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Buying Property in the Texas Hill Country – Secrets to a successful purchase
The ABCs of buying Texas land and homes
Buying property in the Hill Country can be one of life’s most exciting events, but it can also be one of the most stressful. Working with a qualified, local real estate agent is critical to a successful transaction. Vintage Oaks Realty was formed on the promise of excellent service at every stage of the real estate buying process. From helping to research properties to negotiating with sellers to the final closing, our agents help anxious buyers become satisfied owners.
It all begins with the search
Whether buyers come into the process with a good idea of what they’re looking for in the Hill Country or need to be guided through the pros and cons of different types of land and home purchases, Vintage Oaks Realty’s agents are ready to be of service. The first step is conducting a thorough search. Our agents are aware of land and homes throughout the Hill Country, able to counsel buyers about important differences between raw and improved land and custom, semi-custom, and builder homes, and also have the inside track on new releases in local communities.
Hand holding to the very end
There are a multitude of steps between finding the right Hill Country property and signing on the dotted line, and Vintage Oaks Realty stays by buyers’ side every step of the way. From finding the right piece of land or home, to accepted offers, to inspections and appraisals, to the closing table, buyers can feel secure in knowing they are in good hands. When everything else has been taken care of, you’ll take a seat at the closing table to sign your documents, your deed will be recorded, and you’ll be a proud Hill Country property owner.
The CHALLENGES of buying in the Hill Country
This fast-growing area doesn’t sit still. Inventory in the Hill Country moves fast as more and more people discover the benefits of living here and relocate from other areas throughout the state and the nation. Working with Vintage Oaks Realty puts an expert in your corner to guide you through the buying process.
The benefits of living in the Hill Country
Whether you’re moving to the Hill Country for the convenience of being close to Austin and San Antonio, for the burgeoning job markets in cities like New Braunfels and San Marcos, or because you want to be surrounded by natural beauty, abundant charm, and great amenities, you’re about to discover what so many others know about the allure of the area. Vintage Oaks Realty is here to make your real estate purchase easy, but it doesn’t stop there. Need to find a great restaurant, want to learn more about the local schools, or have a question about commuting to work? Feel free to look around our website for resources that will help. Or, simply ask us. That’s what we’re here for.
Securing your financing
You won’t be able to move forward with your land or home purchase until you’ve secured financing. The options available to you will depend on the type of property you’re buying.
Either way, you’ll need to determine a budget. Vintage Oaks Realty can help you figure out what properties fit within your allotted budget and also help guide your understanding of what may be needed when you start working with a lender. Preparing for a lender meeting can help speed the process along; there are a number of things you’ll need to gather in order to give your lender the complete picture of your finances so they can seek loan approval for you. In the meantime, here are some things you may want to be thinking about:
Meeting with a lender will let you know:
- How much you can afford to spend on a home
- What kind of mortgage you can be approved for
- What your down payment will be
- If you have point on your mortgage. Points are fees you pay to the lender when you close; the lender may offer you points to buy down your rate in the event you don’t qualify for the lowest rate out there.
What to ask your lender:
- What is the difference between pre-qualification, pre-approval and approval?
- Why am I not qualified for the lowest interest rate?
- Is there something I can do to get a lower rate?
- What is mortgage insurance and why is it required?
- What type of paperwork should I be getting together?
- Should I consider a 15-year mortgage or an adjustable loan?
- Why do I have pay closing costs and how much will they be?
- What does it mean to be “locked-in?”
- About how long will it take to close?
- What is included in my mortgage payment?
- Will I be responsible for making payments right away?
- Can I get a land loan and a construction loan at the same time?
- Why is it more expensive to finance raw land?
- What happens when my house is built and I need to convert my land loan to a home loan?
Financing Your Hill Country Land
If you’re buying a Hill Country home, you’ll find that loans and terms are different from home loans:
- Land loans usually have a shorter term; often they are only 12–18 months.
- Land loans can used fixed rates or adjustable.
- Loan approval for raw or unimproved land is often more difficult to get approved and may require a higher down payment and rate.
- Down payments for land loans will vary depending on the borrower’s financial picture, appraisal of the homesite, lender requirements, and the loan-to-value (LTV) ratio of the property.
- Rates are usually higher for a construction loan than a home loan.
- Borrowers can find land loans from mortgage companies, lenders, and commercial banks, plus farm credit lending organizations for rural land.
Types of land loans include:
This loan typically has a set short term, often 12 or 18 months, and approval may be contingent on the lender reviewing the detailed plan for the home that is being built on the land. Construction loans work on a draw system instead of requiring regular monthly payments. The bank/lender withdraws funds (typically interest only) according to the construction schedule.
