Real Estate Terms Every Buyer Should Know in Montgomery County, TX

Becca Ellis
May 29
3 min read

Navigating the home-buying process in Montgomery County, TX, can be overwhelming, especially with the unique terms and concepts involved in Texas real estate. Understanding these key terms will empower you to make informed decisions and ensure a smoother transaction from start to finish.

1. Appraised Value vs. Market Value

Appraised Value: The value assigned to your property by the county appraisal district, which is used to determine property taxes.
Market Value: The price your home could sell for today, based on current market conditions. In Montgomery County, these values are often similar, but it's important to verify both to avoid overpaying on taxes4.

2. Assessed Value and Taxable Value

Assessed Value: The value used to calculate your property tax bill, often after exemptions are applied.
Taxable Value: The assessed value minus any exemptions, such as the Homestead Exemption, which can significantly lower your tax liability4.

3. Homestead Exemption A legal provision that reduces the taxable value of your primary residence, lowering your property tax bill. Additional exemptions may be available for seniors, veterans, or those with disabilities4.

4. Earnest Money A deposit made by the buyer to show they are serious about purchasing a property. This money is typically held in escrow and applied to the down payment or closing costs at settlement5.

5. Down Payment The portion of the home’s purchase price that you pay upfront. In Montgomery County, down payments can range from 3% (for first-time buyers using certain programs) to 20% or more, depending on the loan type1.

6. Closing Statement A detailed accounting of all funds exchanged between the buyer and seller at closing, as required by the Real Estate Settlement Procedures Act (RESPA)5.

7. Sales Agreement (Purchase Agreement) A legally binding contract between the buyer and seller outlining the terms, provisions, and conditions of the property sale, including price, contingencies, and closing date2.

8. Contingency A condition in the contract that must be met for the sale to proceed, such as a home inspection, appraisal, or the sale of another property5.

9. Conventional Loan vs. FHA/VA Loans

Conventional Loan: Not insured or guaranteed by the federal government; typically requires higher credit scores and down payments5.
FHA/VA Loans: Government-backed loans with lower down payment and credit requirements, available to qualifying buyers1 2.

10. Mortgage Credit Certificate (MCC) A program for first-time buyers that provides an annual IRS tax credit of up to $2,000 for the life of the loan, helping reduce your overall tax burden1.

11. Survey A professional measurement of your property’s boundaries and structures to confirm lot size and identify any encroachments or restriction violations2.

12. Title and Title Insurance

Title: Legal ownership of the property.
Title Insurance: Protects buyers and lenders from future claims or disputes over property ownership2.

13. Property Tax Rate The percentage applied to your taxable value to determine your annual property tax bill. Montgomery County’s rate includes county, school district, and municipal taxes, as well as any special district assessments4.

14. Principal Residence The home you live in most of the year. Only your principal residence qualifies for certain exemptions, like the Homestead Exemption3.

15. Closing Costs The fees and expenses paid at the closing of a real estate transaction, which may include loan origination fees, title insurance, surveys, and escrow fees.

Final Thoughts

Understanding these essential real estate terms will help you navigate the Montgomery County home-buying process with confidence. If you have questions about any of these terms or need guidance, consult with a local real estate agent or mortgage professional for personalized advice.