SAN FRANCISCO BUYERS
"Purchasing a home is a lifestyle choice that requires you to think about how you like to spend your time and the type of community where you want to live..."
|
Homebuying Flow Chart
As your real estate consultant, I will guide you through the details of each stage of your home search.
| |||
Are you ready to purchase a home?
While it may be acceptable to snap up a pair of shoes on an impulse, buying a home requires thoughtful planning and decision making. Whether you’re becoming a homeowner for the first time or you’re a repeat buyer, buying a home is a financial and emotional decision that requires the experience and support of a team of reliable professionals including a Realtor, a lender, a lawyer and a range of other individuals.
Why Do You Want to Buy?
The emotional part of the decision comes into play when you think about why you want to move. If you’re a first-time buyer, you need stability in your career and the desire to commit to living in the same community for five to seven years. You should want to establish roots in a neighborhood and look forward to decorating as you please without requiring a landlord’s permission.
Purchasing a home is a lifestyle choice that requires you to think about how you like to spend your time and the type of community where you want to live, such as a rural area without nearby neighbors, a highrise building in a city or a home within a planned community with recreational amenities. The more you understand your priorities for a home, the easier it will be for you to narrow your real estate decisions.
Homeownership can also be a powerful way to increase your personal wealth for you and your family, since you’ll be building equity in your home as you pay off your mortgage.
Are Your Finances Ready for Homeownership?
While your dream home may or may not be within your reach right away, you can take steps to become a homeowner the moment you earn your first paycheck. In order to qualify for a mortgage loan to buy a home, you’ll need good credit, a pattern of paying your bills on time and saving money, and a maximum debt-to-income ratio (your gross monthly income compared to the minimum payments on all recurring debts) of 43 percent. Some lenders have stricter guidelines, so the lower your debt-to-income ratio, the better your chances of a loan approval.
While loan programs are available with low down payments of 3.5 to 5 percent, and a few programs offer no down payment at all, you’ll still need some savings to pay for closing costs and moving expenses, a deposit on a home, and for cash reserves after you buy. Saving money and preserving or improving your credit history are essential elements to homeownership.
What Can You Afford to Buy?
Housing prices and rents vary from one location to another, but you can use a rent-vs.-buy calculator to estimate the difference between your current rent and buying a home. In some markets buying a home can cost the same or even less than renting. Remember, when you’re a homeowner you need to included homeowners insurance, property taxes and homeowner association dues in your housing costs. You can also use a home affordability calculator to help you estimate what you can pay for a home. You should also think about your plans for the future and how you spend your money, along with your comfort level with a mortgage payment. A lender will tell you how much you can borrow, but that lender won’t know how much you spend on travel or golf or your plans for potentially reducing your work hours when you have a family.
Once you’ve thought through the emotional and financial aspects of becoming a homeowner, your next steps should be to find a reliable, experienced Realtor to become your partner in the homebuying process and to meet with a reputable lender who can discuss your options for financing your purchase.
Source: realtor.com
While it may be acceptable to snap up a pair of shoes on an impulse, buying a home requires thoughtful planning and decision making. Whether you’re becoming a homeowner for the first time or you’re a repeat buyer, buying a home is a financial and emotional decision that requires the experience and support of a team of reliable professionals including a Realtor, a lender, a lawyer and a range of other individuals.
Why Do You Want to Buy?
The emotional part of the decision comes into play when you think about why you want to move. If you’re a first-time buyer, you need stability in your career and the desire to commit to living in the same community for five to seven years. You should want to establish roots in a neighborhood and look forward to decorating as you please without requiring a landlord’s permission.
Purchasing a home is a lifestyle choice that requires you to think about how you like to spend your time and the type of community where you want to live, such as a rural area without nearby neighbors, a highrise building in a city or a home within a planned community with recreational amenities. The more you understand your priorities for a home, the easier it will be for you to narrow your real estate decisions.
Homeownership can also be a powerful way to increase your personal wealth for you and your family, since you’ll be building equity in your home as you pay off your mortgage.
Are Your Finances Ready for Homeownership?
