How to Buy a House in 10 Easy Steps
Houston Texas is the fourth largest city in the United States with strong ties to Oil & Gas, Health Care and Finance. With a population of approximately 2.3MM people, the competition in the Houston real estate market is fierce. The Houston Broker team is a boutique Real Estate agency in Houston, Texas with more than 25 years of combined experience. To assist you, the Houston Broker Team discusses How to Buy a House in Houston, TX in a very easy manner.
Save For a Down Payment & Get Pre-approved
It’s often assumed you need 20% of the purchase price for a down payment. This is the standard approach, but there are programs that allow for as little as 3% or 0% with VA or USDA loans. It’s also important that you know your credit Score. Different types of home loans require different credit scores. Talk to a qualified lender to better understand what you can afford. Your lender will be able to get you pre-approved and don’t forget to obtain a pre-approval letter. Below is the typical information your lender will require to get your pre-approval.
- A month’s worth of your most recent pay stubs.
- Copies of your last two years’ federal tax returns and W-2s.
- The names and addresses of your employers over the last two years.
- Last three months of bank statements.
- Divorce/separation decree (if applicable).
- Child support papers (if applicable).
- Bankruptcy, discharge of bankruptcy papers (if applicable).
Find A Great Real Estate Agent
Your agent will be the main point of contact and liaison for the transaction. A Real Estate Agent can also point you to a great lender. Once you find your agent, meet and complete your needs assessment. Upon completion of your assessment and receiving the preapproval, your agent will find houses within your criteria and budget. Work closely with your agent to get to know the Houston neighborhoods inventory levels and review the market averages.
Time To Shop!
Now that you have been preapproved and found a great agent, your realtor can begin booking private showings. Create a list of homes you would like to visit and schedule home tours with your agent. Be patient and map your move. The best time to buy is when you find the home that you love. Inventory and economy will have their ups and downs, but when you find a house you can see yourself in, the timing is just right. Once you find your dream home proceed with an offer!
Make An Offer
Your agent will prepare a great offer and help negotiate the purchase price and terms for the home. Use your agent’s negotiation skills to help your offer stand out. Always review comparable sales and contract terms. Don’t forget to request and check the property disclosure from the seller.
Congratulations your offer has been accepted and the contract documents are signed! To adhere to the contract, the buyer will deliver earnest and option fee checks. The earnest fee typically equals to 1% of the contract price (minimum) and is due within 03 days of the contract’s effective date. The earnest fee shows the seller you are a committed and serious buyer. Once the earnest fee is received, the seller takes the property off the market. Note that the earnest fee will get credited back to the buyer at closing. If the buyer terminates, the earnest fee will be reimbursed. The option fee is typically between $150-$500 and due within 03 days of the contract’s effective date. The option fee pays the seller for the option period and gives the buyer time to inspect and negotiate repairs. The option fee will get credited back to the buyer at closing. In the event the buyer terminates the contract for any reason, the option fee will be delivered to the seller.
Schedule Home Inspection
Once your offer is accepted, get a licensed inspector to take a closer look at the home for any underlying issues. This will ensure there are no major deficiencies with the property. All inspections are completed and paid for by the buyer within the option period (first 07-10 days of the transaction). The average cost of a general home inspection is between $400-$700. If required, a termite inspection is approximately $100. If the home has stucco, is recommended to perform an additional stucco inspection which costs between $600-$700. These are all third-party options and are not refunded in the event of a terminated contract. The buyer will receive a detailed report that can be used to negotiate repairs within the option period.
Appraisal of the Property
If you are obtaining financing for your purchase, most lenders will require an appraisal of the property. The appraisal verifies that the sale price of the property is in line with the market value. The appraisal fee is typically between $400-$600 and will be requested by the lender within the first 15 days of the transaction.
Your Journey to Closing
After completing inspection and appraisal, the buyer will have a few more things to address before closing on the home. The buyer will be responsible for acquiring home insurance and sending proof to the lender. The title company will conduct a title search on behalf of the buyer to ensure a “clean title”. The buyer should also select a Home Warranty if applicable. Once all the above is complete the lender will schedule the closing date, certify funds for closing and obtain clear to close. To protect your loan make sure you :
- Notify your lender of any address change.
- Notify your lender of any salary or wage changes.
- Be prepared to provide proof of significant bank deposits.
- Acquire homeowner’s insurance after going under contract.
- Keep all forms of debt paid and in check.
- Make large purchases using credit without first talking to your lender
- Apply for additional lines of credit.
- Pay off, transfer, or close credit balances unless your lender instructs you to do so.
- Change jobs without first talking to your lender.
- Co-sign for another person seeking to obtain a line of credit.
- Pay off collections before conferring with your lender.
Close the Sale
We are almost there! Before you close, schedule the final property walk-through, sign final disclosure within 03 days of closing and transfer funds for closing or get a cashier’s check. Don’t forget to reserve a moving company and set up your utilities.
On closing day, you will sign all the paperwork to complete the purchase, transfer ownership and get the keys to your new home! The buyer should be aware of the closing cost. This is the total amount due on your closing date (it DOES NOT include your down payment). It will typically range between 3%-5% of your contract price. Closing costs consist of lender fees, title fees and document preparation fees. They also include prepaid/prorated fees for taxes, insurance, HOA (if applicable) and other miscellaneous fees specific to your transaction. Remember to bring a printed confirmation of your wire transfer or cashier’s check for down payment and closing costs, a Government-issued photo ID(s) and second form of ID (passport, voter reg etc.) and your checkbook. Wait for other party to sign and for the lender to release funds. Finally get your keys; congrats, it’s yours!
You are a HOMEOWNER! Time to move in and enjoy your new home. Once your move in is complete, proceed to change and update your address. You should also apply for your homestead exemption (if Applicable) and store your closing documents in a safe place. Lastly don’t forget to change your locks and alarm codes.
Daniela is a real estate broker working in Houston, TX since 2011, helping hundreds of families buying and/or selling their home, achieving their real estate goals. She knows the questions, the concerns and the information that buyers constantly seek, which is what inspired her to put everything you need to truly know in one place, eliminating the need to look elsewhere.
“Owning my home has been one of the most rewarding achievements of my life, and my goal is to share the same feeling with all of you. Let me help you on your real estate journey!” — Daniela Antelo