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Texas Housing Insight

Here is a great post from Texas A&M Real Estate Center regarding home sales.

 

Texas housing sales recovered after second-quarter declines, trending upward amid lower mortgage interest rates and a robust economy. Mortgage applications for home purchases and refinances continued to rise, nudged by further decreases in interest rates. Demand was stable as the average home sold after two months on the market. On the supply side, single-family housing permits recovered from second quarter stagnation; however, starts remained sluggish. Home-price appreciation slowed but outpaced wage growth. Housing affordability continues to be the greatest challenge to the housing market across the state.

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction activity, inched up amid ongoing payroll growth in the industry. Higher wages and an upturn in construction values, however, are crucial for the metric’s continued growth. The Residential Construction Leading Index rose to its highest level since the Great Recession as falling interest rates and a rebound in building permits favored a more positive outlook.

Single-family construction permits bounced back 16.5 percent after staggering in June, but the year-to-date (YTD) count remained behind January through July of last year. Nevertheless, Texas’ 10,504 monthly permits (nonseasonally adjusted) accounted for 15 percent of the U.S. total, extending a 13-year stretch as the national leader. Houston and DFW topped the list at the metropolitan level with 3,493 and 2,944 permits, respectively, but North Texas activity remained suppressed through 2019. On the other hand, permits rebounded in Central Texas after taking a step back in June. Austin ranked fifth behind Phoenix and Atlanta with 1,525 permits. San Antonio issued 817 permits, up 10.9 percent year over year (YOY).

Total Texas housing starts flattened as apartment construction stumbled on top of a steep decline in June. The single-family sector remained stagnant while single-family private construction values perpetuated a yearlong trend of decline. Houston construction values rebounded after falling to a seven-year low but trended downward. DFW registered similar movement while Austin and San Antonio values dipped in July.

Dwindling supply pulled Texas’ months of inventory (MOI) to the lowest level this year at 3.7 months. A total MOI around six months is considered a balanced housing market. The MOI for homes priced less than $300,000, which comprised the majority of sales, ticked below 2.8 months. Inventory for luxury homes (those priced more than $500,000), however, increased for the fourth consecutive month to reach an MOI of nine months. These divergent trends exemplify the shortage of affordable housing and the current mismatch between demand and supply.

The MOI ticked down across the major metros, chipping away at 2018 gains. Houston’s MOI fell below four months. Dallas and Fort Worth reached YTD lows at 3.2 and 2.6 months, respectively. In San Antonio, the MOI slid to 3.6 months, while Austin inventories fell to a three-year low, registering below 2.4 months.

Demand

Total housing sales through the MLS corrected upward 17 percent in July after declines in the previous two months. All price cohorts registered double-digit YTD growth except for homes priced less than $100,000, where a shortage of supply constrains sales. Despite the monthly jump, the sales pace shows signs of slowing in the $200,000-$300,000 price range, where more than a third of transactions take place.

After reaching YTD lows in June, metropolitan housing sales posted cycle-highs. Resale activity in Central Texas boosted YTD sales by 3.7 and 3.1 percent in Austin and San Antonio, respectively, compared with the same period last year. Total sales in Houston registered a 1.2 percent rise as the existing-home transactions increased at a more moderate pace. Growth in Dallas and Fort Worth home sales flattened at 1.0 and 0.7 percent, respectively, as North Texas’ resale market fell short of 2018 levels in the first seven months.

As sales stabilized, Texas’ average days on market (DOM) inched up to 60 days. Demand in the major metros also softened slightly but hovered around yearlong averages. Austin and San Antonio’s DOM stabilized at 59 days, as did Houston’s metric after falling the second quarter. The DOM in Fort Worth ticked up to 45 days. Dallas was the exception, where the DOM extended a sharp incline, reaching a six-and-a-half-year high of 58 days.

Continued concerns about global economic growth and trade uncertainty pulled interest rates down for the ninth consecutive month. Economic fundamentals at the state and national level, however, remain healthy and stable. Interest rates could fall further following the Federal Reserve’s rate cut. The ten-year U.S. Treasury bond yield flattened at a two-and-a-half year low of 2.1 percent, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate dropped below 3.8 percent. Texans capitalized on lower rates, pushing mortgage applications for home purchases up 18.1 percent YTD. Refinance mortgage applications, which are more sensitive to interest rate fluctuations, have doubled since year-end.

