Massive improvement so far! Keep it up for another year or 2 before trying to mow at 1". You need more root mass before trying that, but it's pretty easy to do. You scalp to the dirt, then gradually raise it to your desired height. When you see the brown stems (leggy Bermuda), you raise it one notch & get your green top back.

Skip the overseeding this year, it'll only slow the Bermuda down.

You're in the teenager years of your grass. It doesn't respond well & has a spotty appearance due to inconsistent root depth. Aeration & top dressing wouldn't hurt, but may not be as drastic an improvement as you've seen so far. My recommendation at this point would be organics to build the soil & a soil test to get better information about what you have. If the whole yard looks like that, you're well on your way to success.

Yes the backyard looks like the front. Still a few thin spots but they're filling in. Thanks for the tips.

edit: forgot to mention. There is nothing but dirt in the corner. Used the soil from the garden digging to even the ground back there as it dipped pretty sharply.

The area next to the fence is going to be thin because of the shade.

Builder's grade sod bermuda is the second best turf you can get. The only better one is that bermuda used for sports fields. Whatever you do do not overseed with BERMUDA. You can overseed with rye, but as mentioned, the rye will set the bermuda back several months next spring.

Fertilize monthly with a high N (low to zero P or K) fertilizer. Supplement that with an organic like Milorganite, corn meal, alfalfa pellets, or soybean meal (mostly unavailable in central to south Texas). The application rate is 15 pounds per 1,000 square feet. That will do more for you than compost to improve the soil. You can apply both chemical fertilizer and organic on the same day if that's most convenient. They do not interact, so go for the bag rate for the chemicals.

When you start mowing it down at 1 inch I think you're going to want the lawn to be more level. You can start now looking at the lawn leveling topics on this forum.

The area next to the fence is doing great. It gets sunlight from about 9AM until about 5:30-6PM. Most of my backyard is full (6-8 hrs) sun except for parts on the side of the house and a little corner next to my back door.

I think the fertilizer + organic is where I've been messing up lately. I stopped using fert and started using organic thinking I would burn the yard if I did both. I'll have to throw down some more fert here this weekend and I do/did use high N fert. I think it was 31-0-0 if I recall correctly. Although for some reason, or it least it seems, I have better results using scotts high N fert rather than vigoro high N fert.

The backyard will be easy to level. The highs and lows aren't drastic at all. The front yard is another story and will take a bit to level out as there are some pretty big highs and lows.

As for overseeding with Rye. The reason I wanted to do that this year is because I do have some really thin to completely bare spots...mostly in between houses on the sides where the bermuda gets very little sun. These aren't little spots either.

Do you think it's worth slowing down the bermuda next spring a bit to ensure that there is at least something there in those spots instead of it just being dirt?

The spots practically looks like this (not my yard just random google image) http://i156.photobucket.com/albums/t2/johnrizvi/PICT0028.jpg

If the Bermuda isn't growing there now, it never will. You can use rye as the turf in those areas instead or plan a flower bed there.