First Time Homebuyer Tips: 6 Ways You Can Prepare Before Starting the Official Search For Your New Home

First Time Home Buyer Tips: 6 Ways You Can Prepare Before Starting the Official Search for Your First Home

Buying a home for the first time is an exciting yet daunting experience. Due to the sheer amount of factors to consider: the housing market, mortgage loans, square footage, down payments, and more, many first-time home buyers feel overwhelmed before they even begin to browse the market. However, there are several tried and true steps you can take to better prepare yourself financially and mentally before starting the official search. 

The team at Merit Homes is here to break down six expert tips to help you better prepare for buying your first home. We have decades of experience guiding our clients through the first-time home-buying process, ensuring they feel confident and informed every step of the way. Use this blog as your guide in getting started on this exciting journey. 

1. Check and Monitor Your Credit

Before you take any steps in the home buying process, your first priority should be to check your credit score. You’ll need to take an in-depth look into where your credit stands and your credit score history. If your credit score is in good standing - great! Keep it that way by paying off debts and controlling your credit card expenses. If you have a sub-par credit history, it might be beneficial to work to improve it before starting the search for your first home. 

The reason is that a higher credit score increases your chances of being approved for a mortgage loan, as well as receiving a better interest rate. A bad credit score can result in lenders charging you a higher interest rate and even denying you many of your loan options. By regularly checking your credit reports well before the official home buying process begins, you can be aware of any potential problems that could hinder your purchasing attempts down the line. 

2. Decide Your Budget

Before starting the official search for your first home, one of the most essential things to do is to determine how much you can realistically afford. Consider your current and future income and expenses and determine what percentage of that income you can allot towards monthly mortgage payments. You’ll also need to factor various expenses into your overall budget, such as a down payment, HOA fees, closing costs, and utilities. Your down payment will be your most significant expense, and the amount will differ depending on the type of mortgage loan you choose. Down payments typically range anywhere from 3% to 20%. 

Not only will your total budget determine things like the new construction vs. resale, square footage, housing style, and upgrades you can purchase, but it also affects what locations you can begin searching in. All in all, your projected budget will be the foundation of your home search and future home-buying journey. 

As a first-time home buyer in the Greater Seattle area, you may assume that a new construction home in your dream location that checks all (or almost all) of your boxes is out of your budget. However, due to increased demand and sparse inventory, new home prices in excellent locations are now often comparable to resale. If you have dreams about buying in the Kirkland area but are doubtful about being able to afford your first home here, check out our Urban Series by Merit Homes. Our new construction, single-family homes are perfect for first-time buyers looking to put down roots in Kirkland - at a fraction of the cost of typical single-family homes in our area. 

3. Save For a Down Payment 

Now that you know your credit score status and have a better idea of what you can afford, you need to save, save, save! Most mortgage lenders require home buyers to put down 20% of the home's purchase price. This is a considerable cost for most first-time buyers - and likely one of the biggest investments they will make in their lifetime. 

While not all lenders require 20% down, paying a large amount upfront (compared to 3% or 6%) can help you lock in a better interest rate, have lower monthly mortgage payments, and avoid paying private mortgage insurance (PMI). To ensure you have enough money saved up for your future down payment, start setting aside money every month until you have reached more than the amount you think you will need. Most homeowners have to save up for years in order to afford a down payment on their dream home - so today is a good time to start saving. 

4. Research 

One of the most critical steps in the preliminary homebuying phase is… research! The first aspect you need to take a deep dive into is location, location, location. 

You’ll want to research and consider the following:

• Weather and climate of the location 
• Locations proximity to your work or school 
• School districts
• Safety & crime
• Neighborhood amenities
• Community lifestyle 
• Privacy & noise 
• Architectural styles of nearby homes 
• Lot size 

Take your time looking at various cities and neighborhoods, the different architectural and design styles within those neighborhoods, and the current market conditions and prices. Knowing what type of house you want, what your ideal neighborhoods are, prices in those ideal neighborhoods, and what season prices are the highest will give you a better idea of where to buy and when. This will also allow you to find a home builder or real estate agent with experience and connections regarding the style of home you want and your desired location. 

5. Explore Your Mortgage Loan Options 

Once you’ve checked your credit score and decided on an estimated budget, it’s time to research your mortgage loan options. Wondering what is your best loan option? Most homeowners opt for a conventional mortgage loan backed by Fannie Mae or Freddie Mac, where the minimum down payment required is as little as 3%. However, with a smaller down payment, you must pay private mortgage insurance (PMI), and your interest rates and monthly payments will likely be high. Other popular loan types for first-time home buyers include FHA, fixed-rate, adjustable-rate, and VA loans. 

Consider speaking with an experienced mortgage advisor or broker to help walk you through your loan options and pick the right one for your needs. Our experienced Sales Manager, Feisal Ramjee, can help set you up with one of our trusted lenders to assess your budget and begin the Pre-Approval process for your future home loan.

6. Get Firm About Your Needs Vs. Wants 

Before looking at homes for sale, you’ll want to do ample research and list your needs and wants. Start by nailing down the basics, such as what architectural style, size, and layout you like, by looking at different homes in person and online. For example, do you want a Northwest Contemporary style home with modern architecture and an open functional floor plan? Or do you prefer a farmhouse-style home with classic features? How big of a backyard do you need for your growing family? These are the questions you should be thinking about before you get started. 

Then make a list of non-negotiables you need in your future home vs. what would be nice to have. For example, if you love cooking and spending time outside, non-negotiables may be having a chef's kitchen and an outdoor living space. Whereas having a pool or a walk-in pantry might be a want. This list will help you narrow down your list of potential options when your official search begins. 

Often, new construction homes or luxury homes will offer coveted features and sought-after amenities that buyers desire as opposed to older resale homes. Not only does this help resale value, but it also saves you the time and stress of remodeling. All Merit Homes have signature features, such as a chef’s kitchen, a spa-inspired master suite, full-appliance packages including washer/dryer,  built-in smart home technology, and a covered outdoor living area. If these features are on your needs or want list - check out our available homes here in Kirkland!

Kirkland’s Favorite Home Builder

Simply put, the most important actions to take when preparing to buy your first home are researching, budgeting, and planning. By organizing your finances, outlining what you want in a home, and knowing what you can afford, you can streamline the future process and feel more prepared before meeting with a home builder or real estate agent. 

If you are still feeling overwhelmed and uncertain about the home buying process - don’t worry. The team at Merit Homes is more than happy to educate you further about what you can expect and provide our expert advice. We are a luxury home builder with over 50 years of experience helping first-time buyers purchase their dream homes in the beautiful Pacific Northwest community of Kirkland. If school districts, community lifestyle, nature, and amenities are important to you, you can’t go wrong with looking into this area we proudly call home. 

Read more about what you can expect during the buying process with Merit here.