Your First Home:
6 Steps to Get You Ready to Buy

Buying your first home as a couple is one of the most exciting, yet intimidating, milestones you’ll face. It’s easy to get swept up in house hunting, but before you start picking out paint colors, there are some important financial steps to take. Let’s break it down into simple, manageable steps so that you can make your dream home a reality without the stress.

 

Step 1: Know Your Budget—Beyond the Mortgage

Before you even step foot in an open house, it’s crucial to figure out your budget. Start by reviewing your combined income, expenses, and savings. Keep in mind, the cost of a home goes beyond just the mortgage. You’ll also need to account for:

• Property taxes
• Homeowners insurance
• Maintenance and repairs
• Utilities
• Closing costs and down payments

Tip: Most experts recommend that your mortgage payment shouldn’t exceed 25-30% of your take-home pay.

Step 2: Build Your Credit Together

Your credit score plays a huge role in the home-buying process. The better your score, the better your loan terms and interest rates will be. If you and your partner have different credit scores, lenders will often take the lower score into account.

Tip: Start by paying down debt, making timely payments, and keeping credit card balances low. Check your credit reports to ensure accuracy and dispute any errors that might affect your score. 

Step 3: Save for a Down Payment and Closing Costs

A good rule of thumb is to save 20% of the home’s price for a down payment. However, there are options if you don’t have that amount saved. Programs like FHA loans allow lower down payments, but you may have to pay private mortgage insurance (PMI). Don’t forget about closing costs, which typically range between 2-5% of the loan amount.

Tip: Set up a dedicated savings account for your down payment and automate contributions each month. It’s easier when both of you are on the same savings plan.

Step 4: Get Pre-Approved for a Mortgage

Before you start seriously looking at homes, get pre-approved for a mortgage. This step shows sellers you’re serious, and it gives you a clear picture of how much you can afford to borrow. Be prepared to provide proof of income, tax returns, and details about your financial situation.

Tip: Shop around for the best mortgage rates and terms. A small difference in interest rates can make a big impact on your monthly payments and long-term costs.

Step 5: Consider Additional Costs of Homeownership

Owning a home comes with a whole new set of expenses beyond the initial purchase. Things like:

• Home repairs and maintenance (Think new roofs, plumbing issues, etc.)
• Landscaping or HOA fees
• Potential renovations

Tip: Set aside 1-3% of the home’s value annually for repairs. Starting an emergency fund for your home can ease the stress when the unexpected happens.

Step 6: Research the Neighborhood and the Market

Your home’s location is just as important as the house itself. Spend time researching the area where you plan to buy. What’s the crime rate like? How are the schools? What’s the resale value of homes in the area?

Tip: Visit the neighborhood at different times of day to get a feel for the community. You want to make sure it fits your lifestyle and long-term plans.

Buying your first home together is an exciting journey, but the process can be overwhelming if you’re not prepared. Follow these steps, take your time, and make sure your financial foundation is strong before you start house hunting. With a little planning and teamwork, you’ll be handing over the keys to your new home in no time