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Guide To Buying Your First Home

Guide To Buying Your First Home

First Time Home Buying Guide

One of the biggest and most difficult decisions you’ll ever make in your life is buying your first home. There are many things and processes that you are not familiar with. The smartest way to start buying a home is be well-informed. As a first-time home buyer, the first best thing you can do is get a full understanding of how the process of home buying works.

Understanding where you stand in the very beginning and knowing what steps to take after that will give you a sense of control. With understanding and careful planning, you will be able to tread through the intricate process of buying your first home.

Think it’s about time to buy your first home?

How do you know if you are ready to buy your first home? Ask yourself these questions first:

  1. Are you financially ready?
  2. Are you planning to stay for a while?
  3. Have you saved for a down payment?
  4. Can you make that monthly mortgage payment?
  5. Can you handle the additional cost of homeownership?

Did you answer ‘yes’ to all these questions? If yes, then you are ready!

Many people jump on the house hunting wagon without fully understanding the financial responsibility that comes with home ownership, and many find themselves in financial pitfall because of that. If you don’t want to be in a financial mess down the road, you must be ‘really’ financially ready. The average mortgage loan term is 15 – 30 years. Although you don’t need to stay in your home for that time period, buying a house is still a major commitment. Be ‘financially ready’ to commit to a loan.

If you answer ‘no’ to any of the above questions, you may want to hold off buying your first home for now. Instead, keep saving and keep learning. Buying your first home may not be the right time for you yet, just continue to work hard until you reach your goal.

First time home buyer guide

Work with a buyer’s agent

Buying a home can be a daunting process especially if you are buying a home for the first time that’s why it’s important to hire a buyer’s agent. It will make the home buying process less stressful for you if you have a professional working in your best interest.

Real estate transaction involves working with inspectors, appraisers, insurance assessors, mortgage brokers and underwriters, escrow officers, seller’s agent, bankers, title researchers, and a number of other individuals whose actions and decisions have to be coordinated in order to perform in harmony and get your home sale closed. Your buyer’s agent will be responsible for expertly coordinating all the professionals involved in your home purchase and acting as the advocate for you and your interests throughout the home buying process. It is easier to get through all these with a buyer’s agent by your side.

Know how much you can afford

As a first-time home buyer, it is really important for you to know how much home you can afford realistically before you go house hunting. Be sure to know your price range. It is easy to fall in love with a house and then realize in the end that you cannot afford it. It is always better to have a precise idea of how much home you can afford to ensure that you are only looking at houses that are within your price range. If you buy a home within your means, you are saving yourself from financial ruin.

How do I know how much I can afford?

Consult a lender first. Get pre-qualified and get estimates. The lender or lenders, if you can consult with several, will help you determine how much you’ll be able to finance through a loan and what your monthly payments will be. That will give you a definite idea of your price range and you can target your home search based on your qualification.

You can also use a home affordability calculator. You can use this calculator to determine how much house you can afford.

Maintain a good credit

Your credit plays a big role in determining whether you are fit for a loan and how much interest rate you’ll get, so as much as possible you have to get your credit score in good shape. The higher the credit score the better because you can get the best interest rates which can save you money down the road. A score of 760 and above is ideal for getting the best rates. Nevertheless, a minimum score of 620 can still qualify you for FHA, VA, and USDA loans.

You must also remember there are things that affect your credit score both positively and negatively. Knowing the factors that affect your credit score will help you how to maintain a good credit. Such factors that affect your credit negatively are opening a new line of credit or personal loan and not paying your bills on time. Remember, when you apply for mortgage preapproval, lenders will pull your credit report. They’ll pull it again before you close on the house so any negative changes on your credit will be risky for your final approval.

Understand your loan options

If you are financing your first home, it is important to know the best type of mortgage that will meet your needs. There are different types of mortgages and also different mortgage companies that offer different rates. In choosing the best type of loan consider the interest rate, where you live, how long you plan to live in your first home, and other variables. Also, for first-time home buyers like yourself, look for mortgage programs that give competitive interest rates for first-time home buyers.

Here are some familiar types of loans:

Conventional Loans – Conventional loans are the most common type of home loans. They are backed and serviced by private mortgage lenders like banks, credit unions, and other financial institutions. Some benefits of using this loan are you can get a low-interest rate if you have a high credit score. Plus, you can request to have the insurance requirement removed once your loan-to-value ratio reaches 80%. You can also purchase a home with as little as 3% down.

FHA Loan – With FHA loan, your down payment can be as low as 3.5% of the purchase price, FHA loans have less stringent qualifications and tend to be ideal for many first time home buyers or people with imperfect credit histories.

VA Loan – The VA guarantees purchase mortgages with 0% down payment and no monthly mortgage insurance. This is not only for first time home buyer but all buyers who are qualified. This program is only available to service members, veterans, and eligible surviving spouses that meet VA Loan eligibility requirements.

