Are You Ready To Buy A Home?
First Time Homebuyer Tips
Buying a home is one of the single biggest investment purchases a person will make in their lifetime, if not the biggest. Making that leap of faith can take time and sometimes not so peaceful preparations. But there is no need to stress or fret. The details will come naturally, by steadily educating yourself while you save for the dreaded down payment (which is not as expensive as you might think) and checking off the small to-do items, you set yourself up for success and a peaceful transition from homebuyer to homeowner.
It’s always important to familiarize yourself with the homebuying process whether you are a first-time home buyer or someone who is getting ready for the second or third home purchase. With so many advances in technology, data encryption, and just overall ease of process – it has never been easier to buy a home. Working with the right Agent, Title Company, and Mortgage Lender you build a steady foundation (no pun intended) for the entire journey.
Let’s jump right into some of our favorite tips for home buyers:
LEARN KEY TERMINOLOGY
FSBO, loan pre-approval, down payment, earnest money, escrow, closing costs, are just some of the hundreds of terms that you will hear from all parties involved in the purchase of your home. It’s important as an educated home buyer to pay attention to the lingo involved in the Real Estate world. Instead of relying on a quick Google Search while you are at the closing table, take the time to refresh your knowledge on what some of the information is.
At Texas Secure Title Company, we take pride in sitting each homeowner down at the closing table and going through each document before it is signed and making sure that the buyer is aware of life changing moment they are about to embark on.
Also, do not forget that your Agent is on your side. Do not hesitate to call or email them with any questions you might have during the process.
MANAGE YOUR FINANCES
Checking listings on Realtor.com or Zillow is always fun, especially when you are fantasizing about a million-dollar home, with the perfect pool, and six car garage, but before you even reach out to your Real Estate Agent, it’s important to get a clear sense of what you are ACTUALLY qualified to spend – and what you want your actual budget to be, which will more than likely be a little less. Be proactive not reactive, we like to say.
Going through the mortgage lending process will sometimes be the most difficult part. Lenders will look through multiple factors such as your credit score, employment, income to debt ratio, assets and so much more to establish an approved line of credit for your home purchase. Most Agents prefer and highly recommend a loan pre-approval, because nothing is worse than falling in love with a home and finding out you can’t actually afford it.
In fast moving markets, like we are currently in, not only will you want to have a clear sense of your budget, but it speeds the process up by having a Verified Approval Letter from your lender. Which can sometimes translate to a seller being more inclined to accept your offer knowing that you are serious about the purchase and taking the recommended steps to speed the process up.
DOWN PAYMENT AND OTHER EXPENSES
Saving for a down payment is always smart no matter where you are in the home buying process. Sometimes we have a large reserve built up and other times… not so much. But have no fear: the traditional 20% down payment is far from the norm in today’s market, especially for first-time home buyers. With so many new loan programs and having a variety of lenders to choose from, sometimes you are able to put down a significantly less aggressive down payment on your next home purchase.
Apart from the down payment, most contracts will require additional fees such as Earnest Money and Closing Costs. Earnest Money is a sum put down that will be applied to your final payment. However, the closing costs are the additional amount that cover the lender and title company service fees and any appraisals or attorney work that is required to clear title. These fees can vary but typically they will be around 3%-6% of the home.
HAVE A CHECKLIST
One of the best tips we give to new homebuyers is to always have a checklist handy. Here at Texas Secure Title, we provide you with what we like to call a “pizza tracker” that tells you, the client, which document and step we are on up until the scheduling of the closing. Most Title Companies can provide you with a checklist as well as your Real Estate Agent to see what is next in the process.
Having your offer accepted is only the first part! (And sometimes the hardest) Be sure to follow along and keep in contact with everyone involved with the contract to ensure a smooth closing.
With knowledge comes power. Becoming financially prepared to buy a home means nothing if you are not prepared mentally to see what it takes. Don’t forget to keep up with your daily intake of Real Estate Knowledge and we will see you at your next closing!