We can’t tell you how many people have come to us saying they’re tired of paying rent. Every month, they felt like they were throwing money away when all along, they could have been investing in their future.
Buying a house isn’t a minor decision. Many factors have to be considered, such as which neighborhood you want to live in, and the various types of loans that are available to you.
Before you jump into anything, take a look at these nine tips for first-time home buyers in Austin, Texas.
1. Know Your Budget
If you haven’t already created a budget, that’s the place to start. You should have a solid grasp of your financial condition before you try to secure financing for a home.
Make a list of all your monthly bills, including rent, utilities, subscriptions, memberships, and regular loan payments, as well as any other outlying financial obligations. Then factor in the amount of your monthly take-home from your job or jobs, depending on how many people are in the household.
Is any money left over at the end of the month? Would you include additional payments for your savings, 401k, or other form of retirement plan?
2. Secure Your Savings
The current state of your financial situation will say a lot about whether you’re responsible enough to manage a monthly mortgage. Most homes under a conventional loan require at least a minimum of 20% down.
Lenders don’t typically allow you to use their loan for the down payment. They prefer to see that you’ll have the financial substance to ensure you’re a qualified candidate.
If putting the down payment on your dream home would leave your savings completely tapped out, it might be worth waiting until you’ve saved a bit more.
3. Decide on a Neighborhood
Austin is a beautiful city with a lot of different neighborhoods to choose from. They also come with their particular range of price points.
How much you can realistically afford might be the determining factor regarding which region you shop. Think about your non-negotiables.
Do you want to live near the city center to be close to your downtown job? Are you hoping to start a family and would therefore lean in the direction of a more residential character?
Maybe you’re a lover of the great outdoors and crave solitude. An area that’s a bit more secluded might be what you’re looking for. Taking the neighborhoods into consideration with their attendant cost will help you narrow down where to start your house hunt.
4. Choose a Home Type
Aside from the region where you’ll settle, you’ll also want to decide what type of home would be best for your future needs. There’s a wide range of homes for sale in Austin, Texas.
Multi-family homes, for instance, will allow you the potential to renovate and rent out a portion of your home. That’s a great way to generate passive income.
Condos and townhomes have their own perks that usually entail various amenities, such as pools or fitness centers. However, this also means there will probably be some pricey HOA (Homeowners Association) fees.
5. Get Pre-Qualified
If you want a seller to take you seriously, get pre-qualified for a loan. A seller will favor the highest bidder if that party presents evidence of access to the necessary funds for closing.
Make sure before you start house hunting or even come close to putting an offer down that you’re backed by pre-qualification from a lender.
6. Figure Out What You Can Afford
Once you’ve calculated your budget and have identified what size of loan you could qualify for, start doing the real math for what you and your family can realistically afford. Just because a lender says you can obtain a $300,000 loan doesn’t mean you want to spend that entire amount on the house.
You should be aware of other expenses, such as furnishings, lawn equipment, utilities set-up, car registration if you’re moving from out of state, and potential repairs or renovations that didn’t get negotiated during closing.
Usually the buyer is responsible for paying the closing costs, so you’ll want to preserve at least 1% to 2% of the cost of the house for that purpose. Plus, the more unnecessary money you take out, the more you’ll have to pay back over time with the accrued interest.
7. Hire a Real Estate Agent
If you’re a first-time homebuyer, you shouldn’t try to handle the entire process yourself. You might be thinking you could save money if you avoid having to pay a realtor, but there are several other legal facets an agent can’t help you with.
Not to mention they’re apt to catch a lot of things you won’t. Home inspections can be tricky and having a real estate agent that keeps your interests in mind will ensure the seller doesn’t take advantage of you.
Experienced agents have the skills and qualifications to negotiate a fair price and get you the most bang for your buck. Make sure to hire a professional and licensed real estate agent.
8. Speak with Multiple Lenders
A secured loan starts when you head to the bank. Be forewarned: You shouldn’t sign with the first lender you meet.
Get quotes from multiple lenders to get a solid sense of how much you could take out and what their interest rates are. Trust goes only so far when in terms of your perceived ability to pay back the loan, as well. The lender will need to see substantial data, such as your credit score and your last two years of employment.
Here’s a tip about speaking with different lenders. Try to visit as many as you can on a single day. If each lender runs a credit report, it won’t hurt your credit score if a series of them are ordered on the same day.
9. Get to Closing
Last, but certainly not least, the moment you’ve been waiting for: It’s time to wrap up the process. You’ll want to make sure you’ve secured the financing by selecting a lender.
Once you have that, you’re ready to make an offer on the house of your dreams. Don’t forget to schedule a home inspection. If all goes well, you’ll be on your way to signing the papers and closing.
Remember, nothing is final until closing. Try to be patient, because the process can take some time.
If you’re ready to start looking for a house in Austin, Texas, get in contact with the team at Green Residential. We have a wide selection of homes in the area and an excellent staff of real estate agents to get you moving into your new home in no time.