Today is the day. You decided to buy your
first home. It is time to hop in the car and
start looking at “for sale” signs and making
calls. You are excited and you want to make
this happen. Wait…
Buying your first house starts out exciting,
but simply jumping into the process without
a plan will not only give you anxiety and
frustration, it can lead to very costly mistakes.
In the next few minutes, we will outline 12
steps for buying your first home. As important
as the steps, is the order in which they are
executed. This step-by-step process will save
time, minimize stress, and increase your chances
of getting the best house for your money.
In this video, we will summarize each step.
In subsequent videos from the Home Buyer Channel,
we will cover each of them in more detail.
The first step is to make sure your credit
rating is in good order. A low credit score
can make financing more expensive or even
prevent you from getting a home loan. Get
a copy of your credit report, make corrections
if necessary, and do whatever you must to
get your rating as high as possible before
you do anything else.
The second step is to get an idea of how much
house you can buy. There is no sense in falling
in love with a house you cannot afford.
According to Freddie Mac, a quick initial
estimate can be determined by multiplying
your gross annual household income by 2.5.
But this calculation does not fully consider
your expenses or your existing debt. The best
way to factor these in is by calculating your
debt to income ratio. Eventually, your mortgage
lender will do this for you, but you can get
a head start by doing the calculation yourself.
The next step is finding a mortgage professional
and getting pre-approved for a loan. Many
new homebuyers want to skip this step and
go directly to looking at houses. But do not.
There are several good reasons for getting
a loan pre-approval.
First, the size of your loan pre-approval
determines which houses are in your price
Second, loan pre-approval makes you a desirable
buyer. This is especially important if you
end up competing with other buyers for a particular
There are several different places to begin
looking at mortgage loans. You can go directly
to a lender, such as bank. Or you can use
a mortgage broker, who will work as your agent
to help you find a lender who best meets your
needs. There are also mortgage marketplaces
where you can compare different lenders.
Now that you know the price of the house you
can afford, you are ready to choose a real
estate agent. This could be one of your most
important decisions. A good agent will be
a trusted guide through the rest of the process.
Finally, with your loan pre-approval and a
trusted agent, you are ready to look at homes.
Do not be surprised if this process takes
months. But be ready to move quickly if a
promising house suddenly appears on the market.
When you find the house you want, it is time
to make an offer. Though it is common to offer
slightly less than the list price, remember
that every local market and seller is different,
and that in some cases you will be competing
with other buyers.
In most cases, you should expect a counter-offer
and be ready to negotiate. Keep a cool head
and look at the big picture. This is the time
when a good agent can prove to be invaluable.
Once the deal is acceptable to both parties,
the offer is accepted and a closing date is
set. It typically takes 30 to 60 days to close.
Soon after the offer has been accepted, a
home inspection should be performed. This
cost is normally paid by you, the buyer. Get
this inspection done as soon as possible to
allow time for repairs and renegotiation.
In most cases, even the most pristine houses
will have something that comes up during inspection
that needs to be repaired. Unfortunately,
this is when things can become needlessly
contentious. Do not get hung up on the many
small items that can show up on an inspection
report. Instead, focus on the big items that
could be costly to fix.
Before closing, you will need to get homeowners
insurance. In many cases, you can get an overall
discount if you purchase your homeowners and
car insurance from the same company.
The final step is the closing. As daunting
as this may seem, your agent will guide you
through the process. They have been through
it many times before.
Now that you know the 12 steps to buying your
first home, you are ready to set out on your
journey. Subscribe to the Home Buyer Channel
so you can learn in detail the most important
aspects of each step.
If you liked video and want to continue to
learn more about various aspects of home buying,
please subscribe to the home buyer channel.
If your business involves home buying or financing,
we encourage you to embed this video into
Use the comment section to let us know what
you think of this video and what other types
of home buying topics you would like to see
in the future.