How to Buy Your First House


First House 1

Buying a house is a huge step in your personal and financial life. And while it’s not for everyone, most people consider it part of the American Dream. If you think you’re finally ready to buy your first house, there are several things you should know. 

Are You Ready to Buy a House?

The first step in the process is simple: Determine if you’re ready to buy a house. You might feel ready – and you probably want to buy a house – but buying a house is a mathematical decision, not an emotional one.

Charter Homes works with a lot of first-time homebuyers and discovered 12 signs you’re ready to buy a house:

  1. You’ve saved up enough for a down payment (ideally 20 percent).
  2. You have a great credit score (minimum of 620).
  3. You can afford the mortgage payment (no more than 28 percent of monthly income).
  4. You’re comfortable with the current seller’s market.
  5. You have a steady job/employment.
  6. You can afford surprise repairs. (Plan for 3.6 percent of the purchase price per year.)
  7. You plan to stay in the area for at least five years.
  8. Your house will still meet your needs five years from now.
  9. You know exactly where you want to live.
  10. You want more control over your property than a rental.
  11. You’re ready to embrace more responsibility as a homeowner.
  12. You’re finally ready to commit.

If these 12 factors are aligned, then it’s a pretty good sign that you’re ready to buy. If you’re still not sure about two or three of them, you may be better off renting for a while longer. 

Organizing Your Home Search

The next step is to get organized. During this phase of the home buying process, you need to get clear on a few specific things, like:

  • Wants vs. needs. There’s a big difference between what you want in a house and what you actually need. It’s a good idea to sit down and create two separate lists. One list has everything you want in a house, and the other list has everything you absolutely need. When searching for houses, the list of needs gets priority. The wants only come into play once you’ve found a house that checks off all of the “needs” boxes.
  • Real estate agent. There’s no sense in trying to buy a house on your own. When you purchase a house, the seller traditionally pays the commission for both agents. This means your agent basically works for you for free. Find the best one you can.
  • Pre-qualification. Before you actually start seeing properties and putting in offers, you’ll need to get pre-qualified by a lender. They’ll tell you how much they’re willing to lend, which helps you solidify the right price range.

If you get these three things squared away, you’re finally ready to move forward with your home search. It doesn’t mean the search will be easy or effortless, but you can rest assured that you’ll at least be prepared.

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Putting in Offers

In a market like this, you have to be prepared to put in a competitive offer as soon as you find something you like. This is where your real estate agent really becomes a powerful asset. Experienced agents know what you need to offer (as well as other factors that make your offer more attractive). 

Don’t be surprised if you have to put in offers on multiple homes before getting a house under contract. And as difficult as it is to do, try not to get emotionally attached to a home.

Mastering the Due Diligence Process

Getting a house under contract is definitely a big hurdle to clear, but it’s not the only one. Once you’re under contract, the due diligence period begins. Depending on the stipulations of your offer and how the contract is written, you may have the ability to get inspections and bring requested repairs to the buyer. Based on the contract, some issues may be required fixes, while others are simply points of negotiation.

If the home is contingent on appraisal, which it most likely will be unless you’re making an all-cash offer, you’ll also have to wait for the appraisal results to come back. If the appraisal is lower than the purchase price, you and the seller will have to negotiate.

Enjoying Your New Home

Buying a house is more like a marathon than a sprint. It requires you to clear a bunch of different hurdles in order to cross that finish line. But once you do, it’s typically well worth it. Let this article serve as a basic primer, but make sure you hire a good real estate agent to walk you through each step of the process.

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