Whether you're just starting out, working to rebuild, or simply want to make sure you're on solid footing, understanding your credit is one of the most empowering things you can do for yourself. So let's walk through it together.

What Is a Credit Score, Really?

Your credit score is a three-digit number typically between 300 and 850 that summarizes how reliably you've managed borrowed money over time. Lenders, landlords, and even some employers use it to get a quick sense of your financial responsibility.

The most widely used model is the FICO Score, and it's calculated based on five key factors:

• Payment history (35%):  Do you pay your bills on time? 
• Amounts owed (30%): Are you close to your credit limits? How much of your available credit are you using? 
• Length of credit history (15%): How long have your accounts been open?
• Credit mix (10%):  Do you use different types of credit, like credit cards, car loans, or a mortgage?
• New credit (10%): Have you recently applied for new credit accounts?

A score above 700 is generally considered good, and above 740 will typically qualify you for the best loan rates available.

Unsure What Your Number Is? 

If you’ve never checked your credit score, the good news is finding it doesn’t have to cost you anything.  Here are a few easy ways to check:

• AnnualCreditReport.com is the official site authorized by federal law, and it gives you a free credit report from each of the three major bureaus once a year. It's the best place to see the full picture of your credit history.
• Your bank or credit card app may already show your credit score. Many financial institutions now include this as a free feature, so it's worth a quick look the next time you log in.
• Experian.com lets you create a free account to view your FICO® Score and track changes over time — a great option if you want to keep a closer eye on where you stand.
• Credit Karma offers free access to your TransUnion and Equifax scores and updates them regularly, so you can monitor movement as you build or maintain your credit.

Knowing your number is the first step. Once you do, you'll have a much clearer sense of what you need to work on.

Starting with Low or No Credit Scores

If you’re new to building credit or starting over after a rough patch, the good news is you’re not stuck with a low number forever. If your credit has taken some hits, whether from a difficult season of life, a job change, medical bills, or just past habits you've moved on from, know this: your credit score is not permanent. It's a snapshot, and snapshots can change.

Secured credit cards, credit-builder loans, and becoming an authorized user on a trusted family member's account are all practical tools for people working to rebuild. Progress can feel slow at first, but consistent habits add up over time. 
Here's what actually moves the needle:

Pay every bill on time. 
This is the single biggest factor in your score. Even one missed payment can have a noticeable impact, so set up autopay for at least the minimum due on any account.

Keep your credit utilization low. 
Try to use no more than 30% of your total available credit, and ideally less. If your credit card limit is $1,000, aim to carry a balance under $300.

Don't close old accounts unnecessarily. 
Length of credit history matters. Keeping older accounts open (even if you rarely use them) can work in your favor.

Be selective about new credit applications. 
Every hard credit inquiry can slightly lower your score. Apply for new credit when you have a clear reason to do so and not just because it is available.

High Scorers: Here's How to Keep It That Way

You've put in the work and it shows. A strong credit score opens real doors, and the good news is that keeping it there doesn't require much heavy lifting. It mostly comes down to staying consistent and staying aware.

Check your credit reports regularly.
You're entitled to a free report from each of the three major bureaus (Equifax, Experian, and TransUnion) every year through AnnualCreditReport.com. Even with a great score, errors and unfamiliar accounts can sneak in, so it's worth a quick look at least once a year.

Consider a credit freeze. 
If you're not actively applying for new credit, placing a freeze with the bureaus is one of the most effective ways to prevent someone from opening fraudulent accounts in your name. It's free, it's reversible, and for high scorers especially, it's a smart layer of protection.

Watch for the signs of identity theft. 
Unfamiliar charges, sudden score drops, or collection calls about accounts you don't recognize are all red flags worth taking seriously. The faster you catch something, the easier it is to resolve.

We're Here When You Have Questions

At TFNB Your Bank for Life, we believe financial knowledge belongs to everyone in our community, not just those who already have it figured out. Whether you're curious about your score, unsure where to start, or working through a more complicated credit situation, our friendly team of personal bankers is always glad to have a real conversation. No judgment, just honest guidance from people who know you by name.

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And if you're wondering whether the effort is worth it this year: the average tax refund as of late February 2026 is $3,804, up 10.2% from the same point last year. The IRS has already issued over $109 billion in refunds this season, and historically, refunds rise higher as more returns are processed. Whether you're expecting a big check or just want to avoid a surprise tax bill, the prepwork you put in now will make a huge difference.

