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Steps to Buy houses in Texas – What we need to know

Getting a new house can be an overwhelming experience and it is also one of the most important investments that you will make. It is a major endeavour that requires knowledge and experience. These steps might be helpful before sealing the deal for the new house.

Step-1: Check the credit score

First of all, check the credit score. The buyer will receive a lower rate of interest if he/she has a higher credit score. The credit score can be checked by various credit reporting agencies.

1) FICO SCORE:

The lender uses this score to evaluate the buyer’s creditworthiness. FICO score is calculated by Fair Isaac & Co. and it ranges from 350-380.

2) Vantage Score:

Unlike the FICO score, it is not used to evaluate creditworthiness. Vantage Score is the credit score the buyer will see when he/she checks his/her score on the Consumer-Facing credit check website.

Step-2: Check how much house you can afford:

After the checking of credit score, the lender will inform the buyer how much money he will be able to get to buy the house. If the buyer plans to pay a 20% down payment, the lender generally recommends the buyer to buy the house that costs no more than three to five times of their annual household income.

Step-3: Get prequalified for your Mortgage:

Before searching for the home the buyer should get the approval for his mortgage. The mortgage banker needs some information such as financial information, the buyer’s income, and amount of savings. The lender will review this information and tell the buyer how much amount can be lent.

Step-4: Search for a good real estate agent:

Many people buy a house through online procedures while others prefer real estate agents. There are more benefits of buying through the agent as compared to buying the house by yourself. The real estate agent has an insight into the market. He identifies the new developments, buyer’s demand, and home value trends. The agent also recommends a competitive price for the house. Agents are also better negotiators /

Step-5: Home Search

Start the search for a house within your price range. While searching for the house the buyer should keep a check on the following things:

  • Cracks or any structural defects
  • Test the plumbing by running the shower to check the water pressure
  • Try the electrical system
  • Roof and exterior quality
  • Open the door and windows to check their functionality.

The buyer should take his time to search for the dream house. Meanwhile, the buyer should also work with the real estate agent to negotiate a fair offer. Once the price is final between the buyer and the seller then the house will go into escrow. Escrow is the time taken to complete all the remaining steps for buying the house.

Step-6: Schedule an Inspection

Usually, the inspection of the house is scheduled within a week of the contract being signed. The agent also recommends a trustworthy licensed inspector to the buyer. The inspector inspects the whole house. The buyer along with the agent can accompany the inspector so that he also gets a better understanding of the inner workings of the home. After the inspection, the buyer can open the negotiation with the seller if there are any major issues. The buyer can tell the seller to pay for the issues to get them fixed.

Step-7: Make an offer:

The agent will help you to make an offer based on Comparative Market Analysis (CMA). This calculation of the home’s market value is based on the price of the homes sold out recently in the same area. There are some other things to take into consideration when making an offer, such as Disclosure, Closing date, Contingencies and Earnest money.

Step-8: Secure Financing:

Even if the buyer has pre-approved, he still needs to take the following additional steps to officially submit the mortgage application. When the buyer will complete the following requirements, the lender then sends the buyer a “clear to close” command that means the lender has approved your purchase.

Loan Application

Now the buyer will officially apply for the loan. If the buyer works with the same lender that did the pre-approval, he will have some documents ready that are required for the application. The lender will require some remaining documents. The buyer should not delay so that the application can be closed without any delay.  The buyer can also choose to work with a new lender also.

Appraiser

The lender will hire an appraiser. The appraiser is a third party company member and is not directly associated with the lender. The appraiser is hired to provide an estimate of the value of the house you are buying. The appraisal will let the buyer know that the amount he is paying for the house is fair.

Step-9: Homeowners Insurance policy:

The buyer should opt for the policy that is the best for him. It is important to have proof of a homeowner’s insurance policy. Before closing.

Step-10: Close and Move:

On the closing day, the buyer should make sure to take the closing cost along with him. Once the paper is signed, the keys will be handed over to the buyer.

Buying House in Texas:

For buying a house in Texas, the required minimum credit score is 620. The greater the number is the better when it comes to your credit scores. The house to be purchased must be in Texas. The buyer must meet the income and loan requirement for buying a house in the state. Also, the property should be a single-unit condominium. 

The houses in Texas are cheaper because the land is not as expensive as in other states. However, the taxes are comparatively higher but there are some property tax exemptions in the state offered by the government. 

According to the Federal Housing Administration (FHA), the minimum down payment for loan protection is 3.5%. The buyer will get FHA’s maximum financing offers at 96.5%. If the down payment is more than 5%, FHA will charge lower costs.

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Written by George K.

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