With a constant rise in property prices, buying a home for the first time can be a very scary process. For some it can be hard to envision if they can afford not just the house, but meet all their other expenses as well. Sometimes, this may make it harder for them to decide if they should buy or continue paying rent with no long-term commitment. If you are one of those lucky first time home buyers, read on for some valuable tips that you can use to be sure that your home purchase is a successful one.
Effective First Time Home Buying Tips
Be sure you are ready for a loan
One of the most important tasks while buying a house is to be sure you can afford your new home and its expenses. It is easy to go into something like this without planning, but it can end up costing you a lot of money. Therefore it is very important that you are sure that you have enough cash in hand to buy a house, or are sure that you have a source of income that will allow you to take another FHA loan in Texas to seal your homeowner 's status.
Work on your credit score
Another very important part of buying a house for the first time is to work on your credit score. On an average, this means making sure your bills are paid on time, and not maxing out your credit cards. The more positive points you have on your credit score, the easier it should be to qualify for FHA loan requirements. Also if possible, try to pay off all or some of your bills that are due before applying for FHA home loans.
Do not Ignore Pre-approvals
Although pre-approvals are not the final word on whether or not you can get a home loan, they do give you important insights into your chances of success. They also show how much money you are eligible to borrow which can end up being very helpful while negotiating offers for homes.
Be sure you have all the paperwork needed
It is important to make sure that you have all the paperwork needed while making an offer. Make copies of your ID, employment status, credit score and pay stubs, references etc., before you submit these for approval. These will be necessary to complete your file and prove that you are capable of handling the financial liability of a home.
Get down payments
A first time home buyer should never rely solely on a loan to buy his/her house completely. Even if you feel that your credit score is good, a first time home buyer should always put a small amount of money away for down payment before they can move into their new home. It is important to keep in mind that getting a FHA home loan in Texas for your down payment may mean keeping it small, and may limit the kind of house you can afford. Therefore it is best to put away some money from your savings account, even if it means sacrificing something else for this purpose.
There are different types of loans that you can consider before making your final decision. Paying attention to each type will help give you an idea of the kind of loan which suits your needs perfectly.
- FHA Loans
FHA home loans are for low to moderate income buyers who have not had any financial issues. They are designed for first time home-buyers, so if you have owned a house before, or have bad or no credit history, this may not be the type of loan you should choose.
FHA loans in Texas are insured by FHA, so if you can meet the criteria, this is a good type of loan to consider.
- USDA loans:
These are Federal Direct Loans which are insured by USDA Rural Development. These loans are for first time home buyers who live in small towns with less than 10,000 people and also have low income. In order to qualify for these loans, you must be a U.S citizen, and the house you are buying should be in an approved rural area .
- VA Loans
These loans are offered by the Department of Veteran Affairs which offers 100% financing for homes that veterans or active service members decide to buy. Requirements for these loans include being an honorably discharged veteran, qualifying according to income or credit score, and having enough money for closing costs. Conforming loans are also offered by Fannie Mae or Freddie Mac.
- Conventional Loans
These types of loans are the most commonly used for all kinds of home buyers who have good credit scores. They can be combined with other funds to cover your down payment if you don't have the money available at the moment.
A sound understanding of all your options will allow you to make an informed decision when applying for FHA mortgage loans.
Consider Closing Cost
Do not assume that you just have to take care of your down-payment in order to get a home loan. When making an offer on a house, always account for closing costs which include taxes, title insurance and escrow fees. Add up all these numbers before making your decision on what kind of home you can afford.
Closing costs account for up to 4% of the home value. Since closing costs are not refundable, budget accordingly.
There are different types of houses you can purchase, each with their own advantages and disadvantages. Smaller homes will cost less to maintain whereas more spacious ones may be able to accommodate your growing family better in the future. A single story house may also help reduce maintenance cost while an upper floor could give you a larger living space .
Decide on the kind of house you want before applying for a Texas home loan, to make sure that your monthly mortgage payment is affordable.
Set your budget
Before you even look at houses, set a budget. It is important that your monthly mortgage payments do not exceed 31% of your income, in order to prevent long term financial issues. Also consider taxes and insurance costs when setting this figure.
Seek The Help Of A Mortgage Broker
Mortgage brokers can help you get pre-approved for a loan so that you can write an offer on the house of your dreams without worrying about financing.
The mortgage brokers will ask you to fill out an online form with information about your income, employment history and credit score. They will then refer you to various mortgage lenders in Texas who are interested in offering mortgages with similar rates and terms, which will make your decision easier.
Speaking to a real estate agent
Lastly, when it comes time to actually buy a house, it is best that you talk to a real estate agent. They will guide you in your search for a new home by comparing prices and location, among other things. It might be difficult going through the large number of listings alone, so make sure you speak to a professional to get an idea about whether or not the property you are looking at is a good deal.
There are several things to remember before going into house buying, but if you use these tips effectively, then there should be no problem in your new home purchase turning out a successful one for you.
Buying your first house can be overwhelming at times. But with the right decisions and knowledge you should be able to achieve this task successfully.
If you are first time home buyers it is significant to think about how much you can spend, where you want to live and what kind of home meets your requirements . If you take these things into account and explore your options with reliable mortgage lenders in Texas then a few months down the road, you will have a new place to call home.