Prices

The Texas median home price posted a new record-high, reaching $240,500. The annual rate of growth was 3.8 percent, below the 2018 average of 4.6 percent. Austin led the state with an all-time high median price of $315,500, followed by Dallas at $292,900. The median price in Fort Worth ($241,800) and Houston ($240,900) fell $800 and $400, respectively, from second-quarter record highs. San Antonio was the only metro with a median price below the statewide level, posting $232,500.

The Texas Repeat Sales Index increased 4.1 percent YOY on a statewide basis, insinuating greater home-price appreciation than the annual change in the Texas median home price. The index did, however, corroborate slowing growth compared with the 2018 and 2017 averages of 4.3 and 5.1 percent, respectively. North Texas registered 2.9 and 4.2 percent in Dallas and Fort Worth, respectively; however, appreciation calmed in comparison to 2018 levels. On the other hand, Austin’s index accelerated 5.2 percent, the fastest growth rate in over two years. Houston and San Antonio’s indices rose above last year’s average pace to 2.8 and 4.2 percent, respectively.

Click here for the full report.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, and Paige Silva (September 6, 2019)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-In…

DFW Real Estate, Housing Market, Title Insurance, Title Company

Big Changes Being Made to Rollback Taxes for Agricultural Land in Texas

Here is some very helpful information of changes that were made regarding land used for agricultural purpose.

HB 1743 was passed and amends sections 23.55 and 23.76 of the Property Tax Code regarding the appraisal methods and procedures in Texas.  Specific changes made to the Property Tax Code are in regards to rollback taxes for agricultural land.  Land that is converted from agricultural use to non-agricultural use will still incur a rollback tax.  However, starting September 1, 2019 the number of years for a rollback tax bill for changing to a non-agricultural use will be reduced from five years to three years and the interest rate imposed on a rollback tax bill is also reduced from 7% to 5%.

Source:   Dr. Blake Bennett, Associate Professor and Extension Economist, Texas A&M AgriLife Extension Service

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After Closing Reminders For Sellers

Your house has sold and the deal is closed.  Now what do you do?

Here are some reminders for you as the seller:

  • Cancel your homeowners insurance with your insurance agent once the transaction has closed, funded and your personal items have been removed from the home. There may be a prorated refund of your homeowner’s policy, based on the latest renewal date, owed to you. If you are remaining at the property after closing, you should notify your insurance agent of this change.
  • Cancel your auto deduction for your house payment with your current lender if applicable.
  • Your lender will refund all monies left in your escrow account approximately 15 to 30 business days after receipt of the payoff funds. The lender will mail a package containing your original Promissory Note marked “PAID” and the other loan file documents. Retain these for future reference. When you receive this confirmation, you may also receive a “Release of Lien” or “Reconveyance of Lien” from your lender. If the release does not appear to have been recorded with the County Clerk’s office, please forward it to your closer at the title company. We have collected for the recording of the document at closing and will send it to the County to be filed, thereby releasing the lien of record.
  • Depending on what time of the year you sold your property, the Taxing Appraisal District may not have updated the account to show a change in ownership. If you receive a Tax Bill for the property that you sold, refer to your closing statement and send the bill to the new owners.
  • You will receive a Substitute Form 1099-S from Republic Title within 30 days of closing. In addition, retain your closing statement, it serves as a Substitute Form 1099-S for tax purposes.

We hope these tips have been helpful to you in answering any post closing questions you may have had. As always, please do not hesitate to contact your closer should you have any questions. Thank you for allowing us to be a part of this transaction.

Click here for printable version.

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Texas Housing Insight

Here is a great post from Texas A&M Real Estate Center regarding home sales for June.

Texas housing sales dropped 10 percent after hovering around record levels in April and May. The trend, however, remained positive with lower mortgage rates and robust demand. Falling mortgage rates and rising income levels stimulated mortgage applications for home purchases as well as the homeownership rate. The average home continued to sell in less than two months on the market. On the supply side, single-family housing permits and starts wavered on the month, but a surge in vacant lot development indicates positive momentum for future construction. Home prices continued to rise but at a more moderate pace, providing some relief to affordability constraints. The shortage of homes priced below $300,000 remained the biggest challenge facing the housing market. Texas’ robust economy and population growth, however, support a favorable outlook.

