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Home Buying Step by StepHow long does it take to buy a house? Every step, explained simply.See the steps Houston MarketIs it a good time to buy a house in Texas? What the 2026 data shows.See the data Credit ScoresCan rent and utility payments help you qualify for a mortgage in 2026?Read the answer Property TaxesHow much is the Texas homestead exemption in 2026?Read the answer FloridaWhat should you know before buying a Florida condo in 2026?Read the answer Loan OptionsWhat is an assumable mortgage, and how does it work in Texas?Read the answer Getting StartedWhat is mortgage pre-approval, and how long does it take?Read the answer Getting StartedHow long is a mortgage pre-approval good for?Read the answer Getting StartedWhat should you not do after you get pre-approved?Read the answer Getting StartedWhat is in a monthly mortgage payment?Read the answer Under ContractWhat do you pay before closing day?Read the answer RefinancingWhen does refinancing make sense in Texas?Read the answer RefinancingHow do Texas families use a cash-out refinance?Read the answer RefinancingDoes refinancing hurt your credit?Read the answer Loan OptionsFHA vs conventional in Texas: which loan fits you?Read the answer Loan OptionsCan you buy a house in Texas with an ITIN?Read the answer New HomeownersWhen is your first mortgage payment actually due?Read the answer New HomeownersShould you re-shop your homeowners insurance every year?Read the answer Credit ScoresWhat is the lowest credit score to buy a house in Texas?Read the answer Credit ScoresCan I buy a house in Houston with a 600 credit score?Read the answer Credit ScoresWhat credit score do first-time home buyers need in Texas?Read the answer Credit ScoresDoes checking my credit score hurt it?Read the answer Credit ScoresDo I need a 20% down payment to buy a house in Texas?Read the answer Credit ScoresWhat credit score do I need for down payment assistance in Houston?Read the answer Credit ScoresWill a higher credit score get me a better mortgage?Read the answer The Full GuideWhat credit score do you need to buy a house in Texas?Read the guide · 9 min

More answers are on the way, covering down payment assistance, loan comparisons, and buying with an ITIN. Have a question you want answered plainly? Send it to the team.

Terms You Should Know

Every word of home buying, explained.

Nobody is born knowing what escrow means. Here is the language of mortgages and real estate in plain English, from a team that explains it for a living.

Adjustable-rate mortgage (ARM): A loan whose interest rate is fixed for an initial period and can then adjust up or down on a set schedule based on a market index. The alternative is a fixed-rate mortgage, where the rate never changes.
Amortization: The schedule that spreads your loan payments over time. Early payments are mostly interest; as the years pass, more of each payment goes to the balance. It is why your loan payoff speeds up as it ages.
Appraisal: A licensed appraiser's professional opinion of what the home is worth, ordered during the loan process. Lenders use it to make sure the home supports the loan amount.
Appraisal gap: The difference when a home appraises for less than the price you offered. Buyers and sellers negotiate who covers it, and your agent and loan officer help you plan for the possibility.
APR (annual percentage rate): A broader measure of a loan's cost that includes the interest rate plus certain fees, expressed as a yearly percentage. It exists so you can compare offers on more than the rate alone.
Assumable mortgage: A loan a qualified buyer can take over from the seller, keeping its existing terms. Certain government-backed loans can be assumable; most conventional loans are not.

Bank statement loan: A loan program for self-employed borrowers that documents income with months of bank deposits instead of tax returns. One of several paths for people whose income does not fit a W-2.

Cash to close: The total money you bring to closing day: your down payment plus closing costs, minus your earnest money and any credits. The exact figure appears on your Closing Disclosure.
Cash-out refinance: Replacing your mortgage with a new, larger loan and receiving the difference in cash, typically for renovations, debt consolidation, or a family goal. Texas has homeowner protections that shape these loans.
Clear to close: The milestone where underwriting has approved everything and the closing can be scheduled. One of the best phone calls in the process.
Closing: The appointment where documents are signed and ownership transfers. In Texas it usually happens at a title company. Also called settlement.
Closing costs: The fees involved in creating the loan and transferring the home: lender charges, title work, appraisal, recording, and prepaid items like taxes and insurance. They are itemized on your Loan Estimate and Closing Disclosure.
Closing Disclosure (CD): The final, official statement of your loan terms and closing costs, delivered before closing so you have time to review it. Your first payment date and cash to close are printed on it.
Comps (comparables): Recently sold homes similar to the one being valued, used by appraisers and agents to estimate what a home is worth.
Contingency: A condition written into the contract that must be met for the sale to go through, such as financing, appraisal, or inspection. Contingencies protect your earnest money when something falls through.
Conventional loan: A mortgage that follows Fannie Mae or Freddie Mac guidelines without government insurance. Rewards stronger credit, and its mortgage insurance can be canceled once you have enough equity.
Counteroffer: The seller's response that changes some part of your offer, like price or timing. Negotiation continues until both sides sign the same version.
Credit report: The record of how you have borrowed and repaid, kept by the credit bureaus. Lenders review it during pre-approval; you can review yours free every year.
Credit score: A number summarizing your credit history. Payment history and amounts owed matter most. You do not need a perfect score to buy a home.

