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What to Consider Financially Before Buying Your First Home

Buying your first home may be your most significant financial move to date. Here are the most important things for first-time buyers to consider as you begin your search.

Buying your first home may be your most significant financial move to date. Because of that, you’ll want to prepare yourself as best you can financially to make a smart purchase and be ready for all that goes with home ownership. Here are the most important things for first-time buyers to consider as you begin your search. And even if you don’t plan to purchase until later in the year, educating yourself now gives you more time to set yourself up for success.

1.     Know Your Credit Score. A higher credit score can help you qualify for better home loan terms and potentially a lower interest rate. You can access your credit score free at If you have questions about your score or want to learn how to improve your score before you’re ready to buy, call us at 405-755-1000.

2.     Know What You Can Afford. Knowing what you can afford to spend and how much a specific price range will cost you monthly for a mortgage payment is vital. Mortgage lenders like to see you spend no more than 36% of your gross income on your home loan and other debts combined. You should also factor in appraisal fees, home inspection fees, and closing costs, which typically run between 3% and 6% of your purchase price. Additionally, you’ll want to budget for your down payment. Although it’s possible to put down as little as 3% and qualify for a conventional mortgage, set a goal to put down at least 10%. And if you can make a downpayment of 20%, even better, because you can then avoid pricey private mortgage insurance, known as PMI.

3.     Get Pre-Approved for a Loan. Before searching for the perfect home, get pre-approved for a mortgage to know what you can afford. Having a pre-approval in hand will also strengthen your position when making an offer on a home – the seller will know you’re serious. It’s also a good idea to research government programs for first-time homebuyers, as they may offer assistance or incentives. These programs can include down payment assistance, grants, or favorable loan terms. To see what’s available at Quail Creek Bank, click here.

4.     Budget for Homeownership Costs. A good exercise is determining what you’ll likely owe each month, taking that amount out of your budget (like a mock mortgage payment), and seeing how it feels. Are you able to manage your other expenses and daily spending? Are you comfortable spending that amount for the next 20 or 30 years? Completing this exercise will hopefully give you a baseline for a mortgage amount you can comfortably afford. Additionally, it would help if you planned for property taxes, home insurance, utilities, garbage and trash fees, maintenance fees, and HOA fees. Talk to your real estate agent and friends who live in the area to get an idea of what you may spend monthly. 

5.     Consider Your Future Plans and Job Stability. Homeownership is a long-term commitment, so having a stable income source is vital for making regular mortgage payments and meeting other financial obligations. If you anticipate significant life changes (e.g., job relocation, family expansion), you should factor these into buying a home.

6.     Look at the Home’s Resale Value. Think about the potential resale value of the home. While your first home may not be your forever home, it’s essential to consider its resale potential in case you need to sell.

7.     Don’t Overlook the Home Inspection. Invest in a professional home inspection before finalizing the purchase. Unforeseen structural or maintenance issues can have significant financial implications. A thorough inspection can help you make an informed decision. 

These financial considerations will help you make informed decisions and prepare for a successful and sustainable homeownership experience. Now, you’re ready to start searching for your perfect home. 

If you’d like to learn more about the mortgage loans available at Quail Creek Bank, click here. Because we’re a local lender, we know the market and will give you the attention you deserve throughout the mortgage lending process. 

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