Thinking About Buying
Your First House?
Here’s What You Need to Know
This guide breaks down the closing disclosure and financial must-knows for buying your first house. Learn from real experience and avoid costly mistakes on your path to homeownership!
If you’re feeling the pinch of high rent prices and wondering if buying your first home is a better option, you’re not alone. But let’s be real—buying a house isn’t as simple as saving up for a down payment and calling it a day. There are a lot of hidden costs and steps that can catch you off guard if you’re not prepared.
I bought my first home in 2019, and let me tell you—I learned a lot along the way. One of the biggest wake-up calls was my Closing Disclosure, the document that lays out the full financial picture of buying a home. I wish someone had walked me through it, so I’m doing that for you today.
House Purchase
First, let’s get into the real numbers from the closing disclosure so you can see what buying a home actually looks like:
Loan Set Up
Why not a 15-year loan? I was just finishing grad school, and the higher payments made me nervous. I knew that I could refinance later or use recasting.
Loan recasting is when you have the option to make a large, lump-sum payment toward the mortgage principal, and the lender recalculates the monthly payments based on the new, lower balance. This reduces your monthly payment but keeps your loan term the same. Unlike refinancing, recasting doesn’t require a new loan or high fees, making it a simple way to save on interest and lower payments.
Please note that I negotiate and split closing costs with the seller.
Fees
I had to cover a bunch of fees. Here are some that stood out:
These numbers add up fast, and if you’re not expecting them, they can feel overwhelming. That’s why knowing what’s coming is key.
Times You Will Spend Money Before Your First Mortgage Payment
Most first-time buyers assume think is all about the down payment. Not true! Here’s when you’ll actually be handing over cash:
- 1Earnest Money Deposit – This is the first payment you’ll make once your offer is accepted. It shows the seller you’re serious. Mine was $1,000, and if I backed out (except for very specific reasons), the seller could keep it.
- 2Appraisal– The appraisal (which the bank uses to confirm the home’s value). I paid $460 for the appraisal, and the bank selected the appraiser and coordinated this process.
- 3Inspection Fees – I paid over $1,000 for the inspection.
- 4Closing – This is the final payment before you officially close on the home. For me, that meant bringing $13,574.11 to closing, to cover the down payment, taxes, lender fees, and other charges.
That’s over $15,000 in costs before my first mortgage payment even started. This is why budgeting beyond the down payment is so important.
The Part No One Warns You About: Interest Costs
When I first looked at my Closing Disclosure, I was shocked to see how much I’d actually be paying in interest if I stuck with my original 30-year loan:
- Total interest over 30 years: $164,059.43
- Effective interest rate over time: 72%
That means my home would have to increase in value by at least 72% over 30 years just for me to break even—not counting maintenance, taxes and insurance. 😳
Key Takeaways
Buying a house is exciting, but it’s also a huge financial commitment. No one really walks you through the fine print, and it’s easy to feel overwhelmed. That’s why I’m sharing my experience—to help you feel confident and prepared when you’re ready to buy.
If you want personalized guidance on buying your first home, sign up for a free 30-minute money check-up! Let’s go over your finances, make a plan, and ensure you’re fully prepared for homeownership. Click here to book your session today! 😊