Buying your first home should be a time of excitement and looking forward to new beginnings. Despite the horror stories of the not-too-distant housing market upheavals, the home buying process for first-time buyers doesn’t have to be fraught with anxiety and fear of the unknown. That’s why we’ve created this brief guide for first time buyers in Tx. Every state has their own rules, guidelines, and laws so Tx can be different that buying a house in another state.
Determine What You Can Really Afford
Sometimes, in the excitement of getting out from under rent payments to own your own home, it’s easy to forget this critical consideration – what you can actually afford. What your bank or mortgage company is willing to lend you isn’t always the deciding factor for how much home you can afford.
Generally, mortgage payments should not be greater than 28% of your monthly gross income. But you also need to take into account other monthly payments such as for a car, credit card debt, student loan payments, and so on. You also need enough in savings for repairs to your new house and for all those other inevitable life emergencies.
Figure Out the Right Kind of Mortgage
No guide for first time buyers in Tx would be complete without advising you to carefully choose the best mortgage for your unique situation. A good mortgage lender will help you in that process. They know the Debt to Income Ratios (DTI) that apply for a loan and what types of loans are available in the area you want to buy. Once you’ve determined what you can really afford, you should look carefully at the different kinds of mortgages available.
The two most common kinds are the fixed rate mortgage and the adjustable rate mortgage (ARM). With a fixed rate mortgage, just as the name suggests, your interest rate remains fixed throughout the life of the loan. An ARM, on the other hand, is a mortgage with adjustable or fluctuating interest rates that change to parallel market changes. An ARM, usually begins with a very low-interest rate, so it’s a good option for people who don’t intend to live in the house for a long time. But it can be tricky as the rate or payments goes up after a set number of years. If you think you do not plan to stay in the home that long, it might be a good option but if for some reason you fail to be able to move the payment may be become higher than you can afford. So that is a loan you have to approach with care. A good lender can explain that in better detail. Your agent has worked with different lenders over the years and can refer you to a number of good lenders to speak to.
Decide What Features You Want
This next section of our guide for first time buyers in Tx is meant to save you much time in your house hunting and dissatisfaction after the purchase. Before you ever start looking at listings, you should have a pretty clear idea of what you want in a home – number of bedrooms and bathrooms, total square footage, personality of the neighborhood, proximity to schools and shopping, style of house (ranch or Victorian, for instance), carpet or hardwood floors, and all the many other considerations. The other major factor is that if you have gone through the loan application process you know the maximum amount you can spend. That will save time looking at houses above your price range and the possible disappointment you might have looking at a home you cannot afford.
Get an Agent and Start Looking
Then, when you really get serious about looking for that first home, as any guide for first time buyers in Tx will tell you, you should consider working with a real estate agent. An agent can get you access to more homes and more options and can set up the viewing appointments for you. An agent can also serve as a valuable mediator between you and the seller when it comes to negotiations – which means that she can save you money in the long run. Agents are trained to navigate the whole process: from locating homes you would like to getting you to the closing table. And that can be a complicated process based upon numerous factors from pricing of house, how “hot” the market is, condition of house and repairs that might be needed. An agent guides you through the price to offer to getting inspections done, to reviewing all the paperwork from title commitment to the survey and negotiating any items that are required.
Make Your Offer
Finally, when you’ve found the perfect house – the one that meets all your criteria and falls within your price range – it’s time to make an offer. And this is where things get a little tricky. You don’t want to come in too low and risk losing the house, but you don’t want to pay more than you have to either. Making an offer is the part of the process where your agent can be a huge asset.
Following the tips in this guide for first time buyers in Tx should remove much of the uncertainty and help you avoid many of the pitfalls in the process. But that final stage of reviewing the documents and signing the papers at closing still remains. And at that stage, it’s a good idea to call on the expertise of a real estate professional – before taking that final irreversible step.