BUYING PROPERTY

with

THE L&W TEAM

ARE YOU THINKING OF BUYING A HOME?

From country homes on farm land to luxury waterfront homes, you need a Realtor with local market experience. Our agents at Land & Water Team are leaders in the local East Texas Real Estate market. With over a decade of experience we know the land and the lakes because we work here, we live here and we play here. We're dedicated to welcoming everyone into our community and finding their dream property. We are able to match your desires to find the right property for you and can advise you on property features that matter when buying a property in our area.

LOCAL KNOWLEDGE EQUALS BETTER RESULTS.

Here are a few steps and items that you should consider when buying a home.

STEP 1

Get pre-approved by a local lender that knows the area you're buying in.

They are fantastic when it comes to buying unique properties in the region you’re searching for. No one knows their way around better! Ask our team for a list of local lenders to help you get started!


STEP 2

Find a Local Agent that specializes in the area you're looking for.

You have found a team of great Realtors here at Land & Water Team. Most of the properties in our market area are a little on the unique side. The majority of the homes are not traditional lot and block builds as you would find in the big cities. In our area, we still have the small-town charm with the most modern conveniences just a short drive away. These are unique properties and our agents are versed in how unique these properties are, as well as the many of the neighborhoods in the area. Each home, and the land it sits on, is one of a kind. Comparing them, and finding the best fit at the best price, is difficult unless you are working with these properties daily. We specialize in Henderson, Van Zandt, Kaufman, Rockwall, Anderson, and Navarro Counties. The Land & Water Team not only lives here but also works with these unique properties each day. There is no better teaching than experience in the area you’re searching in.

 

STEP 3

Search for your dream house.

Now comes the fun part. You now get to start shopping on the market for a new home, while knowing how much you can afford. When shopping for a new home, it is imperative that you list the features that are most important to you in your new home (fireplace, fenced-in yard, pool, number of beds and baths, new appliances, etc.). It helps both you and your realtor in the search by showing realistic properties in your price range, with all of your prioritized amenities. Establishing your criteria early on will save time by not showing homes that do not qualify to your liking. Keep in mind that some of your top amenities might be sacrificed if an incredible value is available and the location is right.

 

STEP 4

Writing an Offer.

Before you ask your realtor to submit an offer on your new-found dream property, it is important to note that your first offer sends a message to the seller. An initial offer that is too low may cause the seller to fire back with a higher price, or not respond at all. Also note that bargaining sellers down to their lowest price may make them less likely to cover repair costs, or help as much when it comes to closing.

STEP 5

Earnest Money Deposit, Option Fee & Period.

Earnest money is essentially a show of good faith to the seller that you’re serious about your offer on their property, and plan to go ahead with the home purchase. After an offer has been accepted and all terms have been agreed upon, the next step would be to deposit the earnest money as agreed in your contract. It is usually 1% of the sales price of the property in cash. This cash is held in an escrow account by your agent and gets applied to your closing costs at the end of your transaction. The option fee is a fee given directly to the seller if you would like to facilitate the “option” to have any types of inspectors go onto the property. This allows you to see things that need to be fixed and negotiate them into the contract with the seller. The option period is normally 7 days. During this time, you will schedule all inspections that you would like done before closing.

STEP 6

Inspections, Title, Survey & Appraisal

Always make sure to check your inspections. Even if the seller has had a pre-listing inspection, you still have the option period to set up your inspections to catch anything that may have been missed the first time. A certified inspector will look for any electrical, roofing, appliance, or structural issues that a home may have. You will receive a list of these problems, and any major drawbacks should be addressed with the seller before closing. Buyers can ask for a price discount if multiple repairs are needed, or the seller can fix the issues or cover some closing costs. When it comes to the title, you will need to use a title company or a specialized attorney to run a title search on your property. This will check for any issues having to do with the title such as back taxes, liens, a clouded title, etc. that may affect the transaction. A property survey confirms the property’s boundary lines and legal description. It will also determine other restrictions, easements, or inclusions on the property. A property can technically be surveyed at any point in time. However, it is always important to know the boundaries of your property in the home-buying process. An appraisal report is a professional analysis done by an appraiser, ordered by your lender, used to estimate the value of a home and the property based on current market conditions. It is necessary to validate a property’s worth to you and your lender. If a property does not appraise to the value of the price that you and your seller have agreed upon, you will have to negotiate a new price. Buyers should always conduct a final walkthrough to make sure any agreed-upon issues have been resolved by the seller and that nothing was overlooked.

