Buying your own home in the greater Austin, Texas area is one of the largest purchases you will ever make. What should you do to get ready?
The key to a successful home purchase is making your choice through your finances, not your emotions. This takes research and patience. Here are five steps that can help you make a good decision.
1. Decide how much you can afford.
You should look at your finances in order to determine how much you can afford to spend on a home. Look at your income, assets and current debt level. You aren’t looking at what percentage the lender says you can afford, you are looking at what your finances dictate. If your lender says you can spend $1,200 a month, but you know you are struggling with a rental of $1,000 a month, you probably know that you don’t need any more than you already have.
You should also consider the down payment and closing costs. Lenders are usually looking for a 5% to 20% down payment. With Owner Financing, Seller’s are typically looking for 10% down. (What is Owner Financing?)
Don’t overlook other expenses, such as property taxes and homeowners insurance. Your total interest, principal, taxes and insurance payment should not exceed 28 percent of your gross monthly income according to lenders. Your total monthly debt, including your mortgage, autos, student loans and credit cards should be under 36% of your gross income.
You don’t have to have a house in mind before you apply for a mortgage. It is a good idea to be pre-approved when you are looking for a home It will give you the security of knowing that you have funding and the buyer will know you mean business.
2. Look for what you want.
Spend the time to find the home you want. Forte Properties can help guide you through the Austin home search. Start by checking out neighborhoods and then narrow it down to a house. You should consider the Austin schools, parks, commuting times and availability of public transportation. On the bottom of each property detail page here at GreaterAustinHomes.com, you will find a Walk Score map that will show you the nearest amenities including shopping, restaurants, schools, grocery stores and much more. This makes choosing the location of your next home a breeze!
When choosing between Austin homes, look at the size, number of bedrooms and baths, design and amenities. Decide what your “must haves” are and what the “nice to haves” are. For example, you might be willing to trade a large kitchen for a swimming pool.
3. Negotiate for the right price.
Once you have the funding in place and have found a nice home, make an offer. Forte Properties will help you in submitting your purchase contract. This will include the offer price and any contingencies, such as home inspection and appraisal.
The seller will either accept your offer, reject it or make a counter-offer. Negotiations can go back and forth until both parties are satisfied. Don’t get caught up in having to get the home and loose sight of how much you can afford. You don’t want to pay more for the home than it is worth.
4. Pick out of mortgage.
There are many types of mortgages to choose from. The basic two are fixed rate and adjustable rate. Fixed-rate mortgages have interest and monthly payments that remain the same throughout the life of the mortgage, which is usually 30 years or less.
Adjustable-rate mortgages are also called ARMs. They come with a lower initial rate than fixed rate mortgages, but the rate and payment amount can move up and down with the financial index. This can happen as often as twice a year.
There are also Owner Financed mortgages in which the Seller determines if you qualify, not a bank. In this case, your down payment and income are the two main deciding factors in being approved for an Owner Financed mortgage. There are many homes with Owner Financing for sale in the Austin area which you can view here: Owner Financed Homes For Sale
5. Close on your home.
The closing, or settlement, is the point at which you finalize the transaction. You walk in with a check and out with your keys and the property’s title. You can expect to pay between 2% and 5% of the purchase price towards closing costs using traditional financing. These costs include fees, services and points paid. With Owner Financing, these costs are generally less than 1% of the purchase price.
After closing, you can settle in to your home and enjoy all of your hard work. Five simple steps and the Austin, Texas house you dreamed of is yours.