Path to Home Ownership

If you’re thinking of buying a home the Path to Home Ownership can be intimidating. You’re not alone. There are a lot of questions and everyone seems to have a different answer. Remember that every situation is different. What your friend’s experience was will not be the same for you.

Here’s a map with 10 simple steps to follow in the homebuying process. Lets take each one and see if we can untangle some of the uncertainty and fear in the quest of purchasing your home.

The Path to Homeownership doesn’t have to be scary. You just need a team around you for guidance and support.

Save for your down payment. Create a budget and do your research. There are lots of low down payment options available

Save For Your Down Payment

This is probably the most daunting part of the process. I hear it all the time… “I don’t have 20% to put down on a house!” Well, guess what! You don’t need 20%!!! Create a budget and do your research. There are a variety of loan products out there that require much less from you at the purchase.

Christian Johnson of Caliber Home Loans agrees,

“I still think the #1 misnomer in my business is the amount required for a down payment. Many still believe that the minimum down payment is 20%, when this is simply not the case!  On all loan amounts, we offer a minimum of 3% down (Unless a VA loan, which is 0% Down) for our qualified buyers. Time spent with a great loan advisor is certainly well spent.  Get some advice from a seasoned professional who works for a company that only does mortgages – you’ll be glad you did.”

Government loans such as FHA, VA, and USDA offer the lowest down payment options and are viable options for those that qualify. Mortgage Officer, Dave Smith, explains how some of these government loans work and how they can be beneficial.

Of course, the more you can save the less your loan will cost you over time. When a buyer puts more down toward the loan this can get them a lower interest rate or other fees associated with their mortgage.

Where can you find that 3% – 10% down payment? Let’s look…

  • Plan a savings budget – How much do you actually need to save? There is the down payment + closing costs + other associated fees such as inspections and appraisals.
  • Increase your income – Easier said than done sometimes however if you think hard and get creative there are ways to increase your savings. Side hustles, working overtime, selling unused items, taking on a part-time job, or negotiating a raise at your current position are all ways to build that home account.
  • Cut unnecessary spending – Sometimes we don’t realize just how much we are spending day to day. Consider eating out less, skip the beach vacation this year, get a roommate, or make your coffee at home rather than hitting that drive-thru 5 days a week. Although small cuts in your spending may not seem dramatic, a series of small cuts can lead to big savings
  • Pay off your debt – High interest loans and credit cards will eat into your ability to buy your new home and can wreak havoc on your finances. The smart move here is to pay off those high interest debts first.
  • Research First-Time Home Buyer Programs – The availability of these changes over the course of the year depending on current market conditions. These programs are designed to help you achieve your goal of buying a home by helping out with a down payment or offering a low down payment option. Some popular ones are TSAHC (Texas State Affordable Housing Corporation) and SETH (Southeast Texas Housing Finance Corporation). Your lender will have access to these.

Know your credit score. Learn your score and clean up outstanding debts like student loans and credit cards.

Know Your Credit Score

Learn your score and clean up outstanding debts like student loans and credit cards. Your credit score and your debt to income (DTI) ratios will have the greatest impact on getting qualified for a loan. This will determine your “risk factor” and will affect your interest rate.

Low credit scores are the biggest hurdle first-time buyers encounter along their path to home ownership. Our past can catch up to us and we don’t know how to correct it even when we are not in a good job making excellent income. If you are struggling in getting your credit score up here are a few things you can do:

  • Pay credit card balances strategically
  • Pay bills on time
  • Dispute credit report errors
  • Deal with collections accounts

If you need assistance in getting everything taken care of there are credit repair companies that can help. Do your research and make sure you are working with a legitimate and reputable company.

Find a Real Estate Agent. Contact a local professional to guide you through the process.

Find a Real Estate Agent

It seems everyone knows a real estate agent however remember they are not all the same. During this process you are in each other’s back pocket. You will be sharing personal information with your Realtor such as finances, how you like to live, and what you like to do for fun and work. Contrary to popular belief Realtors are humans and you want to make sure your personalities mesh. Realtors are a fiduciary and must conduct themselves as such.

