Learn First-Time HomeBuying Basics

1. Know your credit

The first important step is to monitor your credit. Get familiar with your credit history and make sure all of the information in your credit reports is accurate. You are entitled to one free credit report a year from each of the credit reporting agencies (Equifax, TransUnion^®, Experian). This will give you enough time to deal with any errors that may be on your report or improve your credit before you buy. Also hold off on big purchases for now as they impact your debt-to-income-ratio. Changes to this number may affect your ability to qualify for the loan amount you require. If you have credit cards with high balances, try to pay them down to show that you’re not using all of your available credit, which sends up a red flag for most lenders. If possible, you should keep your balances at 30% of your total credit limit — or less.

2. Get pre-approved for a mortgage

Homebuying does not begin with home searching – getting a pre-approval from a lender before house hunting is important for many reasons, the biggest being that it provides proof of the ability to obtain financing.

3. Stick to your budget

Determine your budget and the monthly payments you can afford and qualify for early on – and stick to it. Use our online mortgage calculator to see what payment you are most comfortable with. Also consider the cost of property taxes and homeowners insurance into your budget.

4. Time the end of your lease

If you currently rent, try to time your house closing and moving with the end of your lease. As you begin to search for a home, revisit your lease agreement. See when the lease expires and learn about penalties for breaking the lease in case it comes to that (and options that are available should you need to extend your lease for a month at a time).

5. Hire a local agent & determine your requirements

If you’re interested in owning a home in a specific area, connect with a local real estate agent that is familiar with that area. He or she will have invaluable experience and knowledge about the neighborhood and local matters such as schools and any issues. Carefully consider the kind of home you want, and separate the needs from the wants. This will narrow down your search for a more effective homebuying process.

6. Look for down payment assistance & remember closing costs

Some programs offer no-interest loans or grants as down payment assistance. Contact one of our mortgage lenders here for more information about Massachusetts Housing Finance Agency (MHFA) loans because if you qualify, many offer lower down payment percentages. Also remember that it’s not just the down payment you need to save up for, but also all the added closing costs. Transfer tax, escrow fees and prepaid interest have also caught many first-time homebuyers off guard.

7. Inspect the home – before and after

You’re making a huge investment – have it inspected by a reputable home inspector while under contract – and don’t forget to do your final walk-through inspection on the day of closing.

What happens after you place an offer on a home?

The buyer can accept, reject, or counteroffer your deal. Make sure a real estate agent and an attorney evaluate all terms in the offer and counteroffers.

Congratulations, your offer has been accepted! What’s next?

Sign the Purchase and Sale Agreement.

This is the contract that contains all the details of the real estate purchase. The home is then withdrawn from the open real estate market and enters escrow when the buyer deposits good faith money into an escrow account. These funds will eventually be applied to the home’s purchase price unless certain contractual contingencies fail to be satisfied (for example mortgage approval, property appraisal, property inspection, title).

If you haven’t already been pre-qualified, contact a MORTGAGE Specialist to apply for a mortgage.

Your mortgage specialist will begin the financial process and order an appraisal for your new home. Be prepared to ask questions, and be completely open with them about your finances. Your lender will require your house be appraised by a professional, which will give you a detailed report on the value of the home.

Order a home inspection.

A home inspection tells you if the home has any issues. Go over the inspection report in detail with the inspector to make sure you’re familiar with any problems, their severity, and the estimated cost to fix them. If the inspector finds problems, you may be able to get the seller to pay for necessary repairs or lower the price to adjust for the cost.

Contact your insurance provider to arrange coverage for your new home.

Sometimes you are required to pay one year's insurance premium up front. Your insurance broker can let you know how much this will be, and will provide a binder for you to bring to the closing.

If you are renting, inform your landlord you are purchasing a home.

Most landlords require at least 30 days’ notice that you are moving or you may forfeit any deposits you have on your apartment.

Arrange for a mover.

This should be done 30 to 45 days ahead of the closing date.

Arrange for a final walk through of your new home.

Your real estate agent will arrange a final inspection of the home you are about to purchase.

Arrange to have the utilities for your new home transferred to your name.

And don't forget to have your current utility services disconnected. This includes gas, electric, telephone, cable television, and internet service.

Close on your new home.

The closing date, mutually decided between buyer and seller in the purchase contract, is when all final documents are signed, closing costs are paid and ownership of the home legally changed. Now, all you have to do is enjoy!