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Don't Make These Mistakes When Buying a Home in Austin

by Rebecca Shahan

Your home buying experience in Austin and Lake Travis should be one that creates great memories and excitement. The trick is to not let all that excitement get out of hand and lead to you making mistakes during the home buying process.

Here are some common home buying mistakes and how you can avoid them.

"I Saw the House Online. It's Perfect — Let's Make an Offer Before It's Gone!"

Photos are never enough to show you everything you need to know about a home. They are meant to be a preview.

Consider this:

  • Agents take photos that they want you to see. They can't show every nook and cranny.
  • You need more than just sight to truly evaluate a home. How does the home flow? What can you smell or hear?
  • Wide angle lenses are used in photos sometimes to make homes look larger.

Before you make an offer, look at the home, the yard, and the neighborhood in person.

"I Want to Buy This House. And Look, There's an Agent Right Here!"

When you go to an open house, the seller's agent is usually there to host it. You might think that's convenient. But remember that the agent represents the seller, not you.

If you start trying to negotiate with the seller agent on your own, you could compromise your negotiation. So make sure you hire a buyer's agent who will work on your behalf and help you get the best home for your needs.

"If a House Doesn't Have Everything On My List, I'm Not Looking At It."

You should make a "needs" and "wants" list of what you want in a home. But don't turn it into strightjacket. It should be a guide to help you find the home with the right balance of features.

You need to prioritize your list to make sure it guides you to the right home and not keep you from it.

Not sure what should go on your list? This worksheet can help you get your priorities straight: The Ultimate “I Wanna Buy a House" Checklist.

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.

Hiring the right real estate agent makes all the difference in a successful real estate transaction in Lake Travis and Austin.

You also need to understand who's side an agent is on when you buy or sell a home and move towards closing.

There are a number of ways agents may represent clients.

By knowing where your agent’s loyalties lie, you’ll know what you can tell her and what you can’t. If, for example, you’re dealing with an agent who doesn’t represent you but is representing the sellers of a home you want to buy, you won’t want to tell her how high you’re willing to go on the price.

No matter what form of representation you agree to, or where you live, watch out for your own interests and understand the six ways brokers and agents represent clients below.

Buyer’s Agency

Do you want the agent to represent you and only you when you buy a home so that all the information you share with her is confidential? Opt for an exclusive buyer’s agent.

Who pays the buyer’s agent? Surprisingly, even if you hire a buyer’s agent, you can still ask the sellers to pay his fee. You can pay your buyer’s agent yourself, or ask the seller (or the seller’s agent) to pay your agent a share of their sales commission.

Seller’s or Listing Agency

An exclusive seller’s agent represents only the sellers, not the buyers. If your exclusive seller’s agent finds a buyer for your home, he may have another agent - maybe even a co-worker from the same brokerage - represent the buyer in your transaction. In some cases the buyer may have no agent at all. Your exclusive seller’s agent is loyal only to you, so it’s OK to discuss strategy with him.

Who pays the seller’s agent? The seller pays a commission to the seller’s agent from the proceeds of the sale. The seller’s agent may, and often does, share the commission with the homebuyer’s agent.

Dual Agency

In many states, agents can represent both the buyer and seller. These dual agents seek to bring both sides together. They can’t do something that’s only good for you and not for the other side.

A dual agent situation often arises when one agent represents the buyers and the sellers of the same home. The agent must disclose the relationship and, in many states, you must agree in writing to such dual representation because of the potential for conflicts of interest. While dual agents have an obligation not to share any confidential information of a client without their permission, be sure to inform the agent that the information is confidential and know that any non-confidential information may be shared with the people on the other side of the transaction.

Who pays the dual agent? Usually the seller pays the commission.

Designated or Appointed Agency

What happens when the buyer’s agent and the seller’s agent both work for the same broker?