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction activity, inched downward due to sluggish residential construction values and wages in the industry. The Residential Construction Leading Index flattened as a decline in building permits offset lower interest rates. The extended economic expansion, however, continues to bode well for the housing market.

Supply-side activity remained stable at the earliest stage of the construction cycle with a 6.3 percent quarterly increase in the number of new vacant developed lots (VDLs). Austin’s VDLs rebounded after a slow start to the year, primarily for those targeting homes selling for less than $300,000. Development maintained an upward trend in San Antonio, but activity cooled for lots targeted for homes priced more than the metro’s median ($229,750). New VDLs picked up for the second straight quarter in Houston but failed to recover all of the losses from the second half of 2018. Dallas-Fort Worth (DFW) continued a yearlong decline of lot development in response to last year’s market adjustment.

Single-family construction permits receded 13 percent in June after five consecutive monthly increases. The overall trend remained positive, but permits are currently on track to fall short of last year’s total. Texas’ 9,767 monthly permits (nonseasonally adjusted) accounted for 15 percent of the U.S. total, extending a 13-year stretch as the national leader. Houston and DFW topped the list at the metropolitan level with 3,030 and 2,822 permits, respectively, but flattened after a marginal recovery from last year’s correction. In Central Texas, permits staggered in June but maintained a steady upward trend. Austin issued 1,598 single-family permits, while San Antonio issued 660.

Total Texas housing starts increased 5.2 percent quarter over quarter due to continued strength in multifamily residential investment. Approximately 22,600 single-family homes broke ground in the Texas Urban Triangle, slightly down from a solid first quarter. Most of the quarterly decline occurred in the ultra-constrained $200,000-$400,000 price range. In Austin and Dallas, single-family starts held a flat trend, but Houston showed signs of weakness. Starts fell back in San Antonio but maintained 7 percent year-over-year growth.

Revised first quarter data revealed that single-family private construction values bottomed out after a sharp decline in the second half of 2018. Austin and Houston displayed similar stabilization, while DFW construction values continued to slide in line with VDLs. Accelerating supply activity in San Antonio pushed single-family construction values up toward a cycle high.

Housing starts had little effect on Texas’ months of inventory (MOI), which held firmly at 3.8 months. A total MOI around six months is considered a balanced housing market. Last year’s stretch of slow and steady inventory growth stalled amid rebounding demand and fewer new Multiple Listing Service (MLS) listings. Different segments of the market displayed wide variation in inventory levels. The MOI for homes priced less than $300,000 hovered below three months, while the MOI surpassed 9.1 months for luxury homes (those priced more than $500,000). These divergent trends exemplify the shortage of affordable housing and the current mismatch between demand and supply.

The MOI ticked down across the major metros with signs of downward pressure after marginal gains last year. Dallas and Fort Worth reached year-to-date (YTD) lows at 3.3 and 2.6 months, respectively, while Austin’s MOI fell to 2.4 months. In San Antonio, the MOI hovered around a three-year high in May, while Houston’s MOI ticked down closer to four months.

Demand

Total housing sales through an MLS dropped 10.1 percent in June but remained on an upward trajectory amid lower mortgage rates, rising wages, and more moderate home price appreciation. Per MetroStudy data, second quarter new home sales surpassed 24,000 in the Texas Urban Triangle for the first time since 2007, corroborating the overall strength of the state’s housing market. New home sales increased across the price spectrum with particular strength in the $200,000-$300,000 price range.

Austin sold a record level 4,628 new homes during the second quarter, surpassing 13 percent year-over-year (YOY) growth. San Antonio was the growth leader at 15.6 percent YOY, selling more than 3,200 new homes. Dallas and Houston accounted for two-thirds of the new-home transactions with 8,623 and 7,611, respectively.

Texas’ average days on market (DOM) hovered around its four-year trend of 58 days. San Antonio continued to track the statewide level, while the DOM in Austin and Houston both fell to 56 days. Dallas’ DOM flattened for the first time this year at 54 days, more than a week longer than in June 2018. Fort Worth remained the exception with the DOM at 43 days and showed signs of trending lower.

