Moving to another place and settling down doesn’t come cheap! It requires a considerable investment of money and time, and often represents a massive change in your life. However, here’s why buying a home can be rewarding:
- Property prices increased in the United States by 20.9% as of March 2022 YoY. As your property’s price increases over the years, so will its value at the time of selling.
- Making your mortgage payments on time for your property allows you to grow your equity.
In this guide, we’ll learn about Texas’ real estate market, the steps to buying a property, the common challenges involved, and how to overcome them.
Texas Real Estate Market Overview
The median home price in the state of Texas was approximately $312,200 in 2022, which is much lower than the national median of $374,500. As per PwC and the Urban Land Institute, Texas has four of the top twelve markets with the highest house-building prospects.
With no state income tax, the fastest job growth in the US between 2021-2022, and an affordable cost of living, Texas is the place to be.
Current Market Trends in Texas
In Q1 of 2023, the median price for a property in Texas was $326,800, marginally higher than the $324,850 median price recorded for the same quarter of 2022. Additionally, demand for homes is outpacing supply in Texas.
Of the 15 highest-ranked metro real estate areas with long-duration home values in the United States, Texas has a record-setting nine spots. If you are looking to invest in affordable property that will bring great returns upon selling, then Texas is where you should be shopping.
Step-By-Step Guide to Buying a Home in Texas
Before buying a home, you need to consider a few things:
- Financial standing at the moment
Apart from having enough for the purchase, check if you have enough money to pay property taxes, closing costs, maintenance and the down payment. - Stable employment or reliable income history
Lenders will examine if you can pay your mortgage amounts based on your income history over the last two years and your expected income in the years ahead. - Managing loans
An FHA loan will require you to pay approximately 3.5% of the home’s value as a down payment. You can also opt for down payment assistance programs to finance your dream home.
Based on the data above, you can determine the ideal place to purchase your dream property. Once your sights are set on a certain area, you can begin taking the next steps.
- Opting for mortgage loans: If you don’t have enough saved up, mortgage loans can come to your rescue. Your mortgage amount will depend on your credit score, debt-to-income ratio, current drawn salary, and other factors.
- Hire a real estate agent: Competent real estate agents can match you with your ideal property. Once you’ve been pre-approved for a mortgage and begin your purchase, the agent can select the best neighborhoods to fit your needs.
- Choose the right time for a purchase: Spring and summer are considered peak seasons for home purchases, so you may face more competition from buyers to lock down your chosen property.
- Make a strong offer: A large upfront deposit, preferably in cash, creates a great impression. You can also consider making an earnest money deposit or a good faith deposit to indicate that you’re serious about purchasing the property.
- Opt for home insurance: The yearly insurance cost in Texas is $3,429. Most home insurance policies cover natural damages, explosions, and home thefts or vandalism.
- Conduct a title search: A title search refers to checking public records to confirm the owner of the property. The process may take a few weeks, but it will help you verify the owner’s details.
- Order inspections and repairs: With the help of a home inspector, you can check and see if there are any plumbing issues, HVAC system issues, repairs required to the roofing or foundation, and even pest control.
- Final Steps: After checking the condition of the home following any repairs and other essential work, sign the final documents and make the required payments to receive the keys to your fabulous new home!
Managing Your Finances During the Home-Buying Process
While you’ve probably allocated a budget for your upcoming purchase, you may have missed out on some key details that could increase your costs:
- The down payment can range from 3.5% to 20%, based on your type of mortgage loan, whether FHA-based or conventional.
- While there is no state property tax in Texas, local authorities do collect property taxes. Texas property taxes are currently the seventh-highest in the country. However, you can opt for a service like Bezit to file a property tax protest in case your home has been incorrectly appraised.
- You will have to set aside some cash for home insurance. As of September 2023, Texas's average annual insurance costs are $4,142.
- Finally, account for multiple closing costs, including escrow deposits, title insurance costs, appraisal and credit report fees, moving costs, and more.
Texas Property Taxes and Exemptions
The good news is that Texas does not impose a state property tax. However, local governments collect property taxes and set the rates for local services. If you feel that the value that the appraisal district places on your property is too high, you can file a tax protest using Bezit’s services for just $19.99. We have helped over 500 customers save thousands of dollars on their Texas property taxes.
In a Nutshell
Texas is the second-largest state in the USA and has a low unemployment rate, a favorable climate, and numerous other factors that make it a great choice for relocation. We hope this guide helps you in exploring the potential of home ownership in Texas, where it is well worth buying your dream home!