To make sure both sides of the home sale are treated fairly in this situation, some brokers designate an agent in their company to represent only the buyers and another to represent only the sellers. A designated agent or appointed agent will be loyal to you and only you. The strategy helps avoid a dual agency situation.

Who pays the designated agents? The sellers pay the commission and the designated agents share it.

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.

5 Tips For Starting Your Home Search

by Rebecca Shahan

Buying a home can be both an exciting and frustrating time. There's a great many things to think about and line up for a successful home purchase.

What are some basic steps you can take to reduce the frustration and guide your way to success? 

1. Get Pre-Approved

Getting pre-approved for a mortgage is more and more becoming a crucial first step in the home buying process. It's a relatively simple thing to do, yet it gives you so much power in return.  It not only shows the seller that you mean business, but it also let's you know more exactly what you can afford.  In the end, it saves everyone more time and helps you more quickly find the right home for your budget.

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

What do you really want versus what you really need in a home? Is that farmhouse sink really your key to happiness? Is a two-car garage a must, or can you deal with a smaller garage? Can that man cave wait for a later renovation or do you need it right now?

Before you begin your home search, write down all the features of a home you want, then categorize them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This way you can keep focused on what's really important in a home.

3. Research Neighborhoods

The neighborhood can be just as important as the home. You can find a home that fist all your needs, but if it's in a neighborhood you don't like, that can ruin it. Make a list of things you want in a neighborhood, factoring commute times and schools, shopping, etc. 

Then explore neighborhoods that fit your needs. You can also look up crime stats and other important information to make sure the neighborhood you chose is also safe.

4. Stick With a Particular House Style

Decide what home style works best for your family and stick to that when searching. This will keep you from touring homes that won't fit your needs.

For example, if you have kids and want your bedroom on the same level, stay away from Cape Cod styles, as they usually have the master bed on the main floor and the other rooms on the upper level.

5. Document Your Home Visits

When you visit homes, write down what you love and don't love about each one, as features will start to bur together. 

If you take these few steps, you can get much closer to finding the home that fits your needs.

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.  

5 Tips For First Time Home Buyers

by Rebecca Shahan

5 tips for first time home buyersIf you're ready to buy your first home, no doubt you've realized already there's a lot of things you need to think about. It can seem overwhelming. But it doesn't have to be.  Millions of people have bought homes before, and we know what makes the process go more smoothly. All it takes is planning and patience.

There are some simple steps you can take to make sure your home buying experience goes more smoothly. Here's a few things to think about before you decide to buy.

How Much Home Can You Afford?

Like any purchase, you need to know how much you can afford. It can be disappointing to find out you can't afford the home you fall in love with. The best thing to do is to determine the maximum amount you can afford.  An online mortgage calculator is a great way to start. You can find out your maximum price limit based on a 30 year mortgage.

You can also pin down a more exact amount of what you can afford is to talk to a loan officer at your bank. A loan officer will have a better idea of what the bank will loan you and what your down payment will need to be.

Knowing how much you can afford in advance, along with being pre-approved for a loan, will give you an advantage over buyers who haven't taken this step.  And it will save you time, since you know exactly what you can afford before you start your home search.

What Are The Must Haves In a Home?

Knowing what you want in a home, and what you don't want, is important. Sit down and think about all the things that you must have in a home, and the things that will make life miserable. Write it all down and use it in your home search. Show it to your agent as well so they know what to look for. You can adjust your list as you look at homes and see first hand what's available.

Use an Experienced Local Real Estate Agent

The right agent who knows the area inside and out makes a huge difference. Research the real estate agents in the are you're moving to.  If you have friends or family who've bought a home there recently, ask them for a referral. If not, read reviews online.

A good agent will know the area you're moving to inside and out, and will pay attention to your needs. In many cases, a great agent will have repeat clients over the years. They will also be able to connect you to loan officer and real estate attorneys, along with other needed professionals.

Compare Prices

You should look at homes in the area that are comparable to get an idea of what they're selling for.

