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Showcase Realty

Buying Your Next Home

In San Antonio, New Braunfels and Boerne, TX

The 8 Steps to Buying a Home

Buying a home can be a daunting task. Whether you are a first time home buyer or an experienced one, it may seem overwhelming. Market conditions are constantly changing. You may have questions throughout the entire process.

This is why you should have a Real Estate professional in San Antonio, New Braunfels and Boerne on your side. We have broken down the steps to buying a home into several categories for you to easily understand the process. Please review the following and feel free to contact one of our Realtors anytime with any and all questions you may have. Also, our services to you as a Buyer’s Agent are always free of charge.

1. How much can you afford?

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Before your search for that perfect home begins, you must determine what you can afford. There are basic factors that determine how much home you can buy.

Income

Your income is a major factor in determining how much you can afford. For conventional loans, the lender typically allows 28% of your monthly income for your complete mortgage payment including principle, interest, taxes and insurance (PITI).

$ 5,000 Monthly Income x .28 = $1,400 allowed for housing expense
Credit Score

The better your credit score, the better the interest rate you will qualify for. Lower interest rates allow you to buy more home for the same monthly payment. Beside are examples are for principle and interest (P&I) only and no money down:

6% 30yrs. $1,400 $233,500
8% 30yrs. $1,400 $191,000
10% 30yrs. $1,400 $159,500
Down Payment

A larger down payment may afford you a larger home. With good credit, you may qualify for a home loan with no down payment.

Homeowners Insurance

Since homeowners insurance is part of the escrow payment on your loan, you must factor this into your total monthly mortgage payment. Homeowners insurance in San Antonio could add around $100 – $300 to your monthly payment.

Monthly Expenses

Car payment, minimum credit card payments, student loans, personal loans, child support payments and any other monthly obligations reduce the amount you many qualify for.

Local Taxes

Increasing home values means increases in property taxes. By going to the county tax appraiser’s website, you can estimate what your taxes would be for a particular home you may be interested in purchasing.

2. Finding a Home

Prioritize First

Before you start your search for a home, decide what features are most important to you. How many bedrooms and baths do you need? Do you need a home office? Do you want a swimming pool or subdivision amenities? Do you prefer a 3-car garage? Maybe you prefer wood or tile floors over carpet or a split bedroom plan where the Master is away from the secondary bedrooms. These are things to think about before starting your search. We have worksheets that will help you determine your needs and possibly point out things you may not have thought of beforehand. Please contact us for the worksheet.

Save Time with Showcase

One you let your Realtor know exactly what you’re looking for ahead of time, they can search for the perfect homes for you. This also saves you time because you’re not looking at homes that wouldn’t necessarily suit your needs. If you’re looking for new construction, we have a list of all the local builders with all the current incentives they are offering. Often times, builders have inventory homes that are ready for immediate occupancy. This means you don’t have to wait six months or more to get into a brand new home.

All Properties in San Antonio

As a member of the San Antonio Board of Realtors MLS, we have access to all homes available in the San Antonio area including: Boerne, Spring Branch, Bulverde, Canyon Lake, McQueeny Lake and New Braunfels.

We can show you any homes for sale including homes listed by: Re/Max, Century 21, Keller Williams, Exit, Prudential, Assist-2-Sell, Phyllis Browning, KuperSotheby’s, Realty Executives, Coldwell Banker, ERA or any other real estate company.

3. Shopping for a Loan

Shopping for a home loan will help you get the best terms. A loan is a product and just like buying a car, terms for the loan may be negotiable. While shopping for a mortgage, you should always compare the costs involved.

There are different types of lending institutions: commercial banks, mortgage companies, and credit unions. A buyer has the option of dealing directly with the above type lenders or with a mortgage broker which shops many different lending institutions and finds the best deal for you.

Rates

Is it fixed or adjustable?

Down Payments

Compare what the required down payment is per individual lender.

Fees

Ask what fees are involved. Some examples include: Loan origination, underwriting fees, broker fees, application fee, and appraisal fee. There may be others depending on the lending institution or mortgage brokerage.

Points

Are there any involved? Points are fees paid to the lender or the broker for the loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.

Private Mortgage Insurance

Not all lenders require PMI so be sure to ask. Private Mortgage Insurance protects the lender against a loss if a borrower defaults on the loan. It is usually required for loans where the down payment is less than 20% of the sales price or when the amount financed is greater than 80% of the appraised value.

Term of the Loan

15, 20, or 30 year loan. Also, be aware that there are now lending institutions providing loans for 40, 45, and 50 years. When comparing programs the different lending institutions offer, pay close attention to the term of the loan and make sure you are comparing the same terms.

