Essential Guide for First-Time Homebuyers
Posted: July 11, 2022
Updated: January 22, 2025
Deciding to buy your first home can be an exciting time. It’s a huge milestone! When you own the place, you can customize it to your liking. Paint the walls or swap out the light fixtures as you please. On top of that, you’ll build equity instead of paying rent to a landlord.
On the flip side, making your biggest purchase yet can feel a bit overwhelming. You might be unclear on how the mortgage process works. The good news is we have your back with tips, resources and programs to make getting your first home loan simple.
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Questions to Ask Yourself Before You Begin Your Homebuying Journey
Trying to determine if you’re ready to buy a home? Start by asking yourself these questions.
1. Am I in a Good Place Financially to Buy a Home?
Consider your income. Is it steady? Can you cover everyday bills such as groceries, car maintenance, internet, phone plan, and any other expenses along with mortgage payments, home insurance, utilities and home maintenance costs? In addition to making monthly mortgage payments, you’ll want enough cushion to cover unexpected home expenses like replacing a broken appliance.
If you need some help with budgeting, try tools like Digital Banking to track your spending and savings. You can also use our mortgage calculators to estimate your budget for a new home.
2. Where Do I Want to Be Within the Next Five Years?
If you plan on traveling a lot or relocating for work or school in the near future, it might make sense to hold off on purchasing a home. However, if you’re ready to put down roots and commit to living in the same area for at least the next few years, buying a home can be a great investment.
When evaluating where to live, you might want to consider how long of a commute you’ll have to your job, the school district you’ll be in if you have or plan to have children, the proximity to family or friends, and other factors that might impact your lifestyle.
Tips for First-Time Homebuyers
Here are some pointers to help you kickstart your homebuying journey.
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Calculate what you can afford: Not sure how much house you can afford? Use our Mortgage Qualifier Calculator to estimate your budget based on your annual income or desired monthly payment amount. You can also contact a Landmark loan officer to help you assess your home budget.
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Save for a down payment: Use our calculator to help you determine how much money you’ll need for a mortgage down payment, as well as how much you’ll need to set aside each month to meet your goal.
Need ideas on how to grow your savings? Consider automating your savings by scheduling recurring transfers in Digital Banking from your checking to your savings account each payday. That way you can “set it and forget it” to grow your savings. You could also supercharge your savings by opening a certificate that earns a higher yield than a traditional savings account.
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Keep your credit steady: You want to show your mortgage lender that your credit and income are stable. Avoid these missteps during the mortgage application process:
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Taking on any new credit, such as opening a credit card
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Cosigning a loan
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Quitting or switching your job
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Making a large purchase, like buying a car or furniture
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Depositing large amounts into your bank account or transferring big sums of money
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Missing bill payments
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Wondering how your credit score is calculated and how you can raise yours? Check out these tips on improving your score.
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Be prepared: Gather your financial documents to expedite your mortgage application. Use our handy Mortgage Checklist to get a head start.
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Get pre-approved: A pre-approval is an estimate of how much money you will be approved for a home loan based on the documentation you provided to the lender. Getting a pre-approval can give you an edge when putting in an offer on a home because it shows sellers that you’re a serious buyer. At Landmark, we offer free pre-approvals.
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Start home hunting: Create a list of your needs, wants and deal-breakers when it comes to a home. Consider the styles of homes and important features like the number of bedrooms, bathrooms, garage size and more. Find a real estate agent who can show you homes that meet your criteria and budget in your desired location.
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Know what to look for during a house showing: Take note of factors inside and outside of the home that could potentially contribute to an unpleasant environment. Watch for signs of mold, water damage and possible infestations. Also, find out when the furnace, water heater, air conditioning, roof, windows and appliances were last updated.
The Steps to Getting Your First Mortgage
How exactly does the mortgage process work? Here is what you can expect as you head down the path of home ownership.
How to Get a Home Loan
- Save for a Down Payment: If you plan to buy a home within the next few years, start setting aside money to save for a down payment, closing costs and other expenses.
- Get Pre-approved: Meet with a mortgage loan officer and get pre-approved for a home loan. This will show sellers that you’re a serious buyer.
