The first thing you should do is determine how much you can afford to spend on a house. Online tools like Nerd Wallet can be help for this calculation. For a more personalized experience this would be an excellent opportunity to meet with one of our Real Estate Loan Officers.

Next, review your credit score. (You can pull a credit report once every 12 months for free.) Look for any errors or opportunities to improve your score, like paying off an outstanding medical bill. Your credit score will drop by a few points when you apply for a mortgage, so hold off on signing up for a Target credit card or purchasing a car during the home-buying process to avoid a significant dip in your score.

So, let’s say you’re looking for a house around $200,000. Luckily, you don’t have to have $200,000 stashed in your account to make your purchase. Instead, you’ll only need a down payment as little as 3.5% and up to 20 percent, depending what type of loan you’re applying for. There are many first-time homebuyer grants and programs available that only require as little as 3.5% for a down payment. Keep in mind, though, that you’ll have a have a lower monthly mortgage payment if you make a higher down payment.

In addition to the down payment, you will also have closing costs that range between 2% and 5% of your loan amount. Though the housing market is competitive, you can sometimes negotiate with the seller to cover some or all your closing costs.

Once you’ve narrowed down your mortgage options and selected a real estate agent to work with, you’ll start looking at houses for sale. Consider the proximity the house has to a grocery store, dry cleaner, pharmacy, and hospital and check to see if there are public schools in the neighborhood, which can affect home value. Then, do a little research online to review safety and crime statistics for the area. If you’re satisfied with nearby amenities and discover the area has low crime rates, drive through the neighborhood on a few different mornings, evenings, and weekends to observe the traffic, noise levels, and activity. 

Don’t go looking for a home that costs $220,000 just because you were pre-approved for that amount. At some point in your homeownership, you’ll have to repair the garage door or replace the dishwasher and you don’t want to feel stuck - or, worse, go into debt - trying to fix the issue. Buying a house outside your budget can set you back later, so stick with what is affordable for you. Plus, you will have plenty of move-in expenses you’ll need to cover, whether it’s purchasing furnishings and appliances or hiring a crew to replace the peeling, yellowed wallpaper in the dining room with a fresh coat of crisp farmhouse-blue paint.

When your offer is accepted, a home inspection will be performed to review the property’s condition. It’s important to attend the inspection and ensure that the inspector can access all parts of the house, including the roof, basement, or crawl space. Before closing, you’ll need to secure homeowners’ insurance. Closely review what’s covered in the policy and don’t assume you’ll be saving money by purchasing a cheaper policy, which offers fewer protections and most likely incurs more out-of-pocket expenses when filing a claim. 

Now that you’ve applied for a mortgage, found your dream home, and had your offer accepted, you might be tempted to start landscaping the front yard or renovating the kitchen, but be sure you stay within your budget. Once you get settled and feel comfortable borrowing a small amount of money, you can apply for a home equity loan (HELOC) down the road to make improvements, but there’s no rush. After all, the people and pets living inside are what makes it home sweet home.