First Time Home Buyers in Central Texas

If you are in the market to buy a new home, whether it is your first time seeking out homeownership or you have been through it before a handful of times, yet forgotten the details, this first-time homebuyer guide provides some handy tips to prepare you for what is ahead.

Key Takeaways: 

  • A first-time homebuyer is someone who has, one, never owned a home or two, or has not owned a home in the last several years.
  • First-time homebuyer programs offer loans with low down payments and favorable terms.
  • Buying a new home involves plenty of steps, from securing financing to negotiating with sellers, a trustworthy real estate agent is a valuable resource and can help you navigate the process.
  • Homeowners should assess their mortgage as economic conditions change, and budget for maintenance and repairs.

Continue to read to find out everything that entails being a first-time homebuyer in New Braunfels, TX.

What is a First-Time Homebuyer?

A first-time homebuyer refers to someone who has never purchased a residence before. In some contexts, the definition is much broader, referring to someone who simply has not owned a home for at least the previous three years. This is how it is often defined by a variety of first-time homebuyer grants and loan programs. The IRS can qualify someone who hasn't owned a home in two years as a first-timer.

Challenges of Being a First-Time Homebuyer

Buying a new house can come with challenges. It is important to be ready for the following:

  • Plenty of Liquidity: People who own a home can use the proceeds from selling their existing place to cover their down payment and closing costs, figuring out how to buy a house for the first time often requires you to have cash on hand. Down payments can easily run into five figures. Closing costs can run into the thousands, too—as much as 6% of your mortgage.
  • Prepare Paperwork: If you are financing your home purchase, you have to provide your lender with plenty of financial documentation. Underwriters can't discriminate against novices, but they might look at you harder with a lack of credit history. You may need to provide extra information.
  • Pay for Ongoing Costs: Paying for home maintenance costs is a large transaction from renting to owning, so it is important to ensure you budget accordingly. Be prepared for other ongoing expenses part of the joys of homeownership, like property taxes, homeowners insurance, and HOA fees, required by law or by your lender.
  • Manage Stress: Buying a home and moving into it is one of the biggest stressors in life. It can become anxiety-inducing when you don't know how the process goes—which is why the next section lays out a step-by-step guide for first-time homebuyers.

Guide for First-Time Homebuyers

Check out this rundown of the usual stages that you might go through in a home purchase. Keep in mind there are always individual twists and turns on the driveway to your dream house.

  • Step 1—Assess Finances. A home is the biggest single item people purchase. Getting a loan may be required if there is no cash to be paid, so it is important to ensure your finances are in a good position to handle a mortgage. Check your credit report and score, examine your budget, and assess your ability to make a down payment and pay closing costs.
  • Step 2—Decide Your Type of Mortgage. There are tons of types of mortgages. Your first consideration is whether you want a fixed-rate or adjustable-rate mortgage.
  1. Fixed or Adjustable Rate—This type of mortgage tends to have a higher rate, but the rate and the monthly payment never change. ARM can start with a lower rate for a set time and then adjust up or down at a predetermined interval. If the rate goes up, your monthly payment will increase with it.
  2. Loan Terms—This type of mortgage is a shorter-term loan that has lower rates, but larger monthly payments, meaning less flexibility in your budget each month in exchange for lower borrowing costs.
  • Step 3—Get Quotes From Multiple Mortgage Lenders. Comparing mortgage loan offers is an essential step to buying a house. Aim to get rate quotes from at least three lenders, as mortgage interest rates vary considerably and change often. You don't need to apply for a loan to get an offer. If you are a first-time homebuyer, you may want to get a sense of how rates fluctuate and the current rate environment you know what to expect when you seek a quote.
  • Step 4—Get Pre-Approved for a Mortgage. A pre-approval is a written, preliminary commitment from a lender to loan you a certain amount of money, though it is not a finalized offer. The letter typically spells out how much you are qualified to borrow, what loan program you are using, and the expected down payment you can make. Getting pre-approved is necessary because sellers won't consider your offer unless they know you have the financial backing.
  • Step 5—Find a Real Estate Agent. Loop in someone who can work alongside you during the process, a real estate agent knows the area and the local housing market and can provide valuable insights about neighborhoods, school districts, and more. Aim to interview three buyer's agents. Discuss your agent's communication style, and how they have helped guide other buyers through the current market.
  • Step 6—Shop for your Home. Talk with your agent about your budget and top requirements so that you don't waste time looking at homes that don't meet your needs. Visit homes in person,  and avoid buying a home sight unseen, even if it seems like the perfect fit based on an online description and photos.
  • Step 7—Be Prepared to Make an Offer. If you tour a home you are ready to make an offer fast, your agent can analyze comparable listings that have recently sold in the area to help you make a competitive offer. An offer should include an offer price, a deadline for the seller to respond, and any contingencies you want to request. Ready yourself to negotiate on price, and don't panic if you don't get the first home you place an offer on.
  • Step 8—Secure your Mortgage. If the seller accepts your offer, it is time to apply for your mortgage. This can be one of the most rigorous steps to buying a house. You will get a loan estimate that details the loan terms and estimated closing costs, along with other information. If you need help with closing costs, you could look to your state's housing finance agency.
  • Step 9—Hire a Home Inspector. Hire a home inspector to evaluate the property, which will check the home's foundation, roof, HVAC, plumbing, and electrical systems, but typically won't check for the presence of lead paint or mold. If the inspection uncovers major problems, you could try to ask the seller to fix them, but the seller might not be willing to if other offers won't require them to pay for repairs.
  • Step 10—Get Homeowner's Insurance. Insure your home, which will help to protect your investment. Insurance premiums vary, so get quotes from several companies or work with an insurance broker who can shop rates for you.

Interested in buying a home in New Braunfels, TX? Though it may seem like a book full of steps to take in the direction of becoming a homeowner, once reading through our guide, we ensure you that it isn't as difficult as it is cracked out to be. With the right real estate agent by your side, you are sure to find your next New Braunfels, TX dream home when the occasion arises.

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