negotiation. You may go back and forth on price, closing dates, or included items (like appliances).
- Earnest money deposit. To show your commitment, you’ll put down a deposit (usually 1-3% of the purchase price). This money goes toward your down payment if the sale goes through.
If your offer is accepted, congratulations! But the process isn’t over yet.
Step 5: The Home Inspection & Appraisal
1. Home Inspection
A home inspection is crucial to identify any potential issues. A professional inspector will evaluate:
- The roof, foundation, and structure
- Plumbing and electrical systems
- HVAC and appliances
If major problems are found, you may negotiate with the seller to make repairs or lower the price.
2. Home Appraisal
Your lender will require an appraisal to confirm the home’s value. If the appraised value comes in lower than the agreed purchase price, you may need to renegotiate or cover the difference.
Step 6: Close on Your New Home
The final step is closing day! Here’s what to expect:
- Final walkthrough. You’ll check that any agreed-upon repairs have been completed and the home is in good condition.
- Closing costs payment. Expect to pay for lender fees, title insurance, and other closing expenses.
- Sign the paperwork. You’ll sign multiple documents, including the mortgage agreement.
Once everything is finalized, you’ll receive the keys to your new home!
Final Thoughts
Buying your first home can feel like a lot, but taking it step by step makes it more manageable. From budgeting and pre-approval to making an offer and closing, you’re on the path to homeownership.
By doing your research, working with the right professionals, and preparing financially, you’ll be prepared to move into a home that fits both your needs and your budget.
Good luck, and happy house hunting!
How Can TwinStar Help?
Buying a home is a big step, but TwinStar Credit Union is here to make the process easier. Whether you need guidance on mortgage options or want to get pre-approved, we offer competitive home loan rates and expert support every step of the way. Learn more about TwinStar home loans.
All loans subject to credit approval. Rates, terms, and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. Mortgaged property must be located in the state of Washington or Oregon. Certain restrictions may apply. Contact a mortgage loan officer for more details. Equal housing opportunity lender. NMLS #530610