The Homebuying Process for First Time Homebuyers

August 11, 2023

Buying a home can be a grueling process. But, with good planning, it can be less stressful. Let’s take a look at the 11 steps of the homebuying process.

Step 1: Prepare Your Finances

Here are some tips for preparing your finances ahead of the homebuying process:

• Set a realistic budget for your monthly mortgage payment.
• Boost your credit score before applying for a mortgage by making full and on-time payments, not opening too many new credit cards, and keeping your credit utilization low. 
• Save for a down payment. 

Bay Federal members also have access to GreenPath Financial Wellness, which offers free and confidential financial counseling services. If you have questions or concerns, GreenPath can help!

Once you have your finances worked out, you can start shopping for a mortgage.

Step 2: Choose a Lender

You can choose to take out a home loan through a financial institution or a private lender. When researching potential lenders, read online reviews and look for lenders that offer excellent service experiences, reasonable closing costs and fees, transparency, and favorable rates. 

For instance, consider Bay Federal's First Time Homebuyer Program. With no closing costs¹ and as little as 3% down payment,² we have helped many of our community members purchase their first home.*

Step 3: Get Preapproved for a Mortgage

Once you’ve chosen your mortgage lender, you can apply for a preapproval on your loan. 

The lender will ask for your financial history and other personal information. If all is satisfactory, the lender will begin putting together the details of your loan.

When they have determined how large a loan you are eligible for, they will grant you a preapproval letter. 

Step 4: Find a Real Estate Agent

A real estate agent can help you find the perfect home that fits your budget and preferences. They have access to a broad range of homes on the market and can negotiate on your behalf.

Step 5: Find Your Dream Home 

Once you have a pre-approval and a real estate agent, it’s time to start shopping for homes. Be sure to know what you want, be prepared to negotiate, and beware of potential red flags as you search. 

Step 6: Make an Offer

If your offer is accepted, the deal will officially be “under contract.” At this point, you’ll likely need to pay “earnest money” or a portion of the down payment. 

Home sales are typically under contract for four to eight weeks, though this can vary. 

Step 7: Get Your Mortgage

As soon as your offer has been accepted, your mortgage lender will get to work on the final details of your loan. If you’ve gotten a preapproval, you should have most of this ironed out already, though the final number-crunching will depend on the loan amount, the property value, the type of mortgage you choose, and the size of your down payment.

Step 8: Schedule a Home Inspection 

A professional home inspection will reveal any potential issues that you may not have noticed. If the inspection uncovers any major issues, you can choose to walk away from the deal, or to negotiate with the seller for a lower price.

Step 9: Obtain Homeowner’s Insurance

Shop around for the best rates and coverage to make sure you have a policy in place before the closing. 

Step 10: Schedule an Appraisal

The home appraisal, which determines the actual value of the home, assures the lender the loan details fit within their policies and regulations. 

Step 11: Close and Move In

Congrats – you’ve made it to the closing! Set aside several hours for the closing and come prepared with the funds you need to cover the remaining closing costs. 

Once you’ve closed, the home is yours. Best of luck in your new home sweet home!