2022 Guide to Buying Homes for the First Time

July 7, 2022

The 2022 Guide for First Time Home Buyers

If this is your first time buying a house, you might be feeling overwhelmed. Home buying can be an exciting and emotional process, but it doesn’t have to be complicated. Of course, there are a lot of things you have to consider, especially with the current times.

It helps to have a reliable real estate advisor or agent to guide you through the process and give you all the insights you need along the way.

What are the things you need to consider?

Buying a house is one of those big purchases that can also be life-changing. That’s why you have to be prepared mentally, emotionally, and financially before entering the market. These are some questions that you might (or should) be asking yourself in the process.

Is now a good time to buy a house?

Honestly, it is both. Due to inflation rising, and the Fed increasing interest rates, house prices and mortgage rates are up as well. But if you need to buy a home, then you might want to go ahead and buy so you can lock in the rate. They forecast that the rates might be raised some more throughout the year.

However, if you feel like the need to buy a house isn’t as immediate, and your finances could use some work, you can wait for a bit. The competition is still fierce in several markets across the US, with the low inventory on active listings. The good news is that a number of new constructions are entering the market, and the new supply is shifting the housing market slightly in buyers’ favor.

Should I buy a house (when I can rent)?

It is undeniable that real estate is a good long-term investment. If the question is “Is it worth it to buy a house?” the answer is yes. Especially if you plan to stay long in it. Renting comes with its own pros and cons, depending on your current living and working conditions, but if we are talking about the long run and “putting down roots,” becoming a homeowner is worth it.

Plus, owning a home makes you feel good about yourself, and gives you a sense of security.


When should I buy a house?

In a normal market, spring is the hottest season for real estate. The pandemic that started in 2020 disturbed that cyclical trend, but since we’re already coming out of it, the housing market is also inching back to a more normal market. We’re still far from pre-pandemic conditions, but we’re slowly getting there.

So, if your financial situation is great, and you want to buy a home, now is as great a time as any.

How’s my financial situation?

It is wise to make a serious audit of your finances before going house-hunting. How is your savings? Do you have enough money for the down payment? How is your spending? Do you have a steady source of income? How’s your debt-to-income ratio? Is your credit score doing good or will you need to do some debt clearing? How much (home price) can you afford?

These are some of the questions you need to ask yourself, and really reflect on. Because buying a home is a big purchase, and it requires a lot of financial planning and responsibility.

And with the mortgage rates up, your credit score will also be a big determining factor in how you can afford to pay for your home.

What type of home am I looking for?

Check your needs and preferences for the type of home you want to purchase. How many bedrooms will you need? Where will you live? Are you moving in alone or with your family? You’ll be staying in that house for a long time, so it will be great to consider the needs of everyone who will be living there.

Will you buy a single-family home, a duplex, or a townhouse? How big do you want the house to be? What type of neighborhood do you want to live in? Is it close to schools, hospitals, malls, shops, and your workplace?

These questions can be a good starting place in making a list of qualifications. That way, once you begin looking for houses, you already have an idea of whether it is the right fit for you.

Steps to buying a home

Once you’ve considered the things above, you’ve already passed the first step. If you have come to the conclusion that you are indeed ready for the commitment of becoming a homeowner, then the following steps will get you started on the journey of buying a home.

Check Your Credit Report

Your credit score is important because it usually determines the loan terms and price points you can get approved by a lender. Check your credit report, and make sure there are no errors you need to have corrected. While you’re at it, working on raising your credit score will also benefit you when applying for mortgage loans. If you want better loan terms and lower interest rates, aim for a FICO score of 720.

Create a Housing Budget

Set a realistic budget for your new home. Aside from the house pricing point, you also have to consider your income and your monthly expenses such as bills, utilities, groceries, and more. Get an idea of the maximum loan you could qualify for, and decide on how much you will set aside to save for the down payment.

Save for Down Payment (and Closing) Costs

If you want to avoid private mortgage insurance (PMI), you need to save up at least 20% of the home price for the down payment. Some mortgages without PMI have lower down payments, but the interest rates might be higher. (Source: Bankrate) You’ll also need to prepare for closing costs–fees you pay to get the loan.

There are homebuyer assistance programs you can check in your local area or state. You can also check out loans that require lower or no down payments.