STEP 7

What to expect on Closing Day

Closing on a home after an offer has been accepted can take anywhere from 2-8 weeks on average. All inspections, appraisals, title companies, and surveys are being completed during this time. On closing day, the ownership of the property is officially transferred to the buyer. This day consists of transferring funds from escrow, providing mortgage and title fees, and updating the deed of the house to your name. Come the closing day, you and the seller sign all the necessary papers to officially seal the deal and make you the owner of your new home. Remember this date, it is now your new Homeiversary!

STEP 8

Happy Life

After everything is said and done, you are the owner of a new property. Now calling your new place home. You can breathe and sleep better knowing that your local lenders and real estate agents did everything in their power to make this process as easy for you as possible. Congratulations!

HELPFUL FACTS ABOUT HOME FINANCING

We've compiled a list of 6 minimal standards that you'll likely need to meet when looking to buy a home in Texas. That way, once you've found the perfect property, you can breeze through the process knowing you're financially prepared.

  • Credit Score Requirements

    It is common for first-time homebuyers in Texas to be concerned that their credit score may be too low to qualify for a mortgage. If you're wondering what credit score is required to buy a house in Texas, keep in mind that the minimum score varies from lender to lender. If you have a strong credit score, you should be able to receive financing easily. Verse, if you have a bad credit score, you may have a difficult time acquiring a mortgage. However, a bad credit score does not always stop you from obtaining a mortgage loan. Lower credit scores represent a risk to lenders. You may be able to qualify by offsetting the risk in other ways. Such as having a co-signer, or making a larger down payment.


    According to Experian data, the average credit score in Texas is 656. However, a score of 620 or more is regarded as “good” by most Texas mortgage lenders. Here's what to expect in terms of minimum credit requirements for purchasing a home: 


    • Conventional home loan: A minimum credit score of 620.
    • FHA home loan: A minimum credit score of 580. Although, some lenders might allow a score as low as 500 with 10% down.
    • USDA home loan: A minimum credit score of 640.
    • VA home loans: The U.S. Department of Veterans Affairs doesn't set a minimum credit score, but most lenders require 620.

    To be clear, just because you can get a mortgage with a poor credit score does not imply you will. Lenders examine factors other than your credit score. They will also look over your credit reports, paying special attention to your recent credit history. Checking your credit score before applying for a home loan might help you determine whether you fulfill the lender's standards for purchasing a home. This might also give you an idea of the types of interest rates you're likely to get when applying for a mortgage.

  • Income Requirements

    A popular question among first-time homebuyers is, "How much money should you make to buy a house?" According to hsh.com, you should earn just under $64,000 a year to afford a property in the Dallas area at the median price of $269,900. In Austin, you’ll need an income of $98,496 to afford that $485,000 median price point. Of course, there are no hard and fast rules here, but often, employment and a consistent income are vital requirements when deciding if you're ready to become a homeowner.


    Before granting your mortgage application, it is common for mortgage lenders to ensure that your income can sustain a mortgage payment. As a result, most lenders require 24 months of consecutive employment before you qualify for a home loan. This also applies to self-employed mortgage borrowers, in which case you must present your business and personal tax returns for the previous two years. Tax returns must reflect continuous income over the last 24 months. In general, most Texas mortgage lenders will ask for the following information: 


    • Proof of employment.
    • Financial history (Tax returns, pay stubs, and W-2s for the previous two years).
    • Monthly income.
    • Recurring debts.
    • Bank statements and information about other assets.
    • Photo ID.
    • Rental history.
    • Year-to-date profit and loss statement, if you're self-employed.