Start by Gathering Your Documents

The first step is easy: pull everything together in one place. Most of your key tax documents should have arrived by now, either in the mail or your email inbox. Create a folder (digital or paper) and add documents as you receive them.

Here's what to look for: W-2s from every employer you worked for in 2025, 1099s for any freelance, contract, or gig work, bank interest statements, mortgage interest forms (Form 1098), retirement distribution notices, and last year's tax return (it's a useful reference).

You don't have to wait until the stack is complete before you start. Getting organized early means fewer last-minute surprises.

Take an Honest Look at Your Income

This is especially worth doing if 2025 was a busy year with a side job, some freelance work, a little rental income, or stock sales. The IRS receives a lot of the same information you do, and with updated 1099-K reporting thresholds, more of that activity shows up in the tax system than it used to.

Go through your bank statements month by month and review deposits to identify which ones represent taxable income. Yes, this takes some time but it almost always uncovers income you’ve forgotten and deductions you didn’t know you had.  

Don't Leave Deductions on the Table

The standard deduction for 2025 is $15,000 for single filers and $30,000 for married couples filing jointly. Many people will take the standard deduction and move on. But it's still worth running the numbers to see if itemizing makes sense for your family.

A few deductions people commonly miss: medical and dental expenses exceeding 7.5% of your adjusted gross income, educator expenses if you're a teacher who buys your own classroom supplies, and contributions to a SEP-IRA or Solo 401(k) if you're self-employed. These can be made up until the filing deadline, including extensions.

This tax season also reflects new provisions from the federal tax legislation passed in July 2025, sometimes referred to as the ‘One Big Beautiful Bill,’ which introduced deductions for tips, overtime pay, and auto loan interest on American-made vehicles. If any of those apply to your household, make sure you're accounting for them. They're a big part of why refunds are running higher this season.

Most deductions don't automatically appear, you have to know to look for them. That's why it pays to review carefully, or sit down with someone who knows what to look for.

Dates Worth Putting on Your Calendar

• January 31 — Employers must mail W-2s; most 1099s due to recipients
• March 17 — Partnership and S-corp returns due
• April 15 — Individual return deadline + IRA contribution deadline
• October 15 — Extended return deadline (if you file Form 4868 by April 15)

Get Organized Digitally and Back It Up

Paper piles have a way of disappearing or scattering when you need them most. If you can, scan your documents and save them in clearly labeled folders: Income, Deductions, Investments, Prior Returns. Keep a backup in cloud storage for just in case.

Audits are rare, but organized records make the process far easier if one ever happens.  And honestly, building these habits now makes next tax season a whole lot easier too.

Should You File Yourself or Work with a Pro?

Tax software has come a long way. If your situation is fairly straightforward (W-2 income, standard deduction, no big changes in 2025), programs like TurboTax, H&R Block, or FreeTaxUSA can handle it well. And if your adjusted gross income is $79,000 or less, you may qualify for IRS Free File at no cost.

But if 2025 brought something more complex, like selling a home, inheriting assets, starting a business, managing investments, or going through a divorce, a CPA or tax pro is likely worth every penny. The savings they find, and the mistakes they prevent, almost always outweigh the cost.

One more note: e-filing is almost always the faster choice. The IRS typically processes electronic returns within 21 days, while paper returns can take six weeks or more.

Start Small, Start Now

You don't have to tackle everything at once. Even setting aside 30 minutes this weekend to collect documents and glance at last year's return puts you ahead of where most people will be in mid-April. A little preparation now can make April a whole lot smoother.

If you ever want to talk through your finances with someone local, there's always someone at TFNB who's happy to sit down and talk it through. That's what TFNB Your Bank for Life is all about.

Questions about your finances heading into this tax season? We'd love to help.

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Usually, it's one of these myths we keep hearing over and over.

At TFNB Your Bank for Life, we've heard them all;  and we're here to set the record straight.

Myth 1: You Need Perfect Credit to Qualify

The Truth: Credit matters, but it's one piece of the puzzle. We look at your business plan, cash flow, collateral, your experience in the industry, and where you're headed.

And if your credit's been through some rough patches? Programs like SBA loans, which are partially guaranteed by the federal government, are specifically designed with more flexibility in mind. That government backing means we can work with credit scores that wouldn't qualify for conventional financing.

