First-Time Home Buyer’s Guide: Everything You Need to Know

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First Time Homebuyers Holding a Key

Buying property is a goal for lots of people. It’s a sad fact, however, that first-time buyers are finding it harder and harder to make their way onto the property ladder.

While it can seem like an insurmountable task, it’s not impossible, and when broken down into stages, it’s actually much more doable for many people than they might initially believe.

There are various things to consider and keep in mind when it comes to planning to buy a home or the actual process of doing so. Here we will consider the costs, requirements, and the process of buying your first property.

How to Prepare for Buying a House

When it comes to buying your first home, you really need to be preparing well in advance to make sure that your finances will allow it and that you’re entering into the process with your eyes open to all of the potential risk factors and cost implications.

Here are some important things to consider prior to buying your first home:

1. Improve Your Credit Score

This is an important one. With a bad credit score, you’re unlikely to be approved for a mortgage. All lenders will carry out a hard search on mortgage applicants, looking at your total debts, repayment history, open bank accounts as well as other financial information.

This doesn’t mean to say that if your credit score is currently below average, you will never be given a mortgage. If you’re still paying off some debts or have lapsed on a few payments in the past, this might not be ideal but don’t panic, there are plenty of ways of improving your credit score.

A number of apps or websites, like Credit Karma, are available that can tell you your current credit score and offer advice on how to improve it. It’s definitely worth downloading one of these and checking it regularly to make sure you’re staying on the right track.

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Reduce Your Debts

Again, lenders will definitely be looking into your current and recent debt history before approving your mortgage. In the months or years before you wish to buy your first property, it’s a good idea to try and reduce your debts.

This means that any affordability checks are more likely to be approved and in turn, you’re much more likely to get the mortgage.

Affordability checks essentially weigh up your income and your regular outgoings and predict whether or not the lender believes that you can feasibly meet the repayment terms of the mortgage. So it’s even more important that you look into reducing your debts if you’re buying alone or if you are the sole earner for your household.

The fewer debts or outgoings you have, the better your affordability level.

Get Saving!

This might seem like an obvious one, but many people wait until they’re seriously looking into buying before putting any money away for down payments and other fees.

Even if you’re not planning to buy in the next few years, or you’re not sure if you even want to buy property in the future, saving money regardless will mean that you’ve got a bigger down payment if you do choose to buy, and if not you’ve got a nice rainy day fund.

First-time Home Buyer Savings Accounts are dedicated to helping you save money for your first home and tend to have some of the best interest rates. It’s also worth checking with your bank to see what savings accounts they have on offer. Choosing one with good interest rates and security is really important when you’re trying to save a substantial amount.

Do Your Research

Finally, it is so important that as a first-time buyer you do sufficient research. Research everything! Research areas you might want to buy in, research the type of homes you like, research the best realtors in the area, the best mortgage lenders. Research everything!

Buying a property is likely to be the biggest expense of your life, so you need to be aware of the process and all of the elements involved. To avoid unexpected costs or delays, you want to make sure you’re working with highly skilled professionals who want to find you exactly what you’re looking for.

Be smart with your money and take the time to learn about this process before embarking upon it.

The Costs

Next on the list of things to consider: the costs. When it comes to buying your first home, the costs can soon add up and it can seem overwhelming.

A common misconception amongst first-time buyers is that once you’ve saved your down-payment and you have a decent, stable income, you’re set to go. In fact, there are lots of other costs to consider, but as long as you are prepared for them, there is no reason that they should take you by surprise or hinder your ability to buy a home.

Of course, it is possible to buy a home outright with no lender or mortgage. For those fortunate enough to be able to do so the process can be much more straightforward. However, that’s extremely rare for first-time home buyers. For the purposes of this article, however, we’re going to look at the process for those who wish to purchase their home using a mortgage.

Down Payments

One of the more substantial costs is likely to be the down payment. In most cases, down payments tend to fall somewhere between 0% and 20% of the overall house price. As a first-time home buyer, you’re not likely to get approved for a mortgage with 0% down.

Let’s say your home costs $200,000, you might be looking at a down-payment of up to $40,000. This is where we begin to understand why preparing to buy your first home well in advance is so important.

This is likely to be the maximum you are required to put down however, the average first-time buyer actually puts down somewhere around 5% to 10%. This is much more manageable for most people, and if you have a great mortgage or financial advisor, it shouldn’t be a problem to find a lender willing to offer the lower down payments.

The Mortgage

The other major factor is your mortgage costs. You’ll want to consider the overall cost, the term period, interest rates, and your monthly payments.

Ideally, you want to secure a mortgage with the lowest possible interest rates and the best fixed rate. A fixed rate means your interest rates will remain the same. Some mortgages have the term fixed for the entirety of the loan period. Other adjustable rate mortgages may come with a fixed rate for a set amount of time, such as five years, and then the rate can increase. The rates are likely to start lower with an adjustable rate, but it is likely to increase later.

Again, a highly-skilled advisor will be able to establish how much you’re able to afford based on your income and should be able to find you the most suitable mortgage to fit your specific needs.

Closing Costs

Closing costs add up quickly and often catch first-time buyers off guard. These include things like inspections, appraisals, fees, taxes, insurance, and title searches. Each of these things is common when buying a home, but they can also be pretty pricey.

Both boyers and sellers have closing costs that are part of the process. As part of your offer, you can request to seller assistance, which means the seller will cover a set amount of your closing costs. However, this makes your offer weaker and the seller may not accept it. 

