If you’re thinking of buying a home in Texas, it’s important to keep in mind that the Lone Star State has a variety of laws and state-specific costs. Consider the following regarding property disclosure, foreclosure, the division of property in divorce and home closings.
Home seller and buyer laws
What must sellers disclose? The Texas Real Estate Commission requires sellers to disclose certain information to buyers during the homebuying process. Sellers are required to provide buyers with a seller’s disclosure notice that alerts buyers to any issues or defects with interior and exterior walls, the roof, ceilings, doors, fences, plumbing, electrical systems and more.
How does foreclosure work? When a homeowner falls behind on their mortgage and repeatedly fails to make payments on their home loan, lenders may foreclose on a borrower’s property. Some states, referred to as nonjudicial states, allow the foreclosure process to proceed without involving the court system. Other states, known as judicial states, require lenders to file a judicial lawsuit in court to carry out a foreclosure. Texas allows foreclosures to proceed through either a judicial or nonjudicial process.
How is property divided in divorce? Texas is what is known as a community property state, which means that everything a couple acquires during the marriage is considered equally owned by both spouses. When a couple divorces, Texas state law mandates that assets, including property, debt and earnings, are divided 50/50 between the two parties.
Does a lawyer need to be present during a home closing? Many states, including Texas, do not require a lawyer to be present during the homebuying process. These so-called escrow states give homebuyers the option to work instead with escrow agents, who handle the process of transferring property from seller to buyer.
Upon closing, many states impose a transfer tax, which is based on the value of the property being purchased. Texas, however, is one of the 13 states that does not impose a real estate transfer tax during the homebuying process.
Additionally, there are no statewide property taxes in Texas. Instead, property taxes are determined and implemented on a local basis, so check with your county and city governments to determine the amount you will owe in property taxes for a home in Texas. In the city of Houston, for example, buyers can expect to pay a property tax of 63.875 cents for every $100 in assessed home value.
Although there are no statewide property taxes in Texas, the Texas state government does offer certain groups reductions and exemptions from paying local property taxes. Exemption programs exist for those age 65 or older, disabled persons who meet the disability guidelines set forth by the Federal Old-Age, Survivors and Disability Insurance Act, disabled veterans and surviving military spouses and children.
Conforming loan limits
The conforming loan limit across Texas is currently $484,350 for a single unit-home. This is the limit for a single-family residence in most areas of the U.S.
Conforming loans are mortgages that are eligible for purchase by government-sponsored enterprises Fannie Mae and Freddie Mac. National conforming loan limits are set at the beginning of each year by the Federal Housing Finance Agency (FHFA). Those with good credit can generally expect conforming loans to offer better interest rates, and as a result, lower monthly payments.