Once the home is finished, a construction loan is often converted to a conventional home loan. Hill Country landbuyers like this type of loan because they can do a “one-time close,” which means they close on the land and home at the same time, which streamlines paperwork and means they only have to pay one set of closing costs.
Texas Veterans Land Board Loans
Texas is home to a large number of veterans, and special loans from The Texas Veterans Land Board (VLB) help make Texas land more affordable for them. VLB land loans offer financing of up to $125,000 for eligible Texas veterans. VLB loans require only a five percent down payment—the lowest down payment in the state—through this one-of-a-kind Texas program.
The VLB land loan is available to veterans who have served in any of the United States’ five military branches: Army, Navy, Air Force, Marines, or National Guard who are “bona fide” residents of Texas. The loan also:
- Is only for properties in the state of Texas
- Is for land purchases of at least one acre
- Caps the maximum land value at $125,000
- Offers loan terms that are 30-year, fixed-rate
- Includes special discounts that are offered to disabled veterans and unmarried surviving spouses
There are a variety of loans for Texas homebuyers, from fixed-rate to adjustable, long and short terms, and special loans that are available for first-time buyers and those who may not have premier credit. Some of the most popular options are:
Adjustable Rate Mortgage (ARM)
An ARM is based on an adjustable rate tied to a specific index. Payments can increase or decrease as interest rates move up or down.
A mortgage that is not a secured government loan (like an FHA or VA loan) is referred to as conventional.
This type of mortgage allows the borrower to convert a loan from an ARM to a fixed-rate loan. Fees typically apply to make this change.
Federal Housing Administration (FHA)
FHA loans are government secured and a favorite choice of first-time buyers and those who have less than perfect credit and/or a large down payment. Minimum credit scores are typically lower than for conventional loans, and down payments can be as low as 3.5%. FHA loans require private mortgage insurance (PMI).
A fixed-rate mortgage is one that has equal payments every month for the life of the loan.
Veterans’ Administration Loans
These home loans for veterans are guaranteed by the Veterans’ Administration and offer low or no down payment programs.
Veterans Housing Assistance Program (VHAP)
For those buying Texas homes, the VLB’s Veterans Housing Assistance Program (VHAP) offers low-interest, fixed rate loans up to $417,000 with low and no down payments for veterans, military, and their spouses. Terms include 15, 20, 25 or 30-year loans. Because the VLB doesn’t provide interim construction financing, veteran borrowers can finance their finished home with a VHAP loan.
ADDRESSING YOUR NEEDS
Breaking Down the Location
“Location, location, location.” It’s the oldest saying in real estate and is repeated today as a mantra for a reason. You can always make changes to you home—and if you’re building a custom home, you can craft it to your exact specifications. What you can’t change is your location, so it pays to give it careful thought.
Spending some time in the communities you are considering can help. Ask yourself this:
- How long is your commute? Testing out a drive to and from work a couple of times may help you decide between two communities that seem equal in other ways.
- Do the schools meet your needs? Hill Country school districts have their own websites, as do individual schools. Your Realtor and/or sales agents, as well as websites like GreatSchools, can give you more detailed information.
- How are the amenities? If you’re looking to build a home in a rural location, you might not care that the closest Target is 45 minutes away, but, for many Hill Country homebuyers, knowing that restaurants, shopping, entertainment, culture, and recreation are nearby is important.
- How private is it? If you’re looking at specific homesites, you’ll want to gauge the activity level nearby. Is it close to amenities? Is it a thoroughfare during rush hour? Is there a loud school nearby? All of these things can affect the desirability of the lot, and, perhaps even the future home value.
- Is the community well kept? This is also critical to your daily enjoyment and your home value.
- What are the neighbors like? Are they warm and welcoming or quiet and standoffish? And how do they feel about living there? The answer may shape your decision more than any other factor.
- Are there development plans for the area? Knowing what might be coming next can also affect your decision.
Zeroing in on the Best Hill Country Real Estate
Once you’ve narrowed down the location, its time to zero in on the right Hill Country property. Have you decided what kind of property you want? You may have different expectations depending on the type of land or home you’re looking to buy.
Buying land in the Hill Country
Building a custom home is an exciting undertaking. Asking yourself a few questions during the land search will help you get right:
- Do you want raw or buildable land? Raw land is usually located in a more rural location and typically isn’t improved. It also may be harder to secure financing because it is sometimes seen as a bigger risk by lending institutions. If you’re buying in a masterplanned community, chances are the land is already improved and ready to be cleared and built on.
- What size lot do you need? Different communities will have different offerings—be sure to ask Vintage Oaks Realty about any restrictions regarding home and lot size.
