06.09.2025 By Amy Miller, AFC®

Homeownership: What to Expect (and How to Prepare)

Owning a home is one of the most meaningful financial milestones a person can achieve. It symbolizes stability, independence, and generational wealth—but it also comes with big decisions and long-term responsibilities.

 

Whether you dream of buying your first home or want to make the most of the one you already have, here’s a practical, step-by-step approach to help make homeownership work for you.

Step 1: Prepare Before You Buy

Homeownership starts long before you’re handed the keys. The more you prepare now, the more confident and successful you’ll be in the long run.

  • Check Your Credit: Your credit score will impact your mortgage options and interest rates. Pull a free copy of your credit report at AnnualCreditReport.com and address any errors or outstanding debts.
  • Save for More Than a Down Payment: In addition to saving for a down payment (typically 3-20%), plan for closing costs (2-5% of the purchase price), moving expenses, and an emergency fund for unexpected home repairs.
  • Know What You Can Really Afford: Lenders may approve you for more than is comfortable. Use our Spending and Savings Tool to build a budget that reflects your actual lifestyle—and leaves room to save.
  • Get Pre-Approved for a Mortgage: This shows sellers you’re serious and gives you a clear idea of your price range. Be sure to compare lenders to find the best terms.

Step 2: Understand Your Mortgage Terms

Not all mortgages are created equal. Understanding the details of your mortgage helps you make informed decisions that support your financial future.

  • Know the Loan Type: Fixed-rate loans offer stability, while adjustable-rate mortgages may start low but can increase. Make sure you understand how your loan works over time. Learn more about the different types of loans here.
  • Interest Rate vs. APR: The APR (Annual Percentage Rate) includes fees and gives a better picture of the total cost of the loan than just the interest rate alone.
  • Escrow and Taxes: Most monthly mortgage payments include property taxes and homeowners’ insurance. Be clear on what’s included and how changes in taxes can affect your monthly payment.
  • Avoid Surprises: Ask questions about penalties, balloon payments, and options for refinancing. Understanding the fine print is part of responsible homeownership.

Step 3: Build Equity Intentionally

Equity is the part of your home you actually own—and it's a powerful tool for building long-term wealth. Here's how to grow it wisely:

  • Make Extra Payments (if you can): Sometimes, this is easier said than done, but even one extra mortgage payment per year can save thousands in interest over the life of your loan and build equity faster.
  • Keep Up with Maintenance: A well-maintained home retains and even increases in value. Regular upkeep protects your investment and avoids costly repairs down the line.
  • Don’t Over-Borrow Against Your Home: Home equity loans and lines of credit can be helpful in emergencies or for value-adding renovations, but using them for everyday spending can put your home at risk.
  • Plan Long-Term: Whether you plan to stay for a few years or a few decades, treat your home as a long-term asset. Your future self will thank you.

Step 4: Use Trusted Resources to Guide Your Journey

You don’t have to navigate the homeownership process alone. These trusted partners can offer personalized support and programs to help you succeed:

*HUD-Approved Housing Counselors

Housing counselors can help you:

  • Create a homebuying financial plan
  • Understand mortgage options
  • Avoid scams and predatory lending
  • Navigate foreclosure prevention, if needed

Find a certified housing counselor near you:
https://www.hud.gov/counseling

*Community Development Financial Institutions (CDFIs)

CDFIs are mission-driven lenders that often offer:

  • First-time homebuyer education
  • Down payment assistance
  • Lower-interest mortgage options for low- to moderate-income buyers
  • Support tailored to underserved communities

Search for a local CDFI:
https://ofn.org/cdfi-locator/

These organizations understand the unique challenges many families face and are committed to helping you succeed in becoming a homeowner—and staying one.

Homeownership on Your Terms

Homeownership isn’t just about buying a house—it’s about making a home in a way that works for your life and your finances. It requires planning, patience, and commitment—but it can also be a key step in reaching your financial goals.

America Saves is here to support you every step of the way. Whether you're just starting your homeownership journey or already navigating mortgage payments and maintenance, commit to making informed, confident financial choices that align with your values and your vision.

Ready to Take the Next Step?

Head to our website and take the "I’m Saving For a Home" pledge to get tips, resources, and encouragement tailored to your goal.

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Have a Homeownership Journey to Share?

We’d love to hear how you made homeownership work for your life and your finances. Your story could inspire others who are just getting started!

Submit your Saver Story today and help us show that homeownership is possible—with planning, patience, and support.

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