Searching for your first home would most probably be like standing before a table filled with delicious fruits, but you will be allowed to choose and eat only one fruit, so now you are confused how to go about it. Home buying is an exciting journey, but it comes with its own share of challenges. From figuring out your budget to navigating closing costs, the process can feel overwhelming at times. Here is a first-time home buyer guide that will help you make smarter decisions during your journey.
Start With a Budget You Can Afford
One of the biggest mistakes first-time buyers make is buying a house they cannot afford. Before you even begin house-hunting, sit down and calculate your budget. A general rule of thumb is to use the 28/36 rule: aim for your mortgage payment to not exceed 28% of your gross monthly income, and keep your total debt payments (including credit cards, car loans, and student loans) under 36%. So overall, before you go and do the deal, consider all the costs of homeownership, including the mortgage, property taxes, homeownerâs insurance, HOA fees, and maintenance costs.
Tip: The average property tax in Texas is about 1.8%, which can significantly impact your monthly payments.
Get Pre-Approved for a Mortgage
Find out your borrowing limit before you start looking for your house. Not only does it clarify your budget, but it also signals to sellers that youâre a serious buyer. During pre-approval, lenders will review your credit score, income, and debt-to-income ratio to determine how much theyâre willing to lend.
Pro tip: Compare multiple lenders to find the best interest rates and terms. Even a 0.5% difference can save you thousands. Additionally, check Texas first-time homebuyer programs for potential down payment assistance and lower rates.
Find a Real Estate Agent You Can Trust
The right real estate agent can make your homebuying experience smooth and stress-free. Theyâll guide you through the local market, negotiate on your behalf, and help you avoid common pitfalls. However, not all agents are created equal. Look for someone with experience in your favorite area who has the technical knowledge and a communication style that can better express your needs.
Create Your Wishlist
When it comes to your first home, itâs natural to get caught up in wishful thinking. A clear wishlist can help you stay focused on what truly matters to you and your family. Start by listing your non-negotiables (e.g., number of bedrooms, location, or proximity to work), and then move on to nice-to-haves (like a backyard or a modern kitchen).
Note: The median size of a single-family home in the U.S. is around 2,233 square feet, but your ideal size may vary depending on your needs.
Explore Neighborhoods
Location is everything in real estate, meaning it is the neighborhood that seals the deal. Start by listing your favorite locations and your lifestyle necessities. Do you need top-rated schools for your kids? Are you looking for walkable neighborhoods with fancy restaurants? Or do you want easy access to parks and outdoor activities? Plano, Frisco, and McKinney are some of Texasâ most sought-after areas for first-time home buyers, step by step. They offer a mix of countryside charm, excellent amenities, and proximity to major job hubs like Dallas.
Tour Properties With an Open Mind
House hunting is often the most exciting part of the process, but itâs easy to get swept up in false praise and appearances. While itâs fun to imagine yourself in a beautiful home, donât overlook practical aspects like structural integrity, layout, price, and location.
Bring a checklist with yourself on each tour, noting details like natural lighting, closet space, hallways, and the condition of appliances. And donât hesitate to ask your agent tough questions about the propertyâs history or any renovations it might need. Itâs better to be thorough and certain now than regretful later.
Conduct a Thorough Inspection
Never skip the home inspection. Even if a property looks flawless, there could be hidden issues lurking beneath the surface. A professional inspection will check for problems like plumbing leaks, electrical hazards, roof damage, and foundation issues. If the inspection reveals significant problems, you can negotiate with the seller for repairs or a price reduction. This step might seem tedious, but itâs a vital one for your investment.
Make a Competitive Offer
When youâve found the home of your dreams, itâs time to make an offer. Your real estate agent will help you craft a competitive bid that takes into account market conditions, comparable sales, and the sellerâs asking price. In a competitive market like Texas, itâs not uncommon for homes to receive multiple offers. Act fast and include safeguards like financing or inspection clauses to protect your interests.
Prepare for Closing
The final stretch of your home-buying journey involves signing contracts, finalizing your mortgage, and covering closing costs, which typically range from 2% to 5% of the purchase price. During this phase, youâll also conduct a final walkthrough to ensure the home is in the agreed-upon condition.
Once the paperwork is done, the keys to your new home will be in your hands. Congratulations! Now youâre officially a homeowner!
Bonus Tips:
Do you have extra funds for later repairs? Will this home suit your lifestyle five or ten years down the road? Have you read every document carefully before signing? Ensure you have gone through these and other such questions before you buy your dream home.
