Buying Your First Home? Read This Before You Sign
Buying your first home is an exciting leap, but it’s also a major financial and legal commitment and one that deserves more than a signature at the end of a long stack of paperwork. For many first-time buyers, it’s easy to get swept up in the whirlwind of showings, mortgage pre-approvals, and contract negotiations. What often gets overlooked is the bigger picture: how to protect your investment, understand your financing, and set yourself up for financial security long after you move in.
With rising interest rates, regional insurance shifts, and stricter underwriting in areas like California, it’s more important than ever to enter homeownership informed and insured. This guide helps you navigate the process with confidence, with insights from real buyers, tips from industry professionals, and expert advice on where home insurance quotes, mortgage strategy, and financial preparation fit into the journey.
Why Now? What’s Happening in the Market
As of late 2025, the U.S. housing market is seeing signs of cautious optimism. Interest rates, while higher than pandemic-era lows, have settled into a more predictable range. That’s giving buyers a chance to plan with more certainty. But here’s where the current news matters: insurance availability in states like California is getting tighter due to climate-related events like wildfires and floods. Many insurers are pulling back or raising rates.
That means homeowners insurance isn't just a checkbox; it’s now a critical part of deciding where and what you can buy.
Step 1: Understand Your Mortgage Position Early
Why Pre-Approval Isn’t Optional
If you’re planning to buy, if in six months or two years ,knowing where you stand financially is essential. A mortgage broker can help you determine your borrowing power, explain your loan options, and map out a path if you’re not quite ready.
One buyer explained their approach like this:
“Of course, you should know your position on home loans, and if not doable for now, you should learn from the loan specialist's advice how to achieve those goals.”
Connecting with a mortgage broker in California early lets you:
- Estimate your borrowing range
- Understand what kind of deposit is realistic
- Plan for expenses like closing costs, insurance, and taxes
- Get familiar with the loan types that suit your financial habits
Step 2: Build a Savings Strategy That Covers More Than the Home
Buying the home is only part of the equation. Successful homeowners prepare for the real cost of ownership, not just the monthly mortgage, but also insurance premiums, taxes, repairs, and utilities.
Here’s how one new homeowner tackled it:
“When we were getting ready to buy, we estimated how much our rates, insurance, etc. would be and started saving for this as well. I can’t tell you how much of a help it was to have all of our bills covered for that first year.”
Their strategy included:
- Paying off existing debt
- Saving up to 50% of take-home pay consistently
- Starting to “practice” paying bills at projected post-move-in levels
- Avoiding surprises by accounting for homeowners insurance and future rate changes
Step 3: Understand How Mortgages Really Work
There's No Single Interest Rate
Buyers often assume the rate they see online or from a lender is fixed, but that’s rarely the case. Mortgages come with a range of rates, points, and trade-offs.
A buyer shared:
“There’s no single rate but a range of rates with varying point costs associated with each rate. The cost can be negative, which means the lender provides a credit to offset closing costs. When positive, you pay a fee or ‘points’ to effectively buy down your rate.”
Some things that can influence your rate:
- How much you borrow
- Your credit score
- Whether the home will be owner-occupied
- Loan term (15-year vs. 30-year)
- If you opt to pay or receive points
Step 4: Choose a Loan That Matches Your Long-Term Habits
Every buyer has a different risk tolerance and financial rhythm. What matters is choosing a mortgage structure that supports, not strains, your lifestyle.
For some, a 15-year fixed rate mortgage is worth the higher payment because it’s faster and comes with less interest. For others, flexibility is key. Either way, make sure your decision aligns with your goals, not someone else's.
One first-time homeowner described their mindset:
“Paying off your debt ASAP and saving aggressively now will help. We had the goal of saving 40% of our take-home pay and kept that goal for 3 years, regularly hitting 50%+ at times.”
It’s this type of discipline that helps homeowners build equity, reduce financial stress, and create a solid future.
Step 5: Know What You’re Signing Before You Commit
Don’t Assume It’s Set in Stone
Signing loan documents can feel like a formality, but it’s where you need to be sharp. A few lines in your mortgage or insurance policy can cost you thousands if misunderstood.
One cautionary experience:
“Look over closely what you are signing and don’t take their word that it is fixed. It was awful because I was paying off student loan debt and throwing extra money at this $76k loan to pay it off.”
Make sure you:
- Confirm interest rate and whether it’s fixed or adjustable
- Check if there are prepayment penalties
- Understand when and how your escrow covers taxes and insurance
- Review all estimated and final closing costs
Step 6: Plan Ahead for Insurance, Don’t Wait Until Closing
A growing number of buyers in California and other high-risk states are finding that homeowners' insurance quotes are coming back delayed, limited, or surprisingly expensive. This can delay your loan, postpone your closing, or make a property unaffordable.
That’s why we recommend getting a Homeowners Insurance quote as soon as you’re under contract, or even earlier if you’re looking in a high-risk zone.
Our agency works directly with buyers and loan officers to:
- Pre-screen properties for insurability
- Provide fast quotes that meet lender requirements
- Bundle coverage efficiently into escrow
- Advise on specialty coverages like wildfire, flood, or earthquake
Step 7: Collaborating With Loan Experts Like Emmett Colon
We’re proud to work alongside professionals like Emmett Colon, a dedicated loan officer at Loan Factory who specializes in guiding first-time buyers through the mortgage process with clarity and care.
Many of our clients benefit from Emmett’s ability to:
- Explain loan options based on your income and savings goals
- Help you understand down payment expectations and how they affect approval
- Navigate the rate structure, including lender credits, discount points, and refinance opportunities
- Provide realistic projections of total costs, not just the monthly mortgage
We collaborate directly with Emmett to provide timely Homeowners Insurance quotes that meet underwriting requirements and guarantee your policy is lined up well before closing. When you're working with a loan officer who understands the importance of insurance in the lending process, the entire transaction becomes smoother.
And for those who aren’t quite ready to buy? There’s still value in connecting early:
“They can help you understand what kind of deposit you might need based on your goals. Very helpful and no obligation.”
Closing with Clarity and Confidence
Buying your first home isn’t just about getting approved; it’s about understanding the full picture: from financing terms to long-term protection. By preparing your finances, reviewing every document before signing, and securing home insurance quotes early in the process, you build a stable foundation for long-term success.
Working with knowledgeable professionals like Emmett Colon, your loan officer, ensures you have a guide throughout the loan process. Meanwhile, our team guarantees your investment is protected with the right insurance coverage from day one.
You’re not just signing for a house. You’re securing a future.
Disclosure: This article mentions independent professionals and businesses for informational purposes only. No referral relationship or compensation exists between Farmers Insurance - Young Douglas and the parties mentioned.