5 Useful Tips for First-Time Home Buyers in Texas

Buying your first home feels like learning a new language while signing a very large check. I have walked a lot of people through it, and the same few habits separate a smooth first purchase from a stressful one. Here are five useful tips for first-time home buyers, in the order I would do them. None of them needs a perfect financial picture. They just need you to start early and know what to ask.

Your credit report is the first thing a lender looks at, so look at it first. The Consumer Financial Protection Bureau (CFPB) tells buyers to review their credit reports early so they have time to correct mistakes. You can get a free copy of your report from each of the three major consumer reporting companies once a week at AnnualCreditReport.com.

If you find something wrong, such as an account that is not yours or a balance that is off, dispute it now rather than during the loan process. For more on how scores shape your options, read my article on how credit scores affect your mortgage. Early review is the cheapest fix there is, because it costs you nothing but a little time.

What is the most important tip for a first-time home buyer?

Start early. Reviewing your credit and building a budget before you shop gives you time to fix problems and keeps you from being rushed into a payment you cannot carry.

How much do I need for a down payment?

The CFPB says that in most cases you need at least 3 percent of your target home price, and that a higher down payment generally lowers what the loan costs. The right amount for you depends on your loan type and your savings, and you also need money for closing costs and a cushion.

Does a preapproval letter promise me a loan?

No. The CFPB describes it as a tentative statement, not a guaranteed loan offer. Final approval depends on a full review of your application.

How many lenders should I compare?

The CFPB recommends getting Loan Estimates from multiple lenders for the same kind of loan. Compare the origination charges, closing costs and monthly payment side by side.

Is there free help for first-time buyers in Texas?

Yes. HUD-approved housing counselors can help with the homebuying process, and TSAHC offers down payment assistance and other programs with their own requirements, including a homebuyer education course.