A Guide to Buying Your First Home: What to Do and What to Avoid

Buying a Home Is a Big Step

Does the thought of purchasing your first home put butterflies in your stomach? You’re not alone. Plenty of first-time homebuyers find the prospect of buying a house to be rather daunting, and when you toss in the super competitive Portland housing market, things only seem to get worse.

But people just like you are becoming homeowners all the time, and if they can do it, you can too, right? Don’t worry: we’ve put together a handy list of do’s and don’ts for first-time homebuyers, and we think you’ll find them very helpful.

Do: Work on Your Credit Now

As you know, your credit score will be a key evaluation criterion for potential lenders. They want to see a history of prudent financial management on your part.

If you’re thinking of purchasing a home, then you should get your credit score in tip-top shape. Pay down those credit card balances. Check our credit report for errors, and dispute any that you find. The better your credit score, the better your chances of being approved for an affordable mortgage.

Do: Shop Around for the Best Mortgage

Mortgage lenders are in stiff competition for your business, and some offer better deals than others. When it comes to mortgages, a few points can save you many thousands of dollars, so it pays to shop around for the best deal. Just make sure you read the fine print so you know exactly what you’re getting into.

Don’t: Just Take Whatever Your Bank Offers

Your bank might seem like a natural fit for a mortgage lender – after all, you already have a business relationship with them, and hopefully you enjoy working with them. But don’t get a mortgage from your bank or credit union just because they’re offering one.

A quality mortgage lender will take the time to get to know you and your unique situation. They’ll consider your goals, needs and preferences, your budget, and your financial situation. Then, they’ll make recommendations from a holistic perspective. 

If your bank offers great rates and you feel certain that they will provide the level of attention that your biggest investment deserves, then great! If not, definitely keep looking.

Do: Hire a Great Buyer’s Agent

You can buy a home without a buyer’s agent, but it’s a good idea to have a professional in your corner, especially if you’re a first-time buyer. A solid buyer’s agent can give you the inside track on the local real estate market, keep you apprised of new listings that fit your preferences, and negotiate with the seller on your behalf. Once again, in a market as hot as the one in Portland right now, looking at homes with a buyer’s agent in your corner makes you that much more competitive.

Don’t: Hire an Agent Just Because They’re a Friend

Okay, so your old college roommate is a Realtor. But these days, a lot of people are jumping into the real estate market. That happens when values rise and sales pick up again.

Just because someone has a real estate license doesn’t make them the best person to help you buy a home.

If your college roomie also happens to be a top-notch buyer’s agent with expertise in the type of property you’re seeking, and you trust them even though they ate your takeout that one time, then go for it. If not, hire someone else and invite your old buddy to the housewarming party when it’s all said and done.

Do: Figure Out How Much You Can Afford

Most of the time, buying a home ends up being a solid long-term investment, but making that investment can be quite expensive on a month-to-month basis. As a general rule, you shouldn’t spend more than 28% of your income on housing expenses.

If you go above that number, you risk putting a serious kink in your cash flow situation. Don’t be house poor. Know what you can afford, and stay within your budget.

Don’t: Go Into the Home Buying Process Blind

Some first-time homebuyers overestimate how much home they can afford, and become disappointed when they find out that the homes that interest them are well outside of their budgets.

When making room in your budget for a home purchase, don’t leave out the details. Make sure you account for property tax, homeowner’s insurance, HOA dues, maintenance and repair costs, and if applicable, mortgage insurance.

Do: Get Pre-Approved for Financing

The housing situation is getting extremely competitive in many markets, especially particularly popular cities like Portland and the surrounding areas. Multiple offers are common in this market, and any desirable listing can quickly become the object of a bidding war.

When you find the right home, it’s crucial that you’re prepared to strike while the iron is hot, so to speak. Having the guaranteed backing of a mortgage lender will show sellers that you’re serious, that you have the means, and that you’re actually ready to buy.

Do: Enjoy the Process of Buying Your First Home!

Buying a home can be stressful, but it can also be a very exciting time. Follow these tips, and don’t get discouraged during the process. You’ll be getting the key to your new life before you know it. Good luck!

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9 Comments

  • Posted August 8, 2016 at 10:48 pm | Permalink

    Getting pre-approved is a great way to stay within your budget. Having a pre-approval form is a great way to act on a home that you love before it's too late. If you already know what loan amount you can afford, that will help remind you to only search in what you can pay for.

  • Posted September 1, 2016 at 3:34 pm | Permalink

    Thank you for reminding me that it is important to have good credit in order to purchase a home. I am not thinking about buying a home for a few years but it's definitely not too early to start working on my credit. Your other tips were great as well. I'll make sure to keep all of them in mind.

  • Posted November 10, 2016 at 3:52 pm | Permalink

    These are some great tips, and I appreciate your advice to get pre-approved for financing when buying your first house. My husband and I have been discussing it for a while now, and we've decided that we're ready to move into our first home. We'll definitely make sure to get pre-approved so we know exactly how much we can afford, and so sellers know we're serious about buying. Thanks for the great post!

  • Posted November 29, 2016 at 7:35 pm | Permalink

    My wife and I are hoping to move out of our rented apartment into our own home in the next few months. It is a daunting process, so we have been looking for some tips. Finding homes for sale hasn't been too difficult. Getting pre-approved seems like the best way to go into an offer. That way, you know exactly what you can spend and how much you can increase your offer if needed.

    • OptionsRM
      Posted November 30, 2016 at 12:24 am | Permalink

      Exactly, you don't want to get your heart set on a home to find out it doesn't fit into the budget, or worse, miss out on The One to someone who is pre-approved! Working with someone you like and trust is HUGE…check out our Loan Officers who are invested in each client and know that buying your first home can be a little daunting at first, and can help walk you through each step! Thanks for the feedback, Burt!

  • Posted January 17, 2017 at 3:27 pm | Permalink

    Thanks for bringing to my attention the value of shopping around for the best mortgage when buying a house. I've decided that it's time to take the next step in my life and buy a home, and I want to make sure I go about this the right way. I imagine that taking some time to check several mortgages could save me quite a bit of money, so I'll make sure to do that.

  • Posted January 17, 2017 at 11:18 pm | Permalink

    I really like your tip about making sure that you shop around for the best mortgage when it comes to buying a home. We are really excited to start looking for the right one for use. We are going to be talking with a real estate agent about the process so we will be sure to keep these tips in mind, thank you for sharing!

  • Posted March 27, 2017 at 7:37 pm | Permalink

    It is good to know that when it comes to hiring a realtor, one should find someone who is a top notch buyer-s agent with expertise in the type of property you are seeking. I also like what was mentioned about the importance of trusting your agent. Another thing to find would be to ask about how many properties they sold during the previous year. 

    • OptionsRM
      Posted March 27, 2017 at 8:09 pm | Permalink

      Good feedback, Jade. Thanks for your comments. 

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