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Buying a first home is one of the most exciting milestones we experience in life. While there are countless financial benefits of owning a home, nothing compares to the pride of ownership and sense of stability and security that homeowners experience. If you’re ready to buy your first home, the feeling of excitement is oftentimes accompanied with apprehension and fear of the unknown. Start out by following these 5 smart tips and you’ll be off to a strong start in your homebuying journey.

1. Make sure that homeownership is right for you. This may seem surprising coming from a lender, but it’s usually more about “who” than it is about “when.” You may check all the boxes for what it takes to get a mortgage, but homeownership comes with responsibility and requires commitment. So, ask yourself some introspective questions like: Is your financial house in order? What spare money do you have each month and are you willing to put it toward maintenance costs and upkeep of a home? Are you ready to settle down in one place? It’s not about an age you need to reach or an amount you need to have in your bank account. It’s about a person you need to become before buying a home. Although I bought my first home at a young age, others might wait until they’re older. Others may rent for life, and that’s fine. I love helping people buy their dream homes, but there’s nothing wrong with renting until you’re sure you’re ready.

2. Make sure you’re financially ready. First, you need to understand whether you can afford to buy a home in your desired area. There are various calculators and methods to determine how much you can afford. Because everyone’s situation is unique, I prefer to have a quick, easy conversation with my clients to know their situation and their goals before getting them to that price tag. Then you can start shopping around online or on your own to see if there are any homes in your price range in the area you want. There’s no sense partnering up with a realtor or getting pre-qualified for a mortgage if your budget doesn’t match the market area.

Second, you’ll want to prepare your finances for the mortgage process. To make sure you’re financially ready to buy your first home, you’ll need three things: good credit, cash to close and verifiable income.
– Good credit: check your credit reports for errors and know your credit score. A solid score that will qualify you for a good interest rate is anything above 700. Regardless of your score, avoid applying for credit until after you’ve closed on your new home. And remember that improving your credit score significantly can take at least six months, so get started if you need to!
– Cash to close: it’s easy to underestimate how much you’ll need at the closing table. A down payment is typically between 3-20% of the purchase price, which can vary depending upon the configuration of your mortgage. Also, closing costs can range anywhere from 2-5% of the purchase price. So you’re looking at closing costs alone between $2,000-5,000 on a $100,000 home.
– Verifiable income: begin to collect documents that you’ll need for the mortgage application: paystubs, W-2’s, bank statements and, if you have freelance or self-employment income, copies of tax returns from the last two years.

3. Before you start shopping, get a pre-qualification letter from a lender. It’s free and non-binding and C&N can turn your pre-qualification around in 24 hours or less. A pre-qualification is important because it presents you as a serious, qualified buyer. Once you’re pre-approved, then you can connect with a real estate agent if you wish and begin the exciting process of shopping for your new home!

4. Avoid the rate game. Once you find the home and put in an offer, you need to secure financing. The wrong way to do that is to simply shop around for the cheapest rate. The lowest rate doesn’t always equate to the best deal or the best value for your dollar. Plus, there are over 400 ways to configure a mortgage, with rate being only one of the many factors involved. The truth is, there are so many factors that go into your mortgage that are just as important as the interest rate, so when you’re shopping for the best mortgage lender, make sure that you consider the entire package.

You’ll also want to find a lender that offers a mortgage product specifically for First-Time Homebuyers. C&N’s First-Time Homebuyer Program offers a low-down payment, free homeowner’s education, no PMI (or Private Mortgage Insurance), seller’s assist up to 3%, a free organizational binder to help you manage through the process and free consultations with our on-staff tax and financial planners. There are also government programs like the First Front Door and Trehab, and other loan options like FHA and USDA loans that might be a better fit for you.

5. Buying a home can feel intimidating and be a lot to take in for the first time – or for anyone who doesn’t do it every day like I do. That’s why I believe in taking a personalized approach to helping my clients. We can talk every day or we can do everything digitally. I can meet face-to-face here in my office, I can come to you or we can meet over coffee. It’s important to me that I make the homebuying experience easy, convenient and fun, especially the first time someone goes through it. It’s such a happy, exciting experience – I love being a part of that time in my clients’ lives!