Texas is the second largest state in America, situated in the South Central area of the country. It is popularly known for its great music, delicious food, and several famous monuments and landmarks to explore, such as the State Capitol, The Alamo, and The Big Bend National Park.
The state has a robust approach to cultural identity as it already has established cowboy customs in Texas that have become a part of the place’s identity. Visitors have every opportunity to immerse themselves in an authentic western experience through bull riding, rope steering, and saddle bronc riding. It is also the home of the country music genre.
Texas is a great state to move and buy a home in as it has strong job markets, economic growth, affordable home prices, and low property taxes, making it an attractive investment opportunity for anyone looking to buy a home. If you want to make an investment, Texas is the perfect place to scout for your first home investment.
Let us walk you through a detailed house buying process for first time buyers in Texas.
8 Steps to Buying a House in Texas
Save for a Down Payment
This is where the home buying process starts. When you already have the down payment to buy a home, the process becomes more accessible as this is a primary requirement for you to close a deal with your chosen property.
Mortgage lenders typically pay the remaining balance. In Texas, you are only required to contribute 20% of the market price, which would come down to $63,163 for a $315,815 home, which is the typical price range of homes in Texas.
However, you have the choice to decrease your down payment through loans, like VA and FHA loans, that allow you to provide 0% and 3.5% of your home’s purchase price, respectively. In addition, conventional loans let you put up a down payment for as low as 3% to 5%, but the exact percentage of the loan you can get still depends on the lender.
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As you purchase your homes with payment plans ranging from 0% to 20%, anything less than the latter comes with some risk of paying more than you should. You have to remember that you are borrowing money, so you have to be mindful of the interest rates while you think you are availing the money-saving down payment terms, which often narrow down to a lesser percentage.
Take a look at the comparison of a 5% downpayment and one in 20%. The cost is much higher when you pay less for your down payment as you pay more interest over the duration of your loan.
Find a Great Real Estate Agent in Texas
Buying a home is a big purchase, which could cost you more if you don’t have any idea about the home buying process, especially on down payments, negotiation techniques, closing process navigation, and loan applications to get you great deals with the cost of your first home.
With extensive investments, it is still a big thing to cut costs in any way you can, and getting a real estate agent helps you save money for your other future house expenses.
Getting a real estate agent guides you through your house buying process without a biased eye, which will help you meet your standards and preferences while staying within your budget. They could also recommend title companies and inspectors to help you with the overall home buying process in Texas.
Although you have to choose an agent with credibility and great reviews from other clients to get your money’s worth of their service and, at the same time, the house you are going to buy. You need to pay attention to their years of experience, number of transactions, good reviews, and complaints. It would be best if you were careful when choosing your realtor.
Get Pre-Approved for a Mortgage
In Texas, you are only required for a downpayment, and the mortgage will pay for the remaining balance of your house buying process. In getting a pre-approval letter for a mortgage, the loaning amount varies depending on your financial qualifications.
The down payment percentage you choose also contributes to the amount of money the lenders will let you borrow to buy your house. Your selected payment plan distinguishes your ability to pay off the balance. The higher the down payment, the higher the loaning amount will be granted. Also, an important note, most sellers in Texas will require a pre-approval letter before showing their house.
Choose the Right Location
During your house buying process in Texas, the location is a vital part to focus on as the prices vary from one city to another, even neighborhoods in Texas.
Typically, the price of a house in this state comes to an estimated amount of $315,815. If this doesn’t fit your budget, you still have other cities or neighborhoods in Texas to choose from. Choosing a location is often based on a subjective decision, which can differ from the buyer’s preferences and personal desires. Still, objectively, they choose sites based on nearby amenities or neighborhood demand.
Of course, everyone wants to be part of a safe, clean, and thriving neighborhood, but it will always come down to one’s vibe preference.
Start House Hunting in Texas
Make a checklist of everything you want in a home during your home buying process in Texas. It will also be a big help if you arrange these preferences based on your priorities. The top of the list must contain the items that are most important to you. This will help you separate your necessities and luxuries.
Make an Offer
You will be guided by your real estate agent on writing a compelling offer that elevates your chances of the homeowners selling the house to you. However, the Texas house market goes through seasonal changes in which, some months, homes stay on the market for 60 days while the busier months put homes on a quick pedestal wherein they get snatched up more quickly.
In a competitive market, you should make an offer that is above the actual listing price, regardless of the house’s condition. If the market is at its slow months, you could make an offer below the asking price and make negotiations at that point.
You can expect acceptance, rejection, or a counteroffer in a negotiation. If the seller responds to your requested price with a counteroffer, you can increase your offer amount to the extent of your budget or be flexible with your move-in date.
You have to make sure to give and take with the seller to have a smooth exchange. Otherwise, move to your house buying process and keep looking for homes that align with your preferences and budget.
Inspections and Appraisals
There is an existing Texas legislation that requires sellers to disclose all of the property discrepancies to interested buyers to integrate into the perceived value of the home during negotiation if the buyers decide to purchase the house. This is one of the qualifications to look for when you buy a house in Texas.
However, some establishment issues can go for so long unnoticed until severe damage has occurred, so homebuyers are strongly recommended to have the property undergo specialized tests before deciding to push through the other steps of buying a house in Texas procedure.
Appraisals estimate a property’s value by assessing its holistic attributes. Mortgages are granted with appraising the property a homebuyer intends to purchase, which aims to ensure lenders that the home you are planning to buy is worth the loan money you are applying for.
Close on Your New Home!
Once you have decided on a home to purchase, you are now at the final step of your house buying process. It’s time to close on your new home! To close on a home in Texas, you’ll need to set a meeting at the title company to settle the paperwork of your closing cost.
On the closing date, allot about an hour to review all the clauses of several legal documents before signing them. This is the final step in the process of buying a house in Texas, which is also essential in finalizing your loan application and title transfer.
After completing your loan application, the house deed, the promissory mortgage note, and disclosure statements, you are ready to pay your agreed house cost to the title company. You must know how much you are paying for the lenders’ fees, title and escrow charges, and prepaid costs such as property taxes and homeowners insurance.
Frequently Asked Questions:
First-time home buyers need to have money set aside for a house down payment ranging from $9,474 and $15,790 since the typical home in Texas is valued at $315,800.
You also need a pre-approval mortgage letter, as most homeowners or sellers will only show their houses to homebuyers with a pre-approval letter to show their eligibility to make a big financial purchase. These two are basically your way to being a first-time home buyer in Texas.
Texas has a down payment assistance program called TX Smart Home Buyer Program for flexible payment requirements.
The biggest challenges for a first-time home buyer when going through a home buying process in Texas narrows down to not hiring a real estate agent to familiarize themselves with a huge variety of options.
Additionally, not knowing exactly how to weigh available options because of the lack of knowledge in the real estate industry is also a drawback for first time homebuyers.
Buyers should be particular with the house foundation as it could go downhill from there once this has been overlooked. The roof condition should also be a priority, along with possible water and plumbing issues, as these can be expensive to repair.
What should first-time home buyers expect to pay in closing costs and other fees associated with purchasing a home?
Lender fees, title and escrow charges, property taxes, homeowners’ insurance, and pest inspection. You can also include real estate commissions, and record filing.