Don't let past financial setbacks stop you from having the conversation.

Myth 2: Banks Only Lend to Established Businesses

The Truth: Startups can absolutely secure financing. Yes, a track record helps, but if you bank locally, your bankers know the heartbeat of your local market. We know which industries are growing here, what the market can support, and where the opportunities are.

So when you walk in with a solid business plan and realistic projections for a new HVAC company or a retail concept in downtown Waco, we're not just reading numbers on a page. We understand the context.

With the right preparation, and sometimes collateral or a personal guarantee, new business owners can access startup loans, SBA microloans, or lines of credit.

Your preparation and our local knowledge, that's the combination that gets new business funded.

Myth 3: The Application Process Takes Forever

The Truth: If you're banking with someone like TFNB, it helps to have someone on your side who answers the phone.

You're not uploading forms into a portal and waiting. You're talking to someone who can actually make decisions, or who sits ten feet from the person who can.

Need to tweak something in your application? Have a question? You call and we’ll keep things moving.

Smaller loans often get approved in days. Larger ones take longer, but you'll know where you stand the whole time. The key is preparation: have your financials, business plan, and tax returns ready before you walk in.

Myth 4: You'll Lose Control of Your Business

The Truth: Taking a loan doesn't mean surrendering ownership or decision-making power. Unlike equity financing where you give investors a stake in your company, business loans are simply borrowed capital you repay with interest. You maintain complete control of your operations, strategy, and profits. Your lender wants your business to succeed. That's how loans get repaid. But they're not becoming your boss.

Myth 5: Collateral Requirements Are Impossible to Meet

The Truth: Not all loans require collateral, and collateral doesn't always mean your house. Depending on the loan type and amount, you might use business equipment, inventory, accounts receivable, or even future revenue as security. SBA loans often require less collateral than conventional loans, and unsecured business lines of credit exist for qualified borrowers. Additionally, lenders work with you to find collateral solutions that protect both parties while minimizing your personal risk.

Myth 6: Interest Rates Are Too High to Make Borrowing Worthwhile

The Truth: Small business loan rates are often more competitive than you'd expect, especially from community banks invested in local economic growth.

When you calculate the return on investment, like increased revenue from new equipment, expanded inventory, or additional staff, the interest cost often looks a lot smaller than the growth opportunity. Plus, loan interest is typically tax-deductible as a business expense.

Growth usually costs something upfront. The question is whether the return justifies the step.

Myth 7: If You're Rejected Once, You're Done

The Truth: Rejection isn't permanent. Lenders decline applications for specific reasons, and those reasons can be addressed. Perhaps your cash flow needs strengthening, your business plan needs refinement, or you applied for the wrong loan type. At community banks like TFNB, loan officers provide guidance on improving your application. Many business owners we work with didn't get approved the first time. We helped them make adjustments, tracked their application along the way, and eventually they got their financing. Think of rejection as feedback. And feedback works a lot better when you've got a banker walking beside you through it. 

Moving Forward with Confidence

We don't just process applications; we build relationships with business owners and invest in their success. 

If you've been holding back because of these misconceptions, now's the time to have a conversation. Our business bankers can assess your situation, explain your options, and help you figure out the right next step. 

Your business dreams deserve truth, support, and partnership. Let's talk about what's possible.

Contact TFNB today to discuss your small business financing options and discover how the right loan can launch your business into the future. 

START THE CONVERSATION >

What Is an After-Tax Retirement Contribution?

Making Roth Contributions Can Pay Off During the Early Stages Of Your Career

Benefits of After-Tax Accounts: Financial Flexibility During Retirement

Post-tax or Pre-tax Accounts? Why Not Try Both?

At TFNB, We're Here to Help You On Your Path Toward a Long, Happy Retirement

If you have any questions or would like to know more about our banking solutions, contact us at 254-840-2836

At TFNB Your Bank for Life, we've worked with countless successful individuals in our community, and we've seen firsthand how these five habits can transform financial futures.

1. They Track Their Net Worth

Consistent builders know their number. They regularly calculate their net worth — the difference between what they own (assets like savings, investments, and property) and what they owe (debts like mortgages, loans, and credit cards). This simple metric provides a complete picture of financial health that income alone can't reveal.
Tracking net worth quarterly or annually helps them see the big picture, celebrate progress, and identify areas needing attention.
 
