A Checklist For Buying Your First Home

Rick Sheppard
Published on April 10, 2020

A Checklist For Buying Your First Home

Buying your first home requires research and a game plan. When you have a list of steps to take, the process will be far less confusing and far more enjoyable. You’ll be more successful with a strategy, so let’s take a look at some of the initial steps to take when buying your first home.

Buying a home – check your finances

Working on your finances won’t be the most exciting part of the process, but it just may end up being the most rewarding. Just as you wouldn’t go car shopping without knowing exactly how much you can afford to spend, neither should you step foot in even one home for sale without understanding where you stand financially.

A good place to start is with your credit score. If you haven’t checked it in a while, order your credit reports. By law, you are entitled to one free credit report (from each of the three reporting agencies) every 12 months. The only company that is authorized by the Federal Trade Commission to supply consumers with these free reports is annualcreditreport.com.

Go through the reports and dispute any errors you find. Fixing even one error may significantly impact your credit rating.  Avoid applying for new credits cards – credit inquiries bring down your score.

Then, go over your budget (if you don’t have one, create one using the template here). Tally up all of your debts and figure out how much money you have coming in every month.

Finally, determine if or where you can reduce expenses and/or earn more money to set aside for your down payment and closing costs.  The down payment amount will depend on which loan program you use and closing costs.  Closing costs vary based on the property you buy, and the type of loan you choose and typically run between 2 to 5 percent of the loan amount.

Shop for a mortgage

Meeting with a lender is the next important step in the game plan. Based on the outcome of your first meeting with a loan officer, you should request a preapproval letter.   This will help you determine how much home you can afford.

Lenders will need to know your financials such as:

  • Annual Income including bonuses
  • Gift (parents helping with downpayment)
  • Bank statements (all pages, including the blank ones)
  • Identification, including your Social Security card and driver’s license
  • Student loan balance
  • Credit card balance
  • Car loan

Buying your First Home – Make a checklist of must-haves

Now that you know how much you can spend on a home, it’s time to make a checklist, which include items such as:

  • Location – proximity to public transportation, schools, shopping or whatever is important to you.
  • Neighborhood must-haves – community pool, security gate, guard, trails, clubhouse, etc. Do you want friendly neighbors or those that keep to themselves? A neighborhood with or without kids?
  • Architectural style – if you have a particular style in mind, such as Colonial or Victorian, list that, as well as the number of bedrooms and bathrooms you need.
  • Interior features – If there is anything you absolutely must have, such as a master bath, fireplace or finished basement, make note of it.
  • Exterior – Do you need a large lot or just a small yard? Is a carport sufficient or do you require a garage? Don’t forget to list pool, spa, fencing and any other exterior features you want when buying your first home.

Finally, organize the list, placing the three most important items at the top. These are your priorities, and you should share them with your real estate agent.

Tip: To determine your priorities, think about what you find intolerable about your current living situation. For instance, if barking dogs drive you crazy, vow to find a quiet neighborhood. If you’re sick and tired of mowing the lawn when you’d rather be relaxing, seek a home with low-maintenance landscaping.

Find a real estate agent

Since you’re now ready to look at homes, you’ll need a real estate agent’s help from here on. Remember, the services of a buyer’s agent won’t cost you anything – the seller pays all real estate commissions, so there really is no reason not to have your own representation and many, many reasons you should.

While all of the steps in the above checklist are important, and should be taken in the order listed, securing the services of a professional real estate agent to help when buying your first home is critical. Having a pro represent your interests, negotiate on your behalf and walk you through all the paperwork will give you peace of mind during the home buying process.

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