14 Tips for First-Time Homebuyers

 

Are You Ready to Buy Your First Home?

Buying a home is a major milestone, both emotionally and financially. Before diving in, ask yourself:

• Are you prepared to live in one place for at least 3–5 years?
• Do you have a reliable source of income?
• Have you accounted for all costs, including additional costs like repairs, property taxes and homeowners' insurance?

 

Owning a home means long-term responsibility. If you're expecting a major life shift, like changing jobs or relocating, then it may be wise to wait. But if your finances and lifestyle point toward stability, you're ready to take the next step.

 

How Much Can You Really Afford?

Before you fall in love with a home, you need to know what price range fits your financial reality. Many experts recommend the 25% rule: your total monthly housing payment (including mortgage, taxes, insurance and HOA dues) should be no more than 25% of your take-home pay.

 

Use Ideal Credit Union’s affordability calculators to estimate your buying power. Consider future costs like utilities, maintenance, and possible homeowner association fees. Stretching beyond your limit now can turn homeownership into a long-term source of stress rather than stability.

Pay Off Debt and Build an Emergency Fund First

Homeownership adds a layer of unpredictability. From water heater failures to roof leaks, you’ll want a financial cushion in place. That’s why paying off high-interest consumer debt and saving 3 - 6 months of living expenses should ideally come before buying.

 

Not only does this increase your financial resilience, but it also improves your mortgage application. Lenders look at your debt-to-income ratio to determine your risk level. Less debt can mean better loan terms as well as more peace of mind.

Start Saving for a Down Payment and Closing Costs

Saving for a home involves more than just the down payment. Here’s what to budget for:

• Down Payment: Most conventional loans require at least 3–5% down, but putting down 20% or more helps you avoid paying private mortgage insurance (PMI).
• Closing Costs: These one-time fees usually run 2–6% of the home’s purchase price. They include loan origination, title fees, inspection, and prepaid taxes.
• Move-In Expenses: Plan for movers, basic furniture, and initial repairs or upgrades. Even a modest budget here can reduce stress after the keys are in your hand.

 

You can easily start saving by automating transfers to a dedicated savings account. Consider using Ideal CU’s high-yield savings options to begin your homeownership journey.

Explore Loan Options and First-Time Buyer Programs

Your mortgage choice shapes your financial future. First-time buyers have several loan paths:

• Conventional loans: Often requiring as little as 3% down, ideal for buyers with strong credit.
• FHA loans: Backed by the government, allow for a 3.5% down payment with more lenient credit requirements.
• VA and USDA loans: Offer zero-down options for qualified buyers.

 

You may also qualify for state or local down payment assistance or first-time buyer tax credits. These programs can offer grants, reduced interest rates, or closing cost support, which, depending on the program, you may not have to fully repay.

 

Ideal Credit Union mortgage team consists of experienced mortgage advisors who can walk you through these options, helping you match your goals to the right program.

Get Preapproved for a Mortgage

Preapproval is one of the most powerful tools a first-time homebuyer can have. It’s not the same as prequalification, which is a basic estimate of what you might be able to borrow. A mortgage preapproval means a lender has verified your income, assets, credit, and employment, and is willing to lend you a specific amount under stated terms. This shows sellers you’re serious, financially ready, and less likely to fall through at closing.

 

Getting preapproved typically takes a few days and involves providing:

• Two years of W-2s or tax returns
• Recent pay stubs and bank statements
• Authorization to pull your credit report

 

Ideal Credit Union offers preapprovals with competitive rates and responsive service, helping you shop confidently and make stronger offers in competitive markets.

Polish Your Credit Before You Apply

Your credit score is one of the biggest factors influencing your mortgage rate and approval odds. Even a small increase in your score can save thousands over the life of your loan.

 

Start improving your credit profile as soon as you can, but aim for at least 3 - 6 months before applying:

• Check your credit reports from all three bureaus (Equifax, TransUnion, Experian) for errors
• Pay down revolving debt to lower your credit utilization ratio (keep it below 30%)
• Avoid opening new credit lines or taking on large debt
• Always pay existing loans and bills on time

 

A minimum score of 620 is often required for conventional loans, though FHA loans may allow scores as low as 580. However, for the best rates, aim higher. Ideal Credit Union can help you understand where you stand and what steps to take to improve your approval potential.

Find a Real Estate Agent Who Works for You

A skilled buyer’s agent is one of your greatest assets during a home search. They represent your interests (not the seller’s) and help you:

• Identify suitable properties within your price range
• Balance the pros and cons of different neighborhoods
• Negotiate pricing, inspections, and seller concessions
• Understand contracts and paperwork from offer to closing

 

Interview agents before committing. Ask about their experience with first-time buyers, their communication style, and their availability. A full-time, local agent with strong negotiation skills and market insight will make the process far smoother.

 

Keep in mind, you don’t pay your buyer’s agent directly. Buyer's agent commissions typically come from the seller’s proceeds.

Make a List of Must-Haves, Nice-to-Haves, and Dealbreakers

Your perfect dream home probably doesn’t exist. At least, not within budget. That’s why creating a tiered home features list is critical. Clarify your needs before you start viewing properties so you can filter possibilities effectively and avoid buyer’s remorse.

