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First-Time Homebuyer Checklist: Your Step-by-Step Guide to Homebuying

May 16, 2024

first time homebuyer homebuying checklist

Buying your first home is an exciting milestone. But, when you’re on this road for the first time, it can be overwhelming. In 2020, nearly one-third of all home buyers were first-timers._[1] Because you’ve never done this before, you need to learn the lingo. And, a to-do list can help you stay on track and take it piece by piece rather than all at once.

If you walk the home buying path one step at a time, it can make for a much smoother process. First, explore a glossary of first-time home-buyer terms. Then, use our checklist to move through the home buying process with ease.

First-Time Homebuyer Glossary

Adjustable-Rate Mortgage (ARM) – Type of variable-rate loan with interest that adjusts to a benchmark. While the interest rate may change, the payments may not.
Amortization – Gradual loan repayment through scheduled payments.
Appraisal – Determination of a property's value by an appraiser.
Closing – Final step transferring ownership and completing the transaction.
Closing Costs – Fees and expenses to finalize a real estate transaction and/or a mortgage.
Contingency – Conditions that must be met for the sale to proceed.
Contingent Offer – Offer dependent on certain conditions.
Debt-to-Income Ratio (DTI) – Comparison of debt payments to income.
Down Payment – Monies that the buyer pays upfront towards purchase of a property.
Earnest Money – Deposit to show serious intent to purchase.
Escrow – Holding of funds or documents by a third party.
Fixed-Rate Mortgage – Mortgage with a constant interest rate.
Home Inspection – Assessment of a property's condition.
Homeowners Insurance – Policy that protects against property damage.
Mortgage – Loan to finance property a purchase.
Mortgage Pre-Approval – Verification of buyer qualification before a property is identified.
Principal – Original amount borrowed (excludes interest).
Private Mortgage Insurance (PMI) – Insurance paid by the borrower that protects the lender if payments are not made on the mortgage.
Real Estate Agent – Licensed professional that represents buyers or sellers.
Title Insurance – Insurance that protects lenders (Lenders title insurance) and/or buyers (Owners title insurance) against title defects.
Underwriting – Evaluation of borrower's financial situation for loan approval.

Understanding these terms will enhance your confidence throughout the home buying process.

The 14-Step Home Buyer Checklist

Buying your first home can be thrilling and exhausting. To help you navigate this process smoothly, we've compiled a comprehensive roadmap. From understanding your financial readiness to closing the deal, each step is essential for a successful home buying experience.

Now, one step at a time, here are the things you need to do to buy a home.

Nearly one-third of all home buyers were first-timers.[1]

1. Check Your Credit Score

The first step in the home buying process is to check your credit score. This step is crucial as it impacts your ability to secure good mortgage terms.

2. Find Out How Much House You Can Afford

Use a mortgage calculator to estimate your budget based on your income, expenses, and down payment. Understanding your Debt-to-Income Ratio (DTI) is key to coming up with a realistic home budget.

You might also like: How much mortgage can I afford?

3. Gather Your Down Payment

Set aside funds for your down payment. Typically, first-time buyers aim for 3-20% of the home's purchase price. However, special programs can help take some of the burden off you. Explore local down payment assistance programs offered through agencies like the Indiana Housing and Community Development Authority (IHCDA)._[2]

You might also like: Free Budgeting Online Course at Centier To You

4. Check for Federal, State, and Local First Time Home Buyers Programs

Explore potential grants, loans, or tax incentives available for first-time homebuyers in Indiana. Again, the IHCDA can be a valuable resource. Government programs and local initiatives may offer financial assistance or favorable terms.

Find out if you qualify for:

Indiana Habitat for Humanity’s Homeownership Program[3]
An FHA Mortgage[4]
A USDA Single-Family Housing Program[5]
A VA Home Loan[6]

If you meet the requirements, these programs and loans can help you save the most money.

You might also like: Meet the Right Mortgage Loan Officer

5. Find a Mortgage Lender and Get Pre-Approved

Research lenders and secure pre-approval for a mortgage from a mortgage lender. This process helps you understand your budget and demonstrates to sellers that you're a serious buyer. Centier Bank's mortgage specialists offer personalized guidance tailored to Indiana's market.

6. Pick the Ideal Location(s)

Choose a location that works for you and your family. Explore the internet and ask on forums like Reddit^® and Facebook^® groups. Find out what locals have to say and explore statistics.

Consider factors like:

Neighborhood safety.
Proximity to amenities.
Commute times.
Local school ratings.
Future development plans.

Use apps like Niche® and Neighborhoods® to get information about neighborhoods you’re unfamiliar with. Be sure to drive through a neighborhood to make sure you can see yourself living there.

7. Enlist the Help of a Real Estate Professional

Partner with a reputable real estate agent or realtor familiar with your desired area. For example, if you’re planning to buy in South Bend or Fort Wayne, find an agent in that area. They can guide you through the home buying process, from house hunting to negotiation.

Once hired, ask your realtor about local crime, schools, and development rumors.

8. Begin the House Hunt

Start searching for your dream home based on your pre-approved budget. Your real estate agent will be able to show homes that fit your needs. They should also answer any questions you have about the home, neighborhood, and realistic sales price.

9. Review the Home Appraisal and Home Inspection

When you find a home you like, you’ll need to be sure its closely examined. A home appraisal and inspection will be scheduled with the seller to identify any issues with the property. This step ensures transparency and can influence your final decision and negotiations.

Sometimes, the seller will agree to pay for this. In other cases, the expense could fall on you.

10. Make an Offer on a Property

Once you find the right home, work with your agent to craft a competitive offer. Speak to your real estate agent about an earnest money deposit. A deposit of 1-3% of the home's purchase price can make negotiations stronger.

Of course, it's best to get the lowest price. However, you may want to bid higher if you’re competing with several potential buyers. The seller’s motivation level can also play a role in negotiations.

11. Hire a Real Estate Lawyer (if needed)

Hiring a real estate lawyer can provide additional legal protection during the home buying process. Consult with professionals to determine if legal representation is necessary.

12. Get Final Approval on Your Mortgage

Ensure all required documents are submitted to your lender for final mortgage approval. Stay in close communication with your loan officer to expedite the approval process.

13. Don't Forget Homeowners Insurance

Secure homeowners insurance to protect your investment. Centier Bank offers resources to help you understand insurance options and requirements in Indiana.

14. Close on Your New Home

Coordinate with your real estate agent, lender, and the seller to finalize the closing process. Be prepared to sign paperwork and transfer funds as necessary to complete the purchase. This will also involve a notary and probably the local title company.

Remote and electronic closing opportunities may be available. Some lenders may send a notary to your home to witness your signing.

There are lots of documents to process at this stage, so stay patient!

Start Your First-Time Home Buying Journey with Centier

Success with the home buying process is doable with a strategic approach. Use this checklist to stay on track as you buy your first home. Start at the top and work your way down as you focus on one step at a time. Breaking a large task down into bite-sized chunks can make it easier.

Ready to begin your home buying journey? Explore Centier Bank's mortgage rates options and connect with a local mortgage professional today.

Sources:

[1] https://gitnux.org/first-time-home-buyer-statistics/

[2] https://www.in.gov/ihcda/homebuyers/

[3] https://indyhabitat.org/how-to-apply/

[4] https://www.hud.gov/states/indiana/homeownership

[5] https://www.rd.usda.gov/programs-services/single-family-housing-programs

[6] https://www.benefits.va.gov/homeloans/