Slightly softer affordability pressure generated an uptick in Texas’ homeownership rate, increasing to 62 percent after three consecutive quarterly declines. The national rate held firmly higher at 64.2 percent. Homeownership is persistently lower in the major metros. Houston ranked the lowest in Texas at 58.8 percent followed by DFW at 59.4 percent. In contrast, Austin’s homeownership rate climbed above 59 percent after bottoming out at 54.1 percent in 2017. San Antonio’s rate surpassed the state level at 63.8 percent and has been relatively stable over the past two years.

Continued concerns about global economic growth and trade uncertainty pulled interest rates down for the eighth consecutive month. Economic fundamentals at the state and national level, however, remain healthy and stable. Interest rates could fall further after the Federal Reserve’s rate cut. The ten-year U.S. Treasury bond yield fell to a two-and-a-half-year low of 2.1 percent, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate dropped to 3.8 percent. Texans capitalized on lower rates, pushing mortgage applications for home purchases up 15.6 percent YTD. Refinance mortgage applications, which are more sensitive to interest rate fluctuations, have nearly doubled over the past six months.

Prices

The Texas median home price reached a record high $239,000, growing at an annual rate of 3.9 percent. While still increasing, home prices are no longer soaring at double-digit growth levels. Texas’ median price for new and existing homes trailed the respective national median by $21,700 and $41,400.

The Texas Repeat Sales Index slowed to 3.3 percent YOY growth during the second quarter, the slowest rate in more than five years. The Central Texas boom maintained more than 4 percent growth in Austin and San Antonio, pushing the median price above $313,000 and $229,700, respectively. Fort Worth’s median price reached a record high $242,700 amid 3.8 percent growth in the repeat sales index. The Houston index decelerated to 2.4 percent growth as the median price hovered around $240,000 for most of this year. Home price moderation was most apparent in Dallas where the index slowed to just 1.9 percent and the median price inched upward to $289,600.

Click here for the full report.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, and Paige Silva (August 6, 2019)

    https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-In…

DFW Real Estate, Housing Market, Title Insurance, Title Company

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Updated Seller’s Disclosure Notice Effective September 1st

The Texas Real Estate Commission has released an updated Seller’s Disclosure Notice for mandatory use Sept. 1.

It’s available for voluntary use immediately.

As of Sept. 1, 2019, the new Seller’s Disclosure Notice has questions in paragraphs 6, 7 and 8 relative to floodplains, and includes definitions of the various categories according to FEMA.  In addition, questions about previous claims for flood damage or assistance from FEMA or SBA are also included.

The notice must also disclose a seller’s knowledge of water damage not due to a flood event and requires a seller to disclose whether a prior flood-related insurance claim was filed with an insurance provider or the seller received aid from FEMA.

Click here for the red-lined seller’s disclosure notice and click here for the blank seller’s disclosure notice.

 

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Effective September 1, 2019: Texas Title Rate and Rule Revisions

Please note that beginning September 1, 2019, there will be a change to the basic premium rate for title insurance including an overall adjustment of -4.9 percent.

The Texas Commissioner of Insurance has issued an order adjusting the basic premium rate for title insurance and amending R-5, R-8 and R-20.

Summary of Changes

Basic Premium Rate – Includes an overall rate adjustment of -4.9 percent, a starting base rate of $25,000 and three new rate tiers for policies with face values over $25, $50 and $100 million.

Refinance Rate Amendment – Amends Rate Rule R-8 to provide for a 50 percent credit within the first four years and a 25 percent credit between four and eight years.

Simultaneous Issue Discount Expansion in R-5 – Allows a simultaneous issue rate credit for 90 days on transactions $5 million and above. The premium is $100 for each loan policy under these circumstances.

Construction Credit Expansion in R-20 – An extension of the credit for developers of large construction projects from one year to two years with a simultaneous issue rate for the loan policy.

These new rates will go into effect on all transactions that close (the date the papers are signed) starting on September 1, 2019.

