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The Ultimate Checklist to Buy a House for the first-time Homeowner

buying a house
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Are you stepping into the world of homeownership for the first time? Congratulations!

 

Purchasing a home can be exciting but daunting if you do not know how to prepare.

 

I am here to guide you through the process with this ultimate checklist to buy a house as a first-time homeowner:

 

1. Location Research

 

Research neighborhoods based on proximity to schools, work, safety, amenities, and future development plans. Determine your priorities with your family to narrow your search and find what will work for you.

 

Also, this is the time to research whether moving out of state or out of your city is convenient for you. Many times, we think moving out of state is a crazy idea and not doable, but in reality, there may be more perks to it. Do your research for states and cities you don’t think are possible for you to move to, and you might be surprised at the information you find.

 

2. Financial preparedness

 

Before buying a home as a first-time homeowner, you need to get your finances in order. There is no other way out, and you need to position yourself in the best financial position possible. You do not want a time that is supposed to be exciting to cloud your excitement with worry and stress due to finances.

 

Savings: We hear about savings all the time, and when buying a home for the first time is no different.

 

You must save for a down payment, closing costs, and move-in expenses. Trust me, this list can grow quickly. Create a house emergency fund! If there is an emergency and you need to fix it as soon as possible, you want cash saved in a high-yield savings account to cover that expense. The last thing you need is to purchase a home that will place you in debt because the roof needs to be replaced.

 

Apparently, roofs are very expensive to fix, so as a rule of thumb, you can build a savings account that covers your roof.
Debt: Reduce your debt-to-income ratio before purchasing your first home.

 

Reducing your debt-to-income ratio helps you qualify for a mortgage and how much you can afford. This is when preparing to buy a home, which is very helpful because you can pay as much debt as possible to increase your purchasing power.

 

What debt should you tackle first? Credit card debt often has the highest interest rates. Student loans, auto loans, and personal loans also count.

 

3. Budget allocation

 

If you are not a budgeter and are not checking in with your money often, this is not the time to skip this part.

 

Think of it as buying a house without seeing the inside and trusting a stranger to buy it because they are so excited to sell it. Would you? Chances are, you absolutely wouldn’t because you need to see if it is in great condition and visualize yourself in it.

 

In the same way, you would not buy a home without seeing it, then you should not buy a house without understanding your finances, even if the loan lenders approve a high mortgage loan for you.

 

Create a budget that reflects your current situation without a home, see where your money is going, and plug in your financial goals. For example, if you want to concentrate on paying down debt in year one, add the extra debt payments to your budget to stay focused and meet your goal. In the second year, adjust your budget to reflect your savings goals. Setting up your budget can take longer initially, but you can automate your savings and remove one less step.

 

Create a budget that reflects your future as a first-time homeowner. Add things like home insurance, a rough estimate of the mortgage, a landscaper, HOA, higher utilities bills, etc. It is important to envision yourself with a different budget because if you notice that the budget barely leaves you with extra money, you should really think about it.

 

Are you willing to stop investing in yourself, investing in your future, decreasing travel, eliminating eating out, family expansion, and lifestyle changes.

 

Run your numbers and visualize how your finances will look like with a home.

 

4. Increase Credit

 

Increasing your credit is a must! A good credit score will help you qualify for a home loan that benefits you with a great interest rate. You are already on track if you decide to pay off debt before purchasing your first home!

 

Let’s dive in deeper.

 

  1. Start by paying off debt and decreasing your credit card usage. The lower your credit card usage, the higher your credit score will be. A rule of thumb is to use only 30% of your spending power.
  2. Focus on your payment history. Do not miss any payments, as it takes about five years for that negative point to fall off your credit. You can automate your payments and never have to worry about missing payments.
  3. Decrease your hard inquiries. The biggest mistakes you can make are buying a car or opening credit cards so close when buying a home. You want to show that you are trustworthy and spend responsibly.

 

5. Home inspection

 

It is never a good idea to ignore home inspection! Ever.

 

Hire your own inspector to do a thorough walk-through to assess the property’s condition. Many homeowners bypass this step because there is a lot of demand for the home, and fear losing it.

 

Even if you have to pay extra upfront, this step can save you money down the road.

 

6. Mortgage pre-approval

 

When you are ready, start by getting a mortgage pre-approval. This means choosing a lender to review your financial information to determine a loan amount for which you qualify. This will show up as a hard inquiry on your credit score.

 

Explore different banks and see what they offer. Often, real estate agents have recommendations that will give you a better interest rate than a different bank. It is worth exploring your options.

 

7. Negotiation skills


I always see negotiation as just asking to make negotiating less intimidating. Work with your real estate agent to help you negotiate based on market analysis and the property’s condition. You can negotiate the price, repairs, and closing dates.

 

8. Homeownership education


You can never know too much about homeownership. The more you read and listen to experts, the better prepared you will be. You can learn more from banks, real estate agents online, books, podcasts, etc.

 

Familiarize yourself with maintenance tasks, HOA regulations, homeowners’ rights and obligations. Making informed decisions helps you make better investments.

 

9. Emotional preparedness

 

Prepare yourself for the rollercoaster that comes with first-time homeownership. Stay open-minded, patient, and flexible throughout the process. A few steps take longer, communication is not always efficient with whom you are dealing with, and unfortunately, all you can do is wait.

 

Finding the right home that fits your finances and is great for your family, takes time but so worth it!

 

Becoming a first-time homeowner is exciting and requires careful financial planning and consideration. This first-time homeownership checklist will help you purchase your first home more confidently. Happy house hunting!

 

When we work together:

 

  • I help you set action steps to meet your financial goals
  • I help you feel safe and confident in managing your money and making investments

 

If this resonates with you, I invite you to work with me! It would be an honor to be part of your money journey. Book a sales call.

 

I cannot wait to be part of your journey!

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ABOUT AUTHOR
Orlenda Cortez

Welcome to my corner on the internet! I’m obsessed with using money as a tool because it led me to pay off $30K in consumer debt in a year and a half, helped me save $20K in nine months to have my dream wedding in Costa Rica and is helping me build the life I never saw my family experience. Now I want to help others do the same!

Orlenda Cortez
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