Costs To Buy a Home in Texas

Do You Know What It Costs To Buy a Home in Texas?

It’s one thing to want to own your own home…it’s another to be able to afford one. Here is a run-down of estimated costs to buy a home in Texas you must consider…

Understanding Down Payments and PMI

PMI – Private Mortgage Insurance

“PMI is a type of mortgage insurance that buyers are typically required to pay for a conventional loan when they make a down payment that is less than 20% of the home’s purchase price. Many lenders offer low down payment programs, allowing you to put down as little as 3%. The cost of that flexibility is PMI, which protects the lender’s investment in case you fail to repay your mortgage, known as default. In other words, PMI insures the lender, not you.

PMI helps lenders recoup more of their money in a default. The reason lenders require the coverage for down payments below 20% of the purchase price is because you own a smaller stake in your home. Mortgagers are lending you more money up front and, therefore, stand to lose more if you default in the initial years of ownership. Loans insured by the Federal Housing Administration, or FHA loans, also require mortgage insurance, but the guidelines are different than those for conventional loans (we’ll cover that later).”

– Source: Investopedia

 

The following example is for a $360,000 home with a 3.5% interest rate conventional 30-year mortgage. Includes $8000 property taxes and $2000 annual home owners insurance (both are estimates…amounts vary depending on home).

 

 

5% Down

10% Down

15% Down

20% Down

Purchase Price

$360,000

$360,000

$360,000

$360,000

Down Payment

$18,000

$36,000

$54,000

$72,000

Loan Amount

$342,000

$324,000

$306,000

$288,000

Monthly Payment:

 

 

 

 

      Principal & Interest

$1535.7

$1454.90

$1374.08

$1293.25

      Property Taxes

$666.67

$666.67

$666.67

$666.67

      Home Owners Insurance

$200

$200

$200

$200

      PMI

$213.75

$202.50

$191.25

$0

Monthly Payment

$2616.15

$2524.07

$2431.99

$2159.92

 

NOTE

You can play with a calculator on Investopedia.

 

 

All the Home Buying Costs Explained

It’s one thing to want to own your own home…it’s another to be able to afford one. Here is a run-down of estimated costs you must consider when buying a new home.

Read: https://www.consumerfinance.gov/owning-a-home/loan-estimate/

NOTE

Please note these are estimates only and will change based on the area where your home is located, price of home, lender requirements, negotiated terms on sales contract, etc.

The following estimated example is for a $360,000 home with 5% down payment with a 3.5% interest rate conventional 30-year mortgage. Includes $8000 property taxes and $2000 annual home owners insurance (both are estimates…amounts vary depending on home).

 

Item

Estimated Cost

Your Cost

Purchase Price

$360,000

 

Down Payment (5%)

$18,000

 

Loan Amount

$342,000

 

TO MAKE AN OFFER & INSPECT HOME

**Earnest Money (typically 1% of purchase price)

$3600

 

**Option Fee (negotiable)

$500

 

Home Inspection

$450-800

 

Termite/Pest Inspection (required by lender)

$125-150

 

Pool Inspection (if home has pool)

$150-200

 

HVAC Inspection (usually recommended on older homes)

$160-200

 

Total to Get Started

$46755450

 

PREPAIDS

Prorated Taxes

$2000

 

Prorated Home Owners Insurance

$2858.33

 

Pre-Paid Interest

819.86

 

Total Prepaids

$5678.19

 

CLOSING COSTS

Title Insurance (calculate) sometimes paid by the Seller

$2202

 

HOA Transfer Fee + Capitalization Fee

$300

 

Loan Application Fee

$300

 

Credit Report Fee for Lender

$65

 

Appraisal Fee

$400

 

Loan Origination Fee (negotiable)

$3600

 

Survey

$425

 

Flood Certificate

$40

 

Doc Prep Attorney Fee

$200

 

Settlement Fee

$250

 

Recording Fees

$50

 

Underwriting Fee

$200

 

Tax Service Fee

$75

 

Total Closing Costs

$8107

 

TOTAL TO PURCHASE HOME

Down Payment

$18,000

 

Earnest Money, Option Fee, Inspections

$5050

 

Prepaids

$5678.19

 

Closing Costs (minus earnest money & option fee already paid)

$4007

 

Sellers Contribution to Closing Costs**

$0

 

Total Paid at Closing

$32,735.19

 

TOTAL TO BUY HOME

 $37,785.19

 

OTHER THINGS TO CONSIDER

Moving Costs

 

 

Yard Maintenance Equipment

 

 

New Appliances (W&D and Refrigerator)

 

 

Repairs to Home

 

 

Updates to Home

 

 

Window Coverings (new construction homes)

 

 

 

You may be able to negotiate for the Seller to pay part of the Closing Costs up to a certain percentage (read more), depending on the loan. This could reduce your total amount to buy a home by a few thousand dollars. However, in a HOT real estate market, most Sellers will not agree to this.

 

 


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