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Houston - House buy

What areas to look in, pitfalls to look out for as well as a list of terms to be familiar with when purchasing a home

If you are planning to stay for more than three years, you may wish to buy a house. The prices of the houses and the property taxes are effected by which school district the house is located in, which in certain areas can be very high. So school districts are an important issue to consider. If you do not have children, or if your children go to a private school, you may look in an area with lower school property taxes.

Best way to select an area - Study the city and the distances. Elements to be considered are: where the job is located, the time you want to spend in the car depending on the traffic, the school and the school’s bus stop, where your national community is present, the level of security in the chosen area, the presence of mature trees to protect the house from the direct sun (it gets really hot in Houston).

Choose a realtor or real estate agent to show you property until you find the house or apartment you are looking for. You may want to have two or three locations in mind. It is wise to know as much as possible about the areas: compare community services, street maintenance and lighting, proximity to major roads, public transportation; ask about lifestyle of neighbours, safety, facilities, parks, quality of education and proximity to home; availability of recycling services, proximity to sources of noise, odor or pollution; check how far the grocery stores, drug stores and malls are.

Try and understand - prior to visiting or moving to Houston - subjects such as property taxes, pending assessment or government actions, expected future growth of the area or intended road expansion plans. Government offices have very specific future development plans and the realtor should be able to enlighten you regarding these.

Things you should look for in order to make a wise buying decision: check the flood plains in the area, foundations, drainage, fireplace, floors, attic, ask about termite and wood rot; check heating, electrical, plumbing, hot water system and appliances; check exterior walls, garage, roof (inquire how old the roof is), landscaping, doors and windows. You should have a professional inspection before buying (check with the mortgage company prior to organizing this yourself, they may use a specific inspection company). Call your local Better Business Bureau to inquire about a home improvement company you are considering.

Your realtor may assist you in finding institutions that can provide you with detailed information on the different mortgage alternatives: 30-years Fixed Rate Mortgage, 15-years Fixed Rate Mortgage, Adjustable-Rate Mortgage, Graduated Payment Mortgage, Bi-weekly Mortgage.

Homestead exemption
 - It is care of the new homeowners, through the Central Appraisal District, to verify they have a homestead exemption and that the value of their home is true and correct. 
Your taxes should be paid or your prorated share paid at closing of the purchase. Make sure the property has been listed under your name at the Central Appraisal District for the next year's billing. 
Not receiving your tax statement does not relieve you of the responsibility; penalty and interest will be applied if payment is not received by the due date.

All interest you pay on the mortgage of your primary residence is deductible, unless your loan is more than $1 million, the Internal Revenue Service will limit your deductible interest for property above that amount

Agent - A person in real estate who is authorized to act on behalf of another person in dealing with third parties.

Appraisal - An expert judgement or considered estimate of the value or state of real estate at a particular date or time which in general is then used as a qualification for the loan amount.

Assessed value - A value placed on property for tax or estate purposes (this does not necessarily reflect market value).

Assumable mortgage - A mortgage that may be passed to the next owner of the property.

Brokerage fee - Often known as commission, this is the fee paid (usually by the seller) for the service provided by the broker in finding a buyer for the property, and is usually calculated as a percentage of the sale price.

Certificate of Title - Signed by a title examiner or attorney, this is the document stating that the seller has a clear and insurable title of the property.

Closing - Term used to describe the period established by the Lender Company and the Title Company in which the actual purchase takes place. On transaction completion, the mortgage company will notify the homeowner when the home purchase will close. On the day of closing, the new owner will be given keys to the property and then be considered ‘the homeowner’.

Closing costs - The fees a buyer pays to ensure the loan is processed to allow closing to take place. The amount is determined by the mortgage company.
As a rule of thumb, closing costs (which include application fee for the loan, taxes, homeowner insurance, inspection fees - termite, structural, mechanical - etc.) represent roughly 10% of the value of the house.
The buyer does not pay any commission on the purchase of the house.

Down payment: a down payment of 20% is suggested and often required, however you can negotiate about the terms. The down payment may be as low as 10% if your employer provides a commitment letter (inquire if this is a possibility).

Competitive Market - Analysis Method of valuing property using a study of similar properties that have recently been sold, others that failed to sell and property currently on the market.

