Chloe is a work from home mom and writer obsessed with all things budget-friendly. She not only spends time looking for the best bargains but also learning how to manage her family’s finances! When she’s not wrangling her four girls, she’s spending time trying new coffee huts and taking too many pictures of the Pacific Northwest’s mountains. Check out her budget-friendly crafts, recipes, and more at Young Fun Mom!
Buying your first home can not only seem daunting but it can seem totally impossible. Start small and break it down into easy steps to make purchasing a home a reality. You may even be surprised at how easy the steps to purchasing your first home are!
1. Get Your Credit Under Control
Checking your credit should be one of the first steps to purchasing your first home. Make sure that you are making all your payments on-time, you don’t have anything that’s in collections, and that you’re in good standing in every way. Begin working on tackling your debt to make getting a great mortgage rate easier!
You may also want to check your debt to income ratio and make sure that you can not only afford the payments that you have now but also a potential new payment for a mortgage. When you’ve decided that you’re going to buy a home, it’s a good idea to stop taking on new debt. Instead of buying a new car, picking up another loan, or signing up for that shiny new credit card, consider waiting until after you’ve purchased your home (or, better yet, not at all)!
2. Save Your Down Payment
While you’re working on your credit, start putting money away for your down payment. Depending on the type of mortgage, there are some requirements for down payments. With some mortgages, you can use gift money from a parent or other family member. For other mortgages, you may be limited to where you can get your down payment money from. With all mortgages, saving up your own money and having proof that you’ve been stashing it away (your savings account statements) will be the best way to get approved. And as far as savings accounts? Look for one with the highest interest rate possible- this is like free money!
3. Talk With Your Banker
Even if you’re not ready to start the home buying process, one of the steps to purchasing your first home is talking to your bank about your desire to buy a home. Many people don’t realize it but their bank can provide them with a wealth of resources that will help them buy a home. When you talk to your banker, you will be able to learn what they offer as far as mortgages, what they recommend in your situation, and more. Some banks may even help you lay out a roadmap for successful homeownership in the future!
Once you’ve saved up enough for your down payment and your credit is where you need it to be, it’s time to get prequalified. Your bank will walk you through the process and you can usually have a decision within a week. Remember, though, that just because you qualify for a certain amount doesn’t mean you can realistically afford it!
4. Set Your Expectations
Yes, you obviously want the house in the newest neighborhood next door to your best friends. But, are you really ready to shell out all that money to live in that neighborhood? Set your expectations and make sure that they are realistic with your lifestyle and your income. Living in the neighborhood might seem like a good idea, but when all you can afford is your mortgage and you have no extras to spend on fun things with your friends, it won’t be worth it. Sometimes starting out with a smaller house that comes at a more affordable price is the best option when you’re buying your first home.
Of course, if you have the means to jump right into your forever home from the start, it may be a good investment!
5. Find a Realtor
Finding a realtor is one of the most exciting steps to purchasing your first home! This is where you’ll get to go over what you want, look at houses, and eventually make an offer. When you’re looking for a realtor, make sure you find someone who is reputable. Be upfront about what you want to spend and make sure that they know exactly what you’re looking for. Most people don’t get everything on their wish lists but letting your realtor know the things that are most important to you will make the process easier.
6. Inspections and Appraisals
Once you’ve found the perfect home, it’s time to get into the detail work. Make sure that you have your potential new home inspected and appraised. Your realtor will have some recommendations on the best inspectors and appraisers to use, but you may also want to find someone on your own who is reputable.
7. Close and Move
The last (and most exciting) of the 7 steps to purchasing your first home is to close on the house and move in! Keep in mind that this step doesn’t come easy or fast. It sometimes takes up to a month or more from the time that you make your offer until you close. Then, after you close, it may be a few days before you’ve moved in! To make time pass faster while you’re waiting to move into your home, do things like pack your rental, give your landlord notice, clean to get your deposit back, make plans to change your address, and plan for movers!
Need help getting your budget in order before that big purchase? Grab my Purchase Goals Worksheet to help you get into the home of your dreams!
