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National Homeownership Month 2022: Top Tips For 1st Time Home Buyers

Thursday, June 2, 2022   /   by Kathryn Jones

National Homeownership Month 2022: Top Tips For 1st Time Home Buyers

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Did you know that first-time homebuyers make up 31% of the current market? June is National Homeownership Month so we wanted to take this time to help our first time home buyers out there! The home-buying process can be hard and perplexing, especially if this is your first time. If you're looking to buy a home in 2022, check out the following tips to remain on track and achieve your real estate goals. 

1. Set A Budget
Examine your finances thoroughly, including your monthly income and obligations, to determine how much house you can afford.
Following are some general recommendations to keep in mind:

  • If you’re debt-free: You can consider houses that are up to 5x's your total household income.
  • If less than 20% of your income goes to pay down debt: You can shop for a home that is no more than 4x's your income.
  • If more than 20% of your monthly income goes to pay down debts: Shop for houses that are 3x's your income or less.

To make it easier to calculate how much you can afford, use a free online tool such as Wells Fargo or NerdWallet.

2. Understand Your Credit Score
Lenders consider more than your credit score when analyzing your mortgage application. They'll also look at your credit history to see how you pay, how much you owe, and how well you manage your money.
Both of these items — your credit report and your credit score — will aid your lender in determining the best interest rate for you. In general, the better your credit, the lower your interest rate will be.

3. Get A Realtor 
The most important step - especially as a first time home buyer. A realtor acts as your expert guide during the home buying or selling process offering you objective information, expanded search power, years of market experience, someone in your corner during negotiations, and overall making sure you're getting the best deal possible without any faults. 
The Russ Phillips Team is the #1 Realtor in Williamson County. We are committed to being your trusted real estate advisor, whether you’re selling or buying a home, or searching for a starter or luxury property in the Georgetown or Greater Austin area. Our dedicated team of buyer specialists, seller specialists, and administrative experts will make sure your home buying experience is seamless. 

4. Get Pre Approved
A pre-approval letter is a document from a lender stating that you have been approved for a specific amount of mortgage. A pre-approval letter in your offer shows the seller that you're serious about buying the house — it's confirmation that you can truly afford it — and it can even help you win a bidding battle.
Before starting your house hunt, always get pre-approved for a loan.
5. Understand Hidden Costs
You'll be accountable for more than just your mortgage payment once you've moved in. There are HOA dues, insurance, property taxes, and utilities to consider, among other things. Then there are the costs of maintenance and repairs, which are frequently unexpected.
Before you go out and buy a house, be sure you calculate these expenditures. Look up previous property tax bills in county records to get a sense of what they were like. To assist you estimate other costs, you can receive estimates from a few insurers and utility companies.

6. Look At First Time Homebuyer Programs
Many city and state housing organizations offer first-time homebuyer programs that might help you save money on your mortgage. Some of these offer help with the down payment, while others may cover a percentage of your closing costs.
Because options differ by location, seek advice from your local housing department. Your real estate agent might be able to assist you as well.

7. Understand PMI, Down Payments & Earnest Money
Once you've located the home of your dreams, you'll need to put some money down to make it a reality. Earnest money is the first payment you make when you sign a purchase contract for a home. Its objective, as the name implies, is to demonstrate that you are acting in good faith and are serious about buying the house.

The earnest money deposit is never made directly to the vendor. A third party, such as the title firm, normally holds it in an escrow account until the closing date. The earnest money is used to the down payment or closing costs at the time of closing. The cash deposit that a buyer makes on a home is known as a down payment. The amount of a down payment varies, ranging from 3% to 20% or more, depending on the type of loan and a variety of other factors.

Private mortgage insurance, or PMI for short, is a sort of mortgage insurance that you may be obliged to pay if you have a conventional loan. PMI, like other types of mortgage insurance, protects the lender rather than you if you default on your loan. When you have a traditional loan and a down payment of less than 20% of the buying price, PMI is normally necessary.

8. Compare Lender Rates
Mortgage rates vary from one lender to the next, making comparison shopping an important part of the home-buying process. Get quotes from more than one lender, paying close attention to the annual percentage rate (APR), additional fees, and total loan costs – both upfront and over time.

9. Find A Good Home Inspector 
Another fantastic companion to have is a home inspector. They'll inspect the house for a few hundred bucks, looking for any safety dangers or issues that need to be addressed.
You can then use their findings to bargain with the seller, either asking them to perform the repairs themselves or providing you with the funds to do it yourself. Getting a thorough home inspection is essential to ensuring that you purchase a safe, well-maintained property that is worth the money.

Shopping for a house as a first-time homebuyer can be overwhelming. By partnering with the Russ Phillips Team, you will get a dedicated, experienced and personable real estate team to help you get the best deal possible and feel comfortable with your first home buying experience. To get in touch with our team of realty experts, you can send an email to Russ@Russ-Phillips.com or give us a call at (512) 888 - 9205.

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