Located about 30 miles west of Dallas, Fort Worth is home to approximately 895,000 people. The city’s history goes back to the mid-1800s, and the median age of Fort Worth residents today is 31. Fort Worth, which is part of the fourth-largest metro area in the country, covers about 300 square miles, and the Trinity River flows through the city. Local attractions include the National Cowgirl Museum and Hall of Fame, Japanese gardens and the historic downtown area.
The Fort Worth housing market is currently a seller’s market, which means buyers should expect to compete for its relatively affordable homes. The median sales price for homes rose 0.9% year-over year to $230,000 in June 2019, well below the national median sales price of $277,700 reported by the National Association of Realtors in May. The number of homes that sold in Fort Worth actually decreased by 8.2% year-over year, with homes selling in an average of just 33 days, while active listings rose by 5.3%.
While homes in Fort Worth are more affordable than the average home nationwide, there are other costs and requirements of homeownership that can have an impact on your purchase. Here’s what you need to know if you are considering buying a home in Fort Worth.
Real estate property disclosure forms: Home sellers in Texas must disclose what they know about the condition of their property. A disclosure form must be delivered before the purchase contract is considered valid. If sellers don’t provide a disclosure form, buyers can terminate the agreement and get their deposit back within seven days. Federally mandated lead-disclosure forms are also required. Depending on where the house is located and its systems, additional disclosure forms may also be required.
Judicial or non-judicial foreclosure state: If a homeowner defaults on their mortgage in Fort Worth, the process depends on the language in their mortgage paperwork. Unlike some states, where the process is either judicial — handled by the court system — or non-judicial, Texas law allows for either process depending on the mortgage agreement between a lender and borrower. If the mortgage has a “power of sale” clause, the process will follow the steps in that clause. If not, a judicial foreclosure can occur. Most often, a non-judicial foreclosure takes place, in which the homeowners have 20 days after receiving a notice of foreclosure to make payment arrangements or the property will be auctioned. If there’s a gap between the amount owed on the loan and the sale price in a foreclosure, lenders are allowed to demand payment of the deficiency. However, the amount of the deficiency is limited to the difference between the fair market value of the property when it’s sold and the balance owed.
Community property state or equitable distribution: Texas is one of nine community property states in the country, which generally means that property acquired during a marriage is considered owned by both spouses, regardless of the name on the title or who paid for it. This, of course, has an impact during a divorce, but buying a house in a community property state can also affect a mortgage application. When applying for government-guaranteed VA, FHA and USDA loans in Texas and other community property states, you’ll need to include the minimum debt payments of your spouse as part of the debt-to-income ratio, even if your spouse is not part of the loan application.
Attorney vs escrow state: While some buyers may want to hire a real estate attorney to help them navigate the homebuying process, closings in Texas are typically handled by a title agent or an escrow officer, according to the Texas Real Estate Commission. Title and escrow agents, licensed by the Texas Department of Insurance, research issues related to the transfer of your property and handle the closing. Certain complex situations may require the use of an attorney.
Texas is one of a handful of states that doesn’t impose real estate transfer taxes. However, a proposal to overhaul the state tax system includes the possibility of a real estate transfer tax. The majority of Texans oppose a property transfer tax, according to Texas REALTORS.
Small fees are imposed for recording property transactions by Tarrant County, where Fort Worth is the county seat. These include a $5 records management fee and similar fees for document copies.
On the other hand, property taxes can be high in Texas. Tarrant County, according to Tax-Rates.org, has among the highest property taxes in the nation, at an average of 2.37% of the assessed home value. The median annual property tax in the county is $3,193, based on the median home value of $134,900.
Some homeowners in Fort Worth are eligible for property tax exemptions. While exemptions that can reduce taxes for seniors, veterans and people with disabilities are typically set by the state or by local law, according to the National Association of Counties, property taxes are set locally. In Fort Worth, homeowners may apply for a homestead exemption through the Tarrant Appraisal District. A property tax deferral is also available if a homeowner’s assessed value rises by more than 5% over the previous year. Additional exemptions are available for seniors older than 65, people with disabilities, disabled veterans, surviving spouses of veterans and surviving spouses of first responders killed while on duty. Farmers and ranchers may also qualify for an alternate method of property tax appraisal.
You can find out more about property tax exemptions in Fort Worth here.
For borrowers who choose a conforming, conventional loan, the maximum amount that can be borrowed for a one-unit property in Fort Worth is $484,350. A conforming loan meets the limit for loans that will be purchased by government-sponsored entities Fannie Mae and Freddie Mac. The loan limits are reviewed annually and may change based on market conditions.
Buyers in Fort Worth can get support for their home purchase though both state and local programs designed to encourage homeownership. Eligibility for down payment assistance and other programs varies and sometimes is restricted to first-time buyers or by household income. Here are a few programs among the many options for buyers.
The Fort Worth Homebuyer Assistance Program provides up to $20,000 in mortgage assistance for first-time homebuyers purchasing a residence within the city limits. First-time buyers include people who have not owned a home during the previous three years. In some cases, displaced people may be considered first-time buyers.
To qualify, buyers must:
The statewide My First Texas Home program provides low-interest mortgage loans and down payment and closing cost assistance up to 5% of the loan amount. Borrowers can use an FHA, VA, USDA or conventional loan for financing.
To qualify, borrowers must be first-time buyers, veterans or have not owned a home during the previous three years. Homebuyers must meet income limits and a limit on the purchase price of the home. In addition, borrowers must have a credit score of at least 620.
The Texas mortgage credit certificate provides a dollar-for-dollar tax credit on the homeowners’ federal income tax for a portion of the mortgage interest they pay, as long as they own the home. The maximum credit is for 20% to 25% of the annual mortgage interest paid.
To qualify for this tax credit, borrowers must participate in the My First Texas Home loan program. All guidelines for that program must be met. In addition, borrowers must pay a $500 issuance fee at the closing.
When you’re ready to apply for a mortgage in Fort Worth, it’s smart to shop around for the lowest mortgage rate. Mortgage interest rates vary daily and from lender to lender, so comparison shopping can not only save you money on the rate, it can also lower your monthly mortgage payment. Follow these tips when you start shopping.
Contact at least three lenders on the same day
Mortgage rates fluctuate daily based on the broader market. This means you can be quoted a rate one day that is no longer available by the next. To get an accurate picture of your options so you can truly compare the offers you receive, you should contact at least three lenders, more if possible, on the same market day.
Give each lender the same information
Ask each lender for a quote on the same type of mortgage, such as a 30-year, fixed-interest-rate mortgage. This allows you to more easily compare rate quotes. Make sure you give each lender the same information about your credit score and household income and other finances, as that will impact your quotes, too. If the lenders you speak with do not have the same information, you may not be getting accurate quotes.
Add up all the lender fees to confirm the costs
Aside from the interest rate, there are other costs you should keep in mind. For example, look for any origination or application fees and add those into your overall calculations. See if any of the lenders are offering you a discount. Adding up all the costs gives you a realistic idea of what your total price tag will be.
Know when to lock in the rate
A rate lock allows you to lock in a quoted interest rate for a certain time period, so that, if interest rates rise, your own rate will not be affected. A longer rate-lock period is better, as it gives you more time to close on a home without worrying about rates spiking. Some lenders offer a float-down provision in case interest rates drop after you receive your quote.
The information in this article is accurate as of the date of publishing.