What you need to know about buying a home in Texas

What you need to know about buying a home in Texas

Sona Sulakian
 | 
What do Beyonce, Matthew McConaughey, Jamie Foxx, Selena Gomez have in common? They all own homes in Texas.

Besides housing attractive people, Texas has no income tax, live music, and even NASA. What’s not to like?

Texas is one of the hottest real estate markets right now. People are moving to Texas in droves, especially Californians. In 2019, Texas welcomed 563,945 new residents, with the highest number (86,164) migrating from California. In fact, many businesses are relocating to Texas, one of the latest being Uber. 

Those moving to Lone Star State are mainly fleeing the rising costs in big cities, such as Los Angeles, New York City, and Chicago. These residents are flocking to the Dallas and Houston areas, respectively, 200,966 and 176,110 new residents in 2019. 

For buyers, interest rates are at historic lows. So if you’re thinking of moving, this year may be the right time to buy or sell a home. 
For sellers, there aren't as many properties on the market as there usually are, so you will likely net a decent profit. And it hopefully won't take forever.

If you’re a Texas native looking for a place of your own or just someone looking to migrate South, here’s what you need to know about buying a home in Texas.

Assess your finances.

Before you buy a home, check your credit score and figure out how much you can afford to spend on a home. Generally, a score of at least 620 is considered good. Generally, you will need a down-payment of at least 20%, which you can use to calculate what price range you can afford.
Many financial assistance programs exist in Texas. The My First Texas Home Program offers mortgage loans at 30-year, fixed interest rates and provides down payment and closing cost assistance. The My Choice Texas Home program is a similar program for those not buying a home for the first time. The Texas Mortgage Credit Certificate Program offers additional savings to Texas first-time homebuyers on their federal income taxes. You can find additional mortgage assistance programs for 2020 on the Federal Housing Administration’s website.
Right now, the median home value of single family homes and condos in Texas is $215,658, up 3.6% over the past year and predicted to rise 4.5% over the next year.

Find a Real Estate Agent and start searching for a home.

You don’t need a real estate agent to purchase a home in Texas, but a real estate agent has knowledge about the local market and access to home listings and sales data that can help you assess your options and minimize errors. The real estate agent will help you find a home, but you can do some preliminary investigative work on Zillow. 
Have the property inspected and appraised. 

Even if you’ve found an impeccable home with no signs of exterior damage, there may be issues inside the home. Before finalizing your home purchase, have the property inspected and appraised. An appraiser will measure the property’s realistic value. An inspector will assess whether the property meets housing standards. 

According to the American Society of Home Inspectors, an inspector will look at the home’s heating system, central air-conditioning system, plumbing and electrical systems, insulation, and any visible structures of the home. Once the inspector has finished, you will be provided with a report about any damages or things to look out for. 

Do a thorough title search on the property. 

Through a title search, you check the ownership of a property over time to make sure the person selling you the home actually has full legal ownership of the home. If long ago someone transferred the property’s deed incorrectly or didn’t record a transfer in the public record, this missing link will raise a red flag for mortgage and insurance companies. 
You also want to make sure there’s no outstanding mortgages, liens, or easements on the property that might fall onto you as the buyer. A lien is a legal right against assets used as collateral to satisfy a debt, and an easement allows another property owner to access the property. Some properties have additional restrictions on what you can do with the property, such as homeowners’ association rules. 
Remember if you don’t do a thorough title search before you buy, title problems with the property will become your problems.

Purchasing title insurance is in your best interests. 

While Texas doesn’t require title insurance, it can protect property owners from future claims about unknown defects in the title to the property at the time of sale. Such claims can include fraud, unpaid property taxes, or forgery. 

There are two types of title insurance policies: a loan policy and an owner’s policy. Usually a mortgage lender will require you to buy a Loan Policy to protect themselves. The loan policy usually lasts until a loan is paid off. 

On the other hand, an owner’s policy lasts as long as you or your heirs own the property. You only pay for title insurance once when you buy the policy, but you can elect to add coverage later on. If you refinance your home, most lenders will require you to buy a new loan policy. 
Title insurance can be bought from licensed title insurers.    

You must draw up a contract in order to finalize your purchase. 

Unlike other states, having a real estate lawyer involved in your home purchase is incredibly common. This is because in order to finalize the purchase of your home, you must draw up a contract. The contract will lay out all the terms of the purchase arrangement, such as the price, contingency date, and more. Typically, both the buyer and seller are represented by practicing attorneys. 

Buying a home is a complex process that involves lots of paperwork and legal terms, especially in Texas. If you are in the process of buying a home and need a lawyer to draft your contract, LawChamps can match you with an experienced real estate attorney. 


This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.
Sona Sulakian

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