Your Realtor is going to be a large part of your transaction. Here are some steps to finding the right agent for you:

  • Get a referral from someone you trust
  • Ask the right questions
  • Clarify your motivation to purchase
  • Explain your communication preferences
  • Clarify your timeframe for purchasing

When you decide on an agent make sure you sign a contract with them. In the state of Texas, and probably most others, unless a Buyer Representation Agreement is signed by all parties the agent works for the seller not the buyer. This agreement is very important between you and your agent.

Get Pre-Approved. Differentiate yourself as a serious buyer and have a better sense of what you can afford.

Get Pre-Approved

Getting pre-approved by a reputable and respected mortgage lender will differentiate you as a serious buyer and you will have a better idea of what you can afford. This is one of those times you want to listen to your agent’s recommendations. Your agent will have several loan officers they have history with. They know how they operate and that they will get the job done for you. When you “go rogue” and choose someone your agent is unfamiliar with a piece of control is lost.

A pre-approval means a lender has looked at your financial background and determined how much home you can afford. This saves valuable time so you can target your home search to your comfort level. Getting pre-approved helps because you know the amount of your mortgage ahead of time, you are able to get all of your documents in order, and you have time to address possible credit errors and issues.

Find a Home. Work with your agent to find a home in your budget that meets your needs.

Find Your Home

This is what is the most fun of the process. You will work with your agent to find a home in your budget that meets your needs and your budget. All the criteria discussed when you were hiring your agent will come into play here. This is what he or she will be searching for on your behalf.

It is important that you are honest and clear with your Realtor as to what your needs and wants are as well as your “deal-breakers”. Does the house have to have a 3-car garage? Will you buy a house with a pool? All of these things are vital in the search for your new home. Your agent should have a great respect for your time and showing you properties that do not match with what you want is not a good use of anyone’s time.

Make an Offer. Determine your price and negotiate the contract

Make An Offer

This is what all the looking comes to; finding the house that you can see yourself living in, that meets your budget, and makes you smile. An offer is simply extending your hand to the seller and an invitation to talk about purchasing the property.

There are many things to consider when preparing your offer. This is where having your own agent, not the one listing the property, is so very important. Your agent will look at the current market, learn as much as possible about the seller, and guide you through these things. Here are some additional things to consider

  • Leave some “wiggle room” in our offer amount. The seller may counter or you made need to make some price adjustments later on in the transaction. Don’t throw all your money in the pot to start. Also, if interest rates go up and you are at your max loan amount you may no longer qualify for the loan.
  • Learn what you can about the seller. This is where your agent can speak with the listing agent to see what is important to the seller. It isn’t always about price! Maybe they need to close quickly…or have a longer closing period. These things can make you a better fit for the seller than other offers.
  • Make a respectful offer. Lowballing in a seller’s market will get you no where. Think about how much you are willing to pay for THAT particular house. Listen to your agent and their opinion on where the asking price is and if there are other offers being made.
  • Keep your emotions in check. This is difficult sometimes because you have spent days…or even weeks or months…looking for THIS house. And yet you want to keep your head about you when it comes to negotiation. Again, seek counsel from your agent.

Have a Home Inspection. Address any hidden issues in the home with the seller

Have a Home Inspection

This is so very important! A general inspection performed by a licensed inspector will give you a “State of the House” report before you purchase it. A good inspector will run the house through its paces making so you know what you are buying.

Most houses are “used” meaning they aren’t new. They have been lived in by one or more families over the years. Your inspector will check everything big (HVAC, roof, foundation, plumbing) to everything small (temperature of the oven, if the doorbell dings & dongs) and provide a report to you and your agent.

Ken Duggan of Pillar to Post is a licensed Texas inspector is knowledgeable and shares what is inspected and what you, as a buyer, should know including on new construction homes!

In some market conditions you may be tempted to forego the inspection process. Before you commit to this consider all potential outcomes as it can lead to some hefty expenses later on.

Get a Home Appraisal. Ensure the property is worth the price you are prepared to pay

Get An Appraisal

An appraisal is an unbiased and independent opinion of a home’s value and is used whenever a mortgage is involved in buying, refinancing, or selling that property. A qualified appraiser creates a report based on an in-person inspection, using recent sales of similar properties, current market trends, and aspects of the home (for example, amenities, floor plan, square footage) to determine the property’s appraisal value.

