First Time Home Buyers Tips
Purchasing your first home is a huge step and quite possibly is the largest financial decision you’ll ever make. Many Central Texas first time home buyers can be discouraged by the home buying process. They continue to avoid home ownership while throwing their money away on rent. However, if you breakdown the home buying process in to the simple steps below, you will find the process less intimidating.
Tips for Austin Area First Time Home Buyers
In most cases buying is better than renting. When you rent, you make your monthly payment and your money is gone forever, no write-offs, no appreciation in value, nothing. You can’t even change the color of a wall without permission from your landlord. When you own your own home you have tax deduction opportunities. On your federal tax return you can deduct mortgage interest and property taxes. Since the front end of your mortgage loan is made up mostly of interest the mortgage interest deduction can be a nice, long term write-off. Its also very likely the value of your home is going to appreciate over time. Keep in mind you’ll no longer have a landlord! But a renter may say “I don’t have to pay property taxes when I rent”. Trust me, your landlord has included all the cost associated with your rental property in your monthly rental payments and that also includes property taxes as well as insurance. The difference is you’re paying the property taxes indirectly and the landlord is getting the tax deduction!
Use a REALTOR® during your home buying process. First-time home buyers and experienced buyers alike are far better off using a licensed real estate professional. Your REALTOR® at Longhorn Realty will have access to information posted on Austin MLS such as surveys, restrictions and disclosures that is not available to the unlicensed public. A Longhorn Realty REALTOR® also has professional contacts, information about communities, builders, future developments that can be invaluable to a buyer. As your exclusive buyers agent we will have your best interests at heart and we will be a tremendous help to you through the home buying process. Contact Longhorn Realty to help guide you step by step with your first home purchase. Read more info on why you should use a REALTOR®.
Know how much you can afford. Lenders will probably tell you that you can spend up to 28 percent of your gross monthly income (GMI) on your mortgage, taxes and homeowners insurance, and up to 36 percent on your total debt. To calculate a housing budget you can live with, start by figuring out how much you spend each month. Track your daily expenses to get a real sense of how much is going out and where you’re spending most of your available cash. Watch your savings and calculate how long it will take you to come up with a down payment. Also be sure to check for financial assistance programs for first time home buyers. Use our mortgage calculator to see how your income, debts, and expenses affect what you can afford. Additional information on “Can you Afford to Buy?”
Get Pre-Approved for a loan. Getting pre-approved from a lender is one of the single most important things you can do when getting ready to shop for your first home. Once you’ve talked to a lender and reviewed your loan options and decided on the right one for you, it’s time to get pre-approved. You’ll need to provide the lender with details of your credit, income and assets to start the process. The bank will verify everything and issue a pre-approval letter that tells you, and the sellers, how much the bank is willing to loan you. Click here to read more about why you need to be pre-approved by a lender.
List what you need in a home. Based on the housing budget you figured, and where you want to live, compile a list of what you’d like to have in your first home. Research is helpful when putting together your list. Check out some homes in your price range online to get a feel for what your money will buy, and make your wish list based on the homes you see.
Start your home search. Decide on a location and identify the features you want in a home. Check local listings, compare prices of similar homes and consult with your REALTOR® to help determine the amount you can expect to pay. Start your online home search in the Austin real estate market by clicking here.
Make the offer. Sometimes you hear that the amount of your initial offer should be a percent below the seller’s asking price or a percent less than you’re really willing to pay. In reality, the offer depends on the basic laws of supply and demand. If many buyers are competing for homes, then sellers will likely get full-price offers or more. If demand is weak, then offers below the asking price may be in order. Because counter-offers are common, it’s important for buyers to remain in close contact with their REALTOR® during the negotiation process.
Get a home inspection by a licensed professional. Its always a good investment for buyers to pay for a home inspection. Home inspections are usually performed during the option period, just in case major deficiencies are found and the seller is not willing to pay to have them corrected. A home inspection is key to really understanding the condition of the home that you are buying.
Close on your property. Next to moving day, closing is the last step in buying your property. The down payment is due at closing and is usually required to be wired to the title company. Closing costs are various fees incurred behind the scenes to process the loan, appraisals, county filings, surveys, title search, legal costs and so on. All of the different closing costs items add up, but are required, so accepting and understanding early on will make this less surprising. When you first apply for a loan, your lender is required by law to give you an estimate of your loan costs, which shows in detail what the estimated closing costs are expected to be.
Click here to read an informative blog post with more home buying tips.