You can easily compare homes in the area you plan to move to using tools such as our Home Search feature.

Ask Your Real Estate Agent About Closing Costs

Closing costs can vary, so make sure you determine the expected costs in advance to avoid any nasty financial issues during closing. Closing costs can include the costs of hiring an attorney to look over the  seller agreement, along with a home appraiser to inspect the home before the sale. A good real estate agent will be happy to help you determine closing costs.

Being a first time home buyer may seem daunting, but it's something you can accomplish successfully with the right planning and information.

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.  

Buying Is 23% Cheaper Than Renting in Austin

by Rebecca Shahan

According to the latest Rent vs. Buy Report from Trulia, owning a home continues to be cheaper than renting in the largest metro areas in the US, based on a 30 year mortgage. Austin stood out as one of the top cities in this report, with owning a home being 23.5% cheaper than buying.

Only two cities in the study turned out to be cheaper to rent than buy - San Jose and San Francisco CA. Median home prices in those cities rose to over $1 million this year. This is the first time in the six years that Trulia has being doing this study that this happened. Home values rose by 29% last year, while rent remained the same.  But not in Austin!

For the 98 metro areas where owning a home is cheaper than renting, 97 of them are in the double digits in advantage when buying. Austin was one of those metro areas that stood out at 23.5%.

Trulia arrived at these figures by taking into account all renting costs, including deposits, and compared them with the monthly costs of owning a home. Those costs included insurance, mortgage payments, taxes, and maintenance, along with one-time costs such as down payments, closing costs, and sale proceeds. The study also assumes that most homeowners stay in their home for seven years, put 20% down, and have a 30 year fixed mortgage.

In 2016, when buying was 41.3% less expensive than renting, the average mortgage rate was the driving force behind the difference. Rates this year are the highest they have been in six years which has narrowed the gap, all while home price appreciation has also been driven up by a lack of homes for sale.

Cheryl Young, Trulia’s Chief Economist, had this to say,

“One point deserves emphasizing: The ultra-costly San Francisco Bay Area is not a harbinger for the nation as a whole. While renting may outweigh buying in San Jose and San Francisco, it is unlikely that renting will tip the scales nationally anytime soon.”

There's many benefits of owning a home beyond just the money. If you're renting a home and would like to explore the possibility of owning a home, we would be happy to help you analyze the costs and benefits.

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.  

Is a 15-Year Mortgage Right For You?

by Rebecca Shahan

Are you planning to buy a home in Austin and want to pay it off faster and save money? If so, then a 15-year mortgage can be a great way to pay off your mortgage in half the time and save tons of money on interest. Just keep in mind that to really get the most from this type of mortgage, you need to have enough income to keep on top of the payments, along with all your regular expenses. This fact alone can deter home buyers to stay away from a 15-year mortgage, since the payments are about 50% higher than a similar 30-year mortgage.

As with any mortgage, there’s pros and cons.  What are the pros and cons of a 15-year mortgage?

Pros

  • Owning your home faster. Your home will be paid for in only 15 years.  Plus you’ll have peace of mind that it belongs to you after it’s paid off.
  • Builds equity. Paying off the principal faster helps you build more equity.
  • Save money. As there’s fewer years of risk in a 15-year loan, they have a lower interest rate. And since the term is shorter, you save even more money on interest.

Cons

  • Higher payments. The payments will be 50% higher than a 30-year loan, so you need to be sure you can keep up with them.
  • Locked up equity. The equity you’re building is locked up in the home. The only way to use it is to sell the home or refinancing.
  • Missing other opportunities. Higher payments means you may not have enough money to take advantage of other financial opportunities, such as investments or matching your employers contribution to a retirement account.
  • Lower quality home.  Since you aren’t stretching your payments over 30-years, you won’t qualify for as high of an amount as you would with a 30-year loan.

To sum up, a 15-year loan is an ideal way for those who can afford the higher payments to save money and own their home more quickly. But if you’re not entirely sure your finances are stable, then you should avoid a 15-year mortgage. 

