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What is Happening with Mortgage Rates in Texas? Feature Image
Posted on November 8, 2022 6 minute read

What is Happening with Mortgage Rates in Texas?

What's in this article?

Current mortgage trends and insights
What are the experts saying about future rates?
Calculate payments with our mortgage calculator
First-time home buyers in Texas
Mortgage options in Texas
Get started today with Homefinity

After years of pandemic-induced increases in home prices, the Texas housing market is beginning to settle. 

Mortgage rates in Texas and across the country rose during the past year as the Fed took aggressive steps to slow inflation. And—if you’re thinking about buying a house—it may actually be good news.

Just a few months ago, anyone trying to buy a home in Texas had to be ready to jump and make an offer—often on the spot – for more than asking, and without a home inspection or other conditions. 

That is if the buyer was still accepting offers. Increasing mortgage rates in Texas have meant fewer bidding wars and less competition for homes.

As of August 2022, the housing inventory in Texas was up 22.4% compared to last year. 

With more homes available and fewer people competing for them, finding and making a successful bid on your dream home is easier than it’s been in quite a while. 

During the pandemic, homebuyers could take advantage of ultra-low mortgage rates. 

Current mortgage rates in Houston, Dallas, and across the state have moved higher than we saw just last year.

Higher interest rates have prompted some homebuyers to rethink taking action—slashing the competition for available homes on the market. 

And that’s good news for anyone trying to buy a house right now. 

While Texas mortgage rates in 2022 are impacted by market activity, the rate you qualify for depends on a few factors, including your credit score. 

Generally speaking, the better your credit score and credit history you have, the lower your mortgage interest rate. 

Other factors that can affect your interest rate include the loan-to-value ratio, which is the amount of money you want to borrow compared to the home’s appraised value, and your debt-to-income ratio, which is the amount of debt you have versus your gross income that comes in every month.

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What are the experts saying about future rates?

Mortgage rate forecasts for Texas expect rates to remain below the double-digit interest rates of the late 80s and 90s. 

According to experts like Fannie Mae, current mortgage rates in San Antonio and nationwide are expected to dip into the mid 4’s in early 2023. 

While rates are expected to dip, homeowners who find a home they can easily afford and meet their home ownership criteria can benefit from the reduced competition for homes now, with an eye on refinancing to a lower mortgage rate when rates drop. 

Additionally, sellers often raise their listing prices when rates drop to take advantage of the increasing number of buyers.

Calculate payments with our mortgage calculator

A mortgage affordability calculator can help you estimate how much you can safely afford to pay for a new home before adding in other expenses such as insurance, utilities, etc. 

There are four pieces of information you’ll need in order to use our mortgage calculator to estimate how much you can afford to buy a new home

  • List price for the home you want to buy (or an estimated amount you think you can afford)
  • How much of a downpayment you’ve saved
  • Length of time you want to have a mortgage 
  • Interest rate

The cost of a new home includes more than just your mortgage payment. But, now that you have a mortgage estimate, you can go one step further and calculate what your new monthly budget might be. 

To do this, look at your total household income after taxes compared to your total monthly expenses from all sources—except any rental payments.

It’s generally recommended that housing expenses should be no more than 30% of your total gross monthly income. 

First-time home buyers in Texas

As a first-time homebuyer in Texas, you have options. 

Texas offers a number of homebuyer programs that can help make owning a home in Texas more affordable. 

The Texas Mortgage Credit Certificate Program helps to reduce income taxes for first-time homebuyers through a special tax credit, which can range between 20-25% of the mortgage loan interest. 

The My First Texas Mortgage Loan program* offers financial assistance toward both closing costs and down payments, up to 5% of the mortgage amount. 

If you are employed in an eligible job category (which includes first responders, military, and public school teachers) you could receive down payment assistance in the form of a non-repayable grant of up to 5% of your mortgage loan amount under the Homes For Heroes program. 

Mortgage options in Texas

Homebuyers in Texas can choose from a number of different loan types when it comes to buying a new home or refinancing their existing mortgage.

Fixed-rate mortgage

Fixed-rate mortgages are one of the most popular types of mortgage loans in Texas. 

Fixed-rate loans offer borrowers a single interest rate for the loan’s entire life. 15- and 30-year fixed-rate mortgages are the most popular, but they can range anywhere between 5 to 40 years.

Fixed-rate mortgages are available for new mortgages and refinance loans

Government agencies don’t back conventional loans such as this one, and their limits are set by the FHFA (Federal Housing Finance Agency)

Loans for amounts more than the limits set by the FHFA are called “Jumbo loans” or “non-conforming mortgages.”

Adjustable-rate mortgage (ARM)

ARMs offer borrowers an initial fixed-rate period with a locked-in interest rate, after which the mortgage structure converts to an adjustable rate. How frequently rates can adjust can vary depending on the loan type.

Adjustable-rate mortgages are available for new mortgages and refinance loans. 

Government-backed loan

FHA loans, backed by the Federal Housing Authority, and VA loans, backed by the Department of Veterans Affairs, are two types of government-backed mortgage loans available in Texas. 

Because a government agency secures these loans, they are typically easier to qualify for compared to conventional home loans. Government-backed loans can be either fixed or adjustable.

Government-backed home loans are available for new mortgages and refinance loans. 

Get started today with Homefinity

The last couple of years has changed the way home buyers find and buy a home. 

But, whether interest rates drop or rise, inventories increase or decrease, or home prices skyrocket or fall, the right time to buy a home is always the same: when it makes sense for your financial situation. 

If you’re considering buying a new home or refinancing your current mortgage—reach out to the licensed loan officers at Homefinity today. 

*Eligibility subject to program stipulations, qualifying factors, applicable income and debt-to-income (DTI) restrictions, and property limits.

Photo by Kindel Media

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