    More importantly, specific mortgage loan programs have special household income requirements. For example, with USDA, your total household income must be at or below 115% of the median household income for the area, and if you're applying for Fannie Mae's HomeReady or Freddie Mac's Home Possible, your income must not exceed the limit set for your area.

  • Down Payment Requirements

    Your down payment is the initial portion of the purchase price of your house that you pay at closing. Your mortgage lender will pay the remaining balance. Mortgage lenders in Texas often need you to deposit 20% of the purchase price as a down payment. That works out to $57,850 for a $289,252 property, which is the average home value in Texas. However, you have several options for lowering your down payment. Government-backed loans, such as V.A. and FHA loans, allow you to contribute 0 percent and 3.5 percent of the purchase price of your home, respectively. Even conventional loans allow for down payments of as little as 3%. Although, the minimum varies by lender. 


    Fortunately, various down payment assistance (DPA) programs are available to Texas citizens. If you meet the requirements for one of these programs, you may be eligible for a grant or a second mortgage to cover your closing costs or down payment. Some of the common DPAs in Texas include: 


    • My First Texas Home

    The My First Texas Home program offers first-time buyers and veterans a 30-year, low-interest mortgage of up to 5% of the loan amount. The first mortgage must be from a lender approved by the Texas Homebuyer Program, and eligible borrowers must have a credit score of at least 620. Home purchase price and income limits apply and vary by county. 


    • My Choice Texas Home

    The My Choice Texas Home program offers a first mortgage with an option to add down payment assistance of up to 5%. Down payment assistance comes as a 30-year, 0% interest second mortgage. This program is available to first-time and repeat homebuyers with credit scores of 620 or better. Home purchase price and household income limits apply and vary by county.


    • TSAHC Home Sweet Texas Home

    The Texas State Affordable Housing Corporation (TSAHC) gives eligible homebuyers a grant or a deferred forgivable second loan through its Home Sweet Texas Home Loan Program. To qualify, the borrower must have a credit score of at least 620. Home purchase price and household income limits apply and vary by county.





  • Pre-Approval Letter

    A mortgage pre-approval letter is an offer to lend you money to purchase a property up to a particular amount. It demonstrates to sellers that you are a serious buyer with the financial means to make an offer on a home. Most Texas sellers will want to see a pre-approval letter before showing you their home. At this time, you are not required to choose a lender. But it is advisable that you compare interest rates and pre-approval amounts from multiple lenders to ensure you're getting the most satisfactory terms possible when purchasing your Texas house. 


    To get pre-approved for a mortgage, most lenders require you to fill out an online mortgage application and provide facts about your financial condition. To determine your mortgage pre-approval amount, they will consider the following factors: 


    • Total Monthly Income

    Lenders want to know that you make enough money each month to cover your mortgage payments. Most lenders prefer that your monthly housing bills be less than 28% of your monthly income. 


    • Recurring Debts

    Lenders also consider your other debts, such as credit cards, student loans, vehicle loans, and personal loans. This information determines your debt-to-income ratio (DTI), which is your entire debt (including any potential mortgage) divided by your total income. While some lenders will approve mortgages with DTIs as high as 43 percent, it is preferable to keep your DTI around 36 percent. As a result, you should pay off some of your other bills before qualifying for a mortgage in Texas. 


    • Cash Reserves

    It is common for Texas mortgage lenders to want to see that you have enough cash in the bank to make your down payment and closing charges without depleting your financial reserves altogether. While this varies by lender, most expect you to reserve enough money to meet two mortgage payments, including insurance and taxes.

  • Determine How Much Home You Can Afford

    The competition among home buyers can be severe. Buyers who plan ahead of time are more likely to win. Knowing how much you want to spend each month on housing puts you in a powerful position— you'll know when to push and when to go on to another place. Budget for all aspects of the home-buying process, such as: 


    • How much money do you wish to put down as a down payment? 
    • Closing costs to be expected. 
    • Your desired mortgage payments per month.

