A Comprehensive Home Buying Checklist for First-Time Buyers

Buying your first home is a big step, but it doesn't have to be overwhelming. Use this checklist as your guide to help you feel more confident, avoid common mistakes and make informed choices as you put your home-purchasing plans into action.

Determine Your Budget

Set the stage for your home search by establishing a realistic budget from the start. This will tell you how much you can comfortably afford and the type of mortgage you may qualify for. Determine your budget by thoroughly assessing your financial situation, including your:

• Monthly income
• Expenses based on typical monthly spending habits and obligations
• Debt such as student loans, car loans and credit cards
• Savings, including how much you will be using for your down payment and closing costs, as well as the amounts in your emergency savings and other savings accounts
• Anticipated future expenses, such as education or expanding your family

Keep in mind that your budget should also account for the new expenses you will have as a homeowner, such as taxes, insurance premiums, any homeowners association (HOA) dues and higher utility and maintenance costs.

Define Your Must-Haves in a Home

Have a solid understanding of what you want and need in a home, now and in the future. Some thought starters to consider:

• What type of home do you want? One-story, two-story or multi-family? An older home or new construction? Maybe you prefer a condominium or townhouse.
• How many bedrooms and bathrooms do you need? Will you be expanding your family or will older relatives be moving in?
• What type of yard are you looking for? Do you want to build a pool or install a swing set? Do you have dogs that need a fenced-in space? Do you want a patio, porch or area to garden?
• How much work are you willing to do? Do you prefer a move-in ready home or are you up for some projects?
• What kind of kitchen, living room or other shared spaces do you want?
• Do you need a home office?
• Do you want a garage, attic or basement?

Along with the must-haves, come up with your list of nice-to-haves, as well as dealbreakers.

Research Neighborhoods

A home is only perfect if it resides in your ideal neighborhood. Define your priorities and research the area you want to live in. You may want to think about:

• Proximity to family, stores, highways, public transportation, houses of worship, parks and healthcare facilities
• Property and school taxes
• School district
• Crime and safety
• Your commute
• Diversity

Some tips for vetting a neighborhood include:

• Asking your realtor for feedback, but keep in mind that they cannot legally answer certain questions that may violate the Fair Housing Act
• Visiting at different times of day to get a better idea of noise levels, traffic and other activity
• Researching the crime rate
• Reading school rankings and reviews
• Searching government websites and town social media pages
• Talking to area residents and shop owners

Gather Your Important Documents

The mortgage process and paperwork go hand in hand. Determine what you’ll need to provide ahead of time so you can start gathering it all now. While required documents can vary by lender, you’ll typically need to submit the following:

Income and Asset Documents

• Pay stubs
• W-2 forms and 1099 statements
• Self-employment documents
• Statement of assets, such as copies of bank statements
• Other income paperwork, including child and spousal support payments, rental property income and gift funds

Debt Documents

• Credit report
• Statements of outstanding debt such as your existing mortgage, car loans, student loans, home equity lines of credit and other debts

Understand Your Mortgage Options

Understanding your mortgage options is essential for making informed decisions about this significant financial commitment. You’ll want to find a loan that meets your specific needs, helping ensure affordability and long-term financial stability. Familiarize yourself with some of the most common types of home purchase mortgages and then talk about your options with your Pennymac Loan Expert.

Conventional Loans

• Low fixed or adjustable rates for qualified borrowers
• Flexible terms to match your financial needs
• As little as 5% down
• Avoid mortgage insurance with a 20% down payment
• Can be used for many types of properties, from single-family homes to condominiums

Adjustable-Rate Mortgage (ARM)

• Low, fixed rates for the initial introductory period
• Ideal for homeowners planning to relocate or pay off mortgage in 10 years or less
• Take cash out of your equity while maintaining a low monthly payment
• Wide range of down payment options

Federal Housing Administration (FHA) Loans

• Low down payment requirements
• Mortgages insured by the government
• Allow a broader range of income, debt and credit history than conventional mortgages