Debt consolidation: Combining several debts into one loan with a single payment, often through a cash-out refinance. It can lower the total paid monthly; it also secures the debt with your home, which deserves careful thought.
Debt-to-income ratio (DTI): Your monthly debt payments divided by your gross monthly income. Lenders use it to make sure the new payment fits your life. Lowering debts or raising documented income improves it.
Deed: The legal document that transfers ownership of the property. It is recorded with the county after closing.
Down payment: The part of the purchase price you pay yourself rather than borrow. Many programs require far less than the traditional twenty percent, and assistance programs exist for eligible buyers.
Down payment assistance (DPA): Programs, often from state or local agencies, that help eligible buyers cover the down payment or closing costs through grants or second loans. Texas has several.
DSCR loan: A loan for investment properties qualified on the property's rental income rather than the buyer's personal income. DSCR stands for debt service coverage ratio.

Earnest money: A good-faith deposit you make when your offer is accepted, held by the title company and credited to you at closing. Contract contingencies are what protect it.
Equity: The part of the home you truly own: its value minus what you owe. It grows with every payment and every gain in value, and it is the foundation for refinancing and home equity loans.
Escrow account: The account your loan servicer uses to collect and pay your property taxes and insurance as part of your monthly payment. When taxes or premiums change, the escrow portion of your payment adjusts.

FHA loan: A mortgage insured by the Federal Housing Administration, known for flexibility on credit and down payment. Popular with first-time buyers, though open to repeat buyers too.
First-time buyer programs: Loan options and assistance designed for people buying their first home, often with smaller down payments or help with costs. First-time is defined generously; you may qualify even if you owned a home years ago.
Fixed-rate mortgage: A loan whose interest rate never changes, so principal and interest stay the same for the life of the loan. The escrow portion of the payment can still adjust with taxes and insurance.
Flood insurance: A separate policy covering flood damage, which standard homeowners insurance does not. Required in mapped flood zones and worth discussing anywhere in the Houston area.
Forbearance: A temporary pause or reduction of mortgage payments approved by your servicer during hardship. The paused amounts are repaid later under an agreed plan.
Foreclosure: The legal process a lender uses to take back a property after prolonged missed payments. If hardship ever hits, calling your servicer early opens options that prevent it.

Gift funds: Money a family member gives you toward your down payment or closing costs. Allowed by most programs with a simple letter documenting that it is a gift, not a loan.

Hazard insurance: Another name for the homeowners insurance coverage that protects the structure. Lenders require it, and it is usually paid through your escrow account.
HELOC (home equity line of credit): A revolving credit line secured by your home's equity that you draw from as needed, unlike a lump-sum loan. Texas home equity rules apply on a primary residence.
HOA (homeowners association): The organization that maintains shared spaces and enforces rules in some neighborhoods and condos, funded by dues. HOA dues are part of your monthly housing math.
Home equity loan: A lump-sum loan secured by your equity, separate from your first mortgage. One of several ways to put equity to work; a cash-out refinance is another.
Home inspection: A professional examination of the home's condition, ordered by the buyer, usually during the option period in Texas. It is about knowing the house, and it often becomes a negotiating tool.
Homeowners insurance: The policy that protects your home and belongings, required by every lender. In Texas premiums are among the highest in the country, which is why re-shopping it at renewal matters.
Homestead exemption: A Texas property tax break on your primary residence that lowers its taxable value. You file once with your county appraisal district, free, and it renews automatically.

Interest: What the lender charges for the loan, included in every monthly payment. Early in the loan it is most of the payment; over time the balance shifts toward principal.
ITIN loan: A mortgage for taxpayers without a Social Security number, using their Individual Taxpayer Identification Number, tax returns, and sometimes alternative credit history. Yes, buying a home without a Social is possible.

