Things to Know if You Are a First-Time Home Buyer

Buying your first home is an exciting milestone, but it can also feel overwhelming. From understanding your budget to navigating the mortgage process, there are many steps involved. This guide covers the essential things every first-time home buyer should know to make the journey smoother and more successful.

1. Assess Your Financial Readiness

• Check Your Credit Score: Your credit score impacts the mortgage rates you qualify for. Aim for a score of 620 or higher for most conventional loans.
• Save for a Down Payment: While 20% is ideal, many programs allow for lower down payments (as little as 3-5%). Factor in closing costs and moving expenses.
• Calculate Affordability: Use our Affordability Calculator to estimate how much home you can comfortably afford.
• Consider If Renting Is Better for You: In some situations, renting may be the smarter financial or lifestyle choice—especially if you plan to move soon, want flexibility, or need time to save more. Use our Rent vs Buy Calculator to compare your options based on your unique circumstances.
• Get Pre-Approved: A pre-approval letter from a lender shows sellers you're a serious buyer and helps define your price range.

2. Understand the Home Buying Process

1. Find a Knowledgeable Agent: A good real estate agent will guide you through the process, negotiate on your behalf, and help you avoid common pitfalls.
2. House Hunting: Make a list of must-haves vs. nice-to-haves. Be prepared to compromise, but don't settle on your biggest priorities.
3. Make an Offer: Your agent will help you craft a competitive offer based on market conditions and comparable sales.
4. Home Inspection: Always get a professional inspection to uncover potential issues before closing.
5. Appraisal & Underwriting: The lender will appraise the property and review your finances before final approval.
6. Closing: Review all documents carefully, ask questions, and don't be afraid to negotiate closing costs or request repairs.

3. Common Mistakes to Avoid

• Not shopping around for mortgage rates and terms.
• Overextending your budget or underestimating ongoing costs (taxes, insurance, maintenance).
• Skipping the home inspection or waiving contingencies.
• Making large purchases or taking on new debt before closing.
• Letting emotions override your financial plan.

4. Tips for First-Time Buyer Success

• Explore first-time buyer programs and grants in your area for down payment or closing cost assistance.
• Keep an emergency fund for unexpected repairs or expenses after moving in.
• Communicate openly with your agent and lender throughout the process.
• Be patient—finding the right home can take time, but preparation pays off.

5. Understanding the Escrow Process

The escrow process is a critical part of buying a home, especially for first-time buyers. Escrow acts as a neutral third party that holds funds and documents until all conditions of the sale are met. Here's how it typically works:

1. Opening Escrow: After your offer is accepted, an escrow account is opened. You'll deposit your earnest money, showing you're serious about the purchase.
2. Document Collection: The escrow company gathers all necessary documents, including the purchase agreement, disclosures, and loan information.
3. Inspections & Appraisal: During escrow, you'll complete your home inspection and the lender will order an appraisal to confirm the home's value.
4. Title Search & Insurance: The escrow company ensures the property title is clear of any liens and arranges for title insurance to protect you and the lender.
5. Finalizing the Loan: Your lender will finalize your mortgage approval and send closing documents to escrow.
6. Review & Sign Documents: You'll review and sign all closing documents, including the loan agreement and deed.
7. Funding & Closing: Once everything is signed and funds are transferred, the escrow company records the deed in your name and releases the keys to you!

Escrow protects both the buyer and seller, ensuring that no money or property changes hands until all conditions are satisfied. If you have questions during escrow, don't hesitate to ask your agent or escrow officer for clarification.

6. Quick Reference: Home Buying Checklist

Conclusion

Becoming a homeowner for the first time is a major achievement. By preparing financially, understanding the process, and working with trusted professionals, you can avoid common pitfalls and make confident decisions. Remember, MortgageFig is here to support you every step of the way—explore our calculators and resources to empower your home buying journey!