30 Tips for the First-Time Home Buyer

If you're a first-time home buyer, chances are you might be a bit nervous and have many questions. Buying a home can be a complex process when you aren't familiar with the ins and outs, but it's a tremendously gratifying process and these first-time home buyer tips can help you organize your plans so that your experience is a smooth one.

1. Check Your Credit

Obtaining financing, of course, is a major step in the home-buying process. Before you start house-hunting, it's a good idea to check your credit. A good credit score is key to securing financing. If you notice errors, be sure to dispute them to ensure your credit report is accurate and the best it can be. Three national major credit bureaus (Equifax, Experian and TransUnion) in the US that compete to capture, update and store credit histories.

2. Pause New Credit Activity

As mentioned, good credit is essential for securing a loan for your mortgage. As a first-time home buyer, banks will naturally be going over your credit report carefully. Avoid any unnecessary credit activity as you get ready to being the financing process.

What not to do:

  • Make any major purchases. (timeshare, car, trailer, furniture, refrigerator, etc.)
  • Open a new credit card.
  • Apply for new line of credit.
  • Transfer credit card balances.
  • Close any revolving credit card accounts
  • Increase your credit card debt.
  • Consolidate debt or credit cards.
  • Change bank accounts.
  • Take out a new loan.
  • Co-sign an any loans.
  • Open a new cell phone or any service accounts.

Ask your lender before doing the followings:

  • Pay charge off.
  • Pay off any collections.
  • Pay off loans or credit cards.

Don't Increase your credit card debt

3. Compare Home Loan Lenders

Too often, anxious first-time home buyers settle for the first bank to pre-approve them for a mortgage. Before you settle for a bank's terms, be sure to compare lenders. Mortgage rates vary, and you will want to get the best rate you can.

4. Obtain Your Pre-Approval Letter

Getting pre-approved for a mortgage is one of the best things you can do for yourself. The bank will let you know in this letter how much it is prepared to finance. This prevents you from shopping for (and falling in love) with a house that's beyond your budget.

5. Work with a Real Estate Buyers Agent

A real estate buyers agent who represents the buyer’s fiduciary interests in a real estate transaction. He or she can help buyers find the right property, submit and negotiate the offer on the buyer’s behalf, and refer the buyer to reliable mortgage brokers, real estate attorneys, home inspectors, movers, contractors, and more.

Having an experienced realtor at your side is like having a treasure trove of first-time home buyer tips and advice at your side. A great realtor can answer all your question regarding the process and explain everything from the first-time home buyer down payment to all the benefits for first-time home buyers.

6. How much do You Need to Buy a House?

Whether for investment purposes or personal residence, this is the question that needs to be answered before browsing a neighborhood or searching online for your ideal property. Keep in mind that just because the bank is willing to finance you for a certain amount doesn't mean that you'll want to purchase a home at that price. You may need to set aside funds to modify your new home. Be realistic about your budget.

How much do you need to buy a house? Start with creating a budget spreadsheet!

7. Don't Forget Closing Costs!

When you're a first-time home buyer, you may be surprised at all the costs and fees associated with the process—fees that have little to do with your down-payment. Talk to your agent about closing costs and what you may be expected to owe when signing your contract.

8. How much does it cost to move?

Buying a home for the first time is expensive. That said, the more detailed your budget, the more prepared you'll be when the time comes. Remember to include move-in costs in your budget. How Much House Can I Afford? Know more before you get started.

9. Ask about Benefits for First-Time Home Buyers

Once you buy a home, you'll be able to declare your interest at tax time! This and other benefits await you. Your real estate agent can explain more about benefits of owning a home and refer you to local CPA or real estate attorneys to find out more about homeowner tax benefits.

10. First-Time Home Buyer Down Payment

Before you begin house-hunting, you'll want to consider how much of a down payment you'd be willing to put down on a home. Chances are you already discussed this with the bank, but this amount could change depending on the cost of the home you purchase. Know your upper limit before you get started.

11. Investigate Home-Buyer Assistance Programs

Depending on your income, you may qualify for financial help from a home-buyer assistance program. The IHDA program in Illinois, for instance, may provide cash assistance or help you secure a government-backed loan. Your mortgage broker/lender can explain more about this program. Check out the IHDA website to learn more.

12. Ask about USDA Loans

A USDA loan is a great option for first-time home buyers. The program may help you secure a zero-down payment mortgage. A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. Speak with a approved mortgage lenders to find affordable home loan options for you.

13. The First-Time Home Buyer FHA Loan

FHA loans have helped thousands upon thousands of first-timers purchase homes. The program relaxes qualification requirements for eligible buyers. Talk to your mortgage broker/lender about this option.

14. Have a Home-Buying Strategy

When you work with an experienced real estate agent, you'll be able to develop a helpful home-buying strategy. Your strategy can include acquiring knowledge about the real estate market in Chicago or tips for how to negotiate.

15. Research Neighborhoods

If you're buying a home in Chicago, you likely know that there are many neighborhoods to consider. Let your real estate agent know what you're looking for in a neighborhood so that you can more easily narrow your search to communities that are ideal for you.

Research Neighborhoods before searching for your dream home.

16. Communicate Openly

It's important to have open communication with your real estate agent. This is your purchase, so be sure you discuss what you're looking for and what you want to spend. Your agent should be able to answer your questions about any aspect of the process—or, at least, help you find the answers quickly!

