Avrahom Orloff Explains What First-Time Homebuyers Should Know: A Beginner-Friendly Guide to Financing, Inspections, Closings, and Hidden Costs

Buying your first home is a major milestone, both emotionally and financially. It's exciting—but it can also be overwhelming. Between deciphering mortgage terms, negotiating with sellers, scheduling inspections, and budgeting for closing costs, it’s easy to feel lost in the process. Avrahom Orloff explains that this beginner-friendly guide breaks down the essentials every first-time homebuyer should understand. With the right knowledge, you'll feel more confident navigating the housing market and making smart, informed decisions.

1. Understanding Your Financing Options

Before you start touring homes, take the time to understand how home financing works. Knowing your options helps set realistic expectations and gives you a stronger footing when making offers.

Start with Mortgage Pre-Approval

A mortgage pre-approval is a lender’s commitment to loan you a certain amount, assuming nothing changes in your financial profile. Avrahom Orloff explains that it gives you a clear budget and shows sellers you're a serious buyer. To get pre-approved, you’ll need:

• Proof of income (W-2s, pay stubs)
• Tax returns
• Credit history
• List of debts and assets

Explore Loan Types
Several mortgage options cater to first-time buyers:

• Conventional Loans: Require good credit and a down payment (often 5–20%).
• FHA Loans: Backed by the government, ideal for those with lower credit scores and smaller down payments (as low as 3.5%).
• VA Loans: Available to eligible veterans and military families with no down payment requirement.
• USDA Loans: Designed for rural homebuyers, also offering no-down-payment options.

Know Your Credit Score’s Role
Your credit score affects your interest rate and loan eligibility. Aim for a score of at least 620 for most conventional loans. The higher your score, the more favorable your terms will be.

Down Payments and PMI
While the classic 20% down payment rule still holds, many buyers now put down less. However, if your down payment is under 20%, you'll likely pay Private Mortgage Insurance (PMI)—an added monthly fee to protect the lender.

2. The Importance of Home Inspections

Once you’ve found a home and made an offer, scheduling a professional home inspection is critical. This step helps you avoid purchasing a home with serious hidden issues.

What Does an Inspection Cover?
A certified inspector examines the home’s structure, systems, and safety, including:

• Roof, walls, foundation
• Plumbing and electrical systems
• HVAC (heating, ventilation, air conditioning)
• Appliances
• Signs of water damage, mold, or pest infestations

What Happens After the Inspection?
If the inspector uncovers problems, you can:

• Renegotiate the price
• Request repairs before closing
• Walk away (if you included an inspection contingency in your offer)

Pro Tip: Attend the inspection if possible. It’s a great opportunity to learn about the house and ask questions directly.

3. Navigating the Closing Process

Closing is the final step—when the property legally transfers to you. This stage can take several weeks, and it’s packed with paperwork, fees, and coordination.

Steps in the Closing Process:

• Title Search & Insurance: Confirms the seller legally owns the home and protects against future claims.
• Appraisal: Required by lenders to confirm the home’s value supports the loan amount.
• Final Mortgage Approval: Your lender will recheck your credit and finances—don’t make big purchases or switch jobs during this time!
• Closing Disclosure: A document outlining all loan terms, monthly payments, and closing costs. Review this carefully.
• Final Walkthrough: Usually conducted a day or two before closing to ensure the home is in the expected condition.

Signing Day: You’ll sign dozens of documents and pay the final amount due. Then, you receive the keys and officially become a homeowner!

4. Uncovering Hidden Costs

It’s easy to focus on the down payment and mortgage—but the true cost of homeownership includes much more.

Upfront Hidden Costs:

• Closing Costs: Typically 2–5% of the home’s purchase price. Includes lender fees, title fees, taxes, and more.
• Home Inspection and Appraisal Fees: Usually $300–$600 each, paid upfront.
• Moving Expenses: Hiring movers, renting trucks, or buying new furniture adds up.

Ongoing Costs:

• Property Taxes: These vary by location and are often included in your monthly mortgage payment.
• Homeowner’s Insurance: Required by lenders and protects your property.
• HOA Fees: If buying a condo or in a planned community, you might owe monthly or annual homeowner association dues.
• Utilities and Maintenance: Expect higher bills than you may have had as a renter. And as the homeowner, you're responsible for all repairs and upkeep.

Emergency Fund for Repairs: Set aside at least 1–3% of your home’s value annually for unexpected repairs—like a broken water heater or roof leak.

5. Tips for Navigating the Market with Confidence

The current housing market can be competitive and fast-moving, especially for first-timers. Avrahom Orloff explains how to stay ahead:

• Work with a Trusted Real Estate Agent: They can help you find homes, negotiate offers, and guide you through the process.
• Don’t Let Emotions Rule: It’s easy to fall in love with a house, but always evaluate if it fits your budget and needs.
• Stick to Your Budget: Avoid bidding wars that stretch your finances. Being “house poor” can make homeownership stressful.
• Be Ready to Act: In hot markets, homes move fast. Have your documents ready, get pre-approved, and be decisive.
• Think Long-Term: Choose a home that fits your future lifestyle. Consider things like commute times, school districts, and resale value.

Buying your first home is a big deal—but it doesn’t have to be intimidating. Avrahom Orloff emphasizes that by educating yourself about financing, inspections, closing steps, and the full range of costs, you’ll be better prepared to handle each phase of the process. Surround yourself with a knowledgeable team of professionals, plan for the unexpected, and stay grounded in your goals. With the right approach, you can turn your dream of homeownership into a confident and successful reality.