Ultimate Guide to Buying Your First Home

Buying your first home is a major step in life and is not something to be taken lightly. There’s a lot of preparation, research, and financial know-how involved in the process. Although this process can seem quite overwhelming at first, it’s possible to enjoy the experience and you’ll have ample opportunity to bask in the excitement of purchasing your first home. 

First-time homebuyers are treated to a few special advantages meant to encourage new buyers and give them a leg up in a competitive market. If this piques your interest, read on to learn all about these advantages, the steps required to make such a large purchase, and a few questions you may want to ask yourself as a first-time homebuyer. 

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The First-Time Homebuyer Advantage

If this is your first experience in the real estate game, don’t fret. This whole process may seem intimidating and confusing, but you actually qualify for a few advantages as a new entrant to the market. As a first-time buyer, you’re given access to state programs, tax breaks, and special loans if you can’t make the typical minimum down payment, which is usually 20 percent of the cost of the house. 

To qualify as a first-time homebuyer, you need to meet any one of the following specifications: 

  • Someone who has not owned a primary residence for three years. For married couples, if one has owned property while the other has not, that couple can purchase a new home together and qualify for the advantages of first-time homebuyers. 
  • A single parent who has only ever previously owned a home with their former spouse. 
  • A displaced homemaker who has only ever previously owned a home with their spouse. 
  • Someone who has owned a primary residence that did not comply with the local or state building or model codes. 

If you qualify as a first-time homebuyer, you will fall under one of these three categories, which will determine the type of loan that you’ll be approved for:

  • Federal Housing Administration Loans (FHA): This type of loan has a competitive interest rate, offers smaller down payments, and has a lower closing cost than typical loans. 
  • The U.S. Department of Agriculture Home Buyer Assistance Program (USDA): This type of loan is focused on the assistance of homeowners who purchase in certain rural areas. There is the possibility that no down payment is required and the loan payments are fixed. 
  • The U.S. Department of Veterans Affairs (VA): This type of loan provides assistance to first-time homebuyers who are active-duty military members, veterans, and surviving spouses. These loans offer competitive interest rates, do not require a down payment, and guarantee at least part of the loan. If the borrower struggles to make payments on the mortgage, the VA is able to negotiate with the lender on their behalf. 

The Home-Buying Process

There is a pretty typical step-by-step process involved with purchasing real estate. For the most part, everyone experiences a similar process. The following is a general outline of what you can expect when you take on the tremendous task of finding your new place of residence:

Consider your finances and set your budget. The very first thing you need to be sure of before you make any major decisions is whether or not you can afford to take this step. First-time buyers have the added advantage of financial assistance to help them make this purchase, but you still need to make sure you’re financially stable enough to meet the requirements of making such a large purchase. 

There are several options to consider when you’re examining your finances. You can sit down with a financial advisor at your local bank, shop around at mortgage brokers, or inquire at a credit union or other money-lending business. Typically, you want to make sure you have enough money for a 20 percent down payment on your home. When choosing a financial institution to acquire your loan, be sure to compare interest rates and find the best fit for your budget. 

Find the right real estate agent. Once you’ve determined what kind of budget you’re working with, it’s time to find the person that will help you through this gruelling process. Real estate agents make the home-buying experience much more manageable and even enjoyable! With the right realtor, you can find exactly what you’re looking for and pick up a few tips on negotiating prices. 

When it comes to finding an agent, take the time to do some research. Look into reviews, find out what type of homes they usually deal with, and speak to a few agents in person to find out if you’ll be compatible. You want a realtor that will be on your team, rooting for you to get exactly what you want, and who is ready to stick to your budget and focus on the areas that you’re interested in. 

Tour a variety of homes. There are so many fantastic homes available on the market! Everything from townhomes to condos, from bungalows to duplexes, and so much more is ready to cater to your lifestyle. If you’re a little undecided about which style of home is right for you, shop around. Take a tour of a home you think you could maybe be interested in and find out what you like and what you don’t like. Take note of the pros and cons of each house and narrow down what you think is best for you. 

There are plenty of options to search for a home so take full advantage of each method. Search the online listings, ask your real estate agent about any private sales they’ve heard about, check out open houses, drive through neighbourhoods that interest you. Don’t forget about family or friends, either. Ask around, put the word out that you’re considering a major purchase, and see what comes back. You never know where you might find an intriguing lead. 

