Buying a house is an exciting step in life. However, it can also be stressful and intimidating if you are not prepared. Whether you’re a first-time homebuyer or have owned a home before, we’ve outlined the key steps in the home-buying process and the ten most important things to know before buying a house.
1. Choosing a Location
A short and sweet hiking trail located right outside of the city of Austin is Mount Bonnell. While the total distance is only a half-mile, the views from the top of the lookout are worthThere’s a reason “location, location, location” is still a heavily-used cliché. Figuring out where you want to live is an important thing to decide before buying a house. You not only want to make sure where you plant your roots matches your lifestyle and offers plenty of nearby activities, but also you want to make sure the location is one of the most important factors that will decide your home value over the long term.
The Lone Star State has been a popular spot for individuals and families looking to move and purchase an affordable home. With countless outdoor activities paired with a strong job market and low cost of living, it’s no surprise that Texas has seen a 16.4% growth since the 2010 census. Whether you prefer Austin’s thriving music and culinary scenes or one of the other lively metropolitan areas, Texas is home to five of the nation’s fastest-growing cities.
Each city and surrounding area in Texas offers a unique snapshot of the people, culture, and landscapes that make up this magnificently large state. While all the cities offer something different, Austin was voted the best place to live in the U.S in 2019. With the Colorado River running through the city’s heart, along with the infamous title of “live music capital of the world,” Austin offers a vibrant and healthy lifestyle for those looking to balance the outdoors with a bit of entertainment.
2. Deciding On a NEighborhood
City vs. Suburb
Do you prefer a neighborhood that is quieter and family-friendly? Or would you like to be within walking distance of shopping and entertainment activities? Answering these questions will help you narrow down what neighborhood you would like to live in, whether it’s in Austin or tucked in a surrounding suburb just outside the city.
Once you have a few locations in mind, it’s time to visit and explore the neighborhoods. Spend time driving through in the morning and evening to get a feel of the traffic, character, and overall atmosphere of the community at different times of the day. For a more hands-on approach, we recommend taking a walk through the neighborhood. You can envision yourself walking the dog, exploring with the family, meeting neighbors, etc. By spending some time in a few communities, you can narrow down your favorite location.
Consider a Planned Community
Looking for a built-in social life and a sense of community? Planned communities like Lakeside at Tessera offer a variety of premium home options and communal amenities like private beaches, pools, and hiking trails. You can also take advantage of a variety of neighborhood events designed to bring you and your fellow neighbors together throughout the year.
Grab a notebook, pull out your laptop, and sit down to make a spreadsheet of your finances. There are a few important steps to take before jumping into the home buying process. First and foremost is accessing your income and the income of a spouse or significant other. When applying for a loan, the bank will require proof of steady income between 6-12 months. Next, take a look at your credit score and your debt-to-income ratio. These essential factors ultimately determine your probability of an approved loan and a monthly payment rate.
A general rule of thumb when budgeting for buying a house is not to exceed 30% of your net income. This includes your monthly payment, interest, taxes, HOA fees, utilities, and insurance. While some of these numbers might be hard to estimate in the initial stages, it is important to identify your 30% figure as you move forward.
Let’s first talk about the home buying pre-approval process. After you’ve done a personal deep-dive into your finances and feel confident about your ability to purchase a home, it’s time for the pre-approval process. Meet with a lender at a bank and provide your supporting financial documents so you can better understand what kind of mortgage you can qualify for. Once you’re pre-approved, it’s time to go back to the budget and determine what kind of house you can afford and what you’re willing to contribute as a down payment. One benefit of getting pre-approved is that once you find your dream home, you can put in an offer and get under contract much more quickly.
While home mortgage interest rates have seen a slight uptick in recent months, rates are still at a historical low. Your specific interest rate will depend on your credit score and the down payment percentage. Your lender can help you navigate a mortgage rate that best suits you and your budget. Finally, if you’re a first-time home buyer you ask your lender about loan programs that best fit your needs.
5. Choosing the Right House
Have you started your own “choosing the right house” priority” list yet? Well, now’s the time. Before you begin house hunting, clearly identify what your deal breakers are. No house will be perfect, but if you start by having a list of non-negotiables, the process will be smoother and less stressful.
It’s easy to get hung up on cosmetics and ugly paint colors. You can quickly fix those small details with a little love and elbow grease. The criteria that matter most to you and your family may include:
- access to schools
- outdoor recreation opportunities
- overall square footage
- number of bedrooms or bathrooms
- amenities (a swimming pool, for example)
6. Working with a Real Estate Agent
Navigating the process of buying a home can be challenging, which is why working with someone who knows the market, the neighborhoods, and the complex financial aspects can be beneficial. As a buyer, your real estate agent is your advocate and will help you find your “forever home” for the best price and terms.
7. Putting In an Offer
If you’ve found your dream home and are ready to put in an offer, contact your real estate agent, and they will submit an offer in writing to the seller. In a competitive market, houses will sell quickly, so if you’ve fallen in love with a home, don’t hesitate to put in an offer.
8. Home Inspections
Inspections are one of the most critical steps in the home buying process. By conducting a home inspection, you get an in-depth look at the home’s structure and any issues that may arise and impact your budget. Generally, the older the house, the greater the potential for problems. Some examples might be a crack in the foundation, roof replacement, or the water heater being on its last leg. These issues will come to light in the inspection process and can be used to renegotiate the home’s price with the seller or solidify your decision to move on to look for a different house. While the location, price, and curb appeal might all be perfect for you, an inspection will provide an inside look at the foundation and longevity of the house. It’s important to know what you’re getting yourself into before buying a house.
9. Signing & Final Steps
If all the paperwork is in order and the seller has accepted your offer, the remaining steps will go quickly! It’s time to sign documents and hand over the keys. Your real estate agent will be by your side through this process and make sure both parties are happy in the final stages.
10. Home Improvements & Future Budgeting
Congratulations on your new home! While there is plenty of time to celebrate and enjoy your new home, don’t put the budgeting spreadsheets away just yet. Whether you purchased a fixer-upper or a home that requires no initial work at all, the budgeting for maintaining your home never ends. Unexpected plumbing, appliance issues, storm damage, and general upkeep need to be factored into your future budget. Financial advisors recommend setting aside a minimum of 1% of your home’s value. So if your house is valued at 300,000, you should set aside $3,000 that year.
If you are interested in living in the Texas Hill Country and would like to tour one of our custom home models, contact Lakeside at Tessera to schedule a tour. With large floor plans, proximity to outdoor recreation, and easy access to an excellent school system, Lakeside might just check all the boxes on your priority list.