It’s definitely a good idea to have a specific savings pot to cover your closing costs so that when you finally close the deal, any spare cash can be spent on furnishing your new home!

Other Costs

As well as all of the fees involved with buying the property, you also need to think about potential costs that you might need to pay with regards to the home itself.

If the home is in need of repairs or renovations, or if there are urgent faults or issues apparent with the home’s infrastructure, these might need to be dealt with sooner rather than later. If a home inspection is a part of the contract, you’ll have an opportunity to negotiate after the inspection for issues that are found. However, sellers may or may not be willing to cover these costs. Depending on the house you’re buying, you may need to put a significant amount of money into it.

The Process

Now that we’re all aware of the costs and preparations needed when buying your first home, we can move on to the exciting part… the process of actually buying your first home.

Speak to a Mortgage Lender

A highly skilled mortgage specialist will make your buying process so much easier and should be top of your list when it comes to purchasing your first home.

Meet with your lender before embarking on the process to discuss your options and allow them to carry out any preliminary searches to give you a better idea of your affordability and the mortgages that could be available to you.

A good mortgage advisor will know the industry inside and out and should be able to find you the best deals.

Get Pre-Approved

Once you have discussed your options with your mortgage lender, they will work to get your pre-approval, or an agreement in principle. This means the lender gives you the figure that they are willing to offer and the terms under which it would be given.

At this stage, you don’t want to accept any offers until you know exactly how much you’re looking to borrow, which won’t be possible until you’ve found your property. Pre-approval simply means that you’re able to begin looking for your home, knowing that when you find it you have a lender willing to offer you the mortgage you will need.

Find Your Home

Now the fun part! Get online, go to open houses, and find an excellent realtor to help you in finding your dream home.

Definitely do plenty of research and look around, even if you feel like you’ve found the one. It’s important that you get a good feel for the neighborhood and the area in general.

Again, it is possible to buy a home without using a realtor, but as a buy, there is really no reason not to use a realtor. The realtor’s commission is paid by the seller, so there is no cost to you.

Once you know for sure that you’ve found the one, and you have your mortgage pre-approved, you’re ready to make an offer.

Make Your Offer

Submit your offer to the seller and await their response. If there isn’t too much competition from other prospective buyers, or if the seller is looking for a quick sale, they might accept your offer as is. If that’s not the case, they might make a counter-offer that you can accept or refuse.

While this can be extremely disheartening, these things happen, and you’ve simply got to get back out there and continue looking. If you have a skilled realtor, they will most likely handle all negotiations with the sellers, and a skilled professional will pull out all the stops (within your means), to get you the home that you desire.

Once you have an offer approved, you’ll need to coordinate with the lender to go ahead with the agreed mortgage and proceed with the purchase.

Close the Deal

When your offer has been approved, your mortgage has been approved, and you have your down payment ready to go, you’re all set to close (after allowing several weeks for the mortgage to be ready). This process can be lengthy and is often subject to delays that are outside of your control.

The speed at which things move is also heavily dependent on whether or not the seller is part of an onward chain. If they are waiting to close on the purchase of their future home, you might need to wait a little longer for things to move ahead.

If you’re lucky, however, things will move nice and quickly and you’ll be able to exchange contracts and have the keys in your hand in no time!

Other Tips and Advice

A quick round-up of some of the key tips to follow when it comes to purchasing your first home:

Choose Great Professionals to Aid the Process

Whether it’s a realtor or a mortgage broker, you need to make sure that you’ve got top-quality, highly skilled, and knowledgeable professionals working on your side.

Not only does this mean the process runs much quicker and is significantly more straightforward for you, the buyer. But it also means you’re more likely to get the best deals and the most for your money.

Buying a property is a huge expense and you want to be sure that you’re investing yours wisely. For many, this means finding a great property in a prosperous area, securing a low-interest mortgage with the best possible terms and conditions, and being aware of all cost implications prior to the purchase of the home. All of these can be difficult to secure alone when you’re a first-time buyer but can be aided hugely by the work of experienced professionals.

Be Realistic About Your Finances

This is an investment, one which will likely stay with you for many years to come. It is of vital importance, therefore, that you are realistic and sensible when it comes to your finances and affordability.

Buying a fixer-upper that needs extensive renovations but might yield high profits in the future is an excellent investment idea as long as you have the means to carry it through. But doing so without any further savings or a plan for how to fund the work is not a good idea.

Be realistic about your current finances and your future prospects. Just getting on the property ladder is a huge achievement in itself, so don’t overstretch yourself and leave yourself potentially struggling in other areas.

Prepare Way Ahead of Time

This one really cannot be stressed enough! Prepare, prepare, prepare. Even when you feel that you’ve saved enough and your credit score is where you want it to be, keep on saving.

For most of us, investing in property is a long term goal and one which often reaps high rewards. So even if you’re unsure yet as to when or whether you wish to buy a home in the future, it is always worth putting money away in case a great opportunity presents itself. Even if you don’t end up investing your savings in a property, it’s great to have money put away for any emergencies or that round-the-world trip you’ve been dreaming of.


Buying your first home can seem daunting and overwhelming. The key really is to be prepared and well-informed when it comes to the process, the requirements, and the costs.

Following the tips in this guide and keeping a tight check on your finances is the best way of ensuring that when the time comes, you’re ready to take the plunge and make the investment in your first home.

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