USDA – This program offers flexible plans for first-time home buyers who are in a low to moderate income range, it is also available to non-first-time home buyers who are eligible. The USDA is able to offer 100% financing on eligible homes at great rates with no money down program and minimal monthly mortgage insurance.

Get pre-approved

In this competitive market, it’s always better to have an edge. Getting a preapproval gives you a leg up because it means you know how much house you can buy. Getting pre-approved for a loan also enables you to move quickly when you find the right home because the lender or bank has determined that you are a suitable candidate for a mortgage. This lets the seller know you are a serious buyer and a pre-approval could prevent you from losing out to another potential buyer who already has financing arranged.

Also, most lenders offer preapprovals from 60-90 days. This will allow you to hold a great interest rate while you go house hunting for your first home.

Find your home

When it’s time to look at properties, you have a lot of options to choose from: a traditional single-family home, a duplex, a townhouse, a condominium, or a multifamily home. Your reason for buying a home will be your guide for making decisions about what type of home you will purchase.

Once you’ve decided on the type of home that’s right for you, you can begin to prioritize which features you want in your home based on your needs. Get your list of must-haves, deal breakers, and a wish list to help target your home search.

Armed with a pre-approval and help of your buyer’s agent, you’re ready to start house hunting. Take advantage of all the available options for finding homes on the market, including using your real estate agent, searching for listings online, and driving around the neighborhoods that interest you in search of for-sale signs. Browsing online resources like is a good place to start.

Once you have found homes that meet your real estate needs, you can arrange with your buyer agent to view them in person.  In finding the right home, don’t be surprised to find that hot properties don’t stay on the market for long, if you found a home you are interested in, you need to have all your ducks in a row so you won’t miss it.

Make an offer

Once you’ve found the right home. Now is the time to move further by writing an offer. The written purchase offer indicates the amount you are willing to give the seller for the property. Your buyer’s agent will help you decide how much money you want to offer for the house, along with any conditions you want to ask for.

The seller could accept, reject, or in many instances, present a counteroffer. In this stage, you will appreciate your agent’s expertise in negotiation. Your agent will try to glean as much as possible about the property until you’ve reached an agreement with the seller. It’s going to be an exciting, emotional, and sometimes stressful experience and you’ll be glad to have your buyer’s agent at your side working for your best interest.

Once the seller accepted your offer and both parties have signed the purchase contract and your earnest money deposit has been put into a trust account, then it is ‘in escrow’. Escrow is a process where both parties deposit funds and documents to a neutral third party until all conditions for the sale are verified and complete.

Your agent, the seller’s agent, or the transaction coordinator will open the escrow process as well as getting the title insurance. Usually, they will choose the title insurer for you. The title company’s first task is to investigate the property’s history of ownership, or chain of title, and identify encumbrances on the title.

Secure your mortgage

Once both sides have signed a purchase contract, it is time to begin the process to secure your mortgage. Unless you are paying cash, you need to apply for a loan.

This is a great read if you want to know more about what home buyers shouldn’t do during the home buying process. Be sure to carefully fill in the application as accurately as possible. It is important to disclose everything about your finances to avoid any delay in the mortgage process or cause for not getting a loan. Mortgage approvals take time – normally 45 days or even more, depending on many factors. Your loan approval will be based on the information you provided during your initial application, so you should try to keep your financial life as stable as possible during the process – any changes to that information could very easily affect your loan approval.

Get an inspector and an appraisal

Home inspections are not always required but it will be for your own good to get the home inspected for any defects or repairs. If the inspector finds problems with the property, you may be able to get the seller to pay for repairs or lower the price. You don’t want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. Make sure you complete your inspections in a timely manner and resolved any issues within the time allowed in your purchase contract.

A home appraisal is a requirement by your lender. It is your responsibility to get the home appraised. During an appraisal, your appraiser will visit the property and inspect it to determine the fair market value of the home. The value of the home will determine how much the lender is willing to lend you to buy the property. You usually pay for it as part of the mortgage costs at the time of closing.


This is the last step in buying and financing the home. At the closing table, you and all other parties in a mortgage transaction sign all closing documents, including the HUD-1, and the final mortgage documents. On the day of the closing, you will need to bring your ID and cashier’s check to pay closing costs.

Things that you’ll be dealing with and paying for on the closing day may include having the home appraised, doing a title search to make sure that no one other than the seller has a claim to the property, obtaining private mortgage insurance if your down payment is less than 20%, and completing mortgage paperwork. Other closing costs can include loan origination fees, title insurance, surveys, taxes, and credit report charges.

The representative from the title company will then record the transaction and deed.  Escrow closes when the deed is recorded in your name. You will be handed the keys to your new house and you are now the proud homeowner.

Are you buying your first home in the greater Greenville, SC area?

Are you a first-time buyer? If you are thinking of purchasing a property in the greater Greenville area, then we can help. Why not download our home buying guide which includes a variety of content, such as the buying process, types of mortgage, what deposit you will need, and insurance insights.

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