Three Financial Tips For Buying Your First Home

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Dear Millennial Friends, this post is for you.

Through Facebook posts, I’ve seen many of you looking at houses, checking out neighborhoods, and asking questions. You think you’re ready to make that leap into homeownership.

I’ll shoot you straight.

Buying a home is exciting.

And stressful.

And horrible.

But ultimately wonderful.

I’ve been through the process 5 times in 20 years. No question that first time was the most terrifying!

Here are three financial tips for buying your first home.

Tip #1: Know what you can afford.

Notice I said how much you can AFFORD, not how much you qualify for! In my experience, those are two very different numbers. It’s especially important for your first home to be realistic in what you can manage.

For #ThrowBackThursday, let’s talk about my first home purchase. It happened in Savannah, Georgia in 1995. I was a newlywed and had just turned 21-years-old. Exciting times, for sure.

We qualified for a house in the $100K range.

I will be honest: I freaked the heck out.

That sounded HUGE. That was – like– adult levels of money! I sat down and ran numbers for our budget and convinced my husband we’d be better off buying something in a lower range.

We fell in love with this 1214 square feet of cuteness at $72,500.

It was way cuter inside (and 20 years ago), trust me. Ha!

I wish I had access to something like the Capital One Home Loans Online Neighborhood back then. This microsite walks you through the entire process of buying a new home in easy to understand language. The site even has helpful videos for those that learn better visually!

Tip #2: Know your financial history and be ready to explain it.

Getting a mortgage gets personal. Real personal.

Lenders look at income, assets, job history, credit score, total debt and how much you?re willing to put down as a down payment. If there are any hiccups in your job or credit history, the lender may ask you questions. Be ready to explain any weirdness that went down.

Generally you’ll be asked to submit a letter with details on a specific situation. We’ve had to do it for big and small concerns, and it has never been an issue.

Like I mentioned before, Capital One offers a free & friendly online neighborhood covering all stages of the home buying process ? from deciding whether now is even the right time to buy and how much home you can afford, to the documents you need to apply for a mortgage.

Tip #3: Don’t forget to factor in closing costs.

Closing costs? What are closing costs? What are you talking about, Shenanigans?!

I hear you. There’re lots of new terminologies to learn when you buy a home.

As you go through this process, feel free to check out Capital One‘s glossary of terms you should know.

But I’ll help you out with this one.

From the Capital One glossary: When a property is sold, both the buyer and the seller are required to pay special costs. Your lender will provide an explanation of what you?ll be facing, which can include attorney?s fees, taxes, escrow payments, origination fees, title insurance and other costs.

Something to keep in mind: closing costs can be negotiable! We’ve had sellers pay our closing costs and we’ve paid some for buyers. But it is an extra expense that might take you by surprise and you should financially plan for this cost.

Bonus tip: just breathe. Ask a lot of questions, check in with Capital One, and remember:

Buying a home is exciting.

And stressful.

And horrible.

But ultimately wonderful.

Have you ever bought a home? How was your first-time home buying experience?

I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.

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