The Lone Star State has one of the most diverse real estate markets in the country. Ranked second in size behind only Alaska, Texas has a diverse climate, terrain, and demographic composition that make it almost another country. From the desert western half that spans from Oklahoma’s border to the Rio Grande River border with Mexico to the Gulf Shore and into the Hill Country of the eastern half of the state, Texas has a piece of property for anyone who wishes to live affordably in any size city imaginable. While much of the Texas population resides in cities over 100,000 people, there are thousands of privately owned ranches and farms that comprise 84% of the land area within the state’s borders. Even with some of the hottest summers in the country, few Texans own more than one home. Hot summers are enjoyed by visiting expansive inland lakes and the shore of the Gulf of Mexico.
Many people who move to Texas are pursuing employment in or near one of the two major metropolitan areas. Consisting of 254 counties, Texas offers every real estate range and type conceivable. The range of existing home prices is misleading because of the expanse of the 142,000,000 acres that comprise the state. Texas has the second cheapest real estate in the country.
- Average Listing Price: $169,646
- Median Sales Price: $173,000
- Rank: 49th
- Highest Listing Average: Borden County – $5,890,585
- Lowest Listing Average: Lincoln – $24,900
Even though Texas ranks 49th in average home prices in the United States, there are numerous multi-million dollar home listings that artificially inflate certain county averages. Turnover of ownership in the cities offsets many extreme listings in the rural areas to bring the state average into an affordable range.
Texas home prices have remained relatively steady throughout the sales prices realignment that has impacted other states because of the presence of major employers, varied industries, and stability within the rural population. Texas is made up of 84% of the 142 million acres of land privately owned. As city dwellers move in and out of the state, that volatility is offset by homesteads that are passed down through generations of families.
Popular Texas Cities
Texas boasts four of the top ten fastest growing states. The state has grown more than any other as proven by the 2010 Census that will be used to shift four seats in the House of Representatives to the state of Texas because of the population shifts that have happened since 2000.
Tarrant County, which includes the cities of Fort Worth, Arlington, and most of the mid-cities in the Dallas-Fort Worth Metroplex, is the fastest growing county in the state of texas. The average listing price in Tarrant County is $237,578.
Williamson County, which includes the city of Austin, is ranked second for population growth. As the capital of Texas and the home to extension campuses of nine universities, Austin is a favorite destination for people of all ages. The average home listing prices in Williamson County is $252,721.
Dallas County, which encompasses Dallas and the southeastern cities in the Metroplex, is the third fastest growing in the state of Texas. With a median home price of $322,424, Dallas is one of the most expensive areas for home purchases.
Comal County, which includes the city of San Antonio, is fourth in population growth in recent years because of its central location and tourist industry that supports the area. The media home price is $368,540, more than double the state median price of $173,000.
Harris County, which includes Houston, the fourth largest city in the United States, is growing steadily because of the various industries that call Houston home. The median house price is $251,084 which is still above the state average, but more affordable than other cities within the state.
Approximately 85% of the people in Texas live in an urban setting. This shift in the population has resulted in extensive road construction and infrastructure improvements within the city areas. Rural areas are less populated which has caused some economic challenges for those who wish to remain outside the cities.
Types of Texas Mortgages Available
Thirty-Year Fixed Rate
Payoff term of 30 years according to a fully amortized schedule with a set interest rate and a level payment that remains the same throughout the loan. Substantial tax deduction is realized in the early years of the loan because the interest is front loaded. Inflation and market changes do not impact the monthly payment amount. Home equity amounts build more slowly than with other mortgage types.
Fifteen-Year Fixed Rate
Very similar to the 30-year, but with a payback period one half the length. This mortgage is ormally offered with a lower interest rate than the 30-year mortgage. Home equity amounts rise more quickly because of the amortization schedule. Total interest paid during the life of the loan is much less than the 30-year loan.Monthly payment amount is substantially higher than the 30-year mortgage.
Adjustable Rate Mortgage Loan (ARM)
The interest rate for this type of loan is based on the Treasury bill short-term rates. Changes in the interest rate are determined by the lender. Initial interest rates are lower which can make the home more affordable in the first one to five years of the mortgage. Few limits are placed on the amount of increases that can be encountered as interest rates rise.
