A First-Time Homebuyer's Hilariously Terrifying Journey: The Abridged Guide

by Allen Faircloth

Congratulations! You're ready to trade the unpredictable whims of a landlord for the crushing, predictable burden of a 30-year mortgage. Welcome to the American Dream!

Step 1: The Great Financial Reckoning

Before you fall in love with a granite countertop, you must face reality.

Financial Readiness: Look at your bank account and weep. Review your income, debt, and savings. You need a Credit Score high enough to convince a bank you're responsible (aim for 620+), but more importantly, high enough to score an interest rate that won't make you spontaneously combust.
Set the Budget (PITI): Your monthly payment covers Principal, Interest, Taxes, and Insurance. If you can't pony up a 20% down payment, you get the bonus prize of PMI (Private Mortgage Insurance)—a monthly "Sorry You're Not Rich Enough" tax. Budget for Closing Costs too, which are the mysterious fees that magically appear at the end to drain your last remaining emergency funds.

Step 2: Assemble Your Entourage

You need professionals to navigate this beautiful mess.

Get Pre-Approved: This is a letter from a lender that basically says, "We'd consider lending this person money." It's essential. It narrows your search and tells sellers you're a serious contender, not just a weekend looky-loo.
Find a Real Estate Agent: They are your market therapist, helping to calm you down when you get outbid. Choose wisely, because you'll be spending a lot of time together. And the agent at Anthem are fantastically awesome!

Step 3: The Hunger Games of Housing

Time to find your "dream home" (or at least, one that hasn't been condemned).

Wants vs. Needs: Make a list. Want: Chef's kitchen. Need: A roof that doesn't leak. You will likely compromise on everything but the need for running water.
Shop for Loans: There are options! Conventional (for the financially established), FHA (for those with lower credit/down payment), and VA (the heroic zero-down option for veterans). Choose the flavor that best suits your palate.

Step 4: Throwing Money at a Wall

You found a house! Now you write an offer that is probably $20,000 over asking, just to be competitive.

The Inspection: Do not skip this! You are paying a few hundred dollars to be told exactly how many terrifying, expensive problems your "perfect" new home has. This is your chance to back out or beg the seller for a discount via renegotiation. If the house has "character," the inspection report will be its tragic backstory. Even if you're buying new construction, get an inspection!
The Appraisal: The bank sends an impartial party to determine if the house is actually worth the insane amount you offered. If it isn't, prepare for a panic attack and more negotiating.

Step 5: The Paper Tsunami and The Key Hand-Off

You're at the finish line.

Underwriting: Your loan file is now in the hands of the underwriter, a mythical being who requires every single financial document you have ever generated, plus one more random pay stub from 2018, just to be sure.
Closing: You will sign more documents than you read in college. Your hand will cramp. You will be asked if you understand everything. You will nod blankly. In exchange for your signature and all your money, you get a set of keys and a lifetime of debt.

Congratulations, You Own a House!

Now the fun begins. Every time it rains, you will stare at the ceiling. You now worry about Property Taxes that mysteriously increase every year, HOA Fees (which let strangers tell you what color your door can be), and the constant need for an Emergency Fund because, as a homeowner, something will break the second you move in. Enjoy! Just kidding, but seriously once you move in we also suggest a couple of quick 'to-dos' that can really save you time, money and headache. Check out our 5 Things to Do After Buying blog.