Buying a home can be tricky if you don’t know what you’re doing. Here are some tips to get you started.
1. Don’t… buy a house if you might move again soon.
Renting can be frustrating. We get it. But it might be the best option if you’re not sure where you’ll be in the next couple of years.
Homes in some neighborhoods like the The Woodlands and Riverstone in Sugar Land can sell in days. But there’s no guarantee you’ll be able to do the same when it’s time for you to move. Even if you get an offer quickly, most buyers need at least 30 days to do inspections and get a mortgage from their lender before closing.
Pro tip: If your job might be relocating or if you have major life changes in the near horizon, we recommend renting. Don’t burden yourself with a home you might have to sell at a loss due to being in a time crunch.
2. Don’t… go over budget.
House shopping is so much fun we decided to do it for a living! when you’re having so much fun it’s easy to get giddy looking at all the possibilities. Some people get distracted by upgrades and features that are beyond your budgeted amount.
Your monthly mortgage might only go up a few dollars for every $1,000 increase in home price, but don’t go over the upper limit of your preapproval or personal budget.
Pro tip: In some neighborhoods like the Houston Heights it’s not unusual to see bidding wars break out. DON’T commit to paying more for a home than what it’s worth!
3. Don’t… forget to budget for home ownership costs.
Your home will need regular upkeep even if you don’t plan on doing any big renovations. There will be maintenance costs, property insurance, utilities and taxes to keep in mind. We recommend including all these items in your budget and not just the bare mortgage amount.
Pro tip: Your lender can include an estimated amount for taxes and insurance on your monthly bill so whenever those items come due you don’t have to draw down your savings. The lender will keep that money in escrow and pay it to the tax office and insurance company at the appropriate time.
4. Don’t… put down the minimum down payment.
Some mortgages can be secured with just 3% down. That isn’t always a great idea because as long as your equity is below 20%, the lender will charge you PMI. This is money you’ll never get back.
Pro tip: PMI is short for private mortgage insurance and this is money the lender will charge you every month since your loan is considered to be risky. Once you reach the 20% mark, the lender will stop charging PMI, but that might take years depending on how much you put down to begin with and the term of your mortgage (for example 30 years versus 15).
5. Don’t… forget to get everything in writing.
Your sales agreement should be very clear about what items will remain in the house. Kitchen appliances, washers and dryers and drapes should all specifically be addressed in the contract if you want them to remain. Don’t assume that because those things were there at the showing that they’re included in the sale.
Pro tip: We always recommend using an addendum to the agreement that lists specific items that are being included. Conversely, if there are items you want removed also address those in the agreement (we’re looking at you, orange shag rug in the game room…).
6. Don’t… skip inspections.
A professional inspection report from a licensed inspector is essential to make sure your investment is sound. Similarly, an appraisal report isn’t always required (for example if you’re paying all cash) but it would be foolish to omit this step.
Good inspection reports and appraisals are the best way to be sure you investment is sound. In Houston it’s especially important to rely on a good appraisal report because some neighborhoods change faster than you might know. The appraisal will be based on recent, actual sales of homes that are very similar to yours. Also, a termite inspection is super important in Houston because termites are more common here than most people realize.
7. Don’t… do it all alone.
The Texas Real Estate Commission and industry groups set high standards that realtors, brokers, appraisers, inspectors and lenders must meet in order to do business in Texas. We’re professionals who have the training, licensing and experience it takes to be successful at making real estate deals.
For most people, their home is the largest and most important asset they own. Not having the right people on your side at the right time can put your investment at risk.