Buying your first home is an exciting prospect, especially if you’ve been renting for years. While you’re daydreaming about paint colors, flower gardens and a world without landlords, however, keep in mind that with all the excitement comes a lot of preparation — and paperwork. There are many steps you’ll have to take if you’re purchasing a home for the first time. Moreover, from pre-qualifying for a mortgage to closing, the process can take weeks. It requires careful planning, but the end result is a property you can finally call home sweet home.

Do Your Research

Research — literally doing your homework — is vital. You don’t want to end up buying a house that you’re unhappy with just because it was the first one that caught your eye. Before you hit the MLS listings or start driving around your dream neighborhood looking for signs reading “For Sale,” you not only need to know what you want, but also what you can afford.

Determine What You Need and What You Want.

A great way to narrow down your options is to start with a needs and wants list. List any non-negotiable factors under your “needs” column. If you have a large or growing family, this may be a specific number of bedrooms. If you’re a car enthusiast or a woodworker, the size of the garage or the absence of a shop may be a deal-breaker for you. If you or someone in your family has limited mobility, it may be crucial that your new home be a single-story structure.

On the other hand, the “wants” column should be reserved for those things you may desire but which you’re ultimately willing to live without. Maybe this is a jetted tub in your master bathroom, a yard with a pool or even an extra bedroom for that home office you’ve always dreamed of having. Documenting these needs and wants in a ranked list will help you determine what’s essential and make the process of selecting a home much easier.

What Type Of Home Suits You?

Residential properties come in many varieties, and you’ll need to determine which kind is best for you and your family. Duplexes, condos, townhomes and co-ops are all located in attached multi-family buildings, putting you in very close proximity to your neighbors. However, these properties may cost less than a single-family home. Single-family homes can provide more privacy but may come with more upkeep and maintenance duties, from keeping the lawn mowed to repairing falling fences.

Beyond type of home, you’ll also have to consider whether you prefer new construction, an existing home or maybe even a fixer-upper (if you’re handy). Each has its pros and cons, all of which should be weighed before you make a decision.

How Will You Pay?

Buying a house is a big expense but can be a worthwhile investment. The cost of the home itself is just one item for which you need to budget. You should consider the cost of hiring a home inspector, having the home appraised and paying closing costs, just to names a few examples. Before embarking on the home buying journey, it’s vital that you perform an honest evaluation of your assets and income. Otherwise, you won’t be able to make a realistic determination about what you can afford. The evaluation is needed whether you are purchasing the home outright or financing the purchase with a mortgage, which is the most common way to purchase a home. And, there’s a lot to consider before applying for a home loan.

Consider Your Savings

When buying a home, first take account of your upfront costs. Upfront costs will include your earnest money (initial financial consideration deposit), down payment, and closing costs. The closing costs include appraisal fees, origination fees, points, homeowners insurance premiums, and escrow and title fees to name a few. Closing costs may not be covered by your mortgage in most cases and will need to be paid out-of-pocket at the time of closing, though some may be covered by the seller in contract negotiations.

Your down payment will vary based on your financial situation, credit worthiness, the value and price of the home being purchased, and the loan program for which you are approved. For example, conventional loans will require a down payment anywhere from 3 percent to 20 percent of the purchase price of the home. A down payment of 20 percent or more will save you money on your monthly mortgage payments as you will not be required to pay monthly mortgage insurance fees. Closing costs vary by mortgage principal and term. The most common home loan terms are 15 and 30 years.

Which Mortgage Is Right For You?

You have several options for financing your home purchase with a home loan. A conventional mortgage conforms to government standards determined by Fannie Mae and Freddie Mac. Federal Housing Administration loans (FHA) are also government-managed and come with additional qualification requirements. Many FHA loans also have lower down payment requirements, depending upon the borrower’s financial situation. The VA Loans program is a special program to help active military and veterans of the U.S. Armed Forces purchase a home. VA loans can require no down payment at all in certain cases.

To determine which kind of loan makes the most sense for your budget, it’s best to consult with a mortgage professional.

Find Your Professionals

When purchasing your first home, it’s best to lean on those who are familiar with the industry. A real estate agent will help you find a property that meets your specifications and requirements. They’ll also help you negotiate and will assist you through the critical inspection and closing phases of your transaction. However, it’s your mortgage Loan Consultant that will be among your most important resources once it’s time to turn your offer into a purchase.

Your Mortgage Lender’s Role Begins Early in the Process

Your mortgage lender will not only help you attain the funds to purchase your first home, but can identify programs that fit your unique needs and help to ensure that the process goes seamlessly from start to finish. Some states and other entities even sponsor special home loan programs for first-time buyers that can benefit you greatly. Ask your Loan Consultant what is available in your area.

Find Your Dream Home

Before hitting the open houses or even considering making an offer on your dream home, at minimum, it is a good idea to meet with your Loan Consultant to pre-qualify you for a loan. Doing so will arm you with the knowledge of how much of a house you could afford based on the information you provide. Better yet, having a pre-approval from a qualified lender is a much stronger representation of your ability to purchase and is an essential component when submitting an offer on the house you want to buy. As there are often many buyers competing with you for the same house, having your loan process completed up front will assure you have the best chance of prevailing in your offer.

To pre-approve you for a loan, your Loan Consultant will help you complete a loan application. Additionally, you’ll need to supply documents that verify your income, employment, credit score, financial assets, and the source of funds for any necessary down payment.

Apply for a Mortgage

Your Loan Consultant will provide you with loan program details, loan comparisons, and pricing to help you decide which program best fits your situation. Some states and other entities even sponsor special home loan programs for first-time buyers that could benefit you greatly. Ask your Loan Consultant what is available in your area.

Once you find your home, make an offer and get under contract, the next stage begins – securing the mortgage loan that is specifically tied to the property you have contracted to purchase.

Your Loan Consultant’s team will prepare your loan request and submit it to underwriting (administrative review). If approved, you may be asked to supply additional documentation such as documentation of your down payment source, further information on your income, etc. Your loan approval will also require documentation from other sources to achieve a full approval and clear to close decision. Let’s cover a few of these examples.

Home Inspection

Once your dream home’s sellers have accepted your offer, even though it is not a lender requirement, you will want to conduct a home inspection. Hiring an inspector is the responsibility of the buyer. An inspector will examine your future home for any structural, systems and safety issues and will deliver a full report. The inspector’s report will help you make an educated decision on whether to move forward with purchasing the property. After the inspection, you can decide whether to negotiate with the sellers to make repairs, or adjust their asking price.


The next inspection of the home will be required by your mortgage company and most loan programs – the appraisal. An appraiser will be sent to the home to make sure the price is representative of market value of comparable properties in the area (“comps”) based on a physical inspection of the home (verify square footage, # bedrooms & baths, quality of construction and amenities, etc.) as well as take into account any upgrades that have been made to the property or will be required as a condition of a renovation loan.


Following inspection, appraisal and final approval of your mortgage, you will be clear to close escrow and your closing date will be confirmed. You will receive additional loan documentation to review and accept prior to closing and your Loan Consultant will help you answer any questions you may have concerning those documents.

At closing, you’ll review the legal documentation related to the home sale with a representative from the title company handling your real estate purchase. Your Loan Consultant and real estate agent will also be present.

Be ready to read and sign many legal documents. Don’t be shy about asking questions of your title or escrow officer. They’re present to facilitate the process. Once all documents have been signed and notarized and all closing costs have been paid, the title of the home will officially transfer to you. Congratulations, new homeowner!