First Time Home Buyers
ARE YOU A FIRST TIME HOME BUYER?
Fear not! While the Austin housing market is highly competitive, I have helped many first time home buyers successfully enter the housing market. Below are a few preliminary things to know before you begin your home search:
1. You might want to find out what your credit score is. There are many free credit check websites, including www.creditkarma.com and www.freecreditreport.com. Most credit scores range from 300-850, with the higher score being more favorable to receive lower interest rates and better loan terms. Lenders prefer to see scores above 600. If you have concerns about your credit score, you may want to speak with a lender about ways that you can work to improve your credit before applying for a loan.
2. Once you are comfortable with your credit score, the next step is to get pre-approved for a loan. This is a critical step before you actively begin your home search, as your lender will let you know how much home you can afford. Lenders will look at your income, assets, and your debts to help make the determination of your approval amount. I always suggest that buyers use local lenders who are generally more accessible and are well versed to our housing market. Once approved, your lender will provide me with a copy of your pre-approval letter. This letter will be important to provide the sellers when you decide to put in an offer on a house. The letter shows that you are serious about buying a home and have taken the necessary steps to get your finances in order to get qualified for your home loan. You may want to look into down payment assistance programs for first time home buyers.
3. The next step of the home buying process is to commit to working together. By hiring me as your Realtor, I pledge to work faithfully on your behalf as your fiduciary. Signing a Buyer Representation Agreement will commit us to working together for a specified period of time. This agreement pledges that I work in your best interest and maintain your information in confidence, and that you will work exclusively with me in your home search. It is rare for buyers to pay the Realtor’s commission, as they are usually paid by the sellers. The Buyer Representation Agreement protects the interests of both the buyers and their Realtor.
4. After discussing with me your desired criteria, I will set up a search for you in the Multiple Listing Service (MLS) so that you can begin receiving emailed listings that meet your criteria. When you come across homes of interest, let me know so that I can schedule the showing appointments. Although this part of the house hunting process is usually exciting and enjoyable, sometimes it can be a bit stressful as a first time home buyer, especially in an aggressive housing market like we currently have. Inventory is low, and demand is high, which often leads to multiple offers on properties that you might be interested in. This means that if you find a house you love, we will need to act fast to view it and put in an aggressive offer. Through my guidance and strong negotiating skills, I have been successful in helping my clients beat out other offers to “win” in multiple offer situations.
5. Prior to putting in an offer, I will pull “comps” so that you can know what homes of similar size, condition, etc. have sold for. This is an important step so that you know that you are not overpaying for a house. We will then discuss the terms before you sign the offer and additional contract paperwork. I will then send your offer to the listing agent who will share it with the seller(s). They might reject the offer, counter the offer, or accept it as is.
6. If your offer is accepted, earnest money (usually 1% of the contract price) will be collected and delivered to the title company, and option money (usually $100-$250) will be paid to the seller. The option money pays for the “Option Period” which is a critical period of time after the contract has been executed. The period of time is negotiable, but it is usually for 7-10 days during which time it is advisable to have a general inspection and possibly further inspections done on the house (foundation, termite, etc.). This is also the period of time in which we can negotiate repairs to the home. The “Option Period” that you pay for gives you the unrestricted right to terminate for any reason and still get your earnest money refunded by the title company.
7. Once out of the option period, if financed, your lender will require an appraisal of the property. This will be an upfront payment to the lender, often costing around $450. Also during the period outside of option, the title work and your loan are worked on.
8. A few days to a few hours before closing, we will do a final walk-thru of the property to ensure that it is still in the same condition as when you placed your offer. Also, a few days before closing, you will want to have the utilities set up in your name for your new home.
9. I will meet with you at the title company on Closing Day (“consummation”) as the title officer goes over the paperwork with you for signing. Once your loan is funded (usually within a couple of hours after closing), it will be time to celebrate, as you will be the new owner(s) of the home!
10. My services to do not stop at closing. I will remain a support to you as you make your transition into your new home. I much enjoy the relationships I make with my clients and enjoy the lasting friendships beyond the closing on the house.