Make an offer. Once you’ve found a home that you can envision moving into, it’s time to pounce. With the aid of your real estate agent, you can decide how much money you want to offer to the sellers of the house. Along with a price tag, you can suggest any conditions you want to put on your bid. Conditions can include anything from having a home inspection completed before anything is officially handed over to ensuring the sale of your current home before closing on your new one. 

After you put in an offer, it’s up to the seller whether or not they will accept that offer or perhaps issue a counteroffer. From here, you’ll go back and forth before you either accept a deal or decide to move on and try somewhere else. This can be the most frustrating stage in the home-buying process, so be patient. Once you’ve found your new home, you’ll know and you can gear up to fight for it! 

Complete a thorough home inspection. Even after walking through the home, maybe on several occasions, there can still be issues that are not obvious right away. Once you’re serious about a home and ready to close the deal, you’ll want to have a professional visit the house for a home inspection. These trained professionals will go over the entire property to search for flaws and get a feel for the overall condition of the home. The last thing you want is to move into a new home and realize you need to sink in a ton of money to repairs you didn’t know were necessary. 

If the report you receive from the home inspection reveals any major issues that the seller did not disclose before you made your offer, you can typically rescind your offer and get your deposit back. If you decide that the necessary damages are easily repaired and you’re willing to sink the money into them, you have the option to negotiate with the sellers to make up for the money you’ll be spending on repairs. 

Either close the deal or move on. By this stage of the home-buying process, you’re ready to decide if this is the place for you, or if it’s time to move on and look at some other homes. If you’ve made an offer, put down a deposit, had the inspection done, and are satisfied with the results, it’s time to close this deal! Closing involves a major amount of paperwork to be signed and a system of money transfers that hopefully pull through with no issues. It’s a tedious stage of the process, but can lead to the most rewarding feeling; the official purchase of your new home! 

Questions to Ask Yourself

If you’re getting serious about a house, or even a particular neighbourhood, you’ll want to be sure that you’re comfortable with your decision. A few questions you can ask yourself before you make any major decisions include:

  • How long will you live in this house? There’s a big difference between finding your starter home and finding your dream forever home. You’ll need to factor in what stage of life you are at and if you’ll reach any milestones while living here. For example, will you need some extra space to fit in all those kids you plan on having?
  • Can you comfortably afford the price tag? There’s more to buying a home than just the initial cost of the house. You need to consider the down payment, any repairs you’ll be facing in the next few years, renovations you’d like to have done, and of course, still be able to afford all the basic necessities like groceries and car payments on top of those costs. 
  • Do you like the neighbourhood? You could find your dream home that fits all your desired specifications, but if it’s in a dingy neighbourhood or if it’s an hour away from work, you’ll likely be unhappy living there. Consider what amenities are closest to you, where you’ll be doing your grocery shopping, or where you’ll be spending your free time. 
  • Is transit easily accessible? If you don’t own a car, access to public transportation is key. You need to be sure that you’ll be able to get around in your new neighbourhood, between getting to and from work, hitting up the grocery store, or trying out the local restaurants. This is an important feature that you’ll want to have sorted out before you make any big commitments to a home. 
  • What’s the school district like? If you have children or are planning on having children while living here, you’ll likely be interested in the local school system. Check out reviews online, ask around to find out if the community is actively involved, and get a feel for the general atmosphere surrounding the schools in the area. 
  • Is there an opportunity for expansion? If you find you’re really into this area and the house you’re looking at could potentially be a more long-term home, figure out if it would be possible to add on any additions or modifications to transform your starter home into your forever home. Look into any zoning issues or surrounding lots that may affect this part of the plan. 

Buying your first home is a seriously exciting moment in your life! This major decision will affect so many aspects of your lifestyle and can set the tone for your next few years. Take the time to savour the moment, make yourself present in all the decisions, fully enjoy each and every moment of touring different houses. If you’re investing such a large amount of money into a house, you’ll want to be sure you can transform it into a home. With the proper research, an experienced realtor to guide you, and plenty of patience, this monumental decision can become one of the best, most satisfying experiences of your life.