The Top Tips for Homebuying in 2016

It is a brand new year and if you are like me, you probably have several resolutions for 2016. One of my goals for this year is to purchase my first house. I have been thinking about this for a couple of years and the thinking alone is overwhelming and arduous. The preparation and planning process may also be intimidating, but it doesn’t have to be. For all of you out there with the dream of becoming a homeowner, I am going to share a list of things I feel are critical to successfully buying your first home!

1. Check, Monitor and Improve Your Credit
   There are several great sites out there for individuals to obtain their credit report and score for free. My favorite is CreditKarma.com as it gives you a report and score from 2 of the 3 credit bureaus, allows you to monitor your credit monthly and offers tips on ways to improve your score. Having good credit can help make your interest rate on a home loan better, and save you money every month.
2. Save For a Down Payment and Closing Costs
   The minimum down payment for most buyers is 3.5% on a FHA loan and 5% on a conventional loan. Closing costs average 3% of the sales price of the home; so, a minimum of 6.5% is needed to cover upfront costs. That sounds like a lot (and for many, difficult to save), but it doesn’t have to be. Skipping a tall Starbucks coffee during the work week will save you $1274 in a year. Shoot, I spend on average $325 each weekend going out. That could be a savings of $16,900 annually. Eliminating both of these would allow me to save 5% for a $350,000 house.
3. Do Research on Home Styles, Neighborhoods and Market Values
   In a city as large as Houston, there are many different home styles such as freestanding houses, townhouses, and condominiums. There are also variations on each of these including traditional, ranch-style, modern and contemporary. The neighborhoods in Houston are vast and the cost of homes in each area is based upon factors such as proximity to central Houston, demand, schools, and population. Your budget will have an effect on the style of home and neighborhood you choose. My favorite website for research is HAR.com as it allows you to conduct searches based upon drive time, provides information about demographics, schools and other socially important needs, and shows you current listings with accurate listing prices. Texas is a non-disclosure state; so, you will only be able to determine actual sold values of homes with the help of a REALTOR®.
4. Choose a REALTOR®
   At this point, you have done extensive research and feel ready to start touring homes. Having representation in a Real Estate transaction is going to make the process much less confusing and overwhelming. A local REALTOR® is familiar with market conditions in the area, skilled at negotiations and personally invested in you finding a great home! They are going to send you listings, arrange showings, obtain insider information, present comparative market data, draw up your contract, negotiate the sales price and terms, recommend contractors and other service providers, facilitate inspections, and most importantly, hold your hand through the process.
5. Select a Lender
   Many of us know what we want to spend on a home, but we don’t know how much house we can afford. A lender reviews your credit, income, work history and financial assets to tell you exactly how much money a bank will give you for a new home, and at what interest rate. This is critical because many buyers underestimate or overestimate what they can afford to buy. Additionally, knowing what you can afford allows you to set a preferred price point, plus a ceiling for negotiations on a home you absolutely love. A lender will pre-approve you for a home loan which will be submitted with your offer to buy and indicate to sellers that you are a serious buyer.