Contract - Legally binding agreement to do (or not to do) a particular act such as purchase or sell a property.

Deed Formal - 
Written document that when executed, delivered and recorded conveys title of property.
A new deed is used for each transfer of ownership.

Earnest money - 
This refers to the money set aside for the seller by the potential buyer upon the initial signing of the agreement of sale that demonstrates the buyer's serious intent to purchase the house. (Otherwise known as the deposit).

Equity - After a property is sold and all pending claims are made against it, the equity is the money realized. The amount is usually the sales price minus the remaining mortgage balance.

ESCROW - An account held by the lender into which a homeowner pays money for taxes and insurance. You have the option at closing to subscribe to this option. Some lender would make the escrow account set up a requirement. For your peace of mind it s advisable to opt in to the escrow account, this way taxes are incorporated in the monthly bill you receive for your mortgage payment.

Listing agreement - Contract between property owner and a real estate broker, authorizing the broker to locate a suitable buyer.

Mortgage - A lien or claim against real property given by the buyer to the lender as security for borrowed money.

M.U.D.s - Municipal Utility Districts, which provide water, sewage and drainage in many of Houston’s neighborhoods (especially the newer ones).

PITI - Abbreviation standing for principal, interest, taxes and insurance, often lumped together in a monthly mortgage payment.
Point One percent of the loan amount, paid in a one-time lump sum to the lender.

Survey - A licensed surveyor produces a map, which shows land measurements, chart boundaries, improvements and relationships to the property surrounding it.

Title - The title document indicates rights of ownership, control and possession of property.

Title insurance - New ownership of a home takes place when the title is passed from one owner to another. Titles by their nature can encounter problems such as forgeries, liens on the property, errors from recording clerks and legal errors. The title insurance is a protection for homeowners from any loss incurred due to a defect in the title.

Deed restrictions - 
Whether you are used to zoning regulations, planning restrictions or no restrictions at all on property ownership, be prepared for Houston deed restriction protection.
Homeowner property here is protected by deed restriction and can be defined as written land-use and building-type agreements that prevent homes and lots from being converted to commercial establishments, apartment blocks and alike. The intent is to protect home values by specifying the nature of use and what can (or can not) be done to a property.
Newcomers need a general understanding of deed restrictions and the way in which they are enforced. As a rule, the restrictions are binding on all property owners.
A subdivision developer initially develops deed restrictions, which are then recorded in county deed records. These restrictions are then enforced with a written notification to a property owner from a neighborhood organization such as Harris County, City of Houston or Fort Bend County.
Prospective homeowners should inquire about, or view the deed restrictions of a property that they are interested in at the time of purchase or prior to purchase. Then there is a general awareness of potential restrictions that are likely to be imposed on your home, leaving you with no surprises at a later date.
Prior to making any improvements, additions or alterations to a property, deeds need to be checked. Master planned communities have strict deed restrictions to ensure the continued success of the developments and can be as restrictive as limiting the number of household pets allowed per residence (this then begs the question of categorizing fish – are they or are they not to be included in the limits of perhaps two household pets allowed?!).

Homeowner association - Homeowner’s Associations are organized to maintain and improve the quality of the subdivision and are responsible for maintaining all the common areas. A fee may be required, so be sure to check how much the fee is and the services it covers. In condominium could be significant as it cover the insurance , the water and the maitenance of the property external struacture (roofs, external walls, pipes before they enter the your property)

In many neighborhoods or communities, the community or homeowners' association enforces the deed restrictions, and all homeowners and property owners are required or encouraged to be members of the organization. The associations are made up of any or all owners in a particular development (this will include single family detached-home subdivisions, condominium projects and townhouse communities).

On purchasing a home, the owner may automatically become a member of the association when acquiring a title to a property in the neighborhood and is hence bound by the rules and regulations of that association.
Many homeowners' associations require fees for the upkeep of common areas in the neighborhood of the subdivisions. They are usually organized as non-profit organizations which helps to ensure their existence.

Some are fairly casually run, others - often in developed communities - enforce strict compliance with deed restrictions, and can be known to enforce gardening infringements to an unreasonably high standard, such as borders having too many weeds showing/grass needing mowing. On the plus side, this standard is often reflected in areas holding their resale value and families living in immaculate and somewhat "over manicured" surroundings.

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