Start now: Create a simple spreadsheet listing all your assets and liabilities. Calculate the difference. Repeat this process every three months and watch your trajectory over time.

2. They Automate Their Savings

Thoughtful stewards don't rely on willpower to save money; they make it automatic. By setting up automatic transfers from checking to savings accounts, they pay themselves first before they have a chance to spend. This "set it and forget it" approach removes decision fatigue and ensures consistent progress toward financial goals.

Start now: Even $50 per paycheck adds up to $1,300 annually. As your income grows, increase the amount.

3. They Review Their Finances Weekly

Successful people don't wait until tax season or a financial emergency to check their accounts. They regularly pick a time each week to review spending, check account balances, and ensure they're on track with their goals.

This habit creates awareness and prevents small issues from becoming major problems. It also helps identify spending patterns and chances to redirect money toward priorities.

Start now: Pick a consistent day and time each week. Sunday evenings work well for many people. Use your bank's mobile app to make quick reviews convenient.

4. They Maintain an Emergency Fund

Before investing in stocks or pursuing aggressive financial goals, these individuals prioritize building a safety net. An emergency fund of three to six months' expenses provides peace of mind and prevents debt when unexpected costs arise — medical bills, car repairs, or a job transition.

This buffer allows them to take calculated risks in their careers and investments without jeopardizing their financial stability.

Start now: Open a separate savings account specifically for emergencies. Begin with a goal of $1,000, then work toward one month of expenses, and build from there.

5. They Build Relationships with Financial Professionals

One thing we’ve noticed about the successful people we’ve worked with over the years? They don't go it alone. They cultivate relationships with bankers, financial advisors, and accountants who understand their goals and can provide personalized guidance. These relationships become invaluable when making major financial decisions.

Working with a local Waco bank means you're not just an account number; you're a valued member of the community. That personal connection makes all the difference when you need advice, loan options, or creative financial solutions.

Start now: Schedule a conversation with a banker like our team at TFNB Your Bank for Life. Discuss your financial goals, ask questions, and begin building a relationship that will serve you for years to come.

Start Small, Think Big in 2026

People who steadily build wealth aren't born with special financial powers — they develop healthy habits that build over time. The key is starting small and staying consistent. You don't need to implement all five habits perfectly tomorrow. Choose one, commit to it for 30 days, then add another.

Your financial future is built one decision, one habit, one day at a time. And you don't have to go it all alone. If you partner with a local Waco bank, like us, you'll have support every step of the way. Because at TFNB, we're not just your bank for today, we're Your Bank for Life.

Have questions? Reach out to one of our friendly bankers today and let's build your financial future together.

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Whether last semester went smoothly or taught some hard lessons, now is the perfect time to reset, refine, and recommit to smart money habits. From textbooks and groceries to spring break plans and unexpected expenses, the costs keep coming and so does the opportunity to help your student build skills that will serve them for life.

At TFNB Your Bank for Life, we understand that managing money is just as important as acing exams. That means teaching them how to manage their money so they don’t just survive college, but thrive.

Here’s a practical guide to help your family build a budget, develop smart habits, and set your student up for long-term financial success.

1. Start with a Realistic Budget

If your student created a budget last fall, now's the time to revisit it. What worked? What didn't? Did they overspend in certain areas or find unexpected savings in others?

Sit down together and update the budget for spring semester. Include:

• Tuition and fees
• Books and school supplies
• Housing and utilities
• Groceries and dining
• Transportation
• Personal care and spending (haircuts, toiletries, clothing, entertainment, etc.)
• Emergency fund

Encourage them to be honest about what they actually spent versus what they planned to spend. Once you have a big-picture view, break it down into a monthly budget to help your student see how much they need and where their money is going. Our experts typically recommend the 50-30-20 budgeting method we wrote about in detail in a previous blog. Whichever strategy they use, encourage them to treat their budget as a living document — reviewing and adjusting it regularly based on what’s working (or not).

2. Teach the Power of Tracking

One semester in, your student has real spending data to work with. If they weren't tracking expenses last semester, January is the perfect time to start. If they were, now's the time to make it a habit.

Whether they prefer a budgeting app, a spreadsheet, or a simple notebook, consistency is key. Real-time tracking, spending insights, and alerts — available through many different financial tools — can go a long way in helping students stay on top of their finances.

