What every first-time homebuyer should know

What should you know as a first-time homebuyer before jumping into the real estate market? Buying a home is a huge milestone and can bring a mix of excitement and stress. Let’s break down the process into understandable steps and give you practical advice to make your journey smoother and more successful.

Understand Your Financial Situation

Check Your Credit Score
Determine Your Budget
Save for a Down Payment
Consider Additional Costs

Before you even start looking at houses, it’s critical to understand your financial health. First, check your credit score, because it impacts the mortgage interest rates you qualify for—higher scores generally mean better rates and lower monthly payments. Next, figure out a realistic budget. Don’t just look at the sticker price of the home—use mortgage calculators to estimate monthly payments, including principal, interest, taxes, and insurance.

Saving for a down payment is usually the biggest hurdle. Depending on the loan type, you may need anywhere from 3% to 20% of the home price. Also, remember there are other expenses like closing costs, moving expenses, and ongoing maintenance that you should budget for. Having a clear financial picture will prevent surprises later.

Know Your Mortgage Options

Fixed-rate vs. Adjustable-rate Mortgages
Loan Programs (FHA, VA, USDA)
Get Pre-Approved
Interest Rates – Shop Around

Mortgages come in several types, the most common being fixed-rate and adjustable-rate mortgages (ARMs). Fixed rates stay the same over the life of the loan, providing predictability. ARMs may offer lower initial rates but can increase over time depending on the market.

For first-time buyers, government-backed loans like FHA (Federal Housing Administration), VA (Veterans Affairs), and USDA loans might be available. These often require lower down payments or have more flexible credit requirements.

Before you shop for a home, get pre-approved by a lender. This process gives you a letter that shows sellers you’re serious and lets you know exactly how much you can borrow. Don’t just stick to one lender—shop around to get the best interest rates and loan terms possible.

Choose the Right Location

Commute Times
Neighborhood Safety
Schools & Amenities
Future Development & Property Values

Location, location, location is an old real estate saying for a reason. Think beyond the house itself and consider the neighborhood. How long will your commute to work or school be? If you have or plan to have children, research the quality of nearby schools.

Amenities like parks, shopping, restaurants, and public transportation add convenience and can affect your quality of life. Also, look into future development plans for the area as that can impact property values positively or negatively. Research neighborhoods thoroughly before deciding.

Work with Professionals

Real Estate Agent
Mortgage Broker/Lender
Home Inspector
Real Estate Attorney

Buying a home is complex and having the right team can make a big difference. A qualified real estate agent will have local market knowledge, help you find properties, negotiate offers, and guide you through paperwork. New regulations also require you to sign a Buyer’s Agreement, outlining fees and commissions, before you even see a house.

Your mortgage broker or lender will help you understand and secure your loan. Once you have a home in mind, it’s wise to hire a licensed home inspector who will check the property for issues like foundation problems, electrical systems, or pests.

Your real estate attorney can review contracts and represent you legally during closing. Don’t hesitate to ask questions and lean on these experts for clarity.

Understand the Homebuying Process

Get Pre-Approved
Start House Hunting
Make an Offer & Negotiate
Home Inspection & Appraisal
Finalize Mortgage & Close

Let’s walk through the typical steps:

Get pre-approved to know your budget and show you’re a serious buyer.
House hunting involves visiting homes, attending open houses, and evaluating options. It can take time, so be patient.
When you find a great home, you make an offer. Your real estate agent will help draft the offer and negotiate terms with the seller.
Once accepted, you’ll schedule a home inspection to check for problems and an appraisal to confirm the property’s value for the lender.
Finally, you’ll finalize your mortgage paperwork and attend the closing. This is when you sign documents and officially become a homeowner.

Understanding this flow will help set expectations and keep things on track.

Be Prepared for Closing

Review Closing Disclosure
Bring IDs, Funds and other Required Documents
Understand Closing Costs

Closing can be overwhelming if you’re not prepared. You’ll receive a Closing Disclosure a few days before the closing date—review it carefully because it outlines all final costs, your loan terms, and the money you need to bring.

Make sure to bring a government-issued ID, proof of homeowner’s insurance, your down payment funds (usually via certified check or wire transfer), and any other documents requested by your lender or closing agent.

Closing costs typically range from 2% to 5% of the loan amount and cover lender fees, title insurance, taxes, and recording fees. Being aware of and ready for these expenses will help your closing day go smoothly.

Moving In and Beyond

Set up Utilities & Change Address
Plan for Maintenance & Emergencies
Budget for Property Taxes & Insurance

After closing, you’re officially a homeowner, but the work doesn’t stop here. Set up utilities like electricity, water, internet, and gas before moving in. Don’t forget to update your mailing address for banks, subscriptions, and government agencies.

Owning a home means ongoing maintenance—plan and budget for repairs, lawn care, and unexpected emergencies. Keep an emergency fund related to homeownership.

Additionally, property taxes and homeowners’ insurance are recurring expenses that should be factored into your annual budget to avoid surprises.

Tips for First-Time Homebuyers

Don’t rush—buy what you can afford and need
Avoid new debt before closing
Communicate openly with your team
Consider future resale value

A few final tips: Don’t rush into buying just because you want to be a homeowner. Make sure the property fits your needs and budget comfortably.

Avoid taking on new debt, like car loans or credit cards, right before closing because it can affect your loan approval. Keep your credit stable.

Maintain open communication with your real estate agent, lender, and other professionals to avoid misunderstandings.

Finally, think about the future—how easy will it be to resell your home when the time comes? Look for features that maintain or increase value.

Have additional questions? Call Karen Daugerdas, your family REALTOR ® and Accredited Buyer’s Representative (ABR ®) at 847.494.1102, karen.daugerdas@cbrealty.com.