Buying your first house: check out all the details now!

Achieving this goal could be just the beginning of other financial accomplishments.

Buying your first house is one of life’s most important financial decisions. From setting the budget to the final signature, each stage requires planning and attention to detail. With good financial preparation and knowledge of the rules, it is possible to make the dream of home ownership a reality.

Fortunately, the real estate market offers various financing and support options, especially for first-time buyers. In this guide, we’ve put together valuable information that will help you find the perfect property under the best conditions. Let’s go!

1. Establish your budget

The first step in buying a house is to understand how much you can afford to spend, taking into account the price of the property and other costs. Evaluate your monthly income and fixed expenses, making sure there is room in the budget for this new expense. This financial planning avoids surprises in the future and makes the process easier.

Also, define how much you can offer as a down payment. This can vary from 3% to 20% of the value of the house, depending on the mortgage. Also set aside funds for additional costs, such as closing fees, which generally represent 2% to 5% of the value of the property.

Don’t forget property taxes, home insurance and any repairs or renovations. It is important to have a financial reserve for emergencies, ensuring that you are prepared for unforeseen events. With this planning, you’ll be safer when you move on to the next steps.

2. Prepare your credit score

The credit score is one of the main considerations evaluated by financial institutions when analyzing mortgage applications. This score reflects your credit history and limit, as well as your ability to honor payments. 

A good score, usually above 620, is essential to qualify for a conventional loan and obtain competitive interest rates. In addition, a higher score can increase your chances of getting better financing terms and faster approval.

To improve your credit score, pay all your bills on time, keep your credit card limit below 30% and avoid opening new lines of credit before applying for a mortgage. Regularly checking your credit report is also important to correct any errors that may impact your score.

3. Get pre-approved for a mortgage

Pre-approval is an essential step in determining how much you can borrow. It also shows sellers that you are a serious and prepared buyer.To get pre-approved, you’ll need to provide documents such as proof of income (pay stubs or tax returns). You’ll also need bank statements and information about your current debts.

With pre-approval, you will know the maximum amount you can finance and have a clear idea of what you can afford. This will help you filter your real estate options and avoid frustration during the buying process.

4. Choose the most suitable type of mortgage

There are several mortgage options available today, each with different characteristics:

• Conventional: deal for those who have good credit and can afford a larger down payment, which results in lower interest rates.
• FHA (Federal Housing Administration): this option is aimed at first-time buyers or those with lower credit. The minimum down payment is 3.5%, but the buyer will need to pay mortgage insurance (MIP) throughout the financing.
• VA Loan: exclusively for veterans and military service members, it offers benefits such as no down payment and reduced rates.
• USDA Loan: available for properties in rural areas, with low down payment and financing costs.

Evaluate the options and talk to your lender to understand which mortgage best fits your financial profile.

5. Hire a real estate agent

An experienced real estate agent is essential to help you find and buy your first house. They will have access to listings that fit your budget and your needs. This makes the process easier and saves time, allowing you to focus on the most suitable options.

In addition, the broker will negotiate the price on your behalf and ensure that all legal aspects are followed correctly. They will take care of the paperwork and ensure that the transaction goes smoothly. This professional help reduces the risk of errors during the purchase process.

The broker can also provide detailed information about the local market. They will analyze the appreciation of the property over time and the profile of the neighborhoods. With this information, you can make better decisions when you make your offer to the seller.

6. Make an offer and inspect the property

With the broker’s help, start visiting properties. Consider factors such as location, size, schools in the area and the general condition of the house. Remember that location can have a direct impact on the property’s long-term value.

Visit the neighborhood at different times of the day to check aspects such as safety and noise. Ask about development plans for the area, as this can affect both the value of the property and the quality of life in the area.

Another important aspect is the condition of the house. Some houses may have great potential for appreciation, but require considerable renovations or repairs. If you have no experience in renovations, carefully assess whether the cost and time of remodeling is worth it, or whether it would be better to opt for a ready-made house.

7. Finalize the purchase

When you’ve found the right house, your realtor will help you make an offer to the seller. If the offer is accepted, the final phase begins, including inspecting the property and signing the contract. Make sure that any problems identified during the inspection are resolved before completing the purchase.

The bank will also carry out a valuation of the property to ensure that the price is in line with the market. This step is crucial, as the appraised value can affect the approved financing. Maintain clear communication with the broker and the bank to avoid any last-minute surprises.

Buying your first house is challenging, but with planning and patience, the dream can become a reality. Remember that this is a long-term investment and deserves attention to detail. In the end, the effort will be rewarded with a home of your own.

Ready to go! Now you know the steps you need to take to buying your first house with greater security. We hope you manage to save money on a daily basis to achieve your financial goals. See you later!