Houston Home Buyers Tips for Today’s Real Estate Market
Buying a home is the largest, single financial investment that many Houston home buyers will make in their lifetime. A recent study by Zillow showed that the average homeowner in the United States has 40% of their wealth wrapped up in their home. In our experience, this is true with most Houston Home Buyers.
We thought that we would help Houston Home Buyers to assist in their home search. This is a great resource to refer to as you are on the hunt for your next home.
1. Play the Long Game
Often a term associated with golf, the long game in buying a home refers to purchasing a home that you can see yourself in long term. Buy a home that will meet you and your family’s needs for at least 10 years. If you are adding to your current family, it should have the room a growing family needs, as well as any other features that you need now or in the near future.
2. Buy a Home to Improve Your Life – Not to Speculate with Money.
It is true that your home is a financial investment. It is also where you live, where you sleep, eat, spend holidays, raise your children, and entertain friends. Life happens in your home.
The Houston housing market can be volatile and unpredictable. Smart Houston home buyers do not look at purchasing a home for short-term financial payoffs. Your top priority in buying a home should be to meet your needs and build a life around those who matter the most.
3. Focus on Buying a House that Meets Your Needs
Home inventory is in short supply, but that does not mean that you are not able to find the right house to fit your needs. We suggest making a list of your basic “must-haves,” and a list of “nice to have.” This will keep you on task while searching for the right house and help prevent you from being distracted by amenities that may be out of your budget.
4. Stick to Your Budget
Setting a budget is one of the first tasks when buying a home. Over one-quarter of all home buyers spend more than their original budget. This number creeps higher in urban areas compared to suburban home buyers.
Spending more on a home than originally anticipated is easy to do. You are looking at stellar school districts, proximity to work, and nearby social attractions, all of which can drive home prices up exponentially. Keep a list of what you are willing to give up in order to be in your “perfect” neighborhood.
5. Put AT LEAST 20% Down
Here are three reasons why your goal should be a 20% down payment when buying a home:
- Down payments of less than 20% can result in higher interest rates, although there is more leeway than there used to be.
- The more you put down, the more likely your offer will be accepted. Zillow recently published that homebuyers with higher down payments make 1.9 offers, compared to 2.4 for those with lower down payments.
- The less you finance, the less risk you have. You never want to owe more money than what your home is worth.
6. Have a 6 Month Financial Reserve
Planning to keep a financial reserve is a great strategy to protect your family in the event of illness, loss of job, or unexpected expenses. Having peace of mind will also be a significant benefit of that strategic reserve. Living paycheck to paycheck is stressful, and it makes it difficult to build a future for you and your family.
7. Get a Fixed-rate Mortgage and Get Pre-approved
Getting a pre-approval requires upfront work and organizing your paperwork to show your financial records. Doing the leg work upfront will save time later. In addition to saving time, getting pre-approved sends a message to sellers that you are financially stable and dependable. One of the most important realizations from the pre-approval process is that it helps you, the home buyer, understand how much home you can afford to buy.
8. Shop Around for the Best Mortgage Rate
Most Houston Home Buyers miss this crucial step in the home buying process. The difference of half of a percentage point in your mortgage rate can equate to thousands of dollars over the term of your loan. We encourage you to research all mortgage rates available that meet your needs as a home buyer. Don’t always go with the first lender that you contact.
The three most important factors are that the lender offers a loan program that caters to your specific needs, has the most competitive rates, and has a history of closing on time.
9. Don’t Spend More Than 1/3 of Your Gross Income on a Home
Many times, buyers’ remorse comes from spending too much on a home, rather than too little. We suggest to our Houston Home Buyers that you do not spend more than one-third of your gross income. You do not want to be in a position where you regret paying your mortgage each month. Houston Home Buyers are in one of the best real estate markets in the country when compared to most other major metropolitan areas.
10. Don’t Be Afraid to Walk Away
Buying a home is a great feeling, especially when you find your dream home. Although the process is exciting, don’t be afraid to walk away if the home does not meet your expectations, the seller refuses your offer, or the home fails inspection. Remember to keep your “must-have” in full view so that you stick to your guns and don’t settle.
We are Ready and Willing to Help Houston Home Buyers
With over 5 decades of experience in the Houston real estate market, The Matthews Team is ready to help our Houston Home Buyers find their dream home. If you have any questions, give us a call at 281-440-7900 or send us an email. We’re happy to help!