    It is common knowledge that home costs do not stop with the mortgage payment. There are numerous expenditures that are particular to homeownership. You need to understand these expenditures and where they fit into your future budget because the last thing you want to do is buy your dream home only to find out you can't afford it. Below are some of the significant costs associated with homeownership, especially in Texas:


    • Mortgage Insurance: Private mortgage insurance (PMI) is required on all home loans (excluding VA loans) with a greater than 80% loan-to-value ratio. FHA loans demand a mortgage insurance premium (MIP) regardless of the down payment level. Mortgage insurance costs 0.50 percent to 1.00 percent of the loan amount, depending on your loan type.
    • Homeowners Insurance: Homeowners insurance is not optional; you must have it if you have a mortgage. The average cost of homeowners insurance is roughly $1,000 per year.
    • Property Tax: Property taxes are the most expensive additional expenditure connected with having a mortgage. Property tax rates vary significantly by zip code. In addition, your lender will set up an escrow account in which a portion of your monthly payment will be used to pay for your homeowners' insurance and property taxes.
    • Home Appraisal and Inspection: The home appraisal is an additional cost borne by the buyer before closing. In Texas, the typical cost of a home appraisal is between $300 and $500. Even if you're buying a new house, a home inspection is strongly advised. Depending on the square footage, you can have your new home inspected for $300–$500.

  • Know the Available Loan Programs

    Almost nine out of ten house buyers utilize a mortgage to acquire their property. You're probably going to as well. That's why it's critical to understand the many mortgage options available to you.


    • Conventional Loans: These loans need a 3% down payment and are often appropriate for those with a solid income, some money saved up, and a credit score of 620 or above.
    • FHA Loans: These loans need a 3.5 percent down payment and are available to persons with poor credit.
    • USDA Loans: Designed to encourage homeownership in rural regions, these mortgages are backed by the U.S. Agriculture Department.V
    • VA Loans: Available to current and former United States military members, VA loans allow buyers to acquire a home with no down payment.
    • FHA 203k Loans: 203k Loans are a form of FHA loan that provides funding for the purchase of a property and additional funds for home upgrades. With a 3.5 percent down payment, a credit score of 620 is required.
    • Home Possible and HomeReady Loans: Fannie Mae and Freddie Mac developed the Home Possible and HomeReady loan programs to assist low-income first-time homebuyers with low down payment options. You will only need a 3% down payment if your credit score is at least 620. They do have income constraints. Your household income cannot exceed 100 percent of the region's median income (AMI).

    It is also essential to learn more about the various mortgage interest rates available when looking to buy a house in Texas using a mortgage. A fixed-rate mortgage, which means you will have the same interest rate for the life of the loan, and an adjustable-rate mortgage starts with a low introductory rate that changes throughout the loan duration.

Ready to take the first step in buying a property?

Get in touch with us today to get started.

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Client Testimonials

  • We highly recommend Valerie. She is very knowledgeable & professional. We're thankful that she was always there to help us in any way that she could. She helped our family find a great 30-acre farm to build our dream house on, she was there to help on every step of the way and made the process seamless.

    -Yolanda & Omar Gomez

  • Valerie helped me find the right home for our family. She also helped get me pre-qualified with a great lender. I feel we got a great deal on the house due to her negotiation skills. She was available to me 24/7 and answered all the silly questions first time home buyers have. I consider her a friend now, not just a realtor.

    -Michael

  • I'm beyond blessed that Valerie Bahm was sent to me. She did an amazing job with helping me get into my dream house. She had to deal with a lot of stuff, and I have to say she handle it way better than anybody else would. I love my new house and I couldn't be happier and it's all thanks to Valerie.

    -Cortney Claiborne

  • Valerie is very knowledgeable about land in the area, I have used her several times in the purchase of land in Kaufman County. She is detailed and was able to help me select the property that would have the best return, she is detailed about land usage, agricultural, exemptions, mapping flood zones and zoning. I value her knowledge and will use her again!!

    -HGI