Buying Your First Home? 5 Things You Should Know for a Smooth Process
Written by: Cora Gold
Buying your first home is a significant life milestone and a crucial step toward achieving personal and financial independence. However, as a woman, you may have your work cut out for you. You can replace anxiety with confidence during your homebuying journey with this step-by-step guide.
1. Solidify Your Financial Foundation
According to 2023 data, women in America earn 83.6% of what men earn for the same work, highlighting the need for greater purposefulness in saving and investing. It’s important to have a clear picture of your financial health before browsing listings. This foundation will help you determine your budget, strengthen your position as a buyer and set you up for long-term success as a homeowner.
Assess Your Credit and Savings
Your credit score is a key factor for lenders. Reliable borrowers often have high credit scores, which some lenders reward with lower interest rates on their mortgage. Get a copy of your credit report, and work on improving it by paying your bills on time and keeping your credit balances low.
Down payment and closing costs are the two major upfront costs of buying a home. Aim for a 20% down payment to avoid paying private mortgage insurance, which can add more to your expenses. Another option is to explore low-down payment options like Federal Housing Administration loans and conventional loans.
Closing costs are the fees you pay to finalize a real estate transaction, which range from 2% to 6% of the loan amount. These can include appraisal fees, title insurance and attorney fees.
Determine What You Can Realistically Afford
Follow the 28/36 rule to avoid overspending on your new home. Your total housing costs should not go over 28% of your gross monthly income, and your total debt should not exceed 36%.
A preapproval amount — which is the maximum amount a lender is tentatively willing to lend you — is a ceiling. Don’t adjust your budget solely to target it. Instead, create a detailed one to identify a monthly payment that feels comfortable and still allows for savings and other financial goals.
2. Get Support From Experts
Knowledge is power, especially when buying your first home. Research can take you far, but working with an expert will help you navigate the process more effectively. Eighty-nine percent of homebuyers rely on a real estate agent or broker for the process, and with good reason.
They can help you represent your best interests, from finding the right property to negotiating the price and navigating the paperwork. The key is to find the right agent, which is especially crucial for women buying their first home. Here are some tips for your search:
Ask for recommendations from family and friends.
Interview at least three agents and ask for references.
Ask specific questions, like “How do you support first-time buyers?”
A preapproval letter can demonstrate to sellers that you’re a serious and qualified buyer. It gives your offer more weight, as it’s a conditional commitment from a lender for a specific loan amount. It’s stronger than a pre-qualification letter’s rough estimate.
Get pre-approvals from at least two to three different lenders, such as a national bank, a local credit union and an online mortgage broker. Compare their fees, interest rates, terms and customer service.
3. Define Your Dream Home and Its Location
Once your finances are in order and you have reliable support, the fun part begins — the house hunt. Consider your lifestyle and make a list of the features your new home must have. For example, what’s the minimum number of bedrooms you need for your current lifestyle? Do you need a home office for remote work or a fenced yard for a pet?
Make another list for your “nice-to-haves,” which are the features that would be a bonus but aren’t deal-breakers. Some examples are a renovated kitchen, walk-in closets and a pool. Give your real estate agent a copy of both lists so they can narrow their search to properties that fit your specific needs.
Safety is also a crucial consideration. If the right house is in the wrong neighborhood, then it’s not the right choice. Gauge your potential neighborhood’s safety with these tips:
Check local crime statistics.
Note practical safety features during your visits, such as streetlights and sidewalks.
Visit the neighborhood at various times of the day throughout the week to get a sense of the community atmosphere.
4. Navigate the Offer and Closing Process
Once you’ve found the one, don’t be hasty about closing the deal. Make a smart offer. This covers the price, a proposed closing date, conditions that must be met for the sale to go through and other terms.
Around 14% of home buyers ask their real estate agent for help in negotiating the terms of the sale, and you can do the same. They can ensure you get a fair price. If necessary, they’ll develop a more competitive offer by pulling comparable recent sales in the area.
A home inspection might cost you extra, but it’s worth it, as it can save you from buying a house with hidden, costly problems. You’ll get a detailed report of the condition of the property, from its roof and foundation to its electrical and plumbing systems. If the inspector finds issues, you can ask the seller to make the necessary repairs or request a credit to cover the repair costs. You can walk away from the sale if the problems are too severe and you have an inspection contingency in place.
5. Prepare for Life as a Homeowner
Some lenders require proof of homeowner insurance before they fund the loan at closing. Get a plan that not only meets this requirement but also protects your biggest financial asset.
Once you have a policy, learn how to navigate the claims process so you know what to do in stressful situations, like dealing with property damage after a hurricane. An insurance provider’s adjuster typically works to protect the company’s interests, so document all the damage before making repairs.
Owning a home comes with continuous upkeep, which means the costs don’t end with the mortgage payment. Create seasonal maintenance checklists to stay on top of tasks. For example, a comprehensive spring cleaning guide can help you tackle deep cleaning and prepare your home for the warmer months. Committing to a maintenance schedule will keep your house in great condition and potentially prevent costly repairs.
Go From House Hunter to Homeowner With Confidence
Having a solid game plan is everything when buying a home. Follow this guide to cover all your bases. Once you’ve found a reliable team, make the most of their expertise as you navigate the rest of the process. With the knowledge and support, you can buy your dream house and ensure you’re off to a great start as a new homeowner.