Ready to Buy a Home? 10 Essential Steps Every First-Time Buyer (and repeat buyers) Must Know in 2025

Step 1: Know Your Numbers

Before you even set foot in a house, check your credit score, scrutinize your budget and determine how much you can afford for a down payment, closing costs and monthly payments.

Credit: The higher score you have, the better the terms of your loan. It’s possible to obtain a loan if your score is lower, but you may pay higher interest or require a larger down payment.

Debt-to-Income Ratio: Your housing costs should remain under 28 percent of your gross income — total monthly debt under 36 percent. Lenders can stretch that to 43% or more, but the higher that gets, the more you’ll pay.  There are several free DtI calculators online.

Down Payment: You’ll avoid private mortgage insurance (PMI) by putting 20% down, the minimum is 3% down with PMI. Some VA and USDA loans have no down payment requirement. Closing cost assistance programs exist for first-time buyers and others who meet qualifications set by the state and local governments.  Be sure to check if you qualify.

Savings: Closing costs are 2-5% of the price of the home. You’ll also need money for your earnest money deposit (think down payment), moving expenses, furniture, and any repairs that need to be done as soon as you move in.

Step 2: Choose the Right Mortgage

Choose between a fixed-rate loan (same payments over time) or an adjustable-rate mortgage (lower initial rate, future adjustments that go up as the years go on). You should also look at the loan term — 15-year loans save you interest, but they have higher monthly payments. Some first-timers go for a 30-year mortgage with a fixed interest rate.

Step 3: Shop Lenders

Don’t work with the first lender you come to. Shop with at least three lenders for quotes. Don’t just look at the interest rate — look at the APR and fees. While there are some fees regulated by the state, each lender can add on other fees. Also remember, your rate is not locked until you tell it to be locked.  So the rate you first discuss with your lender may not be the one you end up signing for when you lock it in.

Step 4: Get Preapproved

A preapproval letter demonstrates to sellers that you’re serious. To get one, you’ll provide your lender pay stubs, bank statements, tax returns — basically, evidence you’re prepared to buy. Don’t mistake this for prequalification — that is different than getting pre-approved and it lacks the weight needed to make an offer.

Step 5: Find a Great Agent

Having a local agent who knows the area and gets what you’re looking for is pure gold. Ask around, read testimonials and interview a few before you sign on the dotted line. Understanding the market and good communication is essential.  Be sure to interview me so I can share my knowledge and guide you further through the process.

Step 6: Start House Hunting

Use my app (see the QR code in the picture at the start of this article) or other platforms, but letting your Realtor know what you want is better since they can weed out the properties you don’t want and just send you the ones you’re going to want to see. When you see something that piques your interest, schedule a showing with your Realtor by your side.

Step 7: Make an Offer

Your Realtor will assist you in drafting a strong offer based on other homes sold that are similar to the one you want and market conditions. Be sure to include important contingencies for appraisal and inspection. Be prepared to haggle — or to walk away if necessary.  Be sure to read my other article on creative ways to negotiate when buying a home.

Step 8: Apply for the Loan

After your offer is accepted, you will complete the full loan application. What you did before with the lender was the preapproval.  Now you will be providing additional documents and answering in-depth questions to fully apply for the loan.

Step 9: Get a Home Inspection

Get a professional to inspect the home’s systems and structure. Try to be present during the inspection — it’s an opportunity to ask questions and to see first-hand what they find – good and bad. If there are significant issues, you can re-negotiate or back out (as long as you stay within the contingency window).

Step 10: Close and Move In

Get recommendations and compare prices on moving companies and home insurance coverage by shopping around. Contact and schedule with movers, and set up your utility and internet service ahead of time. On closing Day, have one final walk-through, sign paperwork, pay closing costs — and receive your keys!

Final Thoughts

Get Ready for Hurdles: You might need to explain unusual financial circumstances, or provide additional paperwork to your lender. Sometimes they want the paperwork several times during the process.  They just want to be sure nothing has changed. Negotiations may go back and forth a few times. And even if you’re an experienced buyer, always remind yourself there will be ongoing maintenance to budget for — homeownership is more than just a mortgage.

That’s why you have me – I will be there from start to finish and beyond closing to explain, help and guide you.  It starts with a text or a call to me and ends with having a friend for life.  Reach out when you’re ready and don't forget to scan the QR code in the picture to get my app!

Source: bankrate.com

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