Buying a first home is one of the biggest financial decisions a person will ever make. For many people it can be a rather intimidating prospect. Between navigating mortgage options, budgeting for hidden costs and competing in a fast-moving market, it’s easy to feel overwhelmed.

The good news is with the right preparation—and the right local guidance—buyers can approach this daunting process with confidence.

Start With What You Can Truly Afford

One of the most common mistakes first-time buyers make is confusing what they can borrow with what they should borrow from a lender. 

A bank or lender may approve someone for a certain amount, but that number may not necessarily account for their comfort level or lifestyle. One should always be wary of the notion of becoming “house poor,” which means spending too much money on a house, necessitating financial cutbacks in other areas of life. A smart approach is to build a monthly budget that includes:

• Mortgage payments.

• Property taxes and insurance costs.

• Utilities and maintenance.

• Savings and everyday expenses.

A home should support one’s life. It should not stretch it to its limits.

Get Pre-Approved Before You Start Shopping

Before a buyer falls in love with a home, it’s important that they understand their buying power.

The pre-approval process is a critical first step when one is looking to buy a new home. A pre-approval gives a buyer a clear price range, stronger credibility with sellers and faster decision-making when they find the right home.

Most pre-approval applications can be done via online portals where borrowers can provide information and supply pay stubs, W-2s, bank statements and/or tax returns. The process can be done in a matter of moments, and a typical pre-approval can be valid for up to 120 days.

Working with a local lender can make this step especially valuable as they often understand neighborhood-specific pricing trends and can move quickly.

Get With the Right Real Estate Agent

Buyers should contact a real estate agent who works frequently in the areas in which they are looking. Having a real estate agent who is plugged in to the local market and knows of homes currently on the market and homes soon to come to market is paramount. Real estate agents assist buyers with making offers, selecting or not selecting relevant contingencies to sale, selecting or not selecting relevant inspections, negotiating a sales price, scheduling a home inspection and getting the buyer all the way through the process of closing on the home. 

Plan for More Than the Down Payment

Many buyers focus on saving for a down payment, but there are additional costs to plan for. For example, closing costs are typically anywhere from 2 percent to 5 percent of the purchase price of the home. Additionally, there are typically home inspection and appraisal fees, initial repairs or updates to account for, as well as moving expenses.

Buyers should ensure that they leave a financial cushion after the closing to make the transition to homeownership smoother.

Think Long-Term When Choosing a Home

It’s easy to get caught up in appearances and aesthetics, but the best first home is one that fits both a buyer’s current needs and their future ones.

Buyers should always consider the home’s location, neighborhood and commute (if applicable). School districts, resale value and potential for appreciation are also key considerations.

Buying with a long-term perspective can help one build equity and avoid outgrowing a home too quickly.

Avoid Common First-Time Buyer Pitfalls

Even well-prepared buyers can run into trouble. Some of the most common mistakes include stretching a budget too thin, skipping a home inspection, draining savings for a down payment and making large purchases before closing.

A steady and informed approach will serve buyers far better than rushing into a decision.

Take Advantage of First-Time Homebuyer Programs

FHLBank Pittsburgh’s First Front Door program provides money to help with down payments and closing costs for qualified first-time homebuyers. Additionally, many local banks offer their own first-time homebuyer programs. Buyers should check if they qualify for any first-time homebuyer programs to ensure they don’t leave any money on the table.

The Value of Local Guidance

For first-time buyers, having a knowledgeable partner can make all the difference. A community bank offers something that’s often hard to find elsewhere: Local insight, accessible decision-makers and a relationship-based approach.

Since they don’t typically use large call centers or one-size-fits-all approaches, community banks can help buyers understand their market and their goals.

Ask Questions

Buying a home is not something people do every day. It is perfectly OK for a buyer to ask questions of their mortgage professional, real estate agent, title company and inspector. Those professionals will welcome the opportunity to educate buyers on their area of expertise or piece of the transaction. 

Final Thought

Buying a first home doesn’t have to feel overwhelming. With the right preparation and the right guidance, it can be a rewarding and empowering experience.

Buyers should also make sure that they have some fun along the way! Buying a first home is literally a once-in-a-lifetime experience, so buyers should take the time to enjoy the journey of finding the right one for them.  

Andrew Goff is VP Residential Sales Manager at Brentwood Bank.