3. Open the Right Accounts

Make sure your student's checking and savings accounts are still meeting their needs. Are they avoiding fees? Using convenient ATMs near campus? Taking advantage of mobile banking features?

If they're struggling with overdrafts or unexpected charges, it might be time to explore different account options or set up spending alerts to help them stay on track.

Before your student heads back to campus, set them up with the right financial accounts. Look for checking and savings accounts that offer:

• No or low monthly fees
• Convenient mobile banking
• ATMs near campus
• Spending alerts and budgeting features

Some accounts also allow shared access or parental alerts — handy for keeping an eye on things and offering support when needed.

4. Discuss Credit — Before They Discover It Alone

Many college students get their first exposure to credit cards during their freshman year. Without guidance, that can lead to overspending and long-term debt.

Talk to your student about:

• What credit is and how it works
• Why it’s important to pay off the balance each month
• How interest and late fees can add up
• How credit scores impact future financial decisions

Consider helping them apply for a student-friendly credit card with a low limit — or becoming a co-signer — and check in regularly to ensure they’re using it responsibly.

5. Encourage Smart Earning

A part-time job during college can help your student cover expenses and learn time management. Work-study programs, on-campus jobs, tutoring, or freelance gigs can all be great options that don’t interfere with academics.

Help them think strategically: if they’re working, how many hours can they realistically handle without affecting their grades? And how will that income fit into their budget?

6. Plan for Emergencies

Unexpected expenses — like car repairs, medical bills, or a broken laptop — can quickly derail a budget. Encourage your student to set aside some savings just for emergencies, ideally enough to cover one month of living expenses.

Also, review your family’s health and car insurance policies to ensure your student has the coverage they need while away from home.

7. Keep the Conversation Going

Sending your student back to college doesn’t mean saying goodbye to money talks. Set up regular check-ins to review their budget, troubleshoot issues, and celebrate progress.

Approach it as a conversation, not a lecture. What’s working well? What’s proving harder than expected? Where do they need support?

TFNB Is Here to Help

A new semester is a fresh start and the perfect opportunity to strengthen your student's financial foundation. With the right tools and habits, they can make this their most financially successful semester yet.

At TFNB Your Bank for Life, we’re here to help you guide them every step of the way. From student checking accounts and mobile banking to real advice from real people, we’ve got your back.

Visit us online or stop by one of our Central Texas locations to learn more about how we can support your student’s financial journey.

1. Review Your Financial Statements

Start by pulling your profit and loss statement, balance sheet, and cash flow statement for the entire year. Compare these against last year's numbers and your budget projections. Look for any unusual entries or discrepancies that need investigation before you finalize your books. Think of this as your business's annual checkup. It's a chance to celebrate wins and identify areas for improvement. This is also an excellent time to schedule a meeting with your local Waco bank to review your business's financial health and discuss any banking needs for the coming year.

2. Reconcile All Accounts

Bank reconciliation is the foundation of accurate bookkeeping. Go through each bank account, credit card, and payment platform to ensure every transaction in your accounting system matches your statements. For restaurants and retailers using point-of-sale systems, make sure your POS reports align with your bank deposits. Don't overlook small discrepancies; they can indicate larger issues or add up to significant amounts over time. Your bank can often provide detailed transaction reports that make this process smoother. Pro tip: Tackle one account type per day if the task feels daunting, rather than trying to do everything at once.

3. Handle Outstanding Invoices and Bills

December is the time to pursue any unpaid invoices from the current year. Consider offering early payment incentives to clients who owe you money, as collecting receivables before year-end improves your cash position. On the flip side, review your accounts payable. Paying outstanding bills before December 31st may provide additional tax deductions for the current year, though you should consult with your tax advisor before accelerating payments solely for tax purposes. According to the IRS, you generally must report income in the year you receive it, even if payment arrives by check at year-end.

4. Document and Organize Receipts

The IRS requires documentation for business expenses, and December is your last chance to gather any missing receipts from 2025. Go through credit card statements and bank records to identify any business expenses that lack proper documentation. Take time to organize these receipts — whether digitally or physically — in a way that makes them easily accessible if you're ever audited. Remember that certain expenses, like meals and travel, require specific documentation beyond just a receipt. The IRS Publication 334 (Tax Guide for Small Business) provides detailed guidance on recordkeeping requirements.