Read the Order and View the Amendments

These changes are outlined in TDI’s adoption order. The revised rate chart and amended rules can be found in the following exhibits:

  • Exhibit A – Basic Premium Rates; Calculation for Policies in Excess of $100,000 with Examples
  • Exhibit B – (R-5) Simultaneous Issuance of Owner’s and Loan Policies
  • Exhibit C – (R-8) Loan Policy on a Loan to Take Up, Renew, Extend, or Satisfy an Existing Lien(s)
  • Exhibit D – (R-20) Owner’s Policy After Construction Period

Republic Title Online Resources

Please visit our website for additional online resources including:

As always, please feel free to contact your escrow officer if you have any questions about the new rates.  If you would like printed rate cards or need help using our online calculator, please contact one of business development representatives.

14 First-Time Homebuyer Mistakes To Avoid

Here is some great advice for the first-time homebuyer.

Buying your first home comes with many big decisions, and it can be as scary as it is exciting. It’s easy to get swept up in the whirlwind of home shopping and make mistakes that could leave you with buyer’s remorse later.

If this is your first rodeo as a homebuyer or it’s been many years since you last bought a home, knowledge is power. Along with knowing what issues to avoid, it’s important to glean first-time homebuyer tips from the pros so you know what to expect and what questions to ask.

First-time homebuyer mistakes

Here are 14 common first-time homebuyer mistakes, along with first-time homebuyer tips on how to avoid them:

  • Looking for a home before applying for a mortgage.
  • Talking to only one lender.
  • Buying more house than you can afford.
  • Moving too fast.
  • Draining your savings.
  • Being careless with credit.
  • Fixating on the house over the neighborhood.
  • Making decisions based on emotion.
  • Assuming you need a 20 percent down payment.
  • Waiting for the ‘unicorn.’
  • Overlooking FHA, VA and USDA loans.
  • Miscalculating the hidden costs of homeownership.
  • Not lining up gift money.
  • Not negotiating a homebuyer rebate.
  • 1. Looking for a home before applying for a mortgage

    Many first-time buyers make the mistake of viewing homes before ever getting in front of a mortgage lender. In some markets, housing inventory is still tight because there’s more buyer demand than affordable homes on the market. And in a competitive market, you could lose a property if you aren’t preapproved for a mortgage, says Alfredo Arteaga, a loan officer with Movement Mortgage in Mission Viejo, California.

    How this affects you: You might get behind the ball if a home hits the market you love. You also might look at homes that, realistically, you can’t afford.

    What to do instead: “Before you fall in love with that gorgeous dream house you’ve been eyeing, be sure to get a fully underwritten preapproval,” Arteaga says. Being preapproved sends the message that you’re a serious buyer whose credit and finances pass muster to successfully get a loan.

    2. Talking to only one lender

    This one is a biggie. First-time buyers might get a mortgage from the first (and only) lender or bank they talk to, potentially leaving thousands of dollars on the table.

    “A good mortgage loan officer can look at your situation and diagnose any potential roadblocks ahead to give you a clear understanding of your home-buying options,” Arteaga says.

    How this affects you: The more you shop around, the better basis for comparison you’ll have to ensure you’re getting a good deal and the lowest rates possible.

    What to do instead: Shop around with at least three different lenders, as well as a mortgage broker. Compare rates, lender fees and loan terms. Don’t discount customer service and lender responsiveness; both play key roles in making the mortgage approval process run smoothly.

    3. Buying more house than you can afford

    It’s easy to fall in love with homes that might stretch your budget, but overextending yourself is never a good idea. And with home prices still rising, this is easier said than done.

    How this affects you: Buying a home that exceeds your budget can put you at higher risk of losing your home if you fall on tough financial times. You’ll also have less wiggle room in your monthly budget for other bills and expenses.

    What to do instead: Focus on what monthly payment you can afford rather than fixating on the maximum loan amount you qualify for. Just because you can qualify for a $300,000 loan, that doesn’t mean you can afford the monthly payments that come with it. Factor in your other obligations that don’t show on a credit report when determining how much house you can afford.

    4. Moving too fast

    Buying a home can be complex, particularly when you get into the weeds of the mortgage process. Rushing the process can cost you later on, says Nick Bush, a Realtor with TowerHill Realty in Rockville, Maryland.

    “The biggest mistake that I see (first-time buyers make) is to not plan far enough ahead for their purchase,” Bush says.

    How this affects you: Rushing the process means you might be unable to save enough for a down payment and closing costs, address items on your credit report or make informed decisions.

