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Homebuying Checklist for First-Time Homeowners

September 14, 2023

Homebuying Checklist for First-Time Homeowners

Buying a home is an exciting step in a person's life, but it can also be overwhelming and complex. Purchasing a property requires many steps — from the initial search to the closing meeting — and first-time buyers must be prepared.

Taking it one step at a time can relieve the stress of purchasing a home, especially for first-time homebuyers. A homebuying checklist can help you prepare for your first home purchase.

First-Time Homebuying Checklist

Whether you're buying a townhouse, condo or single-family home, the following tips can help you facilitate a successful home purchase:

1. Create a Budget

Your budget determines what homes you can afford. The first step in your checklist for house shopping is to look at your finances before you start browsing the housing market. Understanding where you are financially ensures you don't waste time looking at homes outside your price range.

Lenders will only approve loans they believe you can pay monthly, using your credit score and debt-to-income ratio to determine eligibility. A mortgage calculator can help you estimate your monthly mortgage costs — including interest — to help you better prepare. Your real estate agent will also appreciate you having a budget in mind so they can more effectively help you find your dream home.

2. Create a Savings Plan for Your Downpayment

When buying a home, you generally must make a downpayment. The more you can put down upfront, the less your monthly payment and interest rate will be. Conventional mortgages usually require down payments of around 3% to 5% of the total price of your home. However, you'll need to put down around 20% to avoid private mortgage insurance.

While saving up for your downpayment, you should also consider setting extra funds aside to cover any repairs and closing costs. Different ways to save include:

  • Taking on a side job to make extra money.
  • Creating a monthly budget and sticking to it.
  • Setting up automatic savings that pull automatically from your bank account. 

3. Know What You Want

Having an idea of what you want from your home will make it easier to narrow your options. For example, you may want a home in a specific location or near amenities. You may also want a big backyard or a detached house. 

As you save for your downpayment, you should create a wish list of what you want from your new home. Some things to consider include:

  • Yard size
  • Square footage
  • Local school quality
  • Attics or basements
  • New build vs. existing builds
  • Garage space or detached units
  • Number of bedrooms and bathrooms
  • Neighborhood quality and surrounding amenities

Consider what matters most and what would make a house feel like a home.

4. Find a Real Estate Agent

Find a Real Estate Agent

Real estate agents are often valuable lifelines for first-time homebuyers. These professionals are intimately familiar with the homebuying process and can work with you to help you find a home within your budget that meets your requirements. A real estate agent can also walk you through the complicated steps of the process.

5. Find a Lender and Seek Preapproval

The next step is to find a lender for preapproval, which will help you determine what you can afford, eligible loan programs and interest rates. This step is essential to help assure home sellers and real estate agents you can pay for the home you want to buy.

A preapproval is more in-depth than a pre-qualification since it checks your credit score. A preapproval will give you the most accurate loan information necessary for the homebuying process.

6. Gather Documentation

You will need different documentation when you apply for the official loan, and preparing your documents ahead of time can help you be better prepared when the moment comes. The documents you need for buying a house include:

  • Recommendation letters.
  • Tax returns from the last two years.
  • Proof of funding for the down payment and closing costs.
  • Proof of your last two months of income, including bank statements or pay stubs.
  • Photo identification, such as a driver's license, passport or other government-issued ID.

7. Make Offers and Negotiate

Once you've found a home that meets all your requirements, you can put in an offer. Most homebuyers have their real estate agent put in an offer for them.

You can do more in your offer than name a price. You can also request repairs if something is wrong with the home or ask for additional considerations, such as having the seller cover closing costs. If you get a counteroffer you don't like, your real estate agent can negotiate to help you get the best possible deal.

8. Complete Home Inspections and Appraisals 

Before you finalize the sale, you'll want to complete a home inspection and appraisal. A home inspection can give you a better idea of the quality of your home. Your inspector will check to see if everything is in good condition, including the plumbing, electrical, roof, foundation and other amenities or components. They'll let you know if anything is wrong with the home that needs to be repaired before you close.

An appraisal will also determine how much the home is worth so you can determine if you've offered more or less than the value. Additionally, many lenders require an appraisal and won't lend more than the appraised amount. If the appraisal finds that the home is worth less than your offer, you can attempt to renegotiate your offer or move on to another property that's priced appropriately.

9. Get Homeowners Insurance

Many lenders require that you get homeowners insurance before closing on a property. Homeowners insurance protects you and your lender if something happens to the home. You should find coverage that will cover the entire cost of the property, and it should start no later than your closing date. Flood coverage is generally not included in standard homeowners insurance, so you'll likely want to get separate flood insurance if your risk is high.

10. Close on Your New Home

After you've been approved for a loan, completed a home inspection and appraisal, and purchased insurance coverage, you can close on your home. The closing process involves finalizing the deal between you and the seller, as well as between you and your lender. Closing includes signing paperwork and paying closing costs. Before signing anything, review your Closing Disclosure from your lender, which gives you all the terms for your mortgage.

At the closing meeting where everything will be signed, you'll usually meet with your agent and mortgage broker. The seller and their agent might also be there. You'll need to bring proof of payment and your ID. Once the paperwork is signed, you'll get the keys and be a homeowner for the first time.

Find Your Dream Home With SK Builders

Find Your Dream Home With SK Builders

SK Builders has over 25 years of experience building homes with the best designs and craftsmanship in the industry. We can help you find a starter home from one of our available builds, or we can help you create your dream home on your lot in South Carolina.

You can browse our gallery for a better understanding of our work or inspiration, or you can contact us to learn more about our building services.

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