5. Review Inventory and Assets

For businesses that carry inventory, conducting a physical count before year-end is essential. This count affects your cost of goods sold and, ultimately, your taxable income. Restaurant owners should pay special attention to perishable inventory and consider end-of-year waste, while retail businesses should identify any obsolete or damaged inventory that should be written off. Also review your fixed assets and determine whether any equipment needs to be disposed of or has become obsolete. If you're planning major equipment purchases, consider whether completing them before December 31st makes sense for depreciation purposes, though consult your tax professional about the specific implications. Remember, this doesn't have to be perfect — just honest and reasonably accurate.

6. Plan for Tax Payments and Payroll

Estimate your tax liability for the year and ensure you've made adequate quarterly estimated payments. If you've fallen short, making an additional payment before year-end can help you avoid underpayment penalties. Working with a local bank in Central Texas familiar with small business needs can help you manage the cash flow implications of tax payments. Additionally, verify that all employee information is current and accurate, and confirm that all payroll taxes have been deposited properly. Restaurant owners should double-check that tip income has been properly reported and that all tip allocations are accurate. You'll need to be prepared to issue W-2s and 1099s by their January deadlines. The U.S. Chamber of Commerce recommends consulting with a CPA or financial advisor to ensure you're meeting all quarterly payment obligations.

Stay informed about recent tax law changes that may benefit your business. New provisions around qualified business income deductions, research expenses, and equipment purchases could significantly impact your 2025 tax strategy. Discuss these opportunities with your tax professional during your year-end review.

7. Set Financial Goals for the New Year

While closing out the current year, take time to establish financial goals for 2026. Review your budget assumptions, consider necessary adjustments to pricing or services, and think about whether your current banking relationships are serving your evolving needs. Strong relationships with financial institutions that understand your local market can provide valuable support as you grow. The Small Business Administration offers free resources and counseling through their network of Small Business Development Centers, which can help you develop strategic plans for the year ahead. You've worked hard all year — use this moment to dream a little about where you want your business to go next.

Closing your books with confidence isn't just about checking boxes; it's about understanding your business's financial story and positioning yourself for success in the year ahead. Start early, stay organized, and don't hesitate to seek professional guidance when needed. Remember, even the most successful business owners rely on their team of advisors, whether that's a trusted accountant, a supportive local bank like TFNB Your Bank for LIfe in Central Texas, or resources from organizations like the SBA. 

You don't have to do this alone. For additional year-end tax planning resources, visit IRS.gov or consult with a qualified tax professional.

Download our comprehensive relocation guide now to learn about all Waco has to offer.

For those who live in Waco or surrounding areas in McLennan County, an excellent opportunity presents itself today, both for the short-term and the long-term. Waco, TX is in the midst of a real-estate boom while still having prices that are below those of most other major metropolitan areas. Over the last five years, homes in Waco have appreciated in value by 96%, with a 30% increase in value during the last year alone.

In spite of the increasingly hot housing market, homes remain undervalued (as defined by Zillow’s “neutral” outlook) in many Waco neighborhoods, with a median home price of around $270, 000. That’s lower than the Texas statewide average of $298,000. This means that, despite Waco’s affordability, other Central Texas homebuyers have not necessarily caught on to all that the city has to offer.

The bottom line is that Waco is an excellent place to put down roots. In this Homebuyer’s Guide for Waco, we’ll explain everything you need to know about why Waco is the place to be, how to find your perfect home there, and how the mortgage process works. Have questions? Our friendly team is always happy to talk home buying and answer your questions.

Home values in Waco, Texas increased by 30.3% last year and by nearly 96% over the past five years.

- LITTLEBIGHOMES.COM

What home buyers need to know about Waco

Like many American cities, Waco is in the midst of a renaissance. For evidence, the Waco Cultural District website details many of the city’s current offerings: farmers markets, art events, museums, and more. If you’re planning a move to the Waco area and are interested in digging even deeper into all Waco has to offer including area schools, attractions, restaurants and more, check out our handy Waco, Texas Relocation Guide.

Of course, one can’t discount the “Magnolia Effect.” As you probably know, Waco was the setting for the very popular HGTV show “Fixer Upper” with its magnetic hosts, Chip and Joanna Gaines, co-owners of the business Magnolia Homes in Waco and Central Texas. Providing a wholesome yet intricate look at the relationship of this husband-wife team while detailing their renovation efforts in homes in the area, Chip and Joanna put Waco “on the map” for their millions of fans across the country. Today, their Magnolia Market at the Silos is a popular destination for both tourists and locals.