- Do you want a gated or non-gated location? Flat lot, lots of frontage, or wooded landscape? These are just a few of the specific characteristics of the land to think about.
- Do you need special zoning? If you’re looking to bring your horses or build multiple structures, you’ll want to check the zoning first.
- Do you have to build right away and use a specific builder? Some communities have a strict timeline for the start of construction and who is building your home.
Buying a semi-custom home
Another popular option for Hill Country real estate is buying a semi-custom home. These homes feature popular pre-selected builder floorplans and thousands of customization options. To find out if a semi-custom home might be right for you, ask yourself:
- How important is it for me to design my floorplan?
- Is being able to customize room options, fixtures, finishes enough customization for me?
- Am I looking for a custom feel at a lower price?
- Do I want to wait through the long custom home construction period or would the shorter timeline of a home-lot package work better?
Buying an existing home
Some buyers prefer a home that’s been a little lived in and is located in an established location. When looking for an existing home, a few questions can help you key in on the right one:
- Does the floorplan appeal to you? Make sure the layout and number of bedrooms, bathrooms, etc. are what you need.
- Is the home current or outdated? If you’re already thinking about gutting the kitchen, taking out walls, repainting everything, and changing out all the flooring, you’ll want to figure that into your budget.
- Is the home in good condition? Outside of your personal taste, what else needs to be fixed or updated?
- Is the home in your budget? Buying a house you can’t afford can be a hit to your budget—and your lifestyle.
- How long has the home been on the market? If it’s been active for a while, you night be able to get a better price…or it can mean there’s something unappealing about the house.
- Is the home priced well? If it’s too high, too low, not in line with other homes in the area, or has been lowered one or more times, Vintage Oaks Realty should be able to weigh in on your best offer strategy—or guide you toward walking away. Your Realtor should also be able to point out the homes that offer the best value.
Making an Offer
Once you’ve found a property you love, it’s time to make an offer.
What’s included in an offer
Making an offer is more than presenting the price you’re willing to pay for a property. Your Vintage Oaks Realty agent will also present to the seller or seller’s agent:
- The amount of earnest money you will have
- Your down payment details
- Information about your financing
- Your proposed closing date and move-in date
- How long the offer is valid
- Additional financial information including your banking statements that show sufficient balances and income information in support of your ability to make your payments.
Once you’ve made your offer, it can be approved as is, declined, or sent back with a counter offer. This negotiation period is critical. Your Vintage Oaks Realty agent will navigate it with care to get you the best deal.
If you’re making an offer on a piece of land in a masterplanned community or on a semi-custom home, don’t expect to do much negotiating on price. If there is any room for negotiation, it would be more likely to receive concessions from the builder or developer, such as land clearing on a homesite or options like landscaping, window coverings, or flooring upgrades on a semi-custom or builder home.
On existing homes, there may be several rounds of negotiations going back and forth before the two parties agree. Once that happens, you can sign the agreement, and you’re under contract.
The sales contracts will outline the details of the sale and the responsibilities and privileges of all parties. This legally binding document protects all who are involved, and it is imperative to carefully review all terms before signing. Vintage Oaks Realty will spell out details of the contract, which will include:
- The legal description of the property and full street address
- The agreed-upon selling price of the property
- The amount of earnest money you are providing and where it is being held. Often the earnest money is held in an escrow account.
- The amount you will be expected to pay at settlement, including first mortgage payment and closing costs
- Financing details including the total of your mortgage, interest rate, and terms
- The name of the title or escrow company being used
- Date of the closing
- Home inspection—While an inspection is not mandatory on an existing home unless insisted upon as part of the contract, it is recommended
- Inclusions and exclusions—If you are buying an existing home, you may have made an agreement with the seller regarding the home’s appliances, window coverings, or even furniture pieces
- Warranties—A new home will typically include a home warranty, but you may be able to add one to an existing home
- Repairs—This will outline who is responsible for making repairs that are required based on the inspection
- Well and septic—If they are on the property, they must pass a test.
- Date of possession—This is the date you’ll officially take possession of the property
PROCESSING THE SALE
The contract may be signed, but Vintage Oaks Realty’s responsibility to its buyers is not over. Our commitment is to advocate for our clients from day one for years to come. You can expect us to babysit your escrow until the day you move in, making sure we:
- Help with scheduling of any pre-closing inspections
- Check that deposits have been made and financial responsibilities met as spelled out in the contract
- Keep you updated on any issues that may arise
- Provide utility information
- Schedule and attend the pre-closing walk through
- Prepare for and attend your closing
- Continue to stay in touch for any future real estate needs and provide you with important market updates