Buying a home can be a scary process. But if you take it one step at a time, you may find it’s not as complex as you had imagined. Whether you’re entering the market for the first time or as a repeat buyer, these simple steps will put you on the path to homeownership.
Get your credit in order
While you don’t need perfect credit, it’s a smart idea to find out what’s on your credit report before applying for a loan. The Fair and Accurate Credit Transactions (FACT) Act of 2003 made it possible for consumers to access free copies of their credit report. You can request one free credit report every 12 months from each of the three major consumer credit reporting agencies: Equifax, Experian and TransUnion. If you find there are errors, you can fix the problem before contacting a mortgage lender. If you come across legitimate blemishes, you may want to take steps to improve your credit rating before applying for a home loan. Even if you aren’t looking to buy a home today, you might consider taking advantage of this service.
Find a Texas Realtor
Finding a Realtor who understands your needs and serves your best interests is a vital component of the homebuying process. Alleviating the hassles of purchasing a home, a Realtor will guide you through every stage—from helping you determine how much home you can afford to choosing a lender and loan product that works for you. Texas Realtors have the knowledge and skills to ensure the transaction goes smoothly and are committed to finding a home that best satisfies your needs.
Determine how much you can afford
Some lenders may be willing to loan you more than you ever imagined, but be careful. If you borrow more than you can really afford, you may find that other living expenses suffer. Typically, lenders do not like to see your total monthly debts – including your mortgage – exceed 36 percent of your pre-taxed income. If you are thinking about purchasing a home, first figure out what you can afford. Don’t tempt yourself with homes that are likely to stretch your budget too thin.
Most homebuyers require a loan. And while it may not be difficult to get one, you may find securing a loan product that is right for you a bit more challenging. Before pounding the pavement in search of a new home, consider meeting with a lender and looking at loan options. If you don’t qualify for a loan or don’t like the terms offered, it will help to know where your deficiencies lie so you can work toward qualifying in the future.
If the loan officer reviews your financial position and feels a mortgage loan is likely, ask for a letter of pre-approval. Depending on how in-depth your lender delves into your personal finances, you may ask for one of two forms— a Conditional Qualification Letter or a Conditional Approval Letter. While the first letter determines your likelihood of obtaining a loan, the Conditional Approval Letter follows an intensive examination of your background and means that credit, funds, and employment have been verified and approved by the lender. Getting pre-approved is an important step that will not only eliminate surprises, but will place you in a strong negotiating position with sellers.
Decide what you want
Narrow your home search down based on features and amenities that are important to you. Weigh your needs, budget and personal tastes, and keep the home’s purchase and resale value in mind. Here are some things to consider:
The neighborhood: No two buyers are exactly alike. Determine what qualities you are looking for in a neighborhood, including nearby parks, good schools and facilities, close proximity to shopping, restaurants and places of employment, high-occupancy rate, low-crime rate, and well-maintained homes. Knowing what matters to you is an important step in ensuring your happiness.
Type of home: Depending on your needs and your budget, you might consider purchasing a single-family or multi-family home, condominium or co-op. Talk to your Realtor about the advantages and disadvantages of each. Your agent can help you choose the type of home that suits your needs.
Size and configuration: When buying a home, it’s important to consider size and layout. Is it the right size for you and your family? Can the garage hold your automobiles? If the house fits you perfectly today, can it be adapted to fit your life in the future? Maybe you plan to have children or more children?
Resale value: Of course, there is a difference between wants and needs. That said, it’s important to keep the home’s resale value in mind. One-bedroom condominiums are more difficult to sell than two-bedroom. Two-bedroom/one-bath houses generally appeal to fewer people than homes with three or more bedrooms. Look at the home’s potential for curb appeal. Take a close look at the neighborhood. Is it well-maintained? Are retail and business developers taking notice of the surrounding area? If resale is in your future, talk to your Realtor about what factors might contribute to a home’s resale value.
Start the search
Need I say more?
Becoming a homeowner for the first, second or third time is a great experience. It requires some time and energy on your part, but is definitely worth the effort. Knowing the preliminary steps to the process will help you decide if homeownership is right for you today. Your Texas Realtor will be a tremendous asset, walking you through every phase and managing the details of the transaction. For more information on the homebuying process, I invite you to visit TexasRealEstate.com.
For services, contact RE/MAX Genesis at 830-833-2000 or email@example.com.