An appraisal will be ordered by the lender. The fee is usually several hundred dollars and is paid by the borrower prior to closing. The buyer will pay their lender directly for the appraisal. This is required and the only way to purchase a home without an appraisal is to pay cash.

The appraisal is an important part of the transaction and the results, if lower than the contracted price, can delay the transaction or cause it to terminate completely. This is where your agent is vital to your transaction. They can advise how you can handle any appraisal discrepancies at the time you are writing your offer with the use of appraisal waivers and other contract addenda.

Close the Sale. Schedule a closing date once the loan is approved so you can sign the final paperwork.

Close the Sale

Closing! Can you believe all of the above steps happened in about 30 days? Closing is the term used when the transaction to transfer the property from one entity to another is completed. In Texas, real property transactions are facilitated by tile companies. The title company in Texas is usually responsible for two different roles – providing the title insurance, and acting as the escrow officer. Sometimes, different title companies can handle these two roles, but it’s almost always the same title company.

In Texas the parties are not required at the same time. The buyer and seller will sign their own documents at their own appointment. Once all interested parties have signed and the money has changed hands (facilitated by the title company) then the transactions is closed and funded.

Move In! Congrats! You're a Homeowner

Move In!

After everything has funded you get your keys! The home is yours and you can move your family in! You are now a HOMEOWNER!

Robin McCoy | |214.226.3770 |

Rent vs. Buy: How to Decide What’s Best for You

Rent vs. Buy is the question many are asking right now.

According to the U.S. Census Bureau, median rent continues to rise. With today’s low mortgage rates, there’s great opportunity for current renters to make a move into their own home and pay the same or less then what they pay in rent each month.

While the best timeline to buy a home is different for everyone, the question remains: Should I continue renting or is it time for me to buy? The answer depends on your current situation and your future plans, so here are some thoughts to help you decide if you’re ready to own a home of your own.

1. Rent Will Continue to Increase

Rent vs. Buy: How to Decide What’s Best for You

This is one of the top reasons why renters decide to move because in most cases, rent will continue increasing each year. As noted above, the U.S. Census Bureau recently released its quarterly homeownership report, and as the graph shows, median rent is climbing year after year. When you own a home, you’ll lock in your monthly payment for the life of your loan, creating consistency and predictability in your payments.

2. Freedom to Customize

This is a big decision-making point for many people who want to be able to paint, renovate, and make home upgrades. In many cases, landlords determine all of these selections and prefer you do not alter them as a renter. As a homeowner, you have the freedom to decorate and personalize your home to truly make it your own.

3. Privacy

When renting, your landlord has access to your space in case of an emergency. If you own your home, however, you’re the one to decide who can come inside. Given today’s health concerns around the pandemic, this may be a growing priority for you.

4. Flexibility for Relocation

If you’re renting, it may be easier to move quickly should you have a job transfer or simply decide it’s time for a change. When you’re a homeowner and need to sell your house, this might take a little more time. Today, however, with the housing market’s low inventory, this may no longer be the case. Homes are selling at a record-breaking pace, so you may have more flexibility than you think.

5. Building Equity

When you pay your rent, your landlord earns the equity the property gains. If you own your home, the benefits of your investment go directly toward your net worth. This is savings you’ll be able to use in the future for things like sending children to college, starting a new business, buying a bigger home, or simply downsizing to save for retirement.

6. Tax Advantages

When you own your home, there are additional advantages that work in your favor as well. You can deduct things like your property taxes and mortgage interest (Always make sure you check with your accountant to see which tax-deductible benefits apply to your situation). When you rent, however, the tax benefits are directed to your landlord.

