Steps To Home Buying
Purchasing a home can feel overwhelming. Where to begin? Well the internet is a good place to start. By understanding the process and preparing for the next steps, you can ease your worry and make educated decisions. Below are some tools we hope will help. We created them from your perspective, keeping the Austin market in mind. If you have questions, we are here to help - obligation free.
Step One: Deciding to Purchase.
Home purchases are a life experience. You can change the color of the walls, but you can't change the way you feel when you walk through the door. Buying a home should be an experience that allows you to find the right place for your life to unfold.
Whether you are a first-time home buyer or a veteran home purchaser, it is a big decision. You are making an emotional, financial and logistic commitment to whatever home you choose and that decision requires a thoughtful purchasing strategy. You are not alone in this process and should seek out reliable support systems and trusted advisors. The market place fluctuates and it is a good idea to understand your goals and the local housing economy. It is your realtors job to help you navigate the unknown and present useful information to help you in your search.
Owning a home can be a sound investment that will grow over time and can even offer year end tax benefits. Additionally, mortgage rates are historically still low making it so you can afford more house for your money. Contact us to discuss, without obligation, the Austin housing market. You have questions, we have the answers.
Step Two: Hire Your Agent.
Do you wonder if you will find a house that you love in a neighborhood you like at a price you can afford? The answer is yes. Begin by thinking through the qualities you want – this is your “pie in the sky” list – your dream home. Then make a list of all the attributes that you require– these are your “must-haves.” By understanding what you want and want you need, you will have more flexibility in your search. If you need a little help getting started, try answering the questions below. Then start searching for homes and give your list to your agent so that they can help you search the MLS listings. Still looking for an agent, learn more about choosing The Gene Arant Team to help you navigate this process.
Answer the questions and highlight your requirements:
- Age: Do you prefer historic properties or newer ones?
- Type: Do you like a ranch, two-story, bungalow, etc?
- Style: Do you like more modern or traditional?
- Bedrooms: How many?
- Bathroom: How many? Updated?
- Floor plan: Open or traditional?
- Square Feet: How much space?
- Ceilings: How high?
- Kitchen: How big? Recently updated? Island?
- Storage: Large closets? A shed? An Attic?
- Garage: Room for how many cars?
Do you want or need a(n):
- Play/Exercise Room
- Laundry Room
- Sprinkler System
- Media Room
- In-law Suite
- Hot tub
Step Three: The Financial Aspects of Purchasing Your Home.
While finding your new home is an exciting process, the financial aspects are usually a bit daunting. You don’t have to be anxious about such a large financial commitment if you understand the process. Know what you can afford and this part of the buying process is much less confusing.
Lenders make decisions based on averages and formulas. Historically, banks used a 28/36 ratio to decide how much you can afford to borrow. Your house payment can’t be more than 28% of your gross monthly income. Your total debt (car payment, student loans, credit cards) cannot be more than 36% of your total monthly income. Quick tip: this is not the time to be making any large purchases, it affects your credit score and you want to have as much cash in the bank as possible.
While you are excited to be searching and at this stage, may have found your dream home, it is best to hold off on purchasing that new patio or kitchen set. In fact, your mortgage depends on your information, credit cards and debt-to-income ratio remaining the same from date of original approval to the final closing. It is important that during this time you do not
- Purchase a new car
- Buy new costly furniture
- Change banks or bank accounts
- Co-sign a loan for anyone
- Take out another loan for any reason
- Become negligent on current bills or default on current loans
- Change jobs, become self-employed or quit your current job
- Run up your credit card bills
- Do anything that will originate new inquiries to your credit as it will show on your report
And remember, it is good to have cash in savings. This gives you and your lender peace of mind for unexpected costs.
Pretty simple actually. Use our mortgage calculator. Don’t forget to include your current home’s worth - this will be key to determining your new budget and setting your home search parameters.
The benefits of understanding the financial process are:
- Confidence: Once you decide what you can afford, your home search process becomes more defined.
- Security: Knowing how much lenders will allow you to borrow, your budget becomes more clear.
- Financial Profile: don't spend everything on your mortgage, allow for the unexpected – like repairs, landscaping, home improvement.
Step Four: Finding the right home in the right location.
You hear it all the time, location, location, location and when it comes to buying a house, location should be a deciding factor. With a little help and a bit of research, you can begin narrowing your search. Determine what attributes are important to you in a neighborhood. Some things to consider are school districts, work commute, distance from the airport, property taxes and neighborhood amenities. Use our search tool to help get you familiar with Austin neighborhoods. If you have questions about certain areas, just give us a call, we are here to help. By logging in, you can customize and save your searches.
Step Five: Making an offer.
