Is this the year you buy a home?
A lot of first-time homebuyers sat out of the market in 2024 and 2025 due to relatively high interest rates, particularly compared to interest rates during the COVID-19 era. Now, as interest rates ease a little bit, it might be the time to consider your first home purchase.
There’s no shortage of benefits to buying a home. In addition to being able to decorate any way you want, buying a home is a big step on the wealth ladder. When you stop paying rent and start paying a mortgage, you’re really paying yourself by building up equity in a property that you can tap into later. If you’re ready to say bye to your landlord (or move out of your parent’s home), here are the financial steps you’ll need to take.
Get your accounts in order. Since you’ll be working on your taxes this spring anyway, now is a really good time to get your accounts in order. Do you have all of your account numbers, balances, and logins and passwords to all of your bank accounts, loan accounts and retirement accounts? You’ll need to be able to give a future lender lots of information about your finances and having that information easily accessible will make the process a lot smoother.
Check (or increase) your credit score. Every year, you can request a free credit report from www.annualcreditreport.com. You’ll want to look at your scores from all three major credit reporting agencies, and also check all the details of the report. Are there any errors, such as accounts that are listed as past due that are current, or credit accounts that you don’t remember opening? Get a copy of your reports and make an appointment to see us at CommonWealth One, where a certified financial professional can give you advice about raising your credit score and fixing any errors. People with higher credit scores can often get lower interest rates and other perks when buying a home. You can call, message us through online banking or stop by a branch to request an appointment!
Find a Realtor. There are so many Realtors in our area that it might be hard to choose one! While you should ask your friends for recommendations, you should interview several Realtors to decide who you’d like to work with. Your Realtor should be very familiar with your neighborhood, be patient and good at explaining the process, have lots of experience, and be familiar with first-time homebuyer programs that can benefit you. You should also like their personality, because you’ll be spending a surprising amount of time with this person.
Plan for your down payment. Did you know that you don’t need to come up with a 20% downpayment on your new home? There are a lot of programs out there for veterans, first-time homebuyers and other people where you can pay much, much less. Figure out how much you have available for your down payment (without touching your retirement or emergency savings, ideally). If your family has offered to help you, talk to your mortgage lender about how that will factor into your financing. If you only have a little bit for a down payment, you might want to ask your mortgage lender about buying down your interest rate instead of using the money for a down payment, which can lower your monthly costs. Remember: You will probably still have to pay some service fees and closing costs outside of the down payment, so be sure you have enough money to do that!
Find a lender and ask lots of questions! There’s a lot to know and understand about the different types of mortgages — and yes, there are different types! Your Realtor may have a recommendation about who to work with, but it’s important for you to do your own research. Often, your credit union can hook you up with a lower mortgage rate, so be sure to give us a call at CommonWealth One while you do your research.
Get pre-approved before you start house hunting. Once you’ve identified a lender you trust, ask to get pre-approved for a mortgage before you begin seriously touring homes. A pre-approval tells you how much you can realistically afford, helps you avoid falling in love with a home that’s out of reach, and shows sellers that you’re a serious buyer. In competitive markets, a pre-approval letter can even strengthen your offer. Plus, starting this step early gives you time to address any surprises in your finances before you’re on a tight deadline.
Don’t buy a car! An important thing to remember is that the time period when you’re home shopping or preparing to move is NOT the time to make any big changes to your life or any big purchases. Don’t purchase a car, switch jobs or buy all the furniture for your new place until after you’ve closed on your house. Your lender will want to see stability and responsibility with money leading up to your closing.
Be ready for hidden costs. Also, before you start buying furniture for your new place, be sure to ask your Realtor about any hidden costs. These can range from home owners’ association assessments to unforeseen repairs on your new home. Be sure you have a cushion after closing for those just-in-case things!
It seems like a lot, but CommonWealth One is here for you! Watch the recording of our webinar, Navigating Homeownership in 2026: Trends and Predictions. We'll help you learn how to start strategizing, explore your available options, and give practical tips to confidently navigate today’s housing market.
We look forward to celebrating your new home with you this year! Congratulations on considering this big, positive move for yourself and your family.