Waco is hopping on board a recent phenomenon of “mixed-use development” that does its best to locate amenities, shopping, and housing in a convenient, walkable package. Waco residents will soon enjoy a beautiful riverfront area development that will include more than 10,000 square feet of restaurant and retail space and 264-family apartments. The Waco Riverfront Redevelopment is a proposed three-phase project costing more than $35 million to rebuild from Franklin Avenue almost to the Baylor Law School building, with construction on the first phase beginning in March 2024.

Finally, for homebuyers interested in acquiring rental properties, Waco has a large abundance of potentially profitable rentals, with an extensive group of properties costing less than $100,000.

$270,000 Median Listing Pricing in Waco

- Z I L L O W

Should you buy an existing home in Waco, or build a new one?

Individual buyers will have different opinions about whether to custom-build a house; purchase an already existing, older house; or buy a new model in a subdivision. This is a personal question, but in general, if you’re someone with a little extra money and have a strong vision you’d like executed from the beginning, Waco is an excellent place to hire a builder to help your dream come true. Building a new home may also reduce the various “surprise” costs that come with owning an older home (for example, replacing central air, roof replacement). Here are some top-line considerations:

• Currently, building a home is actually more affordable than buying an existing home. The median price for an existing home (all of the U.S.) is $447,000 while building a home has a median price of about $332,524. Of course, there are other costs to consider. For example, landscaping costs for a brand-new home will likely run several thousand dollars, while existing houses already have mature trees and yards with existing landscaping.
• However, the wear and tear of older homes lead to costs adding up more quickly over time. Issues with things such as the roof, the central air, or the need to simply update (due to personal preference) rooms such as the kitchen and bathroom(s), over time, can even out the cost difference.
• Finally, newer homes can be built with greater energy efficiency up front, helping reduce the costs of heating/air conditioning while also reducing to some extent the cost of the original implementation of energy-saving steps (solar cells, newer windows, etc.). Such energy savings are important because on average new homes are about 50% larger than existing homes (average size of approximately 2400 square feet vs 1600 square feet for existing homes).

Zillow provides a separate listing of new homes and existing home plans for Waco here. In addition, a rudimentary search on “Waco” and new home builders will provide you with a plethora of potential builders to choose from. For financing, TFNB offers convenient construction loans that can be turned into a permanent mortgage upon completion.

How to Buy a Home: A Step-by-Step List

1. Looking for a home: When you begin your house hunt, check out the Waco Association of Realtors. Not only do they have a listing of local realtors, but they also feature a directory of home inspectors and other professionals to assist you. Other excellent sites (including Realtor.com, Trulia, Zillow, and Red Fin) provide an easy way to search for homes by city/zip code, and then sort them via a wide variety of search criteria (such as price range, number of beds and baths, off-street parking, amenities such as pools or other unusual features, and square footage).
2. Putting in an offer: Your realtor will help you narrow your focus and put in an offer (at an appropriate price) for the house you and your family want. Prior to putting in this offer, you will apply for a preapproval letter from a mortgage lender that will confirm you qualify for buying the house you’ve chosen. At this juncture, community banks, who have an excellent grasp of the home-buying market in your immediate area, provide personalized service that may not be present at larger banks. Reach out to the TFNB mortgage team to get a glimpse of the types of services that are available.
3. Inspection/negotiation/appraisal: Prior to closing, several steps need to occur. You will choose an inspector for your soon-to-be home to ensure that there is nothing that needs to be fixed prior to closing the transaction, and (sometimes) to get more leverage on the purchase price. See here for a directory of potential inspectors in the Waco area. The bank you are getting your mortgage from will also order an appraisal of your house to ensure that you are paying a fair price for your house. Talk to a mortgage officer at TFNB if you would like more information about how we would develop an appraisal of your house.
4. Closing: At closing day, you will bring a certified check for the down-payment and other associated costs, sign a variety of documents, and purchase your home!

