Friday, March 13, 2015

Steps for First Time Home Buyers

Many people have mixed feelings about purchasing a home; however, there are many benefits to buying a home for anyone who can. In the past five years, it has been more affordable than ever to buy.  Here are some reasons why anyone considering purchasing a home should act now: 

  • Pride of ownership is the number one reason why people desire to own their home. Home ownership gives you and your family a sense of stability and security. Also, it is an investment in your future.

  • There is a chance that your mortgage payment may be less than what you pay for rent and that alone is a good reason to own your home.

  • Homeownership is one of the last remaining tax shelters.  In most cases, mortgage interest and property taxes reduce both taxable income and your overall income tax liability.

  • Interest rates are still low. 

  • Rental cost is on the rise.
The more you know about why you should buy a home, the less anxiety you will have about the process.  However, you do not have to know everything about financing and buying a home if you work with a knowledgeable mortgage loan officer and Realtor. 
When you are budgeting to purchase a home, you should know that your mortgage payment is only a fraction of the cost to sustain your home.  Others expenses that a potential homebuyer should know before buying are:

  • Utilities bills
  • Maintenance costs
  • Property taxes
  • Homeowners Insurance
  • Association dues, if applicable
To prepare for purchasing a home, your initial step should be to get your finances in order and begin setting aside funds for your down payment and closing costs.  The more you put down the lower your monthly payment will be.  In addition to their savings, many borrowers use the following financial resources to cover down payment and closing costs:

  • Tax refunds
  • Gift funds
  • Retirement funds
Potential buyers may also choose to negotiate closing costs with the seller.

Because loan approval is generally the key to a purchase transaction, it is to your advantage to obtain a pre-qualification letter from your preferred lender when you are ready to begin shopping for your home.  Lenders will base their decision on information provided on your loan application, employment history, and credit history.  Your credit history is a key factor when making a decision to approve your mortgage loan.  It is always a good strategy to get your FREE credit reports by visiting You are eligible for a FREE credit report every 12 months from all three credit reporting agencies – Equifax, Experian, and TransUnion. Review these reports prior to applying for a mortgage loan to ensure the accuracy of the information. If you find errors, report them to the appropriate reporting agency. 

Choosing a real estate agent to help guide you through the process of buying your home is a wise decision and will help you avoid potential setbacks.  A good agent will provide information based on their experience and market knowledge. When shopping for your home, you want to make sure you are looking in marketable areas for re-sale purposes, which includes the neighborhood, school district, location, and the surroundings. Life can change overnight. Therefore, you need to make sure your home is marketable and will have a good re-sale value.

Purchasing a home may be one of the most significant decisions you make. Therefore, if you are thinking about buying a home, or currently in the market to buy, you should be aware of your own finances and consider all the elements of your current circumstances before making a decision. Buying a home is a very personal decision and you should buy only when it is right for you.

Click here for more information about Texas Bank and Trust’s mortgage loan options. To speak with one of our mortgage lending officers, please call 903-237-5584.

Texas Bank and Trust is an Equal Housing Lender.

By: Lora Hollins
Vice President/Mortgage Loan Officer