First-Time Homebuyer? Use Real Estate to Build Wealth With These Tips

 First-Time Homebuyer? Use Real Estate to Build Wealth With These Tips

Real Estate as a Wealth Building Tool for First-Time Homebuyers

You’ve been dreaming about owning your own home for years, but it always seemed out of reach. But 

guess what? Home ownership may be more attainable than you think, especially if you’re a first-time 

buyer. Buying a house is one of the best ways to build long-term wealth. With strategic planning and 

smart money moves, you can leverage real estate to start growing your net worth. In this article, we’ll

walk through the key steps to transform from renter to homeowner. You’ll get insider tips to save for a 

downpayment, find the right mortgage, negotiate with sellers, and turn your new house into a wealth-

building asset. Dream of financial freedom? Stop throwing money down the drain on rent. It’s time to 

invest in your future and become a homeowner. We’ll show you how.

Determine Your Budget and Homebuying Goals

As a first-time homebuyer, you have a unique opportunity to build wealth through real estate. Your home’s 

value typically appreciates over time.  Even in down markets, real estate values often rebound and 

continue climbing. While you pay down your mortgage, your equity in the property grows.  When you 

sell, that equity is realized as cash in your pocket.

Consider house hacking to generate extra income.  House hacking involves buying a multi-unit property 

and living in one unit while renting out the others. The rental income can help cover your mortgage 

payment and even generate monthly cash flow.  You get the benefits of owning real estate with less 

financial risk.  

Pay down your mortgage quickly. Making extra principal payments and paying biweekly instead of 

monthly are easy ways to pay off your mortgage early. The sooner it’s paid off, the more you’ll build in 

equity.  You can then use that equity to invest in more real estate or other assets.  

Leverage your equity. Once you build equity in your home, you can borrow against it to purchase 

investment properties. The rental income from those properties generates wealth and the interest on the 

loans is tax deductible.  This strategy, known as the BRRRR method (Buy, Rehab, Rent, Refinance, 

Repeat), allows you to build a real estate portfolio over time without needing a large down payment for 

each new purchase.  

Following these tips, first-time homebuyers can turn their home into a powerful wealth building tool. 

With time and consistency, real estate investments can generate income, build equity, and secure your 

financial future. Who knew your first home could do all that?

Work on Your Credit Score to Get the Best Mortgage Rates

Before you start house hunting, you need to figure out how much you can afford to spend.  As a first-time 

buyer, determine your budget by calculating your income, expenses, down payment, and how much

you’re approved for based on your credit score.  Once you know your budget, set homebuying goals.  Do 

you want a starter home to build equity?  Or are you looking for your forever home?  Defining your goals 

upfront will help guide your search.  

Down Payment and Mortgage Pre-Approval

Save enough for at least a 20% down payment to avoid paying private mortgage insurance.  Get pre-

approved for a mortgage, so you know exactly what you can spend and can make firm offers.  Shop 

around at different banks and credit unions for the best interest rate.  A lower rate means paying less 

interest over the life of your loan and saving thousands.  

Consider Future Costs

Don’t forget to budget for additional expenses like property taxes, homeowners insurance, maintenance, 

and utilities.  These costs are often underestimated by new homeowners and can really impact your 

finances if you’re not prepared.  It’s a good idea to set aside money each month in a fund for expected and 

unexpected home costs.  An emergency fund of 3 to 6 months of expenses is also recommended in case 

you lose your job or have costly repairs.

Location and Type of Home 

Consider what locations and home types fit your lifestyle and budget.  Do you want an urban townhome, 

suburban single-family, or rural property?  Look at homes in neighborhoods you’re interested in to 

determine an average price range.  Then you can search specifically in areas that match what you can 

afford.  Keep an open mind about different locations and styles of homes.  You never know, you might 

find something even better than you imagined!

Following these steps will help ensure you start your homebuying journey on the right foot.  Do your 

research, plan ahead, and don’t get in over your head financially.  Buying a home is a big responsibility, 

but if you go in prepared, it can be a very rewarding experience.

Shop Around for the Right Mortgage Lender and Loan

To get approved for a mortgage and score the lowest interest rate, you’ll need a solid credit score. As a 

first-time homebuyer, your credit score is especially important since you don’t have an established history 

of mortgage payments. Focus on building your score in the months leading up to buying a home.  

Check your credit report for errors  

Order a free copy of your credit report and check it carefully for any errors. Dispute them with the credit 

bureaus to get them corrected. Errors on your report can lower your score unfairly.  

Pay down credit card balances  

Keep your credit card balances low relative to your limits. High balances hurt your score the most. Pay 

off any cards that are at 50% or more of your limit. Make extra payments if needed to get balances down 

before applying for preapproval.

