Thursday February 25, 2021
Following record sales in 2020, new home sales are continuing to explode in 2021. According to an announcement in late February from the U.S. Census Bureau and the Department of Housing and Urban Development, “Sales of new single-family houses in January 2021 were at a seasonally adjusted annual rate of 923,000. This is 4.3 percent above the revised December rate of 885,000 and is 19.3 percent above the January 2020 estimate of 774,000. The median sales price of new houses sold in January 2021 was $346,400 and average sales price was $408,800.”
Low mortgage interest rates and the new “work from home” policies adopted by many companies have encouraged many families to consider a larger, more convenient home. This is great news for master-planned communities such as Devonshire in the charming town of Forney, Texas. This former farming community, just east of Dallas, has highly rated schools, excellent shopping and recreation and an easy commute to employment centers in North Texas.
While the process of purchasing a home can be daunting - especially for first-time buyers - it doesn’t have to be. Real estate experts have tips for making the process a breeze.
The 10 Questions to Ask Before You Buy a Home
Are Your Personal Financials in Order?
As noted above, the median price for a new home is approximately $345,000, and while this may seem challenging, it is doable with the right financial history. Here are some important factors to consider:
Do the homebuyers have steady jobs and a history of paychecks to prove this?
What are the buyers’ credit scores as reported by Experian, Equifax and TransUnion? Scores of over 760 will earn the best rates and terms, while scores under 500 are almost always too low for mortgage approval.
What cash is available for a down payment and closing costs (1 - 3 percent of purchase)? Some mortgages only require a 3-5 percent down payment, but you could need a 20 percent down payment for some loan programs, and you’ll usually be required to pay for private mortgage insurance if your down payment is under 20 percent.
What is Your Budget?
Real estate experts suggest that prospective buyers make an itemized list of their regular monthly expenses (including credit card payments, student loans, car payments and other recurring expenses) and add in all expenses related to a new house (monthly payments including mortgage, property taxes, homeowners insurance and mortgage insurance). There are many online calculators that will show you estimated payments for the house price you choose.
Next take your total monthly expenses and divide by your total monthly income. This will reveal a percentage number that’s known as DTI, which stands for “debt-to-income” ratio. The bank will look at that number to decide whether you can afford a house; 43 percent is the bank’s target number to stay under. If you’re under 36 percent, you should receive much better terms and interest rates. If your DTI is greater than 43 percent, you should look for a less expensive home.
Do You Have Pre-Mortgage Approval?
While there are many factors that go into qualifying for a mortgage, and this “pre-approval” is not a promise to grant a mortgage it will help to clarify any challenges to that process and offers a starting point for the application.
Have You Considered Advantages and Disadvantages of New Construction Versus Existing Homes?
Newly constructed homes, such as those in Devonshire have many advantages over existing, older homes. This is because current construction materials and new appliances require less energy use and maintenance. Proximity to employment, amenities, utility costs, schools and many other factors require homebuyers to carefully consider whether they want a brand, new home or one that has been previously lived in.
Have You Chosen a Realtor?
If not, it is advisable to interview and choose one before looking at potential homes. Having a professional in the residential real estate industry will save time, money and frustration.
Do You Have the Time to Commit to the Shopping Process?
Many homebuyers find that this “shopping” step is like having another job! However, it’s also exciting to imagine your family in a particular home and community. Since it takes about 30 - 45 days to close on any home, school openings and job considerations must be included in this part of the plan.
Is the Financial Paperwork Organized?
Every lender will have their own documentation requirements. However, most likely you will be asked to supply:
- The last two years’ worth of your tax returns
- Pay stubs or other documentation of income for the previous two months
- All bank statements, plus brokerage and investment account statements, for the last two years
- Proof of funds for down payment and closing (or a gift letter, if someone is giving you the money)
- Letter of recommendation from previous landlord, if you’ve been a renter
- ID (preferably a driver’s license or passport)
Are You Ready to Make an Offer?
After doing your financial due diligence and investing the time in looking at home styles, neighborhoods, schools and all of the other factors, it will come time to make an offer on the home you want. This step is where professional assistance from a residential real estate professional is important. This process can include very specific requests about the property and everything, from paint color to appliances, is on the negotiation table.
Is a Lender Ready to Finance Your Purchase?
This step is very straight-forward. A lender will ask for documentation such as credit verification, income verification, and all the other factors noted above and if these meet their criteria, financing will be approved. If there are challenges to the homebuyer’s credit and earning history, this will be discussed and next steps suggested.
Has the Home Been Professionally Inspected?
This is the final step before closing on any home. It is critical for both new construction and existing (older) homes. No purchase should be completed without having a house inspection performed, and no contract should be signed without a contingency clause saying the house must pass inspection. As the buyer, you will be required to pay for the inspection, and your realtor can suggest several reputable inspectors. You’re welcome to stay with the inspector as he does his work, and you’ll receive his entire house inspector checklist when it is finished.
Are You Ready to Enjoy the Lifestyle of Devonshire?
After going through this pre-buying process, many families have made the decision to live in the quiet surroundings of Devonshire. Click here to see some of the families that can become your new neighbors and, most likely, lifetime friends.
Devonshire in Forney is a special place. It has a distinctive look and feel. Click here and let us show you why.