When making an offer, there are several variables to consider. An informed offer means that as a buyer, you have done your research. You are prepared to negotiate, know when to agree to terms or when to walk away. You will begin your negotiations by making an initial offer. Make your offer compelling, depending on the state of the market, you may start low but not too low, showing that you are serious about purchasing the home. Need more help? Contact us without obligation, and our team will help answer any questions you may have about particular houses, neighborhoods or the Austin market.
- How long has the home been on the market? What is the sellers situation? Do they need to move quickly or have they already moved?
- Is this the first time the home has been listed? If this is the second listing why did the first listing expire?
- How does the home compare to others in the area? You should do a comparative market analysis to understand what comparable homes are selling for in the neighborhood.
- Is it a Buyer’s or Seller’s Market?
- When was the home last sold? What was it sold for? This will give you an idea of the amount the seller has invested.
- Know what you are wiling to pay. You know what you feel the home is worth but realize that the seller will have their limits too.
- It is easier to make a lower offer if you can make an offer without contingencies. If you do not have to wait for your current home to sell or can purchase in cash, some sellers are more willing to take a lower offer in return for less hassle.
- Are you competing against other buyers? This will limit your time and possibly your negotiations. You will need to know your price limitations and stay true to your budget – do not get into a bidding war and overbid.
- Be prepared to put down earnest money. This is a deposit made with your written offer showing that you are serious about wanting to purchase the home. This money will become a part of your down payment.
- Be realistic in knowing your negotiating ability. If you do not feel comfortable, hire a reputable agent to negotiate on your behalf – this could save you thousands of dollars and eliminate unwanted stress.
Step Six: Performing due diligence.
You have found the house and now it is time to do some detective work. While most due diligence begins with hiring an inspector, we suggest you do a bit of reconnaissance as well. The home and neighborhood you have chosen seems perfect during daylight hours, but what is it like during peak traffic times or at night? Is there a streetlight that shines directly into the master bedroom? Is the house located next to train tracks that are only utilized at midnight? Is the neighbor's dog left outside to bark for hours on end? Consider these questions below and keep notes of other questions that may arise. Remember, you may not receive the answers until you specifically ask the questions.
Do hire a home inspection, in fact, hire two. Homes are a very large purchase and this is not the time to cut expenses. Time and money spent on due diligence can be your biggest savings in the end. If the home owner offers to provide you a disclosure document, use this as additional information, but never use this as your primary source of inspection.
Here are some questions to ask when screening home inspectors:
- What does your inspection cover?
- How long have you been inspecting homes?
- Do you have a list of trusted vendors for repairs?
- When can you inspect my home?
- Can I be present while you inspect the home?
- After inspecting, when will I receive the report?
- How much do you charge?
- Are you a member of ASHI? (American Society of Home Inspectors 1-800-743-ASHI)
For more information or for a list of trusted home inspectors in the Austin area, call us. We are here to help you - no commitment required.
Step Seven: Closing
Closing on a home should be a painless formality while in reality, it is advisable to expect the unexpected. To ensure that your closing goes smoothly, it is best to prepare weeks in advance. Make sure that you are in contact with your lender and your agent, they should be confirming that your paperwork is progressing smoothly. Here are a few helpful tips to keep in mind.
It is time to close, here are a few helpful tips to keep in mind:
Speak to your real estate agent and your loan officer to make certain that you have provided all the necessary documentation needed to close.
- Take your time when doing your final "walk-through." Make note of anything that is not to your satisfaction - this is the last chance you will have to work with the owners on making changes.
- Plan for more time, not less. Although most closings take less than an hour to actually sign, situations occur that push the schedule back.
- It is less stressful for you if you have allowed plenty of time in your schedule for delays. We recommend at least two hours.
- Make sure you have budgeted for closing costs. Most lending companies require you to bring a cashiers check along with your photo id and proof of insurance. Your loan officer should give you the exact amount needed in advance.
- Read then reread the documents. Make certain that there aren't any typos before you sign this legally binding document.
- Closing is a good time to have your agent present, especially for first time home buyers. A seasoned agent will be able to help clarify the process and make certain that your closing goes smoothly.
Have questions about the process? We are here to help - no obligation required.
Step Eight: Moving and Protecting Your Investment
Congratulations, the paperwork is signed and you are a proud new homeowner. It is time to pack your boxes and make a moving "To-do" list, or use ours to help get you started. When working with our team, our commitment to you continues even after you sign the papers, contact us to arrange usage of our complimentary moving truck.
Once you have moved in and are getting settled, it is time to protect your investment. We can help you with filing your first tax return as a homeowner and explain the Homeowners Exemption Act. We can also help you set up routine maintenance on your home's systems depending on the age of your home.