People are constantly flocking to Austin, Texas, for its thriving job market, world-class restaurants and nightlife, and excellent educational opportunities. The city’s popularity has created a competitive real estate market, so it’s crucial to be prepared before jumping into the home-buying process in the area. Here are some tips and resources for first-time homebuyers in Austin, Texas:
1. Set Yourself Apart
As we’ve mentioned, the Austin real estate market is competitive, so you may need to set yourself apart from other prospective homebuyers. Here are a few ways to stand out from the crowd:
- Get pre-approved: Before beginning your home search, meet with a lender and get pre-approved for a mortgage loan. This accomplishes two things: It helps you know how much home you can afford and it makes clear to sellers that you’re a serious buyer. If there are several other offers on the table, a pre-approval letter is all but essential to securing your ideal property.
- Consider waiving contingencies: When buyers are in a position to negotiate, they often include contingencies in their offer, such as a home inspection, remodeling, or the inclusion of appliances or other existing amenities. In a competitive market, you might need to consider removing any contingencies from your offer to make it more appealing to sellers.
- Shorten your option period: An option period is the specified number of days a buyer has to back out of the contract and still be refunded their earnest money. To make your offer more attractive, you might consider shortening the number of days in your option period.
- Write a personalized offer letter: Aim to reach the homeowners on an emotional level with a handwritten offer letter that expresses why you love their home.
2. Find a Good Real Estate Agent
Hiring an experienced real estate agent is especially important for first-time homebuyers in Austin. Plus, it won’t cost you anything because they work on commission. Find someone who knows the area well and comes with ample recommendations. Then clearly express to them what you’re looking for in a home, with a list of “must-haves” and “nice-to-haves.” A good real estate agent can help you locate a home that meets your standards, negotiate a competitive offer price, and close on a home with minimal hiccups.
3. Don’t Put Down 20 Percent Unless It Makes Sense
Some people assume that you need to put down 20 percent of the home’s purchase price, but first-time homebuyers can actually put as little as 3 percent down with a conventional mortgage, although they might need to purchase private mortgage insurance. Unless you have substantial savings, a smaller down payment can be a smart move because it allows you to maintain a financial cushion to cover any unexpected expenses.
If you don’t have significant savings, but you have a healthy retirement account, you can take up to $10,000 from your IRA without a penalty for early withdrawal, and couples can use $20,000 together.
4. Be Prepared to Pay Property Taxes
One of the many perks of living in Texas is the lack of state income taxes. However, if you’re planning on becoming a homeowner, you need to be prepared to pay property taxes. Austin has a relatively high annual property tax rate of 2-3 percent of the home’s sales price. According to Zillow, a typical home in Austin is valued at $454,896, which would come with annual property taxes between $9,000-$13,600.
5. Check Out Available Loans and Homebuyer Assistance Programs
The majority of homes in Austin are not cheap, but there are several loan and homebuyer assistance programs that can make homeownership more achievable.
6. Complete a Homebuyer Education Course (You Might Need One to Be Eligible for Assistance)
It’s a good idea to take a first-time homebuyer class because they offer a crash course on the home-buying process and are often required for assistance program eligibility. Here are a few available classes for those in Austin:
In addition to completing a homebuyer education class, it might be helpful to seek out a housing counselor to walk you through the process.
Discover More Tips for Becoming a Texas Homeowner
The home-buying process can be overwhelming, especially the first time around. Discover more tips for navigating the path to homeownership in Texas with our guide.