Jumbo Mortgages

• Loan amounts up to $3 million
• Allows borrowers to finance higher loan amounts in counties where the financed amount exceeds the conforming loan limit
• No prepayment penalty

VA Loans

• Government-backed loans reserved for U.S. service members and their spouses
• No down payment required
• No monthly mortgage insurance payment
• Typically lower interest rates than conventional loans

Get BuyerReady Certified

The unique Pennymac BuyerReady Certification process estimates your likely mortgage qualification amount so you can shop for a home with peace of mind. Here's a brief overview of the steps involved:

1. Speak with a Pennymac Loan Expert and complete a mortgage application.
2. Submit key financial documents, including recent pay stubs, W-2 forms and bank statements.
3. Our underwriters will review your documents, credit history and debt-to-income ratio.
4. You’ll receive BuyerReady Certification, indicating your likely approval for a designated loan amount, as long as certain conditions and the home meet requirements. It’s valid for 120 days.
5. Start your house hunting with confidence, knowing which homes align with your budget.

BuyerReady Certified homebuyers also qualify for Pennymac’s Lock & Shop program, which allows you to lock in a rate before locating a property. Protect yourself from future rate increases and potentially save thousands of dollars in the lifetime cost of your mortgage.*

Find a Real Estate Agent

A skilled real estate agent offers invaluable guidance, especially for first-time homebuyers. Leverage their negotiating expertise, neighborhood knowledge and market insights to help streamline the home-buying process. Pennymac Home Connect** powered by HomeStory can help you connect with a top real estate agent in your area.

Begin House Hunting

Once you’ve narrowed down your budget, property type and desired location — and secured a BuyerReady Certification — it’s time to start searching for your new home. Your real estate agent will have access to new homes on the market, but you can also check for listings on house-hunting apps and websites like Trulia and Zillow.

Visit Open Houses and Set Up Tours

While your real estate agent will arrange home tours and keep you updated on open houses, you can also locate properties available for viewing by:

• Taking a drive or stroll around the neighborhood and looking for open house signs
• Searching real estate websites and social media for open house announcements

Submit Your Offer

Found a house that checks all the boxes on your must-have list? It's time to make an offer. Lean on your real estate agent for guidance, as you may need to negotiate. The seller may counter, and you may counter again in return. Once you’ve mutually agreed upon a price, you and the seller will be under contract, also known as being in escrow.

Get a Home Inspection

Once you’re in escrow, you’ll need to arrange a home inspection. This thorough examination covers nearly all aspects and systems of the property, including:

• Roof
• Attic
• Heating and cooling systems
• Electrical system
• Plumbing
• Major appliances
• Basement
• Interior and exterior structure
• Energy efficiency
• Curb appeal

Both you and the seller will receive a comprehensive report outlining the inspector's findings, potentially leading to additional negotiations, especially if repairs or updates are deemed necessary.

Get a Home Appraisal

The home appraisal determines the unbiased fair market value of the property. A lender-selected licensed professional conducts the appraisal to ensure accuracy for the benefit of the buyer, seller and mortgage lender. A home appraiser is responsible for:

• Evaluating the property's worth based on various factors, such as the condition of major interior and exterior systems and structures
• Checking the prices of recent comparable home sales in the area
• Providing the buyer, seller and lender a report detailing how they calculated the home’s value

Renegotiate if Necessary

If the home appraisal comes in lower than the agreed-upon purchase price, you may want to renegotiate a lower price. Lenders want borrowers to borrow only what is necessary, and you should avoid paying more than the home is worth.

In addition, home inspections may reveal issues that justify renegotiation. You can request that the seller fix major safety or structural problems. Alternatively, instead of asking for repairs, you may opt to negotiate a price reduction or seek a contribution toward closing costs.

Secure Homeowners Insurance

Most states don’t legally require homeowners insurance, but mortgage lenders do since they want to protect their investment. You’ll need to provide proof of homeowners insurance on the property before a lender will move forward with your mortgage.

