First, you should determine whether you are ready to buy a home. Homeownership is a lot more expensive than renting, since you're responsible for added costs like home repairs, utility costs, garbage pickup, water, and electricity.

You also need to pay for taxes and insurance related to your home. These costs add up quickly, and if you are not financially prepared, you could end up in a bad position.

Consider getting out of debt (or at least reducing your debt) and saving up an emergency fund before you purchase your first home. Look for ways to reduce high-interest credit card debt before purchasing a home. While you may be under pressure from friends or family to buy a home, it might make sense financially to wait until you're truly ready.

When you buy a house, you have to bear in mind that the house you buy is supposed to fit your needs. You can't just pick something that looks nice or convenient; you need to figure out what will work for you, If it is a townhome, or a unit in a condo, or a detached house and your needs have to fit within that.

If it is a house, the hardest question of all is how much of the house you would build yourself, and how much would be rented out. You can make decisions like this based on what you know about variations in your situation; you can also make comparisons against the choices other people made in similar situations

Step 1: Start Your Research Early

As a first time home buyers, this is a great place to start, though it does require some patience. Remember, inquiries on real estate websites don't count as sales until you actually submit an offer and close on a sale.

You can also check out the local classified ads in your local newspaper or browse the various online real estate sites so you can get an idea of “what’s out there” and see what’s selling for. Keep track of listings that turn into sales and the numbers (and the prices) over time and you will soon have a general sense of where housing prices are going.

Step 2: Determine Your Affordability

The first time home buying process can be stressful, which is why you need to know whether you can afford a particular house. In general, lenders generally recommend that people look for homes that cost no more than three to five times their annual household income if the home buyers plan to make a 20% down payment and have a moderate amount of other debt.

To help you save for your down payment, try Discover Bank’s AutoSavers Plan, which makes it easy to put aside money each month.

Use our Affordability Calculator to see how much house you can afford.

Step 3: Start Shopping for a Loan

A preapproval is a good way to get a general idea of how much a mortgage will cost before shopping around for a better interest rate. A preapproval doesn't guarantee that you'll get the best rate, but it can help give you an idea of what's available in your area.

A mortgage broker can help you get a preapproval, which will let you shop around for the best mortgage rates. If you’re looking to buy a house or refinance, a preapproval can save you time and money.

Step 4: Find the Best Payment Options and Loan Types

When it comes to your mortgage, you may be surprised at the different loan types and payment options available. Looking at terms like ARM and PMI can become overwhelming. However, a little research can help you move forward.

Historically, 30-year loans were used by people who had a lot of equity in their homes and wanted to get rid of it. Since home values have fallen and mortgage rates have gone up, buyers of 30-year loans are generally better off paying off the loan early.

The longer the term on a mortgage, the more likely you'll owe more than your home is worth when you eventually sell it. If you plan to eventually get out of your home and sell it for a profit, get a 15- or 20-year loan.

Adjustable-rate vs. fixed-rate mortgages

With an adjustable-rate mortgage, you can expect to see your interest rate vary over time. The initial rate is lower, but you run the risk of seeing the rate rise as market conditions change—that means a higher monthly payment.

On the other hand, a fixed-rate mortgage remains the same, no matter what is happening with the economy or the market.4

This provides stability in your monthly payment and can make it easier to plan. However, you run the risk of missing out if rates fall, but if they do, it might be possible to refinance to a lower rate and capture the savings.

Step 5: Get Prequalified and Preapproved for credit for Your Mortgage

In today’s market, firs time home buyers need to get prequalified before they start looking for a home. They should also get a preapproved offer from a mortgage lender before the offers expire. Prequalification and preapproval help you find the best house to buy in your price range. Both make sure you have enough money for a down payment and closing costs To get prequalified, you just need to provide some financial information to your mortgage banker, such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much we can lend you. This will tell you the price range of the homes you should be looking at.

Later, you can get preapproved for credit, which involves providing your financial documents (W-2 statements, paycheck stubs, bank account statements, etc.) so your lender can verify your financial status and credit.

Step 6: Find a Good Real Estate Agent (Realtor)

Once you have determined how much you can really spend and are preapproved for a mortgage, look for a good real estate agent. They should listen to your wants and needs carefully. They may make recommendations or explain the market to help you find a home that suits your needs and that you can afford.

Once you make an offer, your real estate agent should work to negotiate terms that you are happy with. They can also guide you through the paperwork and the process needed to close successfully.

Ravi Bhindi Personal Real Estate Corporation specializes in dealing with first time home buyers. He’s a high-touch Realtor known for his extensive market knowledge and unmatched devotion to clients. Ravi Bhindi believes in educating and guiding his clients through the non-pressure consultive approach of selling.

Tip: When you are trying to buy a home for the first time, you need an expert on your side who can make sure you are making good decisions based on the right information. The best way to do this is to use a buyer's agent—someone who is bound to help the buyer, someone in your corner.

Step 7: Shop for Your Home and Make an Offer

Start touring homes in your price range. It might be helpful to take notes (using this helpful checklist) on all the homes you visit. You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video to help you remember each home. Make sure to check out the little details of each house. For example:

  • Test the plumbing by running the shower to see how strong the water pressure is and how long it takes to get hot water

  • Try the electrical system by turning switches on and off

  • Open and close the windows and doors to see if they work properly

It’s also important to evaluate the neighborhood and make a note of things such as:

  • Are the other homes on the block well maintained?

  • How much traffic does the street get?

  • Is there enough street parking for your family and visitors?

  • Is it conveniently located near places of interest to you: schools, shopping centers, restaurants, parks, and public transportation?

Step 8:Request a Home Inspection

Once you've found the home for you, make sure to get a thorough home inspection. This is different from an appraisal. You should pay for the home inspection. The home inspector will look for hidden problems with the home before you purchase it.

You can save thousands of dollars by having a home inspection done before you buy. The home inspector will look for hidden problems with the house. These problems may include termites, mold, foundation problems or a roof that needs to be replaced. The inspection can save you thousands in repairs later on.

You don't want to pick a house that's been in an accident or been condemned. You also don't want to make a purchase that's going to cost much more than you originally planned. If you're not sure about a home, hire a home inspector to do a thorough inspection and then call the seller and negotiate down the price. The difference between an inspection and an appraisal is that you can negotiate for a lower price on a home that is still in good condition.

If you already have a home inspection done by a previous owner, ask them to make a copy of the report for you.

Step 9: Have the Home Appraised

An appraisal is a professional estimate of the value of real estate, such as a house or an apartment. Most lenders will require that you submit an appraisal if your down payment is less than 20 percent of the purchase price. They’ll also want one if you're refinancing and taking out more than 80 percent of the value of the property.

Lenders will arrange for an appraiser to provide an independent estimate of the value of the house you are buying. The appraiser is a member of a third party company and is not directly associated with the lender. The appraisal will let all the parties involved know that you are paying a fair price for the home.

If the appraisal comes in higher than what you agreed upon, lenders can negotiate with you or can ask you to come up with more money as part of your down payment.

Step 10: Coordinate the Paperwork

As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.

Step 11: Close the Sale

As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.

Be sure that you change your address with your bank, and other accounts. You can set up your utilities and cancel your old ones as well. That will save you time and money, because you will avoid late fees. Some companies will waive installation fees if you transfer your old account to your new address