First-Time Homebuyer: Gut Check + 9 Other Steps to Buying Your First Home

Buying your first house is stressful but exciting. When you’re a first-time homebuyer, you’re probably eager to jump right in, so let’s get started. 

FIRST: Do a Gut Check – What’s Your Budget?

Before looking at homes (the fun part), know your budget. For now, casually hash out your feelings about money. This will help you later when you meet with a mortgage pro. Write down your current monthly budget:

• Income
• Expenses
• Any debt you have

If you have a partner in the purchase, include their income, expenses, and debt. Knowing these numbers will help you determine how much you are comfortable spending on a home. Consider how much money you’re spending now on rent and how that impacts other areas of your lifestyle.

Having a partner by your side should make the process so much easier. But it can also be a stumbling block if you have a different opinion on important matters or if one of you has terrible credit. Either way, you need to understand:

Texas is a community property state – what does that mean for your home purchase?

Remember that buying a home is a big decision, so take your time and ensure you’re comfortable with the process and the home you choose. Good luck!

Download Your Free Homebuyers Guide

2. Choose a Realtor® to Represent You

When buying in Texas, you can choose a real estate agent to represent your interest.

An excellent real estate agent can guide you through the home-buying process from start to finish, provide valuable insights about the market, and help you negotiate the best deal. 

As a first-time homebuyer, you must choose a Realtor® you can trust to work as your Buyer’s Agent and put your interest first. You’ll get the personalized guidance of an experienced real estate pro who will lead you through a very involved process.

As your Buyer’s Agent, we can:

• Put your interest first, ahead of all others
• Advocate on your behalf, we’re in your corner
• Give you advice and opinion based on market conditions and experience
• Research the market for you so that you can make informed decisions
• Create customized property alerts so new listings go straight to your inbox
• Show you property—all property, including new construction, not just our listings
• Write contracts, counters, and amendments, and explain your options
• Negotiate on your behalf – we’re in this together
• Handle the details, and there are many
• Keep you informed as the process goes along so you don’t miss deadlines
• Accompany you to close and get the keys to your new home

Choosing a Realtor® to represent you can save you time and money, as well as disappointment and frustration. Plus, you always know who’s got your back! 

DID YOU KNOW? If there’s a sign in the yard, the real estate agent is already under contract with the seller to put their interest first—above yours. Here’s more information about Buyer Representation in Texas.

Contact A North Point Agent To Get Started!

3. Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage will give you a better idea of how much you can afford and help you narrow your home search. 

Have you been prequalified for a mortgage loan? Or preapproved? They are not the same thing.

While both are steps toward homeownership, they have different meanings. Prequalification is an informal process. You provide information about your financial situation—debt, income, and assets and the lender determines how much you can borrow.

You can get prequalified over the phone, online, or in person. Prequalification helps you prepare for the next steps in buying a home and explore your mortgage options. Learn more about Mortgage programs for First-Time Homebuyers in DFW.

What’s Pre-Approval?

For pre-approval, you’ll provide the lender with proof of your financial history. This includes your income, employment status, assets, debt, and a credit report. You might also need to submit W-2s, pay stubs, and a summary of assets. The pre-approval process can be completed online, with support from a loan officer if required.

When you get pre-approved, you receive a letter outlining the amount and type of mortgage the lender is offering and the terms. Pre-approval is a crucial step in the home-buying process.

Know Your Credit History

Your credit score and history are critical factors in whether or not you’ll be approved for a home loan and at what interest rate.

If you don’t know your and your partner’s credit histories, get a copy of both credit reports before you begin your home search. Knowing in advance can save you some disappointments – and your creditworthiness will show you what, if anything, you need to work on to get better mortgage terms.

Credit scores are based on several things: 

• Payment history
• Outstanding balances
• Length of credit history
• Applications for new credit accounts (don’t apply now!)
• Types of credit accounts (mortgages, car loans, credit cards)

Most buyers need a credit score of at least 620 to buy a house, but a higher score will earn you a better interest rate. 

Check your credit score and make sure your report is free of errors. Here’s how: credit scores and how to get yours from the Consumer Financial Credit Bureau

Five Tips from Equifax

Equifax, a consumer credit reporting agency, summarizes what you should do to keep your credit scores in top shape: 

1. Check your credit scores often, which helps you see what lenders see.
2. Pay your bills on time, because it builds your positive payment history.
3. Having a mix of credit accounts can help your credit scores.
4. Keep your debt-to-credit ratio low, so you are not using all the credit available.
5. If you see something wrong on your credit report, file a dispute.

Reduce Debt-To-Income Ratio

One of the biggest goals for most newlyweds is to reduce their debt-to-income ratio—the percentage of their monthly income that goes toward repaying debt, including mortgage or rent costs. Reducing debt strengthens your credit score and helps you get approved for a larger mortgage. Lenders like a debt-to-income ratio of less than 36%. 

Some first-time homebuyers find that one spouse has excellent credit and the other has poor credit. In this case, the partner with the higher credit score could apply for the mortgage in their name alone. However, you should ensure that both spouses are listed on the title. And understand that Texas is a community property state and what that means to you as a new couple.

