Frequently Asked Questions About Buying a HomeShould I buy or rent a home?
This is a commonly asked question, especially for the first-time home buyer. Everyone has a unique circumstance, but we suggest that you think of a home purchase as an investment. When you rent a property, your monthly check goes toward the landlord’s equity. That money is potentially building wealth for someone else. When you own your own home, you are building your own equity. You should also consider that when you do own your own home, you can deduct the cost of your mortgage loan interest from your federal income taxes. This reduces the effective cost of owning.
How much home can I afford?
You will want to talk with a reputable lender to find out how much home you can afford in today’s real estate market. Generally, a lender will use two guidelines for determining the amount.
1) Your maximum monthly mortgage payment should not exceed 28 percent of your gross (pre-tax) income.
2) Your maximum debt load, including your mortgage payment, should not exceed 30 percent of your gross income.
These ratios are for the typical conventional mortgage. A lender will be able to give you details of other types of mortgages, including FHA and VA loans, which have more flexible qualification standards.
Use our mortgage calculator (found at various pages on our site) to find out what your payments would be based on the price of the home, interest rate and term of the loan.
What is the difference between getting pre-qualified and pre-approved for a mortgage?
There is a big difference between the two and as a potential home buyer, it is important to understand the difference. Getting pre-qualified for a mortgage loan is fairly simple and the first step in the loan process. You supply the lender with some basic financial information (income, debt, assets). After evaluating the information, the lender can pre-qualify you for how much mortgage you can afford. This pre-qualification step does not include an in-depth look at your ability to purchase a home
On the other hand, getting pre-approved for a mortgage loan is much more detailed. You’ll complete an official mortgage application and supply the lender with necessary documentation. Your lender will check on your ability to purchase a home by looking into your financial background in much more detail. Your lender will then give you a set amount that you are approved for. You will look like a much stronger buyer with a pre-approval letter as opposed to a pre-qualification letter when submitting offers.
We have some great recommendations for local lenders – just ask us!
What happens if the house is located in a flood plain?
If a property is located in a flood plain, you may be required to carry flood insurance which can affect the cost of living in the house. Your REALTOR® or lender will let you know if the home is located in a flood plain but you can also double check FEMA’s online maps by county. You can also check on the City of Austin’s website for more information about flooding in Austin. If it is located in a flood plain you need to know what type because some ratings indicate higher risks than others. Ask your insurance agent for a flood insurance quote and weigh your options once you have all of the information.
What is the best way to search for homes in Austin and the surrounding area?
We can set you up with an automated search that pulls information directly from the MLS so it’s accurate and timely. You can use our free search tool here on our site, which also pulls from the MLS.
Note that many real estate websites do not pull their information directly from the MLS, so you risk looking at outdated or incorrect information. All the time, we have people inquire about a house they saw online, only to find out that it’s already under contract. Also, don’t be fooled by the estimated values you find on these websites … it turns out the information is inaccurate and unreliable. Don’t take our word for it – they say so themselves!
To have us set up an automated search, just call us or send us an email.
Why should I use a REALTOR to represent me when buying a home?
A home seller’s REALTOR represents the seller’s best interests. When you are the home buyer, it is essential that you are also represented in the transaction and that you have someone looking out for your best interests. A REALTOR® representing you is dedicated solely to finding you the perfect property, representing you and your best interests and making the transaction as smooth as possible. And as a home buyer, you pay nothing for this representation. Our services as your buyer agent are FREE to you, as the seller pays all commission costs.
Why is the word REALTOR capitalized?
REALTOR is a registered trademark of the National Association of Realtors, which both of us here at Team Hurst are members. Capitalizing all of the letters is the “preferred format” as designated by NAR, but not required. More importantly, to become members of NAR, we abide by the NAR Code of Ethics and Standards of Conduct. We take our jobs very seriously, and pledge to treat all clients fairly and to protect and promote the interests of our clients. Hopefully that means you!