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.  

First Time Buyers - Avoid These Common Mistakes

by Rebecca Shahan

Avoid these first time buyer mistakesAre you ready to buy your first home?  If so, this is an important time for you.  This is a big decision, so don’t get caught up in the emotions and make the same mistakes that so many first time buyers make. Let’s take a look at just a few of those mistakes and what can be done to avoid them.

Picking Out a House Before the Mortgage

Having enough money to buy your home is a step you would think most people would realize. But it turns out that many first time buyers get so excited that they start looking at houses before they secure financing. You can’t blame people for doing this, as looking at homes is definitely more fun shopping for a mortgage. But if you don’t know what you can afford beforehand, it can lead to disappointment if you can’t finance enough money to buy the home you want.

Make sure you talk with a lending professional to get pre-qualified or pre-approved for a loan before you start looking at any houses.  You’ll have a better idea of what you can afford. And it also gives you leverage, as the seller will be more confident that you’re serious.

Not Looking at First Time Buyer Programs

As a first time buyer, you may not have a lot of money saved up to put down on a home and cover closing costs. This may lead you to think that you have to wait until you save enough for a huge down payment.

However, there are programs such as Veterans Administration or U.S. Department of Agriculture loans that don’t require a down payment. You may also qualify for a Federal Housing Administration loan that only need a down payment of 3.5%. Even some conventional loans have down payments as low as 3%. You never know until you ask.

Applying For Credit Before Closing

The closing period is the worst time to apply for new credit, as some make the mistake of applying for credit cards so they can buy furniture and other items for their new home.  To be blunt, that is a huge error on their part. The lender will be looking at your credit during this period and will base their decision on your debt-to-income ratio.  Applying for credit can lower your score. About a week before closing they will also check your score.  So if they see any change in credit activity, it could change the interest rate or fees.

Pick out what you want to buy ahead of time, and then get any needed credit after the closing.

Not Having the Home Inspected

Not having a home inspected before you buy it is only asking for trouble. Homes, especially older ones, can have many issues that are hidden from immediate view. You need to be able to see the hidden issues. Some buyers feel that if they waive the inspection that it will give them an edge on other buyers.  But if you end up buying a home that needs major repairs, it ends up being a bad deal anyways. 

The simple solution is to hire a home inspector of your own choosing.  This way they won’t have any bias toward the home seller or your agent, and can give you an honest assessment.

Buying your first home can be a positive experience if you take the time and make wise decisions with the future in mind. Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.  

The Steps to a Succesful Home Inspection

by Rebecca Shahan

Steps to having a succesful home inspectionOf all the parts of the home selling and buying process, the home inspection is certainly one of the most important steps.  A home inspection is really important, as it will determine the condition of the home and could save you quite a great deal of money as a home buyer. And if you are selling a home in Austin, then it can give you time to make the needed repairs to get the most money you can from the sale. A home inspection will also give valuable insight into potential problems in the future.

What are some important things to consider when getting a home inspection?

  1. Research the Inspector

A costly mistake that people make is hiring the first inspector they find or is recommended. As with any service, it’s important to research who you hire, as it can make all the difference in the end. You need an inspector who will make sure you understand the issues and will be thorough.

Here are some important questions to ask a potential inspector:

  • How long have you been inspecting homes professionally?
  • How many home inspections have you performed in your career?
  • What are your qualifications, certifications and training?
  • What did you do for work before you were a home inspector? (Preferably, you want someone who was a contractor or builder.)

Also, is the inspector keeping current in their education? They need to be up to date so that you get the best and most current information possible.

  1. Be There During the Inspection

Being present during the inspection may seem excessive or not needed, but that’s not the case.  A good inspector will welcome your presence. And simply reading the report doesn’t always reveal all that needs repairing.  Seeing the issues in person and having the home inspector explain them will be far more helpful.  Even though an inspection may take a few hours, it will be well worth your time, as it could save you a great deal of money.

