Best Tips for a First-time Home Buyer

Melissa Aguilar

Melissa Aguilar

Happy african american couple first time home buyers celebrate new house purchase on moving day, smiling husband embracing lifting excited young wife laughing standing among boxes in own flat house
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Congrats on making the decision to become a homeowner for the first time! While making such a big investment is always exciting, it can also be scary and confusing. Here’s a quick guide with tips for a first-time homebuyer.

Calculate how much home you can afford

Before what will likely be the biggest purchase of your life, it’s of course a good idea to get a good grasp on your financial situation.

While shopping around for a home, take into account all those extra costs like moving expenses, closing costs, and home insurance that can add up quickly. A lot of experts also recommend saving up money before buying a home. That way you can handle any improvement projects or unexpected costs you’ll encounter while setting up in your new place.

A bank may approve you for a bigger loan than you can reasonably afford down the line. So it’s important to figure out how much you can realistically afford in mortgage payments every month. Take into account any other debts you may have, as well as property taxes and home repairs.

Nerdwallet has a home affordability calculator that will break down your annual expenses based on factors like the type of mortgage you take out, your monthly income, and location.

Check out programs available to first-time home buyers

If you’ve never owned a home before, or fall into one of the categories of first-time home buyers as defined by the government, you may be eligible for special programs that will help cover down payments or closing costs. You may also be granted a Federal Housing Authority (FHA) loan. FHA loans don’t require as high of a down payment as other traditional mortgages.

Find a good buyer’s agent

Especially as a first-time homeowner, it can be really helpful to have someone in your corner to help you navigate all the paperwork correctly. Finding a good real estate agent can help answer any questions you may have. They also often have access to the multiple listing service (MLS), which may lead you to find houses you wouldn’t have otherwise been able to access.

Be prepared to negotiate

Most sellers will expect you to negotiate down from the original asking price. You need to show up to the negotiating table with proof that you’ll be able to afford it. If you can’t show your preapproval letter for a mortgage to a seller, they will probably not take your bid seriously.

Having an agent that is familiar with the local market will help you have a better understanding of how much wiggle room you’ll have.

Another helpful tool to have when you’re negotiating price is having an inspection done on the home. If you have proof of certain repairs that need to be done or other less desirable aspects of the house, you will have an easier time getting the sale price to go down.

As hard as it can be, don’t be afraid of letting go of a dream home. While you may have really pictured you and your family in this particular home, don’t spend beyond your budget trying to outbid other potential buyers. It will only hurt you and your finances down the road. You can always find other places that will feel just as homey.