 

Must-haves are non-negotiables. These might include:

• Minimum number of bedrooms or bathrooms
• Specific commute distance or school district
• Single-level living for accessibility

 

Nice-to-haves are features you’d like but can live without, such as:

• A large backyard
• Finished basement
• Updated kitchen

 

Dealbreakers are features or issues you absolutely want to avoid, such as:

• Proximity to busy roads
• Outdated electrical or plumbing
• A homeowners association with high fees or strict rules

 

Share this list with your real estate agent to keep your search focused and efficient. It will also help you make faster, more confident decisions when it’s time to submit an offer.

Understand the Market Where You’re Shopping

Real estate is an incredibly local affair, so the experience of buying a home will vary widely depending on where and when you’re shopping. Researching the current housing market in your area is critical to setting realistic expectations.

 

Look into:

• Inventory levels: Is it a buyer’s or seller’s market?
• Average days on market: How quickly are homes selling?
• Sale-to-list price ratios: Are homes going above asking price?
• Seasonal trends: Spring and summer usually see more competition, while winter may offer more negotiating room

 

Also, understand how your target neighborhood is changing. Is it growing or declining? Are home values stable or volatile? Are there planned or likely zoning changes, developments, or school boundary changes that could affect value?

Be Strategic When Making an Offer

Once you find the right home, your offer needs to be compelling, especially in a competitive market. Start with your agent’s input on the home’s fair market value and local trends. Your offer should balance your budget with what it will take to win over the seller.

 

Key elements of a strong offer:

• Price: Aim for a competitive but reasonable number based on recent comps.
• Earnest Money: Include a deposit (typically 1–3% of the home price) to show serious intent.
• Contingencies: Standard clauses include financing, appraisal, and inspection contingencies. In hot markets, buyers sometimes waive certain contingencies to strengthen their bid—but do so with caution.
• Closing Timeline: A flexible or faster close may appeal to sellers who need to move quickly.
• Personal Letter: Some buyers add a personal note explaining why they love the home, which can tip the scales in close cases.

 

Work with your Ideal Credit Union preapproval in hand to give the seller confidence in your financial strength, reducing the chance your offer will fall through.

What to Expect During the Home Inspection and Appraisal

Two key milestones follow an accepted offer: the home inspection and the appraisal.

Home Inspection

A licensed inspector assesses the property for issues ranging from roof damage and plumbing leaks to foundation cracks and mold. Even new or well-kept homes may have hidden problems.

 

Common inspection outcomes include:

• Proceeding with no action needed
• Requesting seller repairs or credits for issues with the home
• Reconsidering the purchase in response to major issues being discovered

 

While not always required, inspections are strongly advised. They can help you avoid costly surprises.

Appraisal

Lenders require a professional appraisal to ensure the home is worth the agreed purchase price. Your lender will not loan you more money than the home is worth, because the home is the collateral for the loan. If more is loaned for the home than it appraises for, that makes the difference between the loan and the appraisal amounts effectively an unsecured loan, which is not possible for a mortgage loan. 

 

So if the appraised value comes in lower than your offer, you may need to:

• Renegotiate the price
• Cover the difference in cash
• Dispute the appraisal (this is a rare occurrence)

 

Ideal Credit Union works with trusted appraisal partners and keeps you informed throughout the process, helping avoid delays or financing issues.

Prepare for Closing Day and Final Paperwork

Closing day is when you officially take ownership of the home. A few days beforehand, your lender will send a Closing Disclosure outlining your final costs, interest rate, loan terms, and payment schedule. Review it carefully and confirm all figures match what you were quoted.

 

Closing paperwork includes:

• Mortgage note and deed of trust
• Title and insurance documents
• Tax and escrow agreements
• Final walkthrough approval (usually 24 hours before closing)

 

At the closing appointment, you’ll:

• Sign all necessary documents
• Pay your down payment and closing costs (usually via wire transfer or certified funds)
• Receive the keys to your new home

 

Ideal Credit Union’s mortgage team ensures a seamless closing by coordinating with title companies and walking you through every document, so nothing catches you off guard.

Plan for Life After the Move: Maintenance, Budgeting, and Equity Building

Homeownership is just starting when the boxes are unpacked, and it evolves into long-term financial stewardship.

 

Set a post-move budget that includes:

• Ongoing utilities 
• Homeowner’s insurance
• Maintenance and repair savings (1 - 3% of home value annually)

 

Schedule regular maintenance:

• HVAC service, gutter cleaning, roof inspections
• Lawn care or landscaping
• Safety checks for smoke detectors and sump pumps

Start Your Homebuying Journey with Ideal Credit Union

Ideal Credit Union offers more than just mortgages—we offer a trusted partnership for your first home and beyond. With competitive loan options, local advisors, and seamless preapproval and closing processes, we make buying your first home less stressful and more rewarding.

 

Whether you're just getting started or ready to make an offer, our team is here to help you move forward with confidence.

 

Get your preapproval today!