Purchasing your first home is an exciting milestone! But navigating the home buying process for the first time can feel daunting. This guide covers key steps and tips to set you up for success as a first time home buyer in Texas.
Determine Your Budget and Finances
Before you start looking, take time to get your finances in order:
Set Your Budget
- Consider what monthly mortgage payment you can comfortably afford based on your income and expenses.
- Factor in additional costs like property taxes, insurance, HOA fees and maintenance.
- Look at current home prices and mortgage rates in your desired areas to estimate your price range.
Save for a Down Payment
- Many lenders require at least 3-5% down for a conventional loan. 20% down prevents PMI.
- Explore first time homebuyer programs that offer low or no down payment options.
- If you have an IRA, you may be able to use fund withdrawals penalty-free for your first home purchase.
Check and Improve your Credit
- Good credit in the 620-640+ range helps ensure you qualify for the best mortgage rates.
- Pay down debts, correct any errors on your credit reports, and avoid new credit inquiries.
- If needed, take steps like getting a credit builder loan or becoming an authorized user to boost your score.
Calculate Total Closing Costs
- Closing costs typically range from 2-5% of the total purchase price.
- Factor in origination fees, appraisal cost, title insurance, escrow deposit and other fees.
Having a solid grasp on your finances prepares you to shop confidently knowing what you can afford.
Pick the Right Real Estate Agent
Finding the right real estate agent to guide you through the home buying process is key:
- Ask friends and family for recommendations of agents they have worked with.
- Search online for well-reviewed agents in your desired areas.
- Look for an agent who specializes in first time home buyers. Their expertise will be invaluable.
- Interview 2-3 agents to find one you connect with and who understands your needs.
- Opt for a full-time experienced agent rather than a part-timer.
A knowledgeable, responsive agent becomes your advocate and is there every step of the way.
Get Preapproved for a Mortgage
Preapproval from a lender does two important things:
- Shows sellers you are a serious buyer who has the financing to purchase their home.
- Gives you a budget range to focus your home search on.
- Talk to banks, credit unions and mortgage brokers to find the best lender and loan program for you.
- Provide all required documents for your credit history, income, downpayment funds, etc.
- Lock in the rate once you are ready to start making offers. Rates fluctuate frequently.
The preapproval process also helps you identify and address any issues early on.
Start Your Home Search
Once preapproved, now the exciting part begins – finding that perfect first home!
Make a Must Have List
Decide which features and amenities are absolute must haves versus nice to haves so you can identify the best options.
Attend Open Houses
Tour homes in person to get a feel for different neighborhoods and house layouts. View lots of homes to develop your list.
Drive Commute Routes
Test out driving to and from work during peak times before committing to an area.
Enlist Your Agent
Your agent will continuously send you listing options tailored to your criteria as new homes hit the market.
View Home Histories
Research permits, previous sales and other records to uncover any red flags on homes you’re considering.
Take your time viewing homes until you find the one!
Submit a Competitive Offer
Ready to take the plunge on your favorite option? Here are tips for first time home buyer:
- Determine fair value using comparable recent sales and your agent’s expertise. Avoid overpaying.
- Submit any requested proof of funds or preapproval letter along with your offer.
- Send an earnest money deposit of 1-2% of the purchase price.
- Opt for a shorter feasibility study period of 7-10 days.
- Preview the initial draft of the purchase agreement with your agent.
- Make sure any requested repairs or credits are feasible for the sellers.
- Act quickly if you love the home – competition is fierce!
With a strategic offer in place, you’ll be ready to negotiate and seal the deal. Enjoy the process of buying your first home in Texas!
