How To Buy A House In Texas ?
Congratulations! The Lone Star state has much to offer. Whether you’re buying a house to live in or buying your first investment property, you might be wondering what you need to know to get started, from the required credit score to down payment programs that might apply. Here is all the information you need to get started on your home buying journey.
Requirements To Buy A House In Texas
There are a number of steps you can take to get started when buying a home in Texas.
Take a deep dive into your finances.
The first stop on the home buying journey is to figure out how much house you can afford. The best way to do this is to assess how much money you have set aside for a down payment (more on that below) and how much you can reasonably afford in a monthly payment.
Get preapproved for a mortgage.
Once you think you know what your budget is, it’s time to talk to a mortgage lender about how much you can really afford once they have looked more closely at your financial situation and given you some information about interest rates and how they will affect your potential payment. You also should ask them about Texas-specific programs that might help you with your down payment, closing costs and taxes. (We offer some more insight below.) Believe it or not, it’s important to get your mortgage approval early in the process to help set your budget and show the seller that you have the funds to close the deal once you make the offer.
Find a local Texas real estate agent.
Not sure what part of town you want to live in? A local real estate agent can be an invaluable resource to give you the information you need to know about various neighborhoods. Also, they can help you assess the homes you’re looking at to make sure you find one that’s a good value, relative to the market. Make sure to ask for references, then ask them about their process in order to find a good personality fit.
Begin looking at properties.
Now comes the fun part! With a budget in mind, you can more realistically search for the homes in the neighborhoods you like. Your agent can give you all the information you need about the amenities, schools and more to help you make an informed choice. Many properties have online video tours so you can check out the house from the comfort of your couch.
Make an offer on the house you want.
Once you settled on the right property, your agent will help you create a written offer that covers all the important details, from the amount you’re offering to any contingencies, such as if you have a home to sell.
Seek a property inspection and appraisal.
It’s always important to have an independent third party do an official inspection. That’s because even the most perfect-looking house might have something lurking – and it could be expensive to fix, like a roof that needs replacement or a foundation that’s collecting water. An inspection will give you the peace of mind that the house is in good shape and/or give you the chance to negotiate the price to cover any necessary repairs.
Determine escrow and finalize your deal.
Texas is what’s known as an “escrow state,” which means that you’ll need to put down some money even before the deal officially closes. An escrow account keeps the money and documents safe with a third party as you finish your transaction.
What Do You Need To Buy A House In Texas?
Texas is a strong housing market as people flock to the state for its culture and wide variety of options, from small towns to bustling cities. And, that means that the competition can be tight. But don’t worry, you’re sure to find a home in your price range.
Of course, the amount of money you need to buy a home in Texas depends on your own financial situation, including how much house you can afford, your credit score, the down payment you can put down and the types of mortgage assistance programs you may qualify for.
The average credit score needed to buy a house in Texas ranges from 662 – 730, finds one study, but there may be programs available even if your score is lower. It’s important to remember that the higher your credit score, the more likely it is that you’ll qualify for the best mortgage rates.
For many of the programs mentioned below, you’ll need a credit score of at least 620, but to qualify for a government-backed Federal Housing Administration (FHA) loan, you only need a credit score of 580, and possibly even less if you can put down a larger down payment. Quicken Loans® requires a median FICO® Score of 580 or better.
How Much Down Payment For A House In Texas
You’ve probably heard the conventional wisdom that you need to put 20% down on a home in order to buy a house in Texas. Now, that can be wise advice when saving for a down payment because the more you put down, the more affordable your mortgage payment will be each month. And, by putting down at least 20%, you don’t have to buy private mortgage insurance, or PMI. That’s because the more of the house you personally own, the more likely you are to responsibly fulfill your obligation. However, there are a number of other programs designed to help you achieve the goals of home ownership with far less down.
One to ask about is a loan that falls under the the Federal Housing Administration (FHA) program, which only requires a down payment of 3.5%. If you qualify, you can also get a conventional loan with as little as 3% down. Those who are eligible for USDA or VA loans don’t need to make a down payment.
And every state also has different programs that are state-specific; for example, first-time cash home buyer programs in California are different from those in Texas. That’s why it’s important to work with a local source who can help you look into all your options.
One of the top first-time home buyer tips
is to research programs available for you to help make the down payment as affordable as possible. The Texas Department of Housing and Community Affairs has a number of programs that might be pertinent for you as a qualified borrower that you can achieve through a network of approved lenders. Three to consider are:
My First Texas House Program:
If you are a first-time home buyer (or haven’t purchased a home in 3 years) and have a credit score of at least 620, you might be eligible for this program. You’ll receive down payment and closing cost assistance on a 30-year, fixed-rate mortgage loan. You also might qualify for first-time home buyer tax deductions.
My Choice Texas House
This program is for any home buyer, not just first-time home buyers and has many of the benefits of the My First Texas Home Program, including down payment and closing cost assistance on a 30-year, fixed-rate mortgage loan. You’ll need a credit score of at least 620 and it is subject to income and purchase price limits, among other requirements.
Texas Mortgage Credit Certificate Program:
Another program for first-time home buyers, this one offers additional potential reductions on your federal tax bill. You can even combine with the My First Texas Home Program for even more savings, provided you qualify.
It’s important to note that not everyone to participate in every state program, particularly if the option requires a lien to be placed on the home by a state housing authority. However, lenders will typically always accept grants as sources of down payment funding because these don’t need to be paid back.
In addition to those programs, there might be others for which you would qualify. Be sure to ask your mortgage lender to explore all the potential options which can help make home ownership even more affordable.
Are you ready to start your house hunt? With this information on how to buy a house in Texas, you should feel confident about the upcoming journey. And be sure to check out these additional home buyer tips as you get started.
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