|TIPS FOR SELLERS AND BUYERS
Take the fear out of homebuying
If you’re in the market to purchase your first home, take some time to think about what you’re getting into. From the complexity of the transaction to the increased financial obligations, buying a home can be downright scary. Many first-time homebuyers are overwhelmed with the process and begin to have second thoughts. That’s natural with anything you do for the first time, especially when you’re spending more than $100,000. But don’t let that frighten you. A little research and a lot of help from your Texas Realtor can help you get your foot in the door with minimum stress. Below are some tips to help you avoid common first-time homebuyer mistakes.
Find the right Realtor
Understand that it’s important to choose a Realtor who fits your needs. Texas Realtors vary in their business models and areas of expertise. Some consumers may be comfortable with the first Realtor they meet, while others may want to consider several before making a choice. Talk to your friends, neighbors, and relatives. Solicit recommendations.
Having never worked with a lender before, many first-time homebuyers are apprehensive about the mortgage process. Don’t let that prevent you from asking questions. If you fail to ask, you may miss out on the best deals. From below-market interest rates to downpayment and closing cost assistance, there are a variety of affordable housing programs available to first-time homebuyers. Failing to investigate them or assuming you won’t qualify would be a big mistake. Your Texas Realtor can do the footwork for you. Just ask.
Think about resale
A common mistake that many first-time homebuyers make is not thinking about the property’s resale value before they buy. It might seem odd to consider what the home will sell for before you’ve even decided to buy it, but it’s not. The average first-time homebuyer only stays in a home for four years, so it makes sense to analyze the home’s resale value from the beginning. Your Texas Realtor can help you identify factors that contribute to a property’s resale value.
Buying your first home may require a little bit of compromise on your part. While it’s OK to be picky, don’t be unrealistic. No home is absolutely perfect. It just doesn’t exist – not at any price. If you prioritize your wants and needs, you’ll find it’s much easier to make an educated decision. But if you’re buying for the first time, remember that it can be an emotional event. Don’t let your emotions steer you away from your initial goals. Take some time reviewing your priorities and find a house that meets your objectives.
Three’s a crowd
Don’t involve every person you know in the homebuying process. You’ll go crazy. Too many opinions lead to immobilization. If you feel you need a second opinion, ask someone you can trust who has been through the process before.
Get it inspected
In an attempt to save money, some first-time homebuyers forgo a professional home inspection. This is a terrible mistake that can lead to severe consequences. When you are making what is likely the largest investment of your life, you should know as much as possible about what you are buying. Home inspections typically cost somewhere between $200 and $700, depending on the home’s size and features and its age. That is a small amount to pay to help you sleep better at night. Some consumers consider a home inspection an unnecessary cost. But how would you feel if you decided against one only to later discover that major repairs requiring enormous amounts of money were crucial? To help you better understand the process and give you an opportunity to ask questions, you should make every effort to be present during the inspection.
Consider all costs
When determining just how much home you can afford, make sure you figure in all the costs. There are other expenses to consider when buying a home including property taxes, homeowners’ insurance, utilities, maintenance, and, depending on the neighborhood, homeowners’ association fees. If you max out your budget on the mortgage alone, you may find yourself in over your head. Before you talk with a lender, sit down with your Texas Realtor and determine just how much home you can afford.
Buying your first home can be frightening. There’s a whole new language to learn, and the process can be extremely complicated. But keep in mind that owning property is an investment in yourself and your financial future. If your first step is finding a Texas Realtor, you will have the expertise and the knowledge you need to get through the homebuying maze. It may seem like a daunting experience, but hundreds of Texans go through it each day. If they can do it, so can you! It is my goal to make your home buying experience easy and pleasureable.
Terms you can use
Buying your first home can be scary. Not only is the process complicated, but the terminology is new – at least to you. Understanding the language is the first step to taking the fear out of the homebuying process.
When you go to purchase a home, your lender will require a property appraisal, and they have a good reason for doing so. Lenders are not likely to loan you $300,000 for a home that is only worth $150,000. An appraisal assists the mortgage lender in assessing the actual value of the. An appraisal looks at the condition of the house, its location and comparable property sales in the same area, and, as a buyer, you’re usually responsible for covering the cost.
This appraisal – done prior to closing on a property – should not be confused with the annual appraisals that determine how much you will pay in property taxes. Those are done by the local appraisal districts at no cost to you, unless you look at the annual tax bill. We’ll save that for another column.
Some consumers confuse a survey with an appraisal, but don’t. They are two very different things, and it’s important to understand the functions of both. A survey essentially looks at the home’s boundaries. And with rising property valuations, it’s important to know where your land begins and ends. The surveyor determines whether the house is within the property borders, whether there are any neighbors encroaching on the property and if any easements on the property may affect legal title. Easements include sewer manholes, drainage ditches, telephone and cable TV boxes. Knowing where the easements are located will also help you if you are considering future home improvements.
Today, government regulations are much stricter than they once were. If you have plans to build a deck, you better know how far it is from the drainage ditch. There are stringent regulations that determine how far decks or even swimming pools can be from certain easements, or even the lot line.
Surveys have grown in popularity because many title insurers require one before issuing a title insurance policy. The survey acts as a map, determining precisely the property limits of each neighbor’s home. The last thing that the insurance company wants is a land dispute, similar to the Hatfield and McCoy’s.
So what in the world is title insurance? It seems like you need insurance for everything these days – your home, your car, yourself. Add title insurance to that list. If there are any problems associated with your property’s title, this insurance plan protects against loss. If you are purchasing an older home, that title is likely to have changed hands quite a bit and the land that it sits on, perhaps even more. What do you think would happen if Farmer Ted showed up at your door one day and demanded that you get off his land? You’d probably tell him to get lost, but he may really have a case. Maybe somewhere down the line a signature was forged or the seller failed to sign in the appropriate box. That could mean trouble for both you and the lender.
Title insurance covers the injured party, which in this case, would be the lender. The policy protects the lender up to the amount of the mortgage, but it doesn’t protect your equity in the property. To protect your equity, you would need a supplemental policy called an owner’s title policy, which covers the full value of the home.
Here in Texas, it won’t do you any good to shop around for an competitive title insurance policy. The state of Texas sets the prices for all its insurance carriers. But your Texas Realtor can help you find one that works for you.
These are just a few terms that you should know before diving in to the homebuying process. The real estate glossary is lengthy, covering everything you want to know and more. But I am here to help you along the way. Don’t ever be afraid to ask questions. You will feel much more comfortable about buying that first home if you have a basic knowledge of the terminology and the process.