Loan with an initial period in which the borrower may opt to make a payment that includes interest but no principle. The fully-amortized payment will be required each month after the agreed period has passed.
Mortgage offered through the London Interbank Market network with lower rates than most standard ARM loans. Borrowers are protected from market changes in interest rates and each loan carries periodic caps and limits on increases.
Older homeowners seeking to leverage their home equity with a credit line, monthly payouts, or a lump payment sum can obtain a reverse mortgage anytime after they turn 62 years old. This mortgage is different from all others in that it never needs to be paid back unless the home is sold, or the resident moves or passes away.
When terms of the original loan must be changed to match the market, a new loan contract is written. Many homeowners wish to pay lower interest rates, access home equipty, or want to lock in a fixed rate because of favorable market conditions.
Specific Texas Laws
Beginning in January 2004, all non-exempt bankers who wish to issue mortgages within the state of Texas must register with the Savings and Loan Department of Texas.
One anomaly within the mortgage division of the financial sector within Texas is that more mortgages have been denied approval in the higher income brackets than in the lower income brackets. The Mortgage Insurance Company of America (MICA) has determined that fewer people in the lower income brackets are as likely to default on a mortgage.
FHA Mortgage Loan Rates
The Federal Housing Association sets this group of rates below the average conventional mortgage loan rate of a similar term.
Interest-Only Mortgage Loan Rates
Loan terms will state that the debtor is allowed to make an interest-only payment, which will include all interest due without any principle for some portion of the term of the loan. When the agreed period comes to an end, the borrower must make fully amortized payments of principle and interest.
Adjustable Rate Mortgage Loan
Available for terms of one, three, five, seven, or ten years, these mortgages offer lower initial interest rates that can allow certain buyers to purchase a more expensive home. When the adjustable term of the loan expires, a new mortgage is negotiated for the outstanding balance at market interest rates. Most lenders have established payment caps and limits on interest increases to prevent unaffordable jumps in interest.
Fixed Rate Mortgage Loan
Every payment is equal throughout the entire contract.
Jumbo Loan Rates
All loan amounts above $417,000 are considered jumbo and their interest rates are set 0.75 of a basis point above conforming interest rates since the loans are not guaranteed or insured. The financial institution will most likely sell the mortgage after the contract is written.
Super Conforming Interest Rate
These rates are still within the range of conforming rates but are higher as defined by the (FHFA) – Federal Housing Finance Agency. Location of the property will determine if these rates are used. Major cities often require these interest rates.
Conforming Interest Rates
Across Texas, conforming interest rates will differ according to the county where the property is to be mortgaged. Certain criteria are set by the Federal Housing Finance Agency and these rates must meet each criteria.
The deed of trust and mortgage are the primary legal instruments in Texas. Most foreclosures are completed in a 60-day period of time.
The state of Texas follows non-judicial processes for all foreclosures. When the borrower defaults on the loan, the lender formally notifies the debtor with letters through certified mail. The community is notified through local newspaper announcements. Auction sales are standard. There is no right of redemption.
The debtor is notified that he has twenty days to repay any delinquent payments or the foreclosure will proceed. Twenty one days prior to the foreclosure auction the foreclosure notice will be filed with the county clerk, sent to the borrower, and posted on the door of the county courthouse. The first Tuesday of any month is set aside for auctions of foreclosed property. The courthouse steps will be the location of the auction. Anyone at all may bid on the property including the lender, whose bid will cancel out the some or all of the balance due.
When a Judicial Process is Needed
When there is no existing power of sale, a judicial process is used for the foreclosure proceedings. The court will then declare a property to be foreclosed, and an auction will be held where the highest bidder obtains ownership of the property.
Texas is a non-recourse state with deficiency judgments. A lender is allowed to seek deficiency judgments for the amount of difference between the fair market value and the outstanding balance on the loan at the time of the default.
From large ranches located in the western portion of the state, to stately mansions outside of Austin or Houston there is a property suitable to anyone who would like to live in Texas. Few states have so much variety in soil structure, terrain, weather, and housing types. Research is required to find the areas where property taxes are affordable. Without a state income tax, Texas exacts taxes of other types to support the state’s functions. Large metropolitan areas are surrounded by suburbs that offer larger lots where houses are nestled in neighborhoods with people from every walk of life. Visit every area prior to purchasing a home and you may never leave after you decide to buy.