Bottom Line

It’s up to you to decide if you’d prefer to rent or buy, and it’s different for every person. If you’d like to learn more about the pros and cons of each, as well as resources to help you along the way, let’s connect to discuss your options. This way, you can make a confident and informed decision with a trusted expert on your side.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

City vector created by freepik –

Robin McCoy | 214.226.3770 |

Two Important Impacts of Home Equity

Equity continues to rise, helping American homeowners secure a much more stable financial future. According to the most recent data from CoreLogic, the average homeowner gained $9,800 in equity over the past year. In addition, experts project 2020 home prices to continue rising. With prices going up, equity gains will also keep accelerating. Black Knight just reported:

“The annual percent change in the overall median existing single-family-home price has skyrocketed in the past several months, with recent numbers at three to five times higher than rates seen in the past several years.”

Knowing equity will help enable many homeowners to better survive the economic distress caused by the ongoing pandemic, it’s important to break down two key homeowner benefits of increasing equity.

1. Equity Increases a Homeowner’s Options to Buy a New Home

Aside from the financial damage of the last seven months, there has also been a tremendous emotional toll on many people. Shelter-in-place mandates, quarantine requirements, and virtual schooling have all made us re-evaluate the must-have requirements a home should deliver. Having equity in your current house gives you a better opportunity to move-up or build your perfect home from scratch.

Mark Fleming, Chief Economist at First American, recently explained:

“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.”

If you need to make a move, the equity in your current home can help make that possible – right now.

2. Equity Enables Homeowners to Help Future Generations

An increase in home equity grows overall wealth, which can transfer to future generations. The Federal Reserve, in an addendum to their recent Survey of Consumer Finances, explains:

“There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.”

The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations:

“In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children’s educational success by paying for college or private schools, which can in turn increase their children’s ability to accumulate wealth.”

Bottom Line

Equity can help a homeowner grow their confidence in a more stable financial future. It provides near-term move-up options and creates a positive impact for future generations. In many cases, the largest single investment a person has is their home. As that investment appreciates in value, financial options increase too.
« Selling Your House Is the Right Move, Right Now [INFOGRAPHIC]How Down Payment Assistance Opens the Door to Homeownership »

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

Source: Keeping Current Matters

Robin McCoy | 214.226.3770 |

Many are Eager to Buy a Home Right Now

Many are eager to buy a home right now while affordability continues to be a highlight of the current housing market. However, a recent survey by Sparks Research shows that 20% of first-time homebuyers cite a lack of financial education as a barrier to homeownership. This is definitely understandable. If you don’t feel comfortable with the financial process of buying a home, it’s hard to make a confident decision. In fact, four in five homebuyers say they need help to understand what they can even afford in the first place. This is why finding the right professionals to help you through the process is so important. On top of that, the same survey reports over two-thirds of prospective homebuyers believe they’ll need assistance to save enough for a down payment. What they may not realize is that there are a lot of down payment assistance programs at the state and regional levels, and many of them have funds available for potential buyers. Down Payment Resources recently released its Q3 2020 Homeownership Program Index, which explains:

“The number of total programs is 2,340, and over 81 percent (81.1%) of programs currently have funds available for eligible homebuyers.”

Down Payment Assistance Programs Are Not Only for First-Time Homebuyers

Keep in mind, these programs aren’t just for first-time homebuyers, so it’s worth exploring your options no matter where you are in your homeownership journey. For example, if you’re working from home now, you may be thinking of relocating to a more affordable area where you can stretch your dollar further and have more space, inside and out. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), explains:

“Rural areas have mortgages (USDA loans) that don’t require down payments; and some workers who can work from home may want to consider outer suburbs or small towns where USDA home loans are available and where homes are very affordable.”

If affordability is on your mind and you’re expecting to be working from home long-term, the right home may be in an area you haven’t considered yet. In addition, the assistance program you need might be within reach too. If you’re interested in learning more about down payment assistance programs, additional information is available through Down Payment Resource. Your real estate advisor can help you decide which option is best for you personally.

Bottom Line

Thanks to a range of down payment assistance programs, affordable options are out there for today’s hopeful homebuyers. It’s important to get the financial education you need to understand the homebuying process and accomplish your real estate goals. Let’s connect today to get you started on the path to your dream home.

Check out the Texas State Affordable Housing Corporation (TSAHC) for more information on a specifc program for Texans.

** Source: Keeping Current Matters.

Robin McCoy | 214.226.3770 |