Homeowners insurance helps protect you financially against the unexpected. Typical hazards covered by most policies include:

• Fire and smoke damage
• Hail damage
• Lightning strikes
• Windstorms, such as tornadoes
• Theft or vandalism
• Water damage from plumbing leaks
• Explosions from gas lines
• Damage from vehicles or aircraft

Homeowners can choose from various policy types, ranging from basic to comprehensive. Talk to an insurance agent to compare your options.

Close on Your Home

Your loan has been approved, and now you’re in the home stretch. In this final closing phase, the property title transfers from the seller to the buyer. A closing agent—often an attorney or representative from a title or mortgage company—will oversee the process.

Closing Day

It’s the moment you’ve been waiting for: closing day. The day you’ll get your keys to your new home.

The closing occurs at a title company, escrow office or the home itself and varies across states. At this time, your closing agent will:

• Clarify the details of your settlement process
• Act as a mediator between the selling and buying parties
• Ensure the signing and recording of all necessary documents, including the following:
• Closing Disclosure
• Promissory Note
• The Deed of Trust
• Certificate of Occupancy
• Notice of Right to Cancel
• Oversee the proper payment and disbursement of all funds, including closing fees and escrow payments

What’s your role on closing day?

• Reviewing, authorizing, signing and dating numerous documents
• Paying your down payment and closing costs
• Celebrating! You're officially a homeowner. Congratulations!

Post-Closing Tasks

After months of preparation, paperwork, home searching and anticipation, you’re now a homeowner. As you take a moment to relax and enjoy the fruits of your labor, keep in mind these important post-closing tasks:

• Store all your paperwork in a secure but easily accessible place
• Change all the locks and garage codes
• Transfer all utilities to your name
• Change your address and request mail forwarding
• Deep clean the house or hire cleaning pros
• Do a safety check of smoke and carbon monoxide detectors
• Update your driver’s license
• Start addressing outstanding repairs from the home inspection

No Post-Closing Loan Service Transfer With Pennymac Mortgages

Another post-closing task? Anticipating a possible loan service transfer. This means that a new institution will collect payments and manage the escrow. However, you don’t have to be concerned about this if you have a Pennymac mortgage.

Your Path to Homeownership Begins With Pennymac

Pennymac is dedicated to supporting your home loan needs from application to closing and beyond. We’ve helped over 4 million prospective buyers build and sustain a foundation for homeownership. Experience our award-winning service for yourself and see how we can help you, too.

^* Lock & Shop Program allows consumers with a purchase mortgage Pre-Approval from Pennymac to lock a rate prior to locating a property. The program requires a non-refundable fee of $595 due at the time of the rate lock. Consumers with a purchase mortgage Pre-Approval from Pennymac must meet appropriate underwriting conditions to obtain a mortgage loan. Consumers may choose between a 60-day, 75-day or 90-day lock period. Consumers must initiate a mortgage loan application for a specific property and be under purchase contract for the property at least 30 days prior to lock expiration in order to extend the locked rate. All rate lock extensions are subject to Pennymac’s standard rate lock extension fees. After the rate lock and subject to favorable market conditions, consumers may be eligible for a one-time reduction in rate once the loan application for a specific property has been initiated (0.50 % maximum reduction in interest rate allowed). Eligible loan products are Conventional Fixed, Conventional ARM, FHA Fixed and VA Fixed. Program excludes Jumbo, refinance, third-party and in-process loans. Program subject to termination in Pennymac’s sole discretion and without notice.

^** Pennymac Home Connect is offered in partnership with HomeStory Real Estate Services, a licensed real estate broker. HomeStory Real Estate Services is not affiliated with PennyMac Loan Services, LLC, and PennyMac Loan Services, LLC is not responsible for the program provided by HomeStory Real Estate Services. Obtaining a mortgage from PennyMac Loan Services, LLC is optional and not required to participate in the program offered by HomeStory Real Estate Services. The borrower may arrange for financing with any lender. PennyMac Loan Services, LLC ( Lender NMLS 35953 ) does not perform any activity that is or could be construed as unlicensed real estate activity, and PennyMac Loan Services, LLC is not licensed as a real estate broker. Agents of PennyMac Loan Services, LLC are not authorized to perform real estate activity.

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