Becoming a homeowner can be a very exciting prospect, but this excitement needs to be followed with caution. There are a lot of things to know before buying your first house, as the process if fairly long. As such, doing some research and preparing yourself properly is extremely important. So, in order to help you out, we’ve put together the ultimate guide for first-time homeowners in Texas.
Credit score and debt to income ratio
Qualifying for a house loan depends on a few factors, and some of the most important are your credit score and debt-to-income ratio. When it comes to credit score, lenders usually accept scores between 300 and 850. Within this, scores of 740 and above are considered as excellent. However, the exact requirements can vary from lender to lender, so doing your own research is encouraged. In Texas, lender can be more lenient than usual. Additionally, lenders will always look at your debt and compare it to your income to make sure you can actually afford the mortgage. This is called a debt-to-income ratio, and calculating it beforehand is fairly important as. All in all, you want to make sure you can actually qualify for a mortgage before trying to buy a house. After that, you can consider things such as keeping your home organized with minimal effort.
Employment history
Another thing first-time homeowners in Texas need to consider is their employment history. This is because lenders want to know that your source of income is stable. After all, they don’t want to lend money to someone who won’t be able to pay it back. As such, your source of income has to be steady for the past 2 years before they approve your mortgage. If your employment history is shaky, or if your income has fluctuated wildly, some lenders won’t work with you. That said, certain lenders are much more flexible than others, so you can always try to find another lender. Additionally, experts from Heavenly Moving and Storage note that you should also remember moving costs. The full cost of a move can sneak up on you, so you should be prepared well ahead of time.
Down payment
The final part of your mortgage is going to be the down payment. In an ideal world, first-time homeowners in Texas pay a 20% down payment. However, a lot of borrowers these days aren’t capable of doing this. Fortunately, if your credit score is decent, you can make a down payment as low as 3,5%. However, if you can’t make the higher down payment, you should consider waiting until you can. After all, the more you pay upfront, the less you’ll have to pay in the long run as your monthly payments will be lower. Additionally, remember to think ahead about mortgage insurance as well. This is because certain types of mortgage loans require mortgage insurance as well. Also, think about unexpected costs for first-time buyers ahead of time.
Figure out an exact location
Once you know you’re going to qualify for a mortgage, you need to start the house hunt itself. First up, decide exactly where you want to settle down. Choose a city and a general area, and start your search, If you’re unsure how to go about it, consider working with a real estate agent to make the process easier. Additionally, consider if you’re going to stay in the same place for longer than five years. If not, you can consider making certain compromises in order to find a cheaper home. However, location is extremely important, as it decides whether you like the home or not. And moving out again isn’t going to be viable for a long time. You might find that some of the features of your home need changing. If you do renovations, however, keep in mind that storage units are a great option for extra items.
Think about closing costs
When you do find a home you like and that you can afford, remember to consider closing costs. Closing costs can often blindside first-time homeowners, and you should be ready for them. These include HOA fees, home inspection fees, loan origination fees, recording fees, closing fees, and so on. There are a lot of closing costs, and you should do thorough research into them when making a budget. After all, if you’re unable to pay the closing fees, you can’t take ownership of the house. So, take the time to prepare yourself and plan ahead for this when putting together a budget. And when it comes to the house itself, remember that safety is very important. Consider when it is time to call a locksmith, and make sure your home is always safe from intruders.
Keep an emergency fund on hand
Once you’re actually in your home, keeping an emergency fund on hand is a must. This is because your house will, eventually need to be repaired. No matter how meticulous you are with maintenance, problems will happen. Plumbing leaks, possible structural damage, roof damage, and so on. Certain problems need to be fixed immediately because they can easily become very serious. As such, having an emergency fund on hand helps you deal with these problems before they can become serious issues. And never neglect to fix these problems, as the issues they evolve into are much more expensive to deal with. Remember, the best way to deal with large issues is to avoid them completely.
The ultimate guide for first-time homeowners in Texas – wrap up
There are a lot of things to consider when becoming a homeowner. From qualifying for a mortgage to maintaining your home, first-time homeowners have a long and complicated process ahead of them. As such, preparing yourself properly is very important, as knowing what you can expect can make everything much easier. All in all, it comes down to thorough research and not allowing yourself to become overwhelmed. So long as you take it slowly, you should be just fine. We hope that this ultimate guide for first-time homeowners in Texas helps you out, and we wish you a good day.
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