While your dream home may or may not be within your reach right away, you can take steps to become a homeowner the moment you earn your first paycheck. In order to qualify for a mortgage loan to buy a home, you’ll need good credit, a pattern of paying your bills on time and saving money, and a maximum debt-to-income ratio (your gross monthly income compared to the minimum payments on all recurring debts) of 43 percent. Some lenders have stricter guidelines, so the lower your debt-to-income ratio, the better your chances of a loan approval.
While loan programs are available with low down payments of 3.5 to 5 percent, and a few programs offer no down payment at all, you’ll still need some savings to pay for closing costs and moving expenses, a deposit on a home, and for cash reserves after you buy. Saving money and preserving or improving your credit history are essential elements to homeownership.
What Can You Afford to Buy?
Housing prices and rents vary from one location to another, but you can use a rent-vs.-buy calculator to estimate the difference between your current rent and buying a home. In some markets buying a home can cost the same or even less than renting. Remember, when you’re a homeowner you need to included homeowners insurance, property taxes and homeowner association dues in your housing costs. You can also use a home affordability calculator to help you estimate what you can pay for a home. You should also think about your plans for the future and how you spend your money, along with your comfort level with a mortgage payment. A lender will tell you how much you can borrow, but that lender won’t know how much you spend on travel or golf or your plans for potentially reducing your work hours when you have a family.
Once you’ve thought through the emotional and financial aspects of becoming a homeowner, your next steps should be to find a reliable, experienced Realtor to become your partner in the homebuying process and to meet with a reputable lender who can discuss your options for financing your purchase.
Source: realtor.com
Q&A for buyers
What is the process of purchasing a home?
Please refer to the Homebuying Flow Chart above. As your Realtor®, I will guide you through the details of each step during your home purchase.
I currently own my home. Should I sell first before purchasing a new home?
There are several options for current homeowners who would like to purchase a new home.
- You can sell your current home and find temporary housing (e.g. short-term rental) while you search for a new home to purchase.
- There is also the option to negotiate a seller "rent-back" from the buyer. In this scenario you remain in your current home once your sale is completed (usually no more than 60 days). During this rent-back period you would be searching and buying a new home.
- You can first find a new replacement property and negotiate an offer contingent on the sale of your current property. In this option, you would need to sell your current home in order to close escrow on the new property.
Each individual's circumstances are unique. Please contact me for more information regarding these strategie
- You can sell your current home and find temporary housing (e.g. short-term rental) while you search for a new home to purchase.
- There is also the option to negotiate a seller "rent-back" from the buyer. In this scenario you remain in your current home once your sale is completed (usually no more than 60 days). During this rent-back period you would be searching and buying a new home.
- You can first find a new replacement property and negotiate an offer contingent on the sale of your current property. In this option, you would need to sell your current home in order to close escrow on the new property.
Each individual's circumstances are unique. Please contact me for more information regarding these strategie
What are the costs associated with purchasing a home?
Buyer's should budget for 1-3% of sales price in cash to "close the sale" For a $1million dollar purchase the buyer should expect to have $10,000 - $30,000 cash available in addition to the down payment for their loan.
There are several costs or fees associated with purchasing a home. Some fees are the responsibility of the buyer and some are the responsibility of the seller to cover. It will depend on the final terms negotiated in the sales agreement. Below are the costs or fees that a buyer is normally expected to pay in a San Francisco real estate transaction.
Escrow Fees
Typically between $800 - $1,300.
The fee a title company will charge for handling the transaction. This includes their fee, notary fees for documents, wire transfer fee (they handle monies including deposit, your loan wire, final sales proceeds to seller, etc). The fees are set by the State of California and depends on the price of the sale. It's typically between $1,000 - $1,500.
Title Insurance
Fees Vary
Typically $800-$3000
CLTA Insurance protects the owner against a claim against the title (or deed) on their property.
ALTA Insurance is almost always required by your lender (if using a bank loan) and protects the lender against title claims.
Inspection Costs
$400-$800 (home inspection)
Buyers should expect to at least order a home inspection before purchasing a property. There may be other reports necessary like pest, roof, sewer line, etc. In San Francisco the pest inspection reports are usually ordered by the seller and included in the disclosure package. Also, the seller normally pays for the inspection and compliance with the San Francisco Water and Energy Conservation Ordinance.
Loan Fees
$1000-$2000
Covers processing the loan (eg back office fees) and also appraisal report fees ($400-$600).