TIP: Do Not—repeat—DO NOT buy anything before closing or allow optional credit checks from anyone. The lender will check your credit history immediately before closing to ensure you still qualify for the loan, and the furniture purchase on your credit card could be why you no longer qualify! 

First-time Homebuyer Programs in Dallas

Warning to First-Time Homebuyers: avoid predatory loans

Working with a trustworthy real estate agent will help you avoid bad sales and predatory loans.

First-time homebuyers are often so anxious to become homeowners that they’ll agree to loan deals that aren’t in their best interest. For example, you might get approved for a home loan with an exceptionally low interest rate, but the fine print describes massive late fees or other penalties.

If something seems too good to be true, consult your Realtor® or financial expert before you proceed.

4. Heads-Up First-time Homebuyer: Plan for Future Expenses

In addition to the home’s purchase price, you should also plan for future expenses such as maintenance and repairs, property taxes, and insurance.

First-time homebuyers often overlook these expenses, and failure to plan can be a financial disaster. 

5. Consider Your Current & Future Needs

Before you start looking at homes, both partners should have a general idea of what they’re looking for.

First, determine whether you want to purchase a starter home or a house you’ll live in for decades. 

Most real estate experts suggest you only buy a home if you’re prepared to live in it for at least five years. However, your needs in the next few years may differ greatly from those in 10 or 15 years. 

Maybe all you’re looking for right now is a small and affordable house that fits you and your spouse, or maybe you hope to find a home with enough space to raise children.

In addition to considering space and location, you must consider your budget.

• How much money can you spend on a monthly mortgage without feeling financially strained?
• Are you expecting any significant financial changes in the next few years?
• Be careful (gut check). Do not rely solely on your mortgage pre-approval; use your common sense.
• You might be approved for a large monthly payment, but this doesn’t mean you can comfortably afford it.
• First-time homebuyers typically have more success searching for homes at the lower end of their price range, so they have some flexibility in their budget as they adjust to life as homeowners.

Download Your Free Homebuyers Guide

6. Choose the Right Location

Consider the location of the home, including proximity to

• Work
• Schools
• Shopping
• Parks
• Health Care
• Transportation and highways

…and any other amenities that are important to you. Be sure you have access to important things to you and your partner. 

With more and more work-from-home options, having lightning-fast internet is more important than ever before.

Dallas is a huge area! Here are some of the fast-growing north suburbs that might work for you. When you choose a North Point agent they can help you with the pros and cons of each area. 

7. Decide on Your Must-Haves

Discuss with your partner what you both want and need in a home.

This will help you focus on properties that meet your criteria.

I’m sorry, but as discussed in the paragraph above, it helps to make a checklist and prioritize for both of you.

8. Be Ready to Compromise

As a first-time homebuyer, you and your partner probably aren’t strangers to compromise. 

Although compatible partners see eye-to-eye on many ideas, no two people will agree on everything. Learning to make sacrifices and meet in the middle with your partner is one of the best life lessons for first-time homebuyers, and your journey to becoming homeowners can put those skills to the test.

Both partners should separately list their priorities for the new house. This includes 

• location
• size
• number of bedrooms & baths
• amount of renovation needed.

Then, prioritize your needs and wants in order of importance. When comparing your list with your partner’s, be prepared to sacrifice some of the lower items on your list so that you can fulfill your most essential needs.

9. Home Search & Contract – the Fun Part

As your Buyer’s Agent, we’ll create a personalized search plan for you.

We take our time with first-time homebuyers, so don’t be shy about asking questions. You’ll get the guidance you need and will know your options so you can make good buying decisions.

Your agent should help you find the right homes for you to see, but most buyers want to participate. So, your agent can set up a personalized search that sends property updates to your inbox.

Finding the right house is a joint effort – not an Easter Egg Hunt. Once you find “the one,” the hard work begins.

Your agent will structure an offer that details all the terms and conditions of the purchase. Once the buyer and seller agree on the contract, you’ll be ready for the next important step.

10. Get a Home Inspection & Close

Before you finalize the purchase of your new home, it’s crucial to have a professional home inspection. 

Note: You’ll need to pay for this expense at the time of service, so it can’t be rolled into your closing costs.

This is done after your contract with the seller is in place and within a specific number of days.

This step will help you spot any problems with the house that might need some attention before settling in.

Your real estate agent (buyers agent) will be a great source of help and advice throughout this process. So, don’t forget to lean on them for guidance – especially when you’re a first-time homebuyer!

The Bottom Line

Even though you’re a first-time homebuyer, you and your partner should thoroughly understand your credit history, financial standing, and needs and wants for your home.

Approach this process as a team, and add a trusted Realtor® by your side. You and your partner should take the time to prepare to buy a house. Do your research before looking at homes, and ensure you’re both on the same page.

As stressful as house hunting can be, the joy and excitement of finding the perfect home to start your married life can be well worth the effort.

Contact A North Point Agent To Get Started!

We know what we are doing, and we’re here to help!

Real Estate Questions? Ask Us Anything!