10 Steps to Buying Your First Home + Mortgage Tips for First-Time Buyers

Buying your first home is an often overwhelming process. For most of us, searching for the right home is the easy part – it’s getting your finances in order to secure the property that’s the stressful part. The good news is you can alleviate a lot of that stress simply by knowing the steps you’ll need to go through to secure your first home. Here’s what you can expect when buying your first home:


10 Steps to Buying Your First Home

1. Understand your down payment options: While traditionally, a 20% down payment has been the benchmark, today’s home-buying landscape offers more flexibility. Many buyers now put down just 5%, or even less, so don’t let such a daunting figure intimidate you into not seeing what your options are.

There are more options available than ever before, and some programs even offer “forgivable” loans or those with minimal or no down payment at all. Of course, a large down payment offers benefits, but there are many paths to homeownership.

Don’t forget that, besides your down payment, you’ll also need to save for closing costs and moving expenses. Some of these can be incorporated into your mortgage, so you may only need a little cash to secure your first home.


2. Consult professionals and clean up your credit: Before diving into saving as much money as you can, talk to a lender or new home sales specialist to find out exactly how much money you’ll need to secure your first home. With a specific figure in mind, you’ll know exactly how close you are to homeownership.

While you’re doing that, take a look at your credit report and make sure it’s giving an accurate picture of your financial situation. Make sure you don’t miss payments, pay down your debt to less than 30% of your available credit, and make sure there are no discrepancies. If there are, address them promptly.


3. Determine how much you can afford: Before you start eying up potential homes, find out exactly how much you can afford so you can set your budget. Use an online mortgage calculator to calculate your monthly mortgage payments. Don’t forget to stress-test your budget; in other words, if the interest rate went up about 3% (which it has done a lot recently!), would you still find your monthly payments within reach? This is also a good time to look at your budget and consider what would change when you live in your new home and forecast your budget. Consider cutting costs now to help you reach your goals sooner.


4. Get pre-approved: This step isn’t required, but it will give you and any seller peace of mind knowing you’re in a position to put your money where your mouth is. Getting pre-approved is where you go to a mortgage lender and give them your basic financial details (income, debt, and so on) and they’ll give you an agreement in principle. That means that provided your credit, budget, and the home you want to buy looks good to the lender, they guarantee to give you a mortgage.


5. Search for a home in your budget: Finally, the fun part! Make sure you are clear on what you are and aren’t willing to compromise on before you start searching, especially if you are buying with your partner, a friend, or family member.


6. Work with professionals to make an offer: When you find a home you love, it’s time to make an offer. If you aren’t already working with a realtor, we have a team of licensed realtors to shepherd you through the home buying process. And for those who are, our sales professionals will liaise with your realtor, ensuring you land the best terms tailored to your needs.


7. Put down your deposit: With a sale agreed upon, you pay your deposit and the money is held in escrow until closing. If, for any reason, the sale does not go through, you’ll get your deposit back.


8. Submit your mortgage application: This is, admittedly, the most stressful part of buying a home, whether you’re buying your first or tenth home. At this point, you’ll give your mortgage lender all the supporting information to help them decide whether or not to give you a mortgage, such as proof of income, bank statements, budget, and so on.

No one enjoys having their financial life examined under a microscope, but if you prepared well in the first 4 steps of this process, you won’t have anything to worry about, especially if you’re working with a broker or mortgage expert to secure the best mortgage for you.


9. Close on the sale: You did it! You found a home and secured your mortgage. Now you wait for the professionals to do their thing so you can sign on the line and get the keys to your new home. At this stage, you’ll wait for attorneys to examine titles and other professionals to check the home and legalities to ensure all involved think your purchase is a sound decision. When all is done, you get to sign the paperwork to make the home yours.


10. Get the keys and move in: When closing is done and the funds are transferred, you get the keys and the house is yours! You can now move in at your leisure and start enjoying life in your new home. Congratulations!


Buying your first home is a major milestone and a big commitment, so take your time and make the choices that will best serve you long-term. For many first-time buyers, buying a brand new home means they can rest assured knowing there will be no unexpected expenses and they can simply relax and get into the swing of homeownership, without worrying about maintenance and other issues that come with older homes.

As a new home builder, we often sell homes to first-time buyers and we’d love to help you secure your first home. You can click here to view our current new homes for sale in Tennessee as well as our latest incentives designed to make the process of buying a home as easy as possible for you.

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