Austin Real Estate

Austin Real Estate Buy Your Home Reports Must-Know Facts for First-Time Homeowners

Must-Know Facts for First-Time Homeowners

Myths vs. Reality

MYTH #1: In order to qualify for a house, you need to a 20% down payment.
REALITY: Despite all the uncertainty with the mortgage markets, there are still innovative mortgage packages available, offering the borrowers options between 3% and 5% down. There are even a few packages that offer zero down, if you buy in certain areas. For first-time buyers, it's in your best interest to do some serious comparison-shopping.

MYTH #2: Lenders are required by law to provide you with the best possible rate for your loan.
REALITY: Every lender works with its own rates bases on their standards as well as the type of loan being considered. Rates change literally every day, so once you've made the decision to buy a house, check rates with more than one lender and check on a daily basis.

MYTH #3: You cannot qualify for a house if you've been with your current employer for less than five years.
REALITY: Job stability is important, but the five-year rule is merely a myth. For example, if you have worked in public relations or some other industry for 10 years but have had three jobs in that time, because you've stayed within the same business, lenders will often consider this as continuous employment, especially if you've made advancements. In addition, solid credit and a larger down payment can compensate for work history in some instances.

MYTH #4: Your credit must be perfect.
REALITY: It's true that credit is very important when qualifying for any loan. However, if you have been out of a bankruptcy for two years and can provide a good letter of explanation to the lender, they will usually accept that. If your credit is in really bad shape, consider a credit counseling service to help you get back on track. Generally, this can be done in as little as 12 to 18 months.

MYTH #5: Mortgage interest is not tax deductible.
REALITY: As you make your comparisons of the financial benefits of renting versus owning, be sure to consider tax deductions. When you buy a home, the closing costs, mortgage interest, and points are all tax deductible.

Questions to Consider

Being a first-time home buyer, there are many questions you'll want to ask. It is easy to focus on the size of the rooms, the structure, or the lot, but there are other options to consider — things you need every day to live. Here are some examples:

• Public safety: What is the crime rate in the preferred area? How close are public services such as police, fire, and hospital?
• Parking: Will there be any issues with parking? Is the garage large enough? If the house or condo you're interested in buying doesn't have a garage, is ample off-street parking available?
• Utilities: This is an important finance to look at. Usually the seller can provide copies of the past few months of utility bills for you to review, giving you an idea of what you would need to budget for.
• Public transportation: If you depend on public transportation, then check into what options are available in the area you are interested in looking.
• Aging parents: More and more families are taking care of elderly parents, so you may wish to consider any special needs as you start looking.
• New communities: If the area you are looking to buy in is an entirely new community, what recreational amenities are offered? Is there a clubhouse? Pool? Playground? Exercise facilities?
• Property taxes: Many home buyers from other states are surprised at property tax rates in Texas, so be sure to budget for this. Some tax rules provide special benefits for veterans, elderly citizens, and even long-time residents. You should inquire what these benefits are and whom they cover.

Plan Ahead

When you get to the point of being serious about buying a house, following these steps can make the qualifying and purchase much easier:

• Establish good credit habits and clean up any unfavorable reports.
• Start saving for the down payment, closing costs, and extra for any hidden expenses. Don't forget about utilities, moving expenses, and furnishings needed for your new home.
• Research and read. Search online and/or go to your local library and read up as much as possible about financial management and home buying.
• Start looking at various areas where you might be interested in living. Go to some open houses and do some comparison-shopping, but do not rush into a purchase without qualified representation.
• Meet with a reputable real estate agent and start the preliminary process.

Just remember that there is no reason to be afraid or intimidated when it comes to buying a house. The main concern expressed by buyers is that they aren't sure where to begin. There is also the fear of rejection when it's very possible that the credit situation isn't as bad as they believe.

Home buying has become increasingly easier thanks to the Internet. Years ago, people hated the one-on-one approach of determining if they qualified for a loan. The Internet has made it much easier for people to go to various lenders, provide some information, and be notified online whether or not they qualify.

In addition, mortgage advice is also readily available. Whatever questions you have can easily be asked from the privacy of your own home. Responses are accurate, thorough, and always confidential.