Pre-payment Penalties

Does the loan have a pre-payment penalty? If so, how much is it and how long does the penalty period last? Other questions regarding pre-payment penalties would be if selling your home and making extra principal payments would fall under the pre-payment penalty.

Once you are satisfied with the terms, you may want to obtain a written lock-in from the mortgage broker of lender. It should include that rate, the period the lock-in lasts, and the number of points to be paid. By locking in, it protects you from any rate increases while your loan is being processed.

4. Make an Offer

You finally found the perfect home and you’re ready to make an offer! Your Realtor will research and provide you with a list of comparable properties to help determine the best price and terms to offer for the property.

Another thing to consider when making an offer is the items in the house that you want to convey with the sale. Examples of these items are: refrigerator, range, window treatments, ornate chandeliers and light fixtures, and outdoor sheds or spas.

It’s usually a good idea to make all offers contingent on a satisfactory home inspection. It would be in your best interest to hire a professional home inspector to evaluate the home and advise you of any defects or potential negative aspects of the home.

Contingencies

Will your offer have any contingencies? Examples of some contingencies are: inspections, financing, the sale of a house, satisfactory appraisal, reviewing the covenants and deed restrictions of the community or condo docs, etc.

Closing Date

Determine the date you would like to close. Keep in mind the closer the date is to the end of the month the less interest you will have to pay upfront to your lender. This can sometimes greatly reduce the amount of your closing costs.

Offer and Acceptance

A standard sale and purchase contract includes a provision for you to specify how long the seller may take to respond to your offer. Unless the contract is signed by the seller and delivered to the buyer by the date and time you specify, the offer will be revoked and the buyer’s escrow deposit refunded subject to clearance of funds. This prevents the seller from keeping you in suspense while waiting for a better offer.

Earnest Money

In most cases, you will be expected to provide a deposit or earnest money payment with the offer. An earnest money deposit could range from $500 to several thousand dollars. The check is often made to the title company that will handle the closing who will keep the money in escrow until negotiations are complete. Always get a signed receipt. Be sure that you will get the money back if the sale is not completed due to the seller of certain contingencies that you have written into the contract. If you decide to back out of the contract, you will more than likely have to forfeit the deposit to the seller.

Presenting the Contract

Once you have completed and double-checked the contract, it is presented to the seller. If the seller accepts everything in the contract, including the price and all of the contingencies, the offer becomes binding on both the buyer and seller subject to the contingencies. If the seller wishes to negotiate, a counteroffer is made with either a new contract or with notations and substitutions made on the original document. You then receive the revised contract and can either sign it, if acceptable, or reject it and make a second offer. Most agreements are reached after several rounds of offers and counteroffers.

5. Home Inspection

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Once your offer has been accepted, the next step is the home inspection. The standard sale and purchase contract allows ten days from the effective date for the home inspection to be completed unless other terms have been agreed upon between the buyer and seller.

You should employ the services of a Professional Licensed Home Inspector to identify any hidden or possible future problems with the home.The cost of a home inspection normally runs around $250-$400 for a typical home (homes with larger square footage, pools, spas, etc. may cost more) and this has to be paid to the inspector at the time of service.

Is it Mandatory?

A home inspection for a conventional loan is optional to the buyer but mandatory for FHA and VA loans which follow guidelines set by the local government.

It is highly recommended that you elect to have a home inspection; it could save you thousands of dollars plus headaches in the future. It also gives you peace of mind that the home you’re purchasing is in good condition.

How Long Does it Take?

A detailed home inspection usually takes two to three hours or longer, depending on the home’s age and square footage.

We recommend that you be present at your home inspection so that you can ask your inspector any questions and to look at any areas needing maintenance or repair.

Key Areas to Review in a Home Inspection

The inspector’s job is to give an in-depth and impartial evaluation of the home’s systems as they appear at the time of the inspection. The inspector should also be fully trained in the proper operation of all commonly found home systems. You can expect the inspector to:

  • Evaluate the physical condition including the structure, construction and mechanical systems.
  • Identify items that should be repaired or replaced.
  • Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.

Below is a list of the most commonly inspected items during a home inspection:

  • Structural Components: Foundations, floors and walls.
  • Exterior Components: Siding, paint, windows, decks, garage doors, etc.
  • Roofing: Coverings, flashings, chimneys, etc.
  • Plumbing: Piping, fixtures, faucets, water heating and fuel storage systems, etc.
  • Electrical: Wiring, main service panels, conductors, switches, receptacles, etc.
  • Heating: Equipment, safety controls, distribution systems, chimneys, etc.
  • Air Conditioning and Heat Pumps: Cooling and air-handling equipment, controls and ducting, etc.
  • Interior: Partitions, ceilings, floors, railings, doors and windows, etc.
  • Insulation and Ventilation: Attics, walls, floors, foundations, kitchen and bathrooms, etc.
Pest & Termite Inspection

This is another expense to the buyer usually costing anywhere from $35 to $65. This is usually included in your final closing costs and paid at the time of closing. More often than not, if a buyer is financing a home, the lender will require a termite inspection. This assures the lender that the home is free of termites and other wood destroying insects. If a home is infested with wood destroying organisms, it could compromise the integrity of the structure.