Jumbo loan: A mortgage larger than the conforming loan limits set each year for conventional loans. Guidelines are stricter because the loan is bigger.

Lien: A legal claim against the property, like a mortgage or unpaid tax bill. Title work at closing makes sure old liens are cleared before the home becomes yours.
Loan Estimate (LE): The standardized early disclosure of a loan's terms and estimated costs, delivered shortly after you apply. Its format is identical from every lender so offers can be compared line by line.
Loan officer (LO): The licensed professional who guides your loan: reviews your finances, matches you to programs, and shepherds the file to closing. Every loan officer carries an individual NMLS number you can look up.
Loan-to-value ratio (LTV): The loan amount divided by the home's value. A smaller down payment means a higher LTV. It drives mortgage insurance requirements and some pricing.

Mortgage broker: A licensed company that shops your loan across multiple lenders instead of selling one bank's products, then guides the file to closing. That is what Warens Financial Group is.
Mortgage insurance (PMI and MIP): Insurance that protects the lender on low-down-payment loans. On conventional loans it is called PMI and can be canceled once you have enough equity. On FHA loans it is called MIP and usually lasts until you refinance.

Non-QM loan: Short for non-qualified mortgage: programs outside standard agency rules, built for real situations like self-employment, investors, or ITIN borrowers. Documented differently, not documented less.

Option period: A Texas contract feature: a short negotiated window after signing when the buyer can inspect the home and back out for any reason for a small fee. It is when inspections happen.
Origination: The lender's work of creating your loan, from application through closing. The origination charge on your Loan Estimate is the fee for that work.

Points (discount points): An optional upfront fee paid at closing to lower your interest rate. Whether points make sense depends on how long you will keep the loan; your loan officer can run the break-even.
Pre-approval: A lender's real review of your income, credit, and assets that tells you what you can borrow. It is free, it is not a commitment, and it is the step that turns shopping from guessing into knowing.
Pre-qualification: A quick estimate based on information you state, without document review. Useful as a first conversation; a pre-approval is the version sellers take seriously.
Prepaids: Costs paid at closing that cover the near future rather than fees: the first year of homeowners insurance, months of property taxes to start escrow, and interest through the end of the closing month.
Principal: The amount you actually borrowed. Every payment chips away at it, and anything extra you pay goes straight to it, shortening the loan.
Processing: The stage where your file is assembled and verified: documents collected, employment confirmed, appraisal ordered. A dedicated processor is why files move without drama.
Property taxes: Yearly taxes set by your county, school district, and other local entities, usually paid monthly through escrow. In Texas there is no state income tax, so property taxes carry more of the load, and the homestead exemption softens them.

Rate lock: The lender's commitment to hold your quoted interest rate for a set number of days while your loan closes, protecting you from market moves during the process.
Refinance: Replacing your current mortgage with a new one to change the payment, the term, or the structure, or to take cash out. It makes sense when the new loan serves a goal you can name.
Reserves: Savings left after closing, measured in months of house payments. Some programs want to see them; every family benefits from having them.

Seller concessions: Closing costs the seller agrees to pay on your behalf as part of the deal. A common negotiating tool, within limits set by each loan program.
Servicer: The company that manages your loan after closing: collects payments, runs escrow, and answers account questions. Loans commonly transfer to a servicer after closing, with notice, and the terms never change.
Survey: A drawing of the property's exact boundaries and improvements. Texas closings customarily use one, either the seller's existing survey or a new one.

Title: Your legal ownership of the property. The title company researches the home's history to confirm the seller can sell it and that no surprises come with it.
Title insurance: A one-time policy protecting your ownership against problems in the property's past, like unknown liens or paperwork errors. In Texas its rates are regulated by the state.

Underwriting: The lender's formal review of the complete file: your finances, the appraisal, the title work. The underwriter's approval is what produces the clear to close.

VA loan: A mortgage benefit for eligible veterans, service members, and certain surviving spouses, guaranteed by the Department of Veterans Affairs and known for its no-down-payment option for qualified borrowers.

W-2 income: Wages from an employer, reported on the W-2 form. The most straightforward income to document; self-employed and 1099 earners simply document differently.

Definitions are general education, not financial or legal advice, and program details vary. Missing a word you ran into? Ask us and we will add it. Warens Financial Group, NMLS #2532048. Equal Housing Opportunity.

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