Limit new applications  

Apply only for credit you genuinely need. New applications can lower your score a bit. Avoid opening or 

closing credit card accounts within 6-12 months of applying for a mortgage.  

Consider credit-building loans

If needed, you can take out a small installment loan, like a credit-builder loan, to establish a good 

payment history. Pay it back on time to build your score over a 6-12 month period. Your local credit union 

may offer credit-building loans for first-time homebuyers.  

By monitoring your credit and making improvements over 6-12 months, you can increase your score and 

your chances of getting approved for a mortgage with a great rate. Check your scores again just before 

speaking to a lender to make sure you’re in the best possible position. With hard work and patience, you’ll 

be well on your way to achieving the dream of home ownership.

Find a Knowledgeable Real Estate Agent to Guide You

As a first-time homebuyer, one of the most important steps is finding the right mortgage lender and loan 

for you. Don’t just go with the first option you find or what your real estate agent recommends—shop 

around at different banks and mortgage companies to compare interest rates and loan terms. 

Check Your Credit Score

Before you start applying for mortgages, check your credit score and credit report.  Your score will 

determine your interest rate and eligibility for certain loans. If there are any errors on your report, dispute 

them now to get your score in the best possible position. The higher your score, the lower your interest 

rate will typically be.

Compare Interest Rates and Fees

Once you know your score, compare interest rates from different lenders to find the lowest one you

qualify for. But don’t just look at the interest rate alone—compare other fees like origination fees, 

application fees, and prepayment penalties. Some lenders may offer a lower interest rate but higher fees, 

so calculate the total cost of the loan to determine the best overall deal.

Consider Loan Types  

The two most common mortgage loans for first-time homebuyers are the 30-year and 15-year fixed-rate 

conventional loans and FHA loans. A 30-year mortgage typically has a lower monthly payment but higher 

interest paid over the life of the loan. A 15-year mortgage has higher payments but you pay the loan off 

sooner and pay less interest.  FHA loans allow for lower down payments and credit scores but have higher 

fees. Determine which is right based on your financial situation.

Negotiate the Best Deal

Once you find a lender offering a competitive rate, see if they’ll go even lower. Let them know you’re 

shopping around and considering other options to try and get a rate reduction. Even small decreases can 

save you thousands over the life of your mortgage.  Be willing to walk away if you don’t get an offer 

you’re satisfied with—you can likely find a better deal elsewhere. With some work upfront, you can find 

the perfect mortgage to help you build wealth through homeownership.

Make a Wish List of Must-Have Home Features

As a first-time homebuyer, working with an experienced real estate agent is key. They can guide you 

through the complicated process and help you avoid costly mistakes. Interview a few agents and go with 

someone who specializes in helping new homebuyers, with at least five years of experience. Ideally, you 

want an agent who will take the time to understand your needs and budget rather than pressure you into a 

quick sale.

Ask the Right Questions

Sit down with prospective agents and ask questions like: How long have you been an agent? How many 

clients do you work with at a time? What areas do you focus on? An engaged agent will also ask you 

questions about what you’re looking for in a home, your budget, preferred locations, and your timeline for 

buying. They should seem genuinely interested in finding properties that match your criteria.

Help You Determine Your Budget 

Your agent can evaluate your income and expenses to determine how much you can afford to spend on a 

mortgage payment each month. They can then calculate your maximum purchase price based on current 

interest rates and down payment. While it’s tempting to stretch your budget to get a bigger home, stick 

within the recommendation so you’re not house poor. Your agent can also advise you on the pros and cons 

of different mortgage options to determine the best choice for your situation.

Suggest Properties and Negotiate on Your Behalf

A good agent will search the MLS database regularly for new listings that meet your needs. They should 

only suggest homes that are within your pre-approved budget and in desired areas. They can also handle 

scheduling showings, submitting offers, negotiating with sellers, and ensuring all paperwork is handled 

properly. Your agent is working for you, so don’t hesitate to ask lots of questions and provide feedback on 

what you like and don’t like about different properties.  

The home buying process is complicated, but working with a real estate agent you trust and connect with 

can help ensure you find a home you’ll love while building wealth through one of the greatest investments 

you’ll ever make.

Be Ready to Make Competitive Offers in Today’s Market

Buying a home is a big financial commitment, so make sure it has everything on your wish list. Think 

about your lifestyle and needs now and over the next several years. What features would make your life 

easier or your home more enjoyable?

Adequate Space

Do you want an open-concept space for entertaining or more defined rooms? How many bedrooms and 

bathrooms do you need for your family? Consider if you’ll need space for a home office, media room or 

gym. Think of the flow between rooms and how you’ll use the space. More room means higher costs, so 

find the right balance.