The pest inspector will look for infestation by wood-boring insects such as termites and flying beetles, as well as evidence of dry rot and other fungal conditions. If the pest report mentions damage from an active or previous infestation, the lender may ask the buyer to hire someone to verify the structural integrity of the home. Neither of those inspections takes the place of a home inspection that examines the condition of the house and its components.

6. Appraisal

An appraisal can be defined as an un-biased estimate of the value of a property a buyer is purchasing. The purpose of the appraisal is to determine the market value of the home.This ensures that the buyer is not purchasing the home for more than it is actually worth. The outcome of the appraisal determines the maximum amount a lender will loan to purchase that particular property. The buyer pays for the appraisal up front but the lender must order the appraisal.

An appraiser arrives at a final opinion of value by evaluating the property and the neighborhood in which it is located. They also obtain land values from county sources and recent sales information about nearby properties. They, then, prepare a written report outlining methods by which the fair-market value was estimated. Usually, the buyer’s lender will receive the final report within 3-5 days.

7. Homeowners Insurance

The main purpose of homeowners insurance is to provide financial protection against disasters to your home and other structures like a shed or detached garage. Homeowners insurance covers both damage to your property and your legal responsibility for any injuries and property damage to others while on your property. When purchasing a home, the lender always requires the buyer to obtain and show proof of homeowners insurance before finalizing the loan.

The homeowner’s insurance policy includes four different types of coverage:

Structure of the Home

Pays to repair or rebuild your home if damaged or destroyed by fire, lightening, wind storm, hail, explosions, vandalism, vehicles, smoke and other disasters listed in the policy.

Personal Belongings

Electronics, furniture, clothes, jewelry, and any other personal items are covered if they are stolen or destroyed by insured disasters.

Liability

Covers you against lawsuits for bodily injury or property damage to others while on your property.

Additional Living Expenses

Pays the additional cost of living away from the home if repairs or replacement is needed. It typically covers hotel bills, restaurant expenses, and other living expenses while the home is being repaired or rebuilt.

Reimbursement Calculation Methods

The insurance companies use one of two ways for determining reimbursement to a homeowner for their losses.

  1. Replacement Cost: Cost of replacing damaged property with no deduction for depreciation.
  2. Actual Cash Value: Cost of replacing damaged property minus depreciation.

Keep in mind, before a homeowner is reimbursed for any claim they must satisfy their deductible first.

Watch for these exclusions

Basic homeowner insurance policies do not cover against flood, earthquake, and sinkhole damage. One may consider adding these endorsements to their policy. Although, if the home you decide to purchase is located in a flood zone, the lender will require you to add flood insurance to your policy.

8. Closing the Deal

real estate brokers in San Antonio and Austin, TX

Final Walk Through

Before heading to the closing table, you’ll want to do a final walk through the property you’ll be purchasing. The final walk through is to confirm that the property is in the same condition as when you previously viewed it, all items are in working order, and all necessary repairs have been completed.

To keep the mystery out of the actual closing process, here is an explanation of what will happen and what you’ll need on closing day.

What is “Closing”?

Closing is when the deed of real estate is transferred from the seller to the buyer. It’s also when the buyer signs all mortgage documents, makes the remaining down payment, and settles all closing costs. Any form of payment to the title company on the day of closing must be by certified funds. No other form of payment such as cash, personal checks, etc. will be accepted. Usually, the closing takes no more than a couple hours to read and sign all necessary documents.

Where Will It Take Place?

The closing is held at a pre-selected title company office which represents an unbiased third party.

What Should You Bring to Closing?

You will need a valid form of photo identification such as a driver’s license. You’ll also need any and all funds needed to close in the form of a certified check.

Who Will Be There?

The buyer and buyers’ realtor, the seller and their realtor, a representative of the title company, and sometimes a representative of the lender will attend closing.

What Will You Do?

You will carefully review and sign all mortgage paperwork and title documents, give a certified check to the title company representative for your down payment and your share of the closing costs.

Review the Closing Disclosure.
Make sure to switch utilities into your name after the closing.

Our services to you as a Buyer’s Agent are always free of charge. Contact us today.

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