Buying a Home in Texas
Buying a home in Texas is similar to purchasing a home in some of the other states and very different from yet other states.
Texas is one of nine community property states. Generally speaking, a community property state is a state in which property accummulated during a marriage (other than by gift or inheritance or property owned by one spouse prior to the marriage), is equally owned by each spouse.
Texas homeowners may apply for a Homestead Exemption on their principal residence. A Homestead Exemption protects the home from most creditors; however, this does NOT include the homeowner's mortgage company, taxing authorities nor the noteholder of a home improvement loan (home improvement loans have to meet certain conditions for the lien to be valid). The Homestead Exemption also lowers property taxes on the property, by exempting a portion of the home's value from taxes.
FIRST THINGS FIRST . . . the preliminaries:
Whether you are moving within Texas or from another state, it would be a good idea to choose a Buyer's Agent, a Realtor who you feel confident in and who you feel you can work closely with, to guide you through the homebuying process. When you begin working with an agent, you will be asked to sign disclosure notices such as Information about Brokerage Services, a Residential Buyer/Tenant Representation Agreement and a Broker Notice to Buyer/Tenant. In most cases, buyer representation is free to the buyer.
It may help to make one list of things you want and a separate list of things you need in a home and let your Realtor know upfront, so they can focus only on homes that will be of interest to you. If you need and will only consider one-story homes, there is no point in looking at two-story homes.
Prioritize which things are the most important to you such as the neighborhood itself; size of home, number of bedrooms, other rooms (study, gameroom, other), size of yard, age of home, pool or no pool, one-story or two-story; and proximity to work, freeways, schools, hospitals, golf courses, shopping, etc.
If you will be working outside the home, it will probably be important to decide, before looking at homes, how far you are willing to drive to work and how long you are willing to spend in the car driving each day. In some larger cities, many people who live in the suburbs like to rely on a transit system for getting to and from work. Check with your Realtor for transit system information in a particular city.
Let your Realtor know what time frame you have to work with -- when you want or need to be in a home. If the home you choose is occupied, the seller will need time to move. Many sellers will be prepared to move on short notice. Just get things clarified upfront. If you will be looking at short sales, you may need to allow extra time to close (discusss with your Realtor). Short sales can be good deals, but they often require a lot of extra patience, time (sometimes months) and understanding. Foreclosures usually move along a little more predictably.
One good thing about a short sale is that the homeowner is normally still involved and will be providing a Seller's Disclosure Notice.
If you are purchasing a foreclosure, the bank is the owner and never lived there, so is not required to provide the Seller's Disclosure Notice. Before purchasing a foreclosue property, try to find out as much about the property as possible. Your Realtor may be able to provide you with information regarding things such as previous sales amount(s). If previous MLS information is still available, you may be able to find out about known defects of the property, age of certain updates and other information you would not otherwise know about. And, of course, the neighbors may be a good source of additional information.
Be sure, in any transaction, to understand when you will be allowed to do property inspections, who will be responsible for turning on utilities (you or the seller) and under what terms and conditions you will be able to withdraw from the contract and get your earnest money back.
Discuss with your Realtor what things could help or hinder resale of a property. These may vary by city. For example, a certain location within a subdivision may be fine with you, but is there anything about the location that may make the property harder to sell if you should decide to sell the property at a later date? Or, you may not have children in school, so schools may not be important to you; but it could be important when it is time to sell your property. In some cities, especially larger cities, school district, and even individual schools within a district, can affect resale values as well as how long it will take a property to sell. You can search for and compare all public schools in Texas at www.HAR.com/school.
Not all cities have zoning. Check with your Realtor about local zoning laws.
Crime statistics for different areas can be checked by calling the local police department. Another source is www.spotcrime.com/tx. In larger cities, obviously there will be more incidents of crime since there are more people. Go to www.txdps.state.us to search the Texas Department of Public Safety's database of registered sex offenders.
Before heading out to look at homes, one of the first things your Realtor will suggest is getting pre-approved (not just pre-qualified) - sellers will expect it, especially if you purchase a foreclosure or short sale. Waiting until you find a home and then getting pre-approved can cause you to loose the home you want. If another buyer likes the same property and is already pre-approved, that buyer may well have the advantage.
Your Realtor will probably be able to give you a list of experienced lenders known to give good service if you don't already have a lender lined up. Many buyers also check with their bank or credit union. Check to see if friends or relatives have had a good experience with a lender. Ultimately, who you choose is your choice. Compare interest rates and fees of at least two or three lenders and ask about any special loan programs they have available.
READY TO START LOOKING AT HOMES!
Once the preliminaries are out of the way, you are ready to look at homes! With the prices of homes being what they are and interest rates being at or near historical lows, 2011 should be a great time to buy a home!
Have fun and be sure to take notes on the different properties as you go. After you look at even three or four homes, features may start to run together. Let your Realtor know your thoughts on each home, as well. Before making a final decision, you may want to visit a particular home or homes a second time.
Once you decide on a home, ask your Realtor to do a market analysis for that home. You want to make sure it isn't overpriced for the area before you enter into a contract. If it's priced right, the seller may not be very negotiable on the price.
Before entering into a contract, buyers should ask for the Seller's Disclosure Notice which is a disclosure of the seller's knowledge of the condition of the property. It will also indicate if the current owner carries flood insurance. Flood insurance may be required by a lender, depending on where a property falls on the flood plain maps. If paying cash for a home, ask your homeowner's insurance agent if the home is in a flood plain and whether you should carry flood insurance. Many homeowners choose to carry flood insurance as a preventative, whether required by their mortgage company or not.
Ask if there are any exclusions - things the seller is taking with them that you may have assumed stayed with the property. It's much better to find out upfront and avoid possible disagreements later.
The offer is normally made using forms provided by the Texas Real Estate Commission, Texas Association of Realtors and/or the local Board of Realtors. The following is not a complete list, but some of the forms that may be used for making an offer on a single-family home, in addition to the disclosure forms mentioned previously, are:
- One to Four Family Residential Contract
- Third Party Financing Addendum for Credit Approval
- Notice to a Purchaser of Real Property in a Water District
- Addendum for Property Subject to Mandatory Membership in a Property Owners Association
- Environmental Assessment . . . Addendum
- General Information and Notice to a Buyer
- Inspector Information
- Information About Property Insurance
- Information About On-Site Sewer Facility
- Protect Your Family from Lead in Your Home
- For Your Protection: Get a Home Inspection
- Relocation Addendum (if applicable)
- Short Sale Addendum (if applicable)
- Origination fee
- Discount point(s)
- VA Funding Fee (VA loans only)
- Credit Report
- Document Preparation Fee
- Underwriting Fee
- Processing / Funding Fee
- Tax Service Fee
- Recording Fees
- Amortization Schedule
- Flood Certificate
- PMI or MIP Premium
- Mortgagee's Title Policy
- Escrow Fee
- Homeowner's Assoc. Transfer Fee
Information contained herein is believed to be accurate and correct; however, it is not guaranteed and should be verified. The information contained herein is general information only and no portion of it is intended to be considered as legal advice. An attorney should be consulted for any and all legal advice.