First-Time Homebuyer Guide

As a first-time homebuyer it can be both frustrating and intimidating. Not only is buying your first house a huge purchase, but it also requires a lot of time and research in order to make the right decision. This cannot be an impulse buy. You don't want to fall in love with the very first listing you find or make an offer after seeing one virtual home showing.

Being educated and prepared can go along way and it could mean the difference between landing your dream house or having a more savvy buyer swoop in to buy it from underneath you. Amy Stockberger Real Estate (ASRE) wants to make sure this doesn't happen. Read our first-time home buyer guide to learn the steps for a fun, stress-free buying experience.

What Is the First Thing to Do Before Buying a House?

You should start by paying attention to the real estate market where you're looking to buy. Find homes in your price range and monitor how long it is taking them to sell. Also notice any major shifts in the asking price. The more you familiarize yourself with these trends the easier it will be to navigate the real estate market when it comes time to make an offer.

Gather the Necessary Paperwork

This is a good idea even before you begin searching for potential new houses, and especially if you'll be applying for a mortgage. Gather the following documents listed below to get a leg up on other homebuyers.

  • Tax returns from the last two years
  • Bank statements from the last three months
  • Current pay stubs
  • Canceled rent checks
  • Copy of your lease, if you're currently renting

Locating this documentation may seem like a bit of a hassle, but the mortgage officer will need it when they're determining your capability as a borrower and having this paperwork at the ready will help close on the loan more quickly.

Check Your Credit Score

In addition to having a down payment, a first-time homebuyer will need a good credit score. It's smart to check your credit report prior to contacting a lender in case you need to answer questions or dispute any errors. A credit score consists of data from the three, major credit-reporting agencies: Equifax, Experian, and TransUnion, and it's based on the criteria below.

  • How long have you been borrowing money? Lenders want to see a lengthy credit history.
  • What is your total amount of debt? For obvious reasons you don't want this number to be too high.
  • What types of credit do you have? Mortgage lenders prefer a variety of credit types, including student loans, bank cards, and car loans.
  • Do you pay your bills on time? This demonstrates reliability to mortgage lenders.

Your credit score is a key factor when it comes time to secure a home loan. This three-digit number will influence the amount of your down payment, your interest rate, and other terms of your mortgage, not to mention it will help determine the type of loans you are eligible for, as certain loans have different credit score requirements.

Get Pre-Approved for a Mortgage

After you've decided on a mortgage lender it's time to get pre-approved for a home loan. A pre-approval requires the lender to pull your credit history and assess your current situation. After they review all relevant financial information, the lender will issue a letter stating how much they're willing to borrow you. This step is important for numerous reasons.

Getting pre-approved will let you know how much home you can afford and it shows sellers that you're serious about buying. Pre-approval can also give you an edge if there are multiple offers on the table because the seller will have more confidence that you will be approved for a loan large enough to purchase their house. Make sure you get quotes from at least three different lenders for your first-time homebuyer loan to compare amounts, interest rates, and fees.

Determine Your Housing Needs

Think about your lifestyle, current housing needs, and future plans before you start house hunting. Do you really need a three-stall garage? Are hardwood floors a dealbreaker? Will you really use that fourth bedroom? It's crucial to consider these types of questions prior to searching for your new home and prioritize the following elements:

  • Most Important: Square footage, preferred number of bedrooms and bathrooms, type of neighborhood, and commute time
  • Important: Yard and outdoor space, storage areas, home office, and exercise room
  • Less Important: Countertops and finishes, specific appliances, window types, and pool

Make a list of must-haves and features you'd like but don't really need. The amount of home listings can be overwhelming so taking this step will help you get started and narrow your search.

Find a Trusted Real Estate Agent

First-time homebuyers don't have to go through this process alone. Finding a trusted realtor like Amy Stockberger Real Estate (ASRE) can be invaluable during the home buying process. Our knowledge of the Sioux Falls area is unmatched and we can help you with the following:

  • Evaluate home listings
  • Answer questions
  • Negotiate offers
  • Recommend other home professionals you may need

ASRE will help put you in a position to act fast when it's time to make an offer and what's better? The services of a buyer's agent are free to first-time homebuyers because the seller is responsible for paying the sales commission. Be sure to ask your realtor about all available options for first-time homebuyers.