A Checklist for First-Time Homebuyers

Here are four things you'll need (and two things you won't) when you're ready to switch from renting to owning.
#2: Act Like a Buyer

#2: Act Like a Buyer

Photo by: ©iStockphoto.com/theboone

©iStockphoto.com/theboone

Sure, owning a home is the American dream. It's also the largest investment most of us will ever make, so go into it knowing what is and isn't required.

Here's what you'll need:

  • Enough money to make monthly mortgage payments. Duh! If a mortgage payment will bust your budget, you can't get rid of your landlord yet. Use a mortgage calculator to estimate your monthly payment.
  • Enough income to pay property taxes and homeowner's insurance. The mortgage isn't the only cost you'll have each month. You also have to pay taxes and insurance. If you can't make those payments, say bye-bye to the house.
  • The ability to maintain the property. You must keep a home in good repair or it will lose value and you'll lose money. You can do the work yourself or hire it out. Either way, you can’t ignore peeling paint and windows that won’t close, like you did when you were a tenant.
  • A decent credit record. If you have lots of late payments, have declared bankruptcy or left old debts unpaid, it's harder to get a mortgage. And if you do get one, your bad credit record will make you pay a much higher interest rate.

Here's what you won't need:

  • A big down payment. It's best to make a big down payment so you can skip paying private mortgage insurance (PMI) and lower your monthly payments, but it is possible to buy a house for almost nothing down.
  • Experience. In most major cities, real estate companies hold home-buyer education classes for first-timers. Go, even if you have no immediate plans to buy. The information you get can lead you to other sources of help.

Next Up

Checklist: Essential Mortgage Documents

Gather these important documents before you visit your lender.

Real Estate Survival Guide: Buyer's Checklist

Refer to this 10-step checklist to get you through the homebuying process.

Anti-Checklist: What Not to Do Until You Close Escrow

Take a list of things to avoid before you close on your new house.

Anti-Checklist: What Not to Do While House Hunting

Searching for a house to buy can be daunting, and most of the homes you see won't be what you're looking for. Get through it efficiently and painlessly by avoiding these common house hunting mistakes.

Anti-Checklist: What Not to Do When You're Making an Offer or Negotiating

Don't even bother trying to justify a lowball offer. (Believe me, the seller and their agent were well aware that there's an electric tower in the backyard when they set the asking price.) Avoid these buyer faux pas when offering on a house.

'Last-to-Go' Box Checklist

After a long day of moving, the last thing you'll feel like doing is rooting through boxes to find your toothbrush. Pack these items into a "special box" that stays with you on moving day.

Real Estate Survival Guide: Seller's Checklist

Refer to this 10-step checklist to get you through the home-selling process.

What's the Point? The Lowdown on Loan Fees

Confused by references to "points" on your mortgage settlement statement? Points are actually quite simple: they're fees, and they came by their name because they equal one percentage point of the loan amount.

Options for Affordable Waterfront Living

How to find a bargain in pricey communities without drowning in debt.

The Moving Parts of an ARM

Here's how to weigh an adjustable rate mortgage against a fixed rate mortgage.

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