    What to do instead: Map out your home-buying timeline at least a year in advance. Keep in mind it can take months — even years — to repair poor credit and save enough for a sizable down payment. Work on boosting your credit score, paying down debt and saving more money to put you in a stronger position to get preapproved.

    5. Draining your savings

    Spending all or most of their savings on the down payment and closing costs is one of the biggest first-time homebuyer mistakes, says Ed Conarchy, a mortgage planner and investment adviser at Cherry Creek Mortgage in Gurnee, Illinois.

    “Some people scrape all their money together to make the 20 percent down payment so they don’t have to pay for mortgage insurance, but they are picking the wrong poison because they are left with no savings at all,” Conarchy says.

    How this affects you: Homebuyers who put 20 percent or more down don’t have to pay for mortgage insurance when getting a conventional mortgage. That’s usually translated into substantial savings on the monthly mortgage payment. But it’s not worth the risk of living on the edge, Conarchy says.

    What to do instead: Aim to have three to six months of living expenses in an emergency fund. Paying mortgage insurance isn’t ideal, but depleting your emergency or retirement savings to make a large down payment is riskier.

    6. Being careless with credit

    Lenders pull credit reports at preapproval to make sure things check out and again just before closing. They want to make sure nothing has changed in your financial picture.

    How this affects you: Any new loans or credit card accounts on your credit report can jeopardize the closing and final loan approval. Buyers, especially first-timers, often learn this lesson the hard way.

    What to do instead: Keep the status quo in your finances from preapproval to closing. Don’t open new credit cards, close existing accounts, take out new loans or make large purchases on existing credit accounts in the months leading up to applying for a mortgage through closing day. Pay down your existing balances to below 30 percent of your available credit limit, and pay your bills on time and in full every month.

    7. Fixating on the house over the neighborhood

    Sure, you want a home that checks off the items on your wish list and meets your needs. Being nitpicky about a home’s cosmetics, however, can be short-sighted if you wind up in a neighborhood you hate, says Alison Bernstein, president and founder of Suburban Jungle, a real estate strategy firm.

    “Selecting the right town is critical to your life and family development,” Bernstein says. “The goal is to find you and your brood a place where the culture and values of the (area) match yours. You can always trade up or down for a new home; add a third bathroom or renovate a basement.”

    How this affects you: You could wind up loving your home but hating your neighborhood.

    What to do instead: Ask your real estate agent to help you track down neighborhood crime stats and school ratings. Measure the drive from the neighborhood to your job to gauge commuting time and proximity to public transportation. Visit the neighborhood at different times to get a sense of traffic, neighbor interactions and the overall vibe to see if it’s an area that appeals to you.

    8. Making decisions based on emotion

    Buying a house is a major life milestone. It’s a place where you’ll make memories, create a space that’s truly yours, and put down roots. It’s easy to get too attached and make emotional decisions, so remember that you’re also making one of the largest investments of your life, says Ralph DiBugnara, president of Home Qualified in New York City.

    “With this being a strong seller’s market, a lot of first-time buyers are bidding over what they are comfortable with because it is taking them longer than usual to find homes,” DiBugnara says.

    How this affects you: Emotional decisions could lead to overpaying for a home and stretching your budget beyond your means.

    What to do instead: “Have a budget and stick to it,” DiBugnara says. “Don’t become emotionally attached to a home that is not yours.”

    9. Assuming you need a 20 percent down payment

    The long-held belief that you must put 20 percent down payment is a myth. While a 20 percent down payment does help you avoid paying private mortgage insurance, many buyers today don’t want (or can’t) put down that much money. In fact, the median down payment on a home is 13 percent, according to the National Association of Realtors.

    How this affects you: Delaying your home purchase to save up 20 percent could take years, and you could limit cash flow that could be put to better use maximizing your retirement savings, adding to your emergency fund or paying down high-interest debt.

    What to do instead: Consider other mortgage options. You can put as little as 3 percent down for a conventional mortgage (note: you’ll pay mortgage insurance). Some government-insured loans require 3.5 percent down or zero down, in some cases. Plus, check with your local or state housing programs to see if you qualify for housing assistance programs designed for first-time buyers.

