Whether you are a first-time buyer, a new resident to Texas, or a seasoned homeowner who has plans in moving to Texas, you need to know what you can afford and a big part of that equation is the closing costs that you need to consider when making a home purchase.
Contrary to popular belief, buying a home in Texas won’t only require you to pay your home’s down payment as there are many other costs involved when buying a home. If you want your home-buying experience to smooth and stress-free, it’s vital that you’re aware of what these costs are.
It’s not a simple as basing your calculations on the offer price that you have in mind or even the final sale price for that matter. There are numerous monetary requirements and costs to consider during the offer and completion process. Knowing what these costs are is going to be important so you can prepare a budget ahead of time and ward off financial stress as you’re buying a home in Texas.
So, here is a list of 5 costs to consider when buying a home in Texas.
1. Down Payment
The largest upfront cost you will incur in any real estate transaction will usually be the down payment on the purchase of a home. Depending on financing options and purchase conditions, a down payment can range from 3.5% to 20% or higher, depending on if you get an FHA or conventional mortgage loan. If you are a Veteran or a surviving spouse of a Veteran, you may qualify for a no down payment VA loan.
Before choosing a home in Texas, make sure to ask the amount of the down payment. In fact, this should be one of your considerations when picking a property in Texas.
2. Property Taxes
Ranked as the sixth highest in the country, Texas’ effective property tax rate costs the typical homeowner about $1,500 a year. Property taxes is one of the taxes which people tend to miss when calculating a rough estimation of the buying costs. Property taxes are not a fixed tax, they vary depending on the value of the home, so the rate goes up for more expensive properties.
Aside from inquiring about the down payment, don’t forget to ask about the amount of property tax you’re going to pay as well. Even if you’re only going to buy a small or cheap home in Texas, the property tax you’ll pay can still cause a lot of stress, especially if you’re unaware of it.
3. Homeowner Insurance
Ranked as the seventh most expensive state in the country for home insurance, Texas’s homeowners’ annual premiums for homeowner’s insurance is around $1,945. How much you will have to pay for home insurance depends on your home’s size, location, and a multitude of other factors, so it’s best to confirm rates if you are on a tight budget.
Paying for homeowner insurance is important because this offers dwelling coverages, personal property coverages, and guest medical protection. Also, paying for homeowner insurance when you buy a home will enable you to save a lot of money in the long run.
4. Closing Costs
Loan origination fees, an escrow deposit, appraisal fees, title insurance, survey fees, credit report fees are all costs that you may have to pay as soon as you have closed the deal which means as soon as the seller has accepted your offer and has signed the deal and handed you the original property papers, you have to pay this cost.
Fortunately, Texas does not impose any recording fees on the transfer of the real estate which some States typically charge somewhere around $.55 for each $500 of value.
5. Movers Closing Costs
Finally, we come to the often-overlooked moving cost which a lot of people forget to factor in their home buying budget. Although you can go through the trouble of packing and unpacking all your stuff yourself, the thought of a whole home move can be daunting when you actually sit down and consider how many truckloads of stuff you will have to move, and the time involved.
No doubt you will be looking to hire good junk haulers to get rid of all those unwanted items during your move. However, it goes without saying that most people would also rather have the peace of mind of simply delegating all moving chores to a company that’s an expert at moving in the area and does it on a daily basis.
Regardless of where you’re moving from, it’s important to include movers closing costs in your budget. Hiring professionals to help you in your move is a cost-effective investment as you’ll be able to save time and effort from packing and transporting your valuables on your own. Because of their experience, hiring a moving company can also help you save money because they’ll make sure that none of your valuables are damaged or lost during the move.
Some real estate agents also have relations with movers and trash pickup services. So, do ask about them for a recommendation too.
Buying a home in Texas is an exciting experience but this can also cost a lot of stress, especially if you’re not financially prepared for this endeavor.
If you’re looking forward to starting a brand-new life in Texas, make sure that you take note of the information presented in this article. Your home-buying experience in Texas will be one for the books if you’ve properly budgeted for it.