Real estate transactions are complicated. A Texas REALTOR® will help you with the following steps and much more.
Find a REALTOR®
Decide What You Want
Before you start looking, make a list of what you want and assign each item a priority. Some areas to consider are the location, type of home, age of the home, school district etc. With a certain home price point in mind, most people can NOT find 100% of what they would like. It is helpful to follow the 85% rule. Narrow your requirement list down to 3 or 4 absolute requirements and then have a few 'would be nice to haves'. Make sure you don't deviate from and get your 'must haves' and maybe also get a couple/few of the 'would be nice to haves" and then.... be happy and content with getting more than 85% of what you were hoping for.
Know What You Can Afford
- Most loans require a down payment. The amount can vary upwards from 0%, but 6- 20% of the purchase price is typical. If you’re a first-time buyer there are programs to be had to reduce the down payment required or if you fall below certain income thresholds, you may qualify for affordable-housing programs. Generally, a higher down payment means better loan terms and a lower interest expense on the mortgage.
- Qualifying for a loan: A lender will determine how much he or she thinks you can afford based on your income, employment history, education, assets (e.g., bank account balances, other property, insurance policies, pension funds), and debt. It is a good idea to check your credit report before the lender does to clear up any problems, although some loan officers can be helpful in guiding you to a better credit score and position prior to application..
- Your comfort level: You don’t have to spend $200,000 on a home just because the lender says you can afford a $200,000 home. Do some math and determine what you’re comfortable spending. Remember, your lifestyle encompasses more that just the home you live in.
Make an Offer
You’ve figured out your home-search criteria and what you can afford. Now find a house and make an offer. Your REALTOR® is an invaluable part of this process. He or she will help you preparea contract,negotiate, juggle inspections and option periods, and lots more. There is a heck of a lot going on behind the scenes to help you!
Unless you’re paying cash for the home, you’ll need a loan. A shorter term loan is not always better. For example, if you can afford the payments on a 15 year note, if you are disciplined, you may want to consider the merits of having a 30 year note and and making monthly payments in excess of the agreed to monthly loan payment. If you take a close look at this, you will see it can be a huge benefit to you. Also, please keep in mind the true price of financing goes beyond the interest rate alone. Consider items such as points, total lender fees, term of the loan, and penalties for early payment. The lender will likely require an appraisal to verify that the home is worth the cost of the loan as well as a physical survey. Repairs may be required. Insurance must be purchased. All these conditions and others must be satisfied before a transaction can close.
Close the Deal
After weeks or even months of research and decision-making, you close the transaction, usually at the title company’s office. The title agent ask you to sign many, many documents and will explain each one. You’ll present a cashier’s check to the seller, sign another document that itemizes closing costs (the lender will have given you an estimate in advance), and pay your share of the closing costs. In return, you will receive a deed, transferring ownership rights to you. Typically the keys to the property are not released to the new owner until after funding is verified.