First-Time Home Buyer Guide: Everything You Need to Know


What Matters When You are Making Your First Home Purchase

Before embarking on your first home purchase, you need to have clear goals of what you are looking for and how to achieve them. And since you cannot afford to buy on a cash basis, you must have a clear grasp of the following to ensure that your mortgage pre-approval passes without a hitch and that you get your dream home.

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  • Financial status

If you want to qualify for a mortgage, you must do a serious audit of your finances because you don’t want surprises when you find your dream home. Ensure that you have enough savings to last you at least 6 months. With a mortgage, you will be required to pay some upfront costs such as application fees and closing costs.

So if you are 24 years old and want to buy your first home at 28 years, you will have 4 years to build your credit, savings, and even invest some. Ensure that your savings are accessible.

Related Article: How to start investing

Review how much you are spending every month to determine how much you can allocate to your mortgage. Ensure that you account for every expense, from bills, groceries, clothing, entertainment, and debts.

Make sure you have good credit because your lender will check your credit score and credit report, debt-to-income ratio before mortgage pre-approval.

Learn how to fix bad credit fast if your credit score is low.

  • The type of home that meets your needs

When buying a home, you have a few options from a condo, duplex, single-family residence, or a co-operative. So ensure that you identify which type of home you want. You can contact your realtor about the pro and cons of each of those homes before making your decision.

  • How much the lender is approving

Before going house hunting, it’s good to know how much your lender is willing to loan you. This will help you narrow down your search and start by looking at homes within your budget.  Make sure that you apply for mortgage pre-approval before placing an offer, as it shows sellers that you are serious.

It will also give you room to negotiate with the sellers, and you may find that they are willing to compromise on some things, such as offering to pay for home appraisal and inspection. Compare different lenders based on their interest rates, communication, and terms before selecting.

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