    10. Waiting for the ‘unicorn’

    Unicorns do not exist in real estate, and finding the perfect property is like finding a needle in a haystack. Looking for perfection can narrow your choices too much, and you might pass over solid contenders in the hopes that something better will come along. But this type of thinking can sabotage your search, says James D’Astice, a real estate agent with Compass in Chicago.

    How this affects you: Looking for perfection might limit your real estate search or lead to you overpaying for a home. It can also take longer to find a home.

    What to do instead: Keep an open mind about what’s on the market and be willing to put in some sweat equity, DiBugnara says. Some loan programs let you roll the cost of repairs into your mortgage, too, he adds.

    11. Overlooking FHA, VA and USDA loans

    First-time buyers might be cash-strapped in this environment of rising home prices. And if you have little saved for a down payment or your credit isn’t stellar, you might have a hard time qualifying for a conventional loan.

    How this affects you: You might assume you have no financing options and delay your home search.

    What to do instead: Look into one of the three government-insured loan programs backed by the Federal Housing Administration (FHA loans), U.S. Department of Veterans Affairs (VA loans) and U.S Department of Agriculture (USDA loans). Here’s a brief overview of each:

    FHA loans require just 3.5 percent down with a minimum 580 credit score. FHA loans can fill the gap for borrowers who don’t have top-notch credit or little money saved up. The major drawback to these loans, though, is mandatory mortgage insurance, paid both annually and upfront at closing.

    VA loans are backed by the VA for eligible active-duty and veteran military service members and their spouses. These loans don’t require a down payment, but some borrowers may pay a funding fee. VA loans are offered through private lenders, and come with a cap on lender fees to keep borrowing costs affordable.

    USDA loans help moderate- to low-income borrowers buy homes in rural areas. You must purchase a home in a USDA-eligible area and meet certain income limits to qualify. Some USDA loans do not require a down payment for eligible borrowers with low incomes.

    12. Miscalculating the hidden costs of homeownership

    If you had sticker shock from seeing your new monthly principal and interest payment, wait until you add up the other costs of owning a home. As a new homeowner, you’ll pay for property taxes, mortgage insurance, homeowners insurance, hazard insurance, repairs, maintenance and utilities, to name a few.

    How this affects you: Bankrate.com survey found that the average homeowner pays $2,000 annually on maintenance services. Not having enough cushion in your monthly budget — or a healthy rainy day fund — can quickly put you in the red if you’re not prepared.

    What to do instead: Your agent or lender can help you crunch numbers on taxes, mortgage insurance and utility bills. Shop around for insurance coverage to get compare quotes. Finally, aim to set aside at least 1 percent to 3 percent of the home’s purchase price annually for repairs and maintenance expenses.

    13. Not lining up gift money

    Many loan programs allow you to use a gift from a family, friend, employer or charity toward your down payment. Not sorting who will provide this money and when, though, can throw a wrench into a loan approval.

    How this affects you: “The time to confirm that the Bank of Mom and Dad is ready, willing and able to provide you with help for your down payment is before you start home shopping,” says Dana Scanlon, a Realtor with Keller Williams Capital Properties in Bethesda, Maryland. “If a buyer ratifies a contract to purchase a home with an understanding that they will be getting gift money, and the gift money fails to materialize, they can lose their earnest money deposit.”

    What to do instead: Have a frank discussion with anyone who offers money as a gift toward your down payment about how much they are offering and when you’ll receive the money. Make a copy of the check or electronic transfer showing how and when the money traded hands from the gift donor to you. Lenders will verify this through bank statements and a signed gift letter.

    14. Not negotiating a homebuyer rebate

    The concept of homebuyer rebates, also known as commission rebates, is an obscure one to most first-time buyers. This is a rebate of up to 1 percent of the home’s sales price, and it comes out of the buyer agent’s commission, says Ben Mizes, founder and CEO of Clever Real Estate based in St. Louis.

    How this affects you: Homebuyer rebates are available in most U.S. states, but not all. Ten states prohibit homebuyer rebates: Alaska, Alabama, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon and Tennessee.

    What to do instead: If you live in a state that allows homebuyer rebates, see if your agent is willing to provide this rebate at closing. On a $300,000 home purchase, this can be a $3,000 savings for you so it’s worth asking.

    Source: Deborah Kearns https://www.bankrate.com/real-estate/first-time-homebuyer-mistakes/