Follow these seven tips to guide you smoothly through the homebuying process.

Buying your first home is a significant and exciting step, but it can also feel overwhelming. It's a major financial decision, but you can make it a smoother process with the right information and resources. This guide will take you through seven key steps to make your dream of owning a home come true. We'll help you understand your finances and credit, find the perfect home, and close the deal. We've got you covered every step of the way.

7 Tips to Owning a Home

Are you dreaming of owning your own home but not sure where to begin? Let's explore the seven steps that will guide you on your journey to homeownership.

1. How Much House Can You Afford?

The first step in buying a home is determining your budget. The 28/36 rule is a helpful guideline.

Lenders prefer that you spend no more than 28% of your gross monthly income on housing costs (mortgage principal and interest, property taxes, homeowners insurance, and any homeowners association fees). Additionally, they prefer that your total debt (including housing costs, car loans, student loans, credit card debt, and other obligations) doesn't exceed 36% of your gross monthly income.

We'll help you understand your finances and credit, find the perfect home, and close the deal. We've got you covered every step of the way.

This rule helps lenders assess your creditworthiness and ensure you can handle mortgage payments over time. Besides housing costs, consider other ongoing expenses like utilities and repairs, as well as upfront costs such as the down payment. A 20% down payment can get you lower interest rates, saving you money in the long run. If you put down less than 20%, you'll likely need to pay for private mortgage insurance (PMI), which adds to your monthly payment.

Remember, putting down 20% isn't always necessary or feasible. Other options, like FHA loans, require a lower down payment but may result in higher monthly payments due to less equity in the home.

2. Mortgage Prequalification

To show sellers and real estate agents that you're a serious buyer, get a prequalification letter from your lender. This letter confirms that the lender has reviewed your finances and verified your ability to make mortgage payments.

During the prequalification process, the lender will check your financial records and assess your current situation to ensure you’re a reasonable risk. They’ll look at your debt-to-income ratio and credit history to understand your ability to repay the loan.

To prepare for your prequalification letter, follow these steps:

  • Focus on your debt-to-income ratio: Ensure that your potential mortgage payment, along with your other debts, doesn’t exceed 36% of your income.
  • Review your credit report: Your credit report shows your debt repayment habits and is crucial for the lender’s decision. Check your report to see what the lender will see.
  • Know your credit score: Your credit score is a key part of your credit picture. You can get your score for free from credit scoring websites or through i-bank's online banking. A score of 670 or higher is considered good, while a score above 800 is excellent.

3. Choose a Real Estate Agent

Next, you’ll need to choose a real estate agent to guide you through the home-buying process.

When selecting a real estate agent, find someone with experience in your local market. They’ll have valuable insights and a good understanding of the area. Consider these factors when making your choice:

  • Track record: Look for an agent with a successful history in your local market.
  • Knowledge: Choose an agent who knows the type of property you’re interested in.
  • Satisfied clients: Check online reviews and testimonials for their reputation and customer service level.
  • Licenses: Ensure the agent is licensed and affiliated with a reputable brokerage.
  • Communication: Pick an agent who communicates well and responds to your needs and concerns.

Once you’ve chosen your agent, they will help protect your rights, give you access to homes for sale, and manage the complex buying process.

4. House Hunting

Now comes the fun part – finding the right home for you. With a clear budget in mind, you can focus on finding a place that matches your lifestyle and preferences. Do you prefer the space and privacy of a single-family house, or is a condo or townhouse more your style?

Keep in mind several costs beyond the purchase price:

  • Homeowners association (HOA) fees: These cover services like grounds maintenance, pool upkeep, and trash removal.
  • Maintenance costs: These vary depending on the age and condition of the home.
  • Commuting expenses: Costs vary based on your proximity to major transportation hubs and public transit.
  • Property taxes: These can differ greatly depending on the neighborhood.

When choosing your location, also consider the quality of local schools, nearby amenities, and the state of nearby development. Let your agent know your housing budget and what you're looking for in a home. They can help you narrow down your search.

5. Make an Offer

Once you’ve found your dream home, it’s time to make an offer. Your real estate agent will draft the purchase offer, present it to the seller, and help you negotiate any counteroffers. After your offer is accepted, there are a few important steps to complete before finalizing the sale:

  • Deposit earnest money: This deposit, usually 1% to 3% of the sale price, shows your commitment to the purchase and is held in an escrow account. It can be applied toward your down payment or closing costs. Make sure the contract specifies how and when you can get this deposit back if the sale falls through.

  • Finalize financing: Inform your lender once your offer is accepted. Choose your mortgage type, complete the necessary paperwork, and potentially lock in your interest rate. Avoid making large purchases or increasing your debt, as this can affect your credit score.

6. The Home Stretch

You’re almost there! But before you can close on the house and get the keys, there are a few final tasks to complete:

  • Professional appraisal: A certified appraiser will evaluate the property's value, considering its size, condition, improvements, and comparable sales in the area.

  • Title search: The lender will conduct a title search to verify the property's ownership and identify any liens, judgments, or other issues that could affect it.

  • Home inspection: Hire a professional inspector to assess the home's condition and identify any potential issues or necessary repairs. It's important to know the property's condition before you decide to buy it.

  • Homeowners insurance: Obtain a homeowners insurance policy to protect your new home and its contents.

  • Walk-through: Before closing, you and your real estate agent will do a final walk-through to ensure the property is in the agreed-upon condition. Check that any negotiated repairs have been completed.

7. Closing Day

It's time to make your new home official! You'll meet with your real estate agent, the seller's agent, a representative from the title company, and other professionals to sign all the closing documents. Once all the signatures are in place, you'll provide certified funds – usually cashier's checks or a wire transfer – for the down payment and closing costs. Typically, closing costs for buyers range from 2% to 5% of the loan amount, which is about $2,000 to $5,000 for every $100,000 of the home's value.

Finally, the moment you've been waiting for – getting the keys to your new home! Take a deep breath, give yourself a pat on the back, and enjoy the excitement of starting this new chapter.

Putting It All Together

Homeownership offers many financial and lifestyle benefits but can be challenging for first-timers. That's why having a trusted financial partner is crucial to guide you through each step. If you're ready to start your journey, contact one of our friendly mortgage specialists today.


When searching for your new home, take your time and make an informed decision without rushing.