  1. Get a Presale Inspection

If you’re selling your home, you may think you can leave the inspection to the home buyer. Here’s the issue with that plan. If the buyer’s inspection reveals repairs that are needed to make the sale, you won’t have as much time to make the needed repairs. But if your home is inspected before you put it on the market, you’ll have more time to make needed repairs and will have more control over the costs.

A good home inspection is crucial to buying a home, so make sure you find the best inspector you can.

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.  

Misconceptions About Home Buying

by Rebecca Shahan

So you’re ready to buy your first home in Lake Travis or Austin? It can be both an exciting and confusing time. Maybe you have some doubts about your ability to buy a home based on information from friends or relatives, or perhaps the internet. Not all the things people think about buying a home are accurate. Real estate is a constantly changing field, so you need to make sure your information about the home buying process is current. What are some of the home buying misconceptions that first time buyers encounter?

  1. You need a 20% down payment to get a mortgage.

This was accurate a few decades ago. Back in the old days, you had to pay 20% - 50% down for a mortgage and needed almost immaculate credit.  Unfortunately this limited the ability of many hard working people to own their own home. In order to make it possible for more people to own a home, the government created the Federal Housing Administration and began offering “FHA Loans”. The FHA currently will back a loan from a home buyer with a credit score of as little as 500 and a 10% down payment. If your credit score is above 580, you only need 3.5% for a down payment! Today it’s more possible for people with less than perfect credit to buy a home.

  1. You Can’t Qualify For a Mortgage With Student Loans

Lenders look at all of your debt combined and don’t single out student loans.  What lenders look at is your total debt to income ratio. That means that when you take into account all that you owe in loans and can still afford a mortgage payment, then that’s what matters.

  1. You can save money by not using a real estate agent.

Real estate agents not only make your buying experience simpler, but safer. Most people don’t know how to deal with the paperwork. Real estate agents also make their commission from the sale of the home, which is worked into the price regardless of whether you decide to use an agent. So why would you go it alone when you really won’t save money by not using one? The agent takes care of all the paperwork, appraisals, inspections, and other matters that are part of the process, so you don’t have to deal with it.

  1. It’s cheaper to buy a home that needs a lot of renovating.

It’s fun to watch those shows where they turn a worn out home into a palace. But let’s just say it’s more fun to watch than to do in this case.  After all of the time and money you put into the renovation, you may end up spending much more than if you bought a home that’s move-in ready. Save yourself the pain and chose the home in Austin that meets your needs without all the mess of renovation.

Are you planning to buy a home in the Austin and Lake Travis area and have questions about the home buying process? Please contact us today for more information. You can also search for your dream home now using our convenient home search tool.

What is PMI?

by Rebecca Shahan

If you plan on buying a home in Austin and want to go with a low down payment loan, are you familiar with a type of insurance called Private Mortgage Insurance (PMI).  There are plenty of mortgage options that offer down payments under 20%.  But if you plan on getting one of these types of loans, it’s a good idea to look into and educate yourself about Private Mortgage Insurance. How can Private Mortgage Insurance help you buy a home in the Austin area?

Here’s how Freddie Mac defines PMI:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

The simple explanation is that the buyer pays the monthly premiums for the PMI insurance policy, and the lender is the beneficiary. As Freddie Mac explains:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.”

The average down payment last year for all home buyers across the nation was 10% and 5% for first time buyers, according to the National Association of Realtors (NAR). They also reported that the average down payment for repeat buyers was 14%. In other words, PMI didn’t stop these buyers from getting loans.

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:


What is Private Mortgage Insurance

The larger the down payment, the lower your monthly housing cost will be, but as Freddie Mac says:

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Are you planning to buy a home in the Austin area and have questions about home loans and PMI? Please contact us today for more information. You can also search for your dream home now using our convenient home search tool.

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