Look for Home Loans and Get Pre-Approved

When shopping around for mortgages, try looking for at least three brokers to get higher chances of getting lower interest rates. Work with someone who can provide you with details and your loan options and overall costs. Ask what first-time homebuyer programs are available for you as well. And get pre-approved for a mortgage–this is helpful once you start bidding on houses.

Hire a Real Estate Agent/Advisor

Don’t go into the battlefield without a trusted advisor. An experienced real estate agent can help you save time and money while helping you navigate all the negotiations and procedures when buying a home. Find someone you can work with, who has the knowledge of the local market, and will work to get you the best house for the best price.

Go House-Hunting

View listing photos and arrange for viewing in person as much as possible. Seeing the house in person helps you visualize better if the home is right for you. And, you can see what repairs and changes you might need to make before moving in. You also get a feel of the neighborhood the property is in, and what the transportation situation looks like in the area. And take notes of the properties you visit, what you like about them, and why–that way you won’t forget which house had caught your eye.

Make an Offer

When you make an offer letter, it includes your details, the price, your terms, and contingencies. The seller might give you a counteroffer, and it is up to you to reply or reject it. When your offer is accepted, most also include earnest money deposit, usually around 1% to 2% of the purchase price.

Remember that contingency clauses are for your protection, so you should include an appraisal, financing, and home inspection. This helps you back out and get a refund in case the home inspection showed major problems.

Your agent will handle negotiations after you submit your offer. Don’t be afraid to walk away if you can’t agree with the seller. Once you get into an agreement, it is time to get a home inspection and appraisal done.

Get a Home Inspection and Appraisal

Find a trustworthy home inspector to check if the home has any major problems that the seller didn’t disclose. You can negotiate with the seller to have these problems fixed. Remember that once you close the deal, those repairs are already your responsibility. That is why it is best to identify them during the negotiation process.

A home inspection isn’t required for financing, but it is something that you want for your protection. An appraisal, on the other hand, is required for you to finalize your loan. Lenders won’t lend out money more than what the house is worth.

Sometimes, problems arise when the appraised value turns out lower than the price you offered. You can contest it, to some degree, but most of the time, the reviewer won’t agree with you. Having an appraisal contingency in your offer helps you back out or negotiate a lower price.


Don’t be shy to negotiate. Especially if the inspection found some problems that need repairs or the appraisal result shows the property has a lower value than its price. Your agent handles the negotiation on your behalf, and you can haggle with the seller to have them correct the problems found in the inspection before the closing of the deal, give you a discounted purchasing price, or have them give you credits to cover some of your closing costs.

Secure Your Financing

A pre-approval doesn’t mean you are in the clear. Once negotiations are done, your next step is to wait for the final loan approval. During the underwriting, you might need to sit tight on your finances. Avoid opening a new credit line or making big purchases that could affect your credit score–This could also affect the mortgage rates you’ll get approved for. Be ready to submit additional paperwork your lender will require, such as bank statements, tax returns, or additional proof of income.

Do a Final Walk-Through

Visit the property before it becomes yours. Ask your real estate agent to come with you as a witness and bring your checklist of home inspections and other documents to make sure that everything has been done as per agreement with the seller. Once you are satisfied, it is time to close the sale.

Close the Deal

Once all the contingencies have been met, and you are satisfied with the final walk-through, it is time to close the deal. Your lender will issue a clear-to-close status on your loan. They’ll give you a closing disclosure where you can see the loan details, monthly payments, loan type and term, interest rate, APR, and your closing fees. Review the closing disclosure and all other documents and correct any errors before signing on the dotted line. Lastly, make sure they hand over all the keys, entry codes, and garage door openers before leaving.

Once the documents are signed and the handover is done congratulations! You are now the proud new owner of your first home. Now it’s time to plan your moving in.

Some Final Tips

When you found the house you want, make sure to lock in the rate. A lot of things can change from making the offer to closing, and given how mortgage rates are fluctuating, locking in the rate can help you secure favorable rates.

Don’t hesitate to ask a lot of questions. That’s why your agent is your best friend and most trusted representative during the home buying process. Also, know all your rights as a home buyer. This way, you can protect yourself from getting an unfair deal for your first home purchase.