It should go without saying that buying a home is a huge step in anyone's life and it requires plenty of planning. The problem is that many first-time buyers don't know how to make sure they're ready when it comes time to buy, which could mean that you're missing out on amazing homes. This is particularly important in the hot Austin real estate market, where most homes don't stay on the market long and sellers won't wait for buyers who don't have all their ducks in a row.
But even though preparing to buy a home may seem a bit daunting to inexperienced buyers, having a clearly defined list of thing you need to do before buying your first Austin home will make things much easier. That's why we've outlined five steps that will help you be ready to snap up a gorgeous home in one of your desired Austin neighborhoods.
Pay Off Your Debt and Improve Your Credit
This may not be that big of an issue for some, but many Americans carry some form of debt and it's ideal to become at least close to debt free before buying a home. We recommend having an overall debt of no more than 40 percent of your income in our guide for first-time buyers.
In particular, paying off your credit card debt is a great way to free up space in your bank account and, perhaps more importantly, improve your credit score for when you need a mortgage. Having a credit card where the balance is paid in full before the due date every month is a great way to improve your credit score when it comes time to apply for a mortgage.
Get Pre-Approved for a Mortgage
This is a vital thing to do before even beginning to look for a home. In fact, it's not even worth making an offer on a home in a hot housing market like Austin without being pre-approved for a mortgage, because almost every seller will require a copy of your pre-approval letter along with your offer.
Most lenders require documents such as tax returns, recent pay stubs to prove your current income, and bank statements to show what kind of a down payment you can afford. A credit check will also be done before the lender decides how much you will be pre-approved for.
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There's not much point in looking for a home if you haven't examined your finances to identify how much you can afford to spend on a home. It's important to get pre-approved for a mortgage before you do this, but you shouldn't confuse the amount you're pre-approved for with what you should budget for mortgage payments.
Most experts recommend that your monthly mortgage payment should be no more than 28 percent of your monthly income. Budgeting for this on top of the money you've set aside for your down payment should give you a good idea of the types of homes you can afford in Austin.
Identify Your Desired Neighborhood
Once you know what you can afford, you can narrow down your search to the Austin communities that have homes in your price range and close to amenities that are most important to you. Is there a specific type of school you'd like to live near for your kids to attend? Do you value residential neighborhoods with larger lots or would you rather be closer to downtown? How important is green space to you?
The good news about Austin is most neighborhoods have fairly convenient access to the city center via either public transportation or one of the highways that runs through the city. Most communities also have at least a couple of parks with a decent amount of greenery.
Find a Great Real Estate Agent
The right real estate agent is critical to your home search and should be chosen carefully. Find an experienced REALTOR® that is interested in listening to your needs and wants to know how much you can afford. At Berkshire Hathaway HomeServices Texas Realty, we want to hear exactly what you're looking for in your first home so we can find something that you will be truly happy with. Our owners have a combined 35 years of experience helping Austin residents find their ideal homes. Contact us for more information about how we can help you.