Buyer may also opt for a loan buydown of rate (say from 5.185% to 5.00%) in exchange for paying a fee up front (e.g. 1 point or 1% of loan). There may be also a mortgage broker fee/commission which is usually 1-2% of the loan.
Homeowner's or Condo Insurance
Varies depending on insurer, property appraisal, and property type.
$1000-$6000 per year depending on policy.
This is paid by the buyer and goes into effect when title is transferred to the buyer from the seller. If you are financing your purchase with a loan/mortgage the lender will require you show proof of insurance by close of escrow. Consult an insurance broker for a quote. There are optional add-on coverage for properties with tenants (landlord's insurance) and earthquake insurance. Homeowner's insurance protects the owner in the event the property is destroyed or damaged (e.g. fire). Condo insurance protects the owner's possessions. Insurance covering the structure of a condo building is included in the HOA dues.
Pro-ration of Property Taxes
Varies by property
The fiscal year ends on June 30th. Over the course of the year the seller should have made 2 property tax payments. The first payment is due November 10th and the second payment is due April 10th. If the sale occurs after one of the tax due dates but before fiscal year end, the buyer will need to reimburse the seller for property taxes covering the time they will own the property after title transfer.
Pro-ration of Monthly Loan Amount
Partial or a full month of mortgage insurance may be due upon which day of the month escrow closes.
Pro-ration of any HOA Dues
Partial or a full month of HOA dues (condos and planned unit developments)) may be due upon which day of the month escrow closes.
There are several costs or fees associated with purchasing a home. Some fees are the responsibility of the buyer and some are the responsibility of the seller to cover. It will depend on the final terms negotiated in the sales agreement. Below are the costs or fees that a buyer is normally expected to pay in a San Francisco real estate transaction.
Escrow Fees
Typically between $800 - $1,300.
The fee a title company will charge for handling the transaction. This includes their fee, notary fees for documents, wire transfer fee (they handle monies including deposit, your loan wire, final sales proceeds to seller, etc). The fees are set by the State of California and depends on the price of the sale. It's typically between $1,000 - $1,500.
Title Insurance
Fees Vary
Typically $800-$3000
CLTA Insurance protects the owner against a claim against the title (or deed) on their property.
ALTA Insurance is almost always required by your lender (if using a bank loan) and protects the lender against title claims.
Inspection Costs
$400-$800 (home inspection)
Buyers should expect to at least order a home inspection before purchasing a property. There may be other reports necessary like pest, roof, sewer line, etc. In San Francisco the pest inspection reports are usually ordered by the seller and included in the disclosure package. Also, the seller normally pays for the inspection and compliance with the San Francisco Water and Energy Conservation Ordinance.
Loan Fees
$1000-$2000
Covers processing the loan (eg back office fees) and also appraisal report fees ($400-$600).
Buyer may also opt for a loan buydown of rate (say from 5.185% to 5.00%) in exchange for paying a fee up front (e.g. 1 point or 1% of loan). There may be also a mortgage broker fee/commission which is usually 1-2% of the loan.
Homeowner's or Condo Insurance
Varies depending on insurer, property appraisal, and property type.
$1000-$6000 per year depending on policy.
This is paid by the buyer and goes into effect when title is transferred to the buyer from the seller. If you are financing your purchase with a loan/mortgage the lender will require you show proof of insurance by close of escrow. Consult an insurance broker for a quote. There are optional add-on coverage for properties with tenants (landlord's insurance) and earthquake insurance. Homeowner's insurance protects the owner in the event the property is destroyed or damaged (e.g. fire). Condo insurance protects the owner's possessions. Insurance covering the structure of a condo building is included in the HOA dues.
Pro-ration of Property Taxes
Varies by property
The fiscal year ends on June 30th. Over the course of the year the seller should have made 2 property tax payments. The first payment is due November 10th and the second payment is due April 10th. If the sale occurs after one of the tax due dates but before fiscal year end, the buyer will need to reimburse the seller for property taxes covering the time they will own the property after title transfer.
Pro-ration of Monthly Loan Amount
Partial or a full month of mortgage insurance may be due upon which day of the month escrow closes.
Pro-ration of any HOA Dues
Partial or a full month of HOA dues (condos and planned unit developments)) may be due upon which day of the month escrow closes.