First-time homebuyer: Where do I start?

Buying your first home is big financial milestone, and while it’s exciting, it can also feel overwhelming. From the home search to the financing to closing day, many factors must align before you’re given the keys to your new home. Check out our First-Time Homebuyer's Guide, then rest on these 5 steps and follow a home buying plan that will really work.

Before you begin searching for a new home, take some time to review your finances. It may sound simple, but it’s important to do this first, suggests Jeremy Seldon, manager of TCU’s Mortgage Lending group. New buyers need to establish financial parameters around their home searches.

“People often start looking for homes casually first, and then may get emotionally excited and attached to a house without knowing if it’s a viable option,” Seldon says.

Use a budget tool to identify spending priorities. Then, work with a mortgage calculator and answer these questions:

• How will a mortgage impact my monthly cash flow?
  
• What is the maximum monthly payment I can afford? Or more importantly, what is the maximum payment I would feel comfortable with?
  
• What price range should I be searching in?
  
• What is my maximum purchase price?

When your price range is identified, it’s time to meet with a lender. It typically only takes a few minutes to go through the prequalification process and begin to explore your mortgage options and various structures of payment. Getting prequalified will help your realtor focus your home search. Discuss your options for down payments and cash needed to close. If you’re a first-time homebuyer, you may need as little as 3% of the purchase price for a down payment. The more you can put down, the more mortgage options you’ll have and the more efficient your monthly payment will become.

Partnering with the right realtor is an important step in the home buying process. Consider enrolling in our Home Rewards Program, which matches you with an experienced realtor who knows your market. This complimentary team and service will also provide you with a realtor commission rebate and many other discounted services. Whoever you decide to work with, take time to interview the realtor before moving forward. Ask questions about experience, availability, knowledge of the market and process.

Leverage the planning you did in steps 1, 2 and 3 to make this step as easy as possible. Stay focused in the markets and price ranges that you identified. Be methodical about home visits – don’t be afraid to flush toilets, open doors or peak inside cabinets. Bring along our House Hunter Checklist to make sure you're checking off your wants and needs in a house. Notice the surroundings of the house you’re looking at. Take note of busy roads, parks, schools and other nearby amenities. Consider the home’s resale value; is the home similar in style to those around it? Remember the three most important details with real estate are Location, Location, Location!!!

Don’t let the home loan process scare you. When you’re ready to say “yes” to the home that fits in your budget, tell your realtor. Work together to craft an offer and be prepared to negotiate. Next, select the loan and payment structure that fits your lifestyle. Your lender will schedule an appraisal, lock and verify your loan and prepare you for the closing process.