Storage 

Never underestimate the need for storage space. Look for a home with an attic, basement or garage that 

can be used for storage. Closet space is also important. Check that bedrooms have enough closet space

and that there are linen closets for extra bedding and towels. Kitchen pantries and entryways with coat 

closets are extremely useful.

Low-Maintenance Features

Look for features that will save you time and money over the years like energy efficient appliances, newer 

windows and insulation, and minimal outdoor upkeep. A smaller lawn, drought-resistant landscaping, 

composite decking and fencing are good options if you want to avoid constant yard work.  Consider the 

age and condition of the roof, furnace, hot water heater and major systems. Newer, updated features may 

cost more upfront but save money in the long run.

Making a detailed wish list and being realistic about what you need in a home will help ensure you find a 

place you’ll be happy with for years to come. Discuss your wants and needs with your real estate agent so 

they can help find properties that match as many items on your list as possible. With some compromise, 

you’ll find a home that suits your needs and fits comfortably within your budget.

Negotiate Seller Credits and Closing Costs

In today’s real estate market, buyers often have to act fast to secure their dream home. As a first-time 

homebuyer, you’ll want to go in with realistic expectations about what it may take to have your offer 

accepted. Be prepared to potentially bid over the asking price and waive certain contingencies to make 

your offer as attractive as possible to sellers.

Do Your Homework

Before you start viewing homes, work with your real estate agent to determine a budget and price range 

you’re comfortable with based on your income and savings. Also research recent selling prices of 

comparable properties in the neighborhoods you’re interested in to determine fair market value. That way 

you’ll know if a listing price seems reasonable or if it may spark a bidding war.  

Be Ready to Bid Competitively 

Unfortunately, in many markets today sellers often receive multiple strong offers, especially on desirable 

properties. You’ll want to go in with your highest and best offer from the start. Consider offering slightly 

over the asking price, especially if the home seems fairly priced based on your research. Be willing to 

potentially bid even higher if needed to beat out the competition. Every little bit may help your offer stand 

out.

Consider Waiving Contingencies

Another tactic to make your offer more appealing is waiving certain contingencies like the financing 

contingency or inspection contingency. Waiving the financing contingency shows the seller you’re 

confident in your ability to obtain a mortgage. Waiving the inspection contingency indicates you’re 

willing to accept the property in its current condition. Of course, only waive contingencies you’re fully 

comfortable with, as there are risks involved if issues surface later.

With open communication and the right mindset, you can navigate a competitive market and find a home 

you love. Staying realistic yet determined, and working closely with your agent, will help ensure your

first offer and home purchase experience is a success. Keep at it—the rewards of homeownership will be 

well worth the effort.

First-Time Homebuyer Real Estate FAQs

As a first-time homebuyer, negotiating seller credits and closing costs effectively can save you thousands 

of dollars. When sellers are motivated, they may offer credits and pay for some of the closing costs to 

entice buyers and get the deal done.   

Ask your real estate agent to find out how much the seller is willing to offer in seller credits and closing 

cost contributions before making an offer. Let the seller know you’re a first-time buyer interested in the 

property, but closing costs are a concern. See if they’ll pay for title fees, appraisal fees, origination fees or 

other expenses. They may offer a lump sum credit, or pay for specific fees. Any amount helps!

Once you have an accepted offer, work with your lender and agent to determine final closing costs. Then 

go back to the seller and ask if they’ll increase their credit offer to fully or partially offset these costs. Be 

prepared to show documentation supporting the total fees. The worst they can say is no, but many sellers 

will negotiate to keep the deal together, especially if there are other interested buyers.

Closing on a home is stressful enough without worrying about affording potentially five-figure closing 

costs. With some persistence and negotiation, seller credits and closing cost contributions can help make 

your first home purchase achievable. Keep an open mind in negotiations and remember that any amount 

the seller will contribute makes a difference.  

Other tips to keep in mind:

•Ask for more than you expect to get. The seller likely won’t accept the first offer.

•Be willing to compromise. Don’t walk away over small amounts. 

•Closing costs are often negotiable, even for buyers with approved financing.

•Get estimates from a few lenders and use the lowest fees in negotiations.

•Ask the seller to pay specific fees like the appraisal, title insurance or origination charges.

•Request the seller buy down your interest rate by paying discount points. This saves money long-term.

•Don’t waive important contingencies just to get seller credits. Protect yourself.

With some negotiation, you’ll be in your new home in no time and starting your journey as a first-time 

homeowner with money in your pocket from seller credits and closing cost contributions. Best of luck!

    As an experienced full-time Luxury & New Construction Realtor, servicing the state of 

Massachusetts; it will be an honor to support you to buy your first home. Whether as a first time 

homebuyer, investor or a dream home-builder; my team and I can support you to navigate the

home buying process seamlessly.Visit www.kimberlyadegokehomes.com to learn more.