New to Home Ownership? What to Know as a First-Time Homebuyer: Up-Front and Long-Term Home-Buying Costs

• Down-payment: Most 30-year loans require 20% down to avoid paying PMI (private mortgage insurance). To put this in perspective, if one were to purchase a $270,000 house in Waco, about the median price, $54,000 down would be required. Choosing to put less down (say, 10%, or $27,000) would require private mortgage insurance, a fairly small expense (less than $1000 a year).
• Taxes: In Waco, taxes will usually be between 2% and 4% of the home’s asking price (imagine a range between $5400 and $6400 for houses between $270,000 and $320,000). Of course, taxes are based on the city’s appraisal, and Waco has been aggressive in reappraising houses every year in order to take advantage of increased prices and housing demand, while helping ensure that homeowners’ appraisals and property taxes are as fair as possible
• Insurance: Homeowners’ insurance (assuming there aren’t idiosyncratic features of the property) will generally be between $60 and $80 a month.
• How the cost of the mortgage is impacted: Your mortgage lender will generally escrow all costs associated with both taxes and insurance if you are holding a loan with a down payment. This is usually an easier way of managing these expenses compared to the other options. So, take the example given above: a $270,000 sale price minus 20% down leaves you with an approximate loan amount of $216,000. Let’s assume $5,400 a year in property taxes and a 4.5% interest for 30 years (see “What different mortgage loans are available?” below); and $75 of insurance a month. The loan costs $1,095 a month; taxes are $450 a month; and insurance is about $75 a month. Hence, the monthly amount of the loan would be $1,620 a month.
• Other costs (inspection, closing costs, homeowner’s association): The buyer is required to pay for inspection and other closing costs associated with the loan, usually worth 2% or so of the price of the house. As Waco has a lot of newer housing stock, homeowner’s associations are also prevalent in many areas, with costs ranging from $400 a year to more than $1,000.

Financing options

Understanding your financing options, and which one to use, is a large part of a successful closing. These options for your new home can be organized into several categories, in which two options are available. With respect to interest rates, you can get either a fixed-rate or an adjustable-rate mortgage. Government-insured loans (through the FHA or VA) are available in instances where one only has 5% to put down as a down payment (FHA) or for veterans (VA). Finally, there are jumbo loans (for investment properties primarily) versus regular loans. Each of these three categories is reviewed in brief here:

• Fixed vs adjustable rate: The fixed rate loan scenario was presented in the example above of mortgage financing; you obtain a 15-year or 30-year loan and the payments over the life of the loan remain the same. While the 15-year loans have higher payments because of their overall shorter term, the loan payments will be lower over the entire term because you will have paid the house off in half the time. In an adjustable-rate mortgage, most loans (say, a 5/1 adjustable mortgage) will retain their original interest rate for five years, then adjust according to the movement of a chosen index rate + a premium (right now, the most common rate used is the 1-year LIBOR).
• Jumbo vs conventional: A jumbo mortgage is a mortgage that is higher, cost-wise, than the amount that can be insured by Freddie Mac/Sallie Mae, which is currently $647,200. They differ from conventional loans in many ways, although (as the subprime mortgage crisis recedes further into the past) they are gradually losing some of these differences. A greater proportion of jumbo loans are adjustable-rate mortgages; however, for those that aren’t, interest rates are now comparable to those of conventional loans. Jumbo loans are also used often for multiple-unit investment properties.
• FHA/VA vs conventional: FHA financing is available for owner-occupant properties and allows individuals with limited down-payment funds to use as little as 3% down to purchase a home. VA (for Veterans Affairs) loans are a similar program that is available to veterans. USDA loans provide a no-down-payment incentive to assist those who wish to purchase homes in a rural area. See Consumer Finance Protection Bureau for more information about these loans, or speak with a TFNB representative, who (knowing the local area) will have a good idea about what houses, for example, would be eligible for a USDA mortgage.

In addition, there are many federal, state, and local programs available to potential new homeowners. Read more about them through these links, or talk to the friendly and knowledgeable mortgage loan officers at TFNB.

• City of Waco website
• Texas Department of Housing and Community Affairs
• First-time homebuyer grants and programs
• Department of Housing and Urban Development

Where do I start?

TFNB of McGregor and Waco wants to be a nimble, helpful partner to you as you engage in the home-buying process. Contact our mortgage team today for pre-approval, consultation, or just to tell us what you’re thinking when it comes to purchasing your home. As Your Bank for Life, we are here to help you with every stage of your life and finances!

Jason Lavender is SVP of Strategic Initiatives at TFNB- Your Bank for Life. TFNB is 130- -year-old organization serving thousands of customers in Central Texas. It is the oldest National charter in McClennan County and the seventh oldest in the state of Texas.

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