- Find Your Home: Work with a real estate agent to find a house that meets your needs, is within your budget, and is in your desired area.
- Make an Offer: Think you found the one? Ask your real estate agent to make a formal offer to buy the home.
- Underwriting: The lender reviews your finances and credit history to determine if you will be approved for a home loan.
- Closing Time: Your loan officer will schedule your loan closing. This is the final step in purchasing and financing a home.
- Welcome Home!: You’ve got the keys in hand, and now it’s time to move into your new home.
First-time Homebuyer Mortgage Programs
If you’ve heard that you must put 20% down to buy a home or are worried you need to have a perfect credit score to get a home loan, breathe a sigh of relief. Learn more about these mortgage myths. At Landmark, we offer programs designed to make it easier for you to get into your first home, including:
First-time Homebuyer Program
- Free pre-approval
- Put as little as 3% down
- $1,000 closings costs discount*
Learn more about our First-Time Homebuyer Program.
WHEDA
- Free pre-approval
- Put as little as 3% down
- WHEDA Easy Close DPA, a Down Payment Assistance program, can be used to cover down payment and closing costs
Mortgage Terms Glossary
What exactly do “closing costs” mean? What is escrow? If you’ve heard mortgage terms but aren’t sure exactly what they mean, we’ll help you learn the home loan lingo! Consider this your personal mortgage glossary.
- Annual Percentage Rate (APR): This is a comprehensive term that includes additional charges that go into your rate beyond just the interest.
- Appraisal: This is a professional estimate of a property’s value.
- Adjustable-Rate Mortgage (ARM) vs. Fixed Rate Mortgage: With fixed rate mortgages, the interest rate is consistent throughout the whole mortgage term. With an adjustable-rate mortgage (ARM), the interest rate is variable and will fluctuate within a range throughout the mortgage term (such as every year or every five years after the initial term).
- Closing Costs: This is an umbrella term for the fees associated with finalizing a mortgage.
- Debt-to-income ratio (DTI): This is a comparison between how much total monthly loan debt a borrower has versus their gross monthly income.
- Discount Point: A borrower can pay an extra fee to buy discount points to reduce their interest rate.
- Down Payment: This is the initial amount of cash put toward paying for your new home. A larger down payment might mean better rates, smaller monthly payments and less interest paid over the life of the loan.
- Escrow: This is an account a mortgage lender establishes to pay expenses like property taxes and homeowner’s insurance.
- Home Equity: This is the difference between what you owe on the home and its estimated value. You can calculate your equity by subtracting the current market value of your home minus how much you owe on it. For example, if your home is valued at $300,000 and you owe $200,000 on your mortgage, you have $100,000 in equity. If you buy your home in cash or pay off your mortgage loan, you’ll have 100% equity in your home.
- Mortgage: This is a type of loan that is secured by a home.
- Mortgage Loan Officer: A mortgage loan officer is a borrower’s point of contact with the mortgage lender, guiding borrowers through the mortgage application process.
- Private Mortgage Insurance (PMI): If a borrower defaults on their mortgage, mortgage insurance helps protect the lender. Mortgage insurance can typically be avoided if the borrower’s down payment is at least 20%.
- Pre-approval: The lender reviews your finances to give you an idea of how much of a mortgage you'll qualify for and an estimate of your monthly payments.
- Principal: This is the amount of money owed on a loan, excluding interest.
- Underwriting: This is the part of the process in which the entire transaction is reviewed and a final approval is issued. The underwriter assesses whether the borrower can be approved for the total loan amount based on the information in hand.
If you still have questions on some of these terms, don’t hesitate to ask a mortgage loan officer. They’re here to help!
Ready to Get Moving?
We’re here to help you turn your dream of homeownership into a reality. Take the next step and meet with a mortgage loan officer, sign up for a mortgage seminar, or apply for a home loan.
*$1,000 reduced from closing costs for qualified first-time homebuyers. ARM loans (including construction and lot loans) are not eligible. To be eligible for the first-time homebuyer credit all occupying borrowers must not have owned a home within the past three years.