17. What Type of Home Are You Looking for?

Your real estate agent has access to databases filled with homes on the market. Be sure to explain what type of structure you're looking for. In the Chicago area, you'll be able to peruse Georgians, ranches, bungalows, vintage houses, new constructions, etc…Your agent can help you find homes in your price range that suit your idea of "home."

What type of you are you looking for? A condo, a townhouse or a single house

18. How to Buy a Home with best Resale Value

When buying a house for the first time, it makes sense to buy the type of house you need now. But don't forget to consider your future plans. If you plan to have children, for example, it may be worthwhile to include such considerations in your house-hunting plans. Naturally, you want the home you buy to be a smart financial investment too.

19. Consider Commune

When you narrow your search to a specific area, don't forget to consider your work commute. Your dream house might not feel so dreamy if you're stuck in traffic for an hour—both ways—each day. Naturally, if you plan to rely on public transportation, be sure to tell your real estate agent so you can look for houses near Metra stops, for instance. If you work in the City of  Chicago, CTA website can provide the detailed information about Chicago public transportation.

Consider commune, especially when you travel to downtown for work.

20. Line Up a Home Inspector

When you become serious about making an offer on a home, you'll want to have it professionally inspected. The bank typically requires this step too. It doesn't want to fund a home that's not worth the asking price. Your realtor can help you locate professional house inspectors in your area.

Line up for inspector

21. Look Critically

When you start searching houses, be sure to assess each one carefully. Take good notes. There are even apps to help you log information about each home you visit. For example, you should note if the windows are old (it's costly to replace them) or if the furnace is an energy-efficient one. You may love the look of the house, but if its essential systems are aged, it's going to be a serious expense for you—and possibly sooner than you'd like. Again, be sure to list the pros and cons immediately after viewing a home. You'll likely be looking at several. It's easy to forget or even confuse details if you don't take excellent notes about each dwelling.

22. Look beyond the House

It often happens that first-time home buyers fall in love with a house, but not the neighborhood. Maybe the schools aren't up to snuff or maybe there's no convenient access to public transportation. It's important to love both—the home and the community whenever possible. If you require certain amenities—like being close to shopping centers or medical facilities—be sure to tell your real estate agent so you can focus on areas that have the services and amenities you need.

23. Maintenance

As you hunt for your new home, be sure to consider things like routine maintenance. Older homes typically require a bit more attention, but newer constructions also need to be maintained to retain their value. Consider the surrounding property too. You may not want to spend your Saturday mowing half an acre or tending to a lot of yard work. As you calculate the maintenance on homes, don't forget to consider the expense. More rooms means more to furnish, more walls to paint, and, of course, more heat and air conditioning to pay for.

24. Get a Second Opinion

Searching for a house is exciting—so exciting that you might overlook details or forget to ask questions. Bring along a family member or trusted friend who has experience buying homes. They can help you by providing valuable advice—especially at second viewings when you get serious about making an offer on a house.

25. Real Estate Negotiation Tips for Buyers

When you get serious about a house to the point that you make an offer, be prepared to negotiate. Your real estate agent can help you with the process of counter offers and so forth. You may be willing to pay a certain price for the house, for example, if the seller is willing to agree to certain terms. For instance, an inspection may turn up problems. It's perfectly fine to ask the seller to make the fixes as part of the contract agreement.

26. Shop around for Home Insurance

Once you put in an offer and it's accepted, you'll have to line up home insurance. Don't settle for the first insurance company you meet with. Shop around so you get the best rates. Many first-time home buyers simply contact their auto insurer, for instance. That insurer might not offer you the best rates of coverage. On the other hand, sometimes it can save you money to stick with one insurer because of the discounts they may offer when you take out multiple policies. You don't know, of course, until you shop around and scout out the best deal. You should also learn the difference between home insurance and home warranty so you get the best protection for your new home.

27. Be Organized

Once you make an offer on a home, you're going to be inundated with paperwork. You probably already know this as the banks will have required many documents during the pre-approval process. It's important to keep all paperwork as organized as possible. Try to keep everything together so that if you need to refer to something, it's easy to find.

28. Go over Everything in Detail

First-time home buyers can feel overwhelmed with all the paperwork presented to them. Although you may feel pressured to make an offer on that house before someone else snaps it up, you'll want to examine everything carefully. Ask questions. It's better to be cautious rather than rush into a bad deal. In addition, be sure to carefully go over that inspection report. Ask the inspector questions. Although an inspection can't uncover absolutely everything about a house, you definitely need to know the condition of its major systems and its roof and foundation. If there are signs of trouble, you need to know about them before you sign on the dotted line.

29. Be Flexible

Weird things happen. That's a fact. You might have a contract on a house and are even packing up for the move when you get a call that tells you the seller is backing out of the deal. Always remember that until the closing, things can change, but your savvy realtor can help you if any challenges arise.

30. Be Resilient

There's nothing like losing a house to another bidder. It can be incredibly disappointing when you aren't able to buy the house you want. This is common, but your real estate agent is working for you to find you the right home at the right price in the right neighborhood. Be patient. You will arrive at your new home—and quite often those disappointments turn out to be positive turns in the long run.

If you're a first-time home buyer, I can help you navigate the entire process. With my experience and knowledge of the Chicago region, I can assist you during each part of the house-hunting journey. Whether you have questions about first-time home buyer programs or need help understanding any part of the paperwork involved in purchasing a new home, I'm at your disposal.

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