May 1, 2019

What to Expect When Buying Your First Home

A young man and woman smile as a realtor hands them a key to their new home.

You’ve been stashing away money for a down payment for your new home for several years now. Open houses and model home tours have been your life for the past several months, and you’ve found your unicorn--a perfectly sized home with a big backyard, located in a highly-rated school district, and only a few miles from work. But, before you take steps to snatch up those keys to your dream home, there are a few things you should know.

If you have realistic expectations when buying your first home, you’re less likely to be disappointed. Here’s what first-time homebuyers can expect when purchasing a home.

You’ll Need More Than a Down Payment

You’ve likely heard that down payments can range between zero and 20 percent of the purchase price, depending on the loan program. However, first-time buyers are often surprised at the other expenses associated with completing the transaction, i.e., closing costs. Closing costs vary by state but generally range from 2 to 5 percent of the purchase price. They are due at the time of closing along with the down payment.

The exact amount due is provided by the lender before closing and covers additional expenses ranging from application fees to underwriting fees. Negotiating with the seller on some of these expenses is possible. Once an offer is accepted, it can take several months before you come to the closing table. This can give you time to secure the additional funds, if needed.

You’ll Need to Look Past the Perfect Home Staging

An updated kitchen, hardwood floors, or shaker cabinets may signify that the seller follows the latest decorating trends, but tells nothing about the condition of the home. A beautifully staged home may hide faulty electrical wiring, leaky pipes, or inadequate attic insulation. This is one reason a real estate agent should submit a contingency offer on your behalf. Instead of making a general offer to purchase, an offer can be made contingent upon other requirements being satisfied, e.g., cleared home inspection.

It’s okay if the home inspection identifies items that need to be repaired or replaced. Even new construction homes may need several fixes before closing. A contingency offer allows you to work with the seller to resolve problems related to the condition of the home. The seller may agree to fix several or all of the findings named in the home inspection report, or may offer to split the costs with you. You can either agree to share the costs or walk away if the seller decides they will not resolve any of the items in the report.

The contingency requires that the repairs or replacement of items found in the home inspection must be fixed or the sale is a “no go”. Some sellers will provide credit at closing for the repair cost. Or, they may pay to fix the repair or replacement before closing.

You’ll Want to Clean Up Your Credit First

Several months before you apply for a mortgage loan, order a copy of your credit report and correct any errors. Don’t assume your credit report is accurate. Incorrect information in credit history reports is the most common complaint against the three major credit reporting bureaus: Equifax, Experian, and TransUnion.

A credit score of 620 is needed for most mortgage loan programs. However, some loans are available with lower scores.  If you’re aiming for the best rates, terms, and loan programs then the higher your score, the better. Besides correcting inaccuracies, be timely with your payments and keep new debt to a minimum.  Both are factors in your credit score and your loan approval. Order a free copy of your credit history report from each bureau by visiting

There’s more to purchasing a new home than what’s discussed here. Partner with a licensed real estate agent who is an expert in your local market. Ask questions every step of the way. When you know what to expect, unnecessary pitfalls can be avoided. Living in your new dream home may come sooner than you think.

Ready to get started? Applying for a mortgage can seem like an overwhelming task, but the professionals at Hughes are experienced and available to make the process as stress-free as possible. Apply today!