Buyer's Guide

HOW MUCH CAN YOU AFFORD?

When you have made the decision to purchase a home, you will need to determine how much you can afford and how much you want to spend. Take a good look at your personal financial situation in comparison to housing price trends and mortgage plans available in your community.

SELECTING YOUR LENDER

 A very important part of purchasing a home is finding the right lender. Listed below are ways to choose a lender and what characteristics you should look for.

 QUESTIONS TO CONSIDER WHEN SELECTING A LENDER

  • What is his/her reputation within the community? Do they have references?

  • Is the company well known in the area? How long have they been in business?

  • Is the lender a mortgage broker? Do they have access to a wide variety of loan programs?

  • Can the interest rates be locked in and for how long? Is there a charge?

 

GETTING PREQUALIFIED

Once you have chosen your lender, you should receive a "Pre-Approval" letter, which is a very important element when submitting an offer. This way you will be prepared to preview and negotiate your home purchase with confidence.

REASONS TO GET PREQUALIFIED

  • With prequalification, you can determine which loan program fits your needs

  • You will know exactly how much you are qualified for

  • You can estimate your monthly payment. This will allow you to outline your budget before making this important investment

  • It allows you to see what the down payment and closing costs will be

  • If you are a first-time home buyer, you may be able to qualify for a special first-time homebuyer program, saving money and allowing a larger purchase price

  • Meeting with your lender to preview your financial options prior to shopping affords you the opportunity to consider what you really want and need before the emotions of purchasing your home engage. 

TYPES OF LOANS

Adjustable-Rate Mortgage: Loans that have an interest rate that is adjusted at certain intervals based on a specific index during the life of the loan.

Balloon-Payment Loan: A fixed-rate loan that is ammortized over 30 years, but becomes due and payable at the end of a certain term, may be extended, or may roll over into another type of loan.

Buy-Down Loan: Fixed-rate loans where the interest rate and the payment are reduced for a specific period of time by passing the interest up front to subsidize the lower payment.

Community Home-Buyer's Program: A fixed-rate loan for first-time homebuyers with a low down payment (usually 3%-5%), no cash, no cash-reserve requirement, and easier qualifying ratios. Qualification is subject to borrower meeting income limits and attendance of a four-hour training course on homeownership.

Conventional Loan: Sometimes more lenient with the appraisal and condition of the property. When you are buying a "fixer-upper" you may need to use a conventional loan.

FHA Loan: Insured by the Federal Housing Administration under the Department of Housing and Urban Development. They offer a low down payment and are easier to qualify for than conventional loans.

Fixed-Rate Loan: Has a one-time rate that remains constant throughout the life of the loan.

Graduated Payment Mortgage: A fixed-rate loan that has payments starting lower than a standard fixed-rate loan, which then increases by a predetermined amount each year for a set number of years.

Mortgage Credit Certificate: A first-time homebuyer program is subject to purchase price and income limits in some areas. It is actually a special tax credit and assists the buyer in qualifying for many loan programs.

Nonqualifying Loan (Assumable): Pre-existing loans that can be assumed by a buyer from the seller of a property without going through the qualifying process. The buyer pays the seller for their equity and then starts making payments.

VA Loan: Guaranteed by the Department of Veterans Affairs. A veteran must have served 180 days of active service. The maximum  loan is currently $203,000 with no down payment.

 

THE BUYING PROCESS

Buying a home is one of the biggest and most exciting decisions in life. As a San Francisco native with many years of experience, Mary has execptional knowledge of the San Francisco residential market in every neighborhood. She will help you make the purchase of a home as easy as possible. By staying alert and on top of the market, Mary stays in constant contact with you to provide first-hand knowledge on properties that are coming to the market, or those that are off-market.

 

PROPERTY SEARCH

Now that you are ready to start your search, the first step is to preview properties. By touring properties, you are able to understand the value of the market. You are able to see different kinds of properties that will help you determine a sense of what it is you are looking for.

Items to consider that help define your search parameters:

  • Price Range

  • Location

  • # of Bedrooms

  • # of Bathrooms

  • Parking

  • Outdoor Space

  • Proximity to Schools

  • Walkability Score

  • Type of Residence - single-family home, condominium, cooperatives, tenancy-in-common, multi-unit building

     

 

BIDDING AND NEGOTIATING

Now that you have identified a property of interest, Mary will skillfully help you come to a price that you feel comfortable and confident with. This can be based on comparables, price per square foot of homes that have recently sold, and most importantly on current market conditions. Once you determine the value you want to offer, Mary will submit an offer on your behalf with a presentation of all your qualifications.

There are several outcomes when submitting an offer - Acceptance, Counter Offer, Multiple-Counter Offer and Rejection. In the case of multiple offers, Mary will work with you to structure a "best and final" offer that you feel comfortable and confident with. As an experienced professional, Mary works with you throughout the entire process to prepare and review a contract of sale, helping you make the best offer. If an offer is accepted, the conclusion of the process will result in an agreement upon price, terms and closing date.

 

INSPECTIONS

Real Estate contracts often contain contingency clauses that allow buyers to inspect the property physically (at their expense). These inspections provide a comprehensive review of the infrastructure of the property. As an experienced professional, Mary will help you decide what inspections are necessary through observance and knowledge and what is critical in a certain location.

 

COMMON TYPES OF INSPECTIONS

STRUCTURAL PEST CONTROL: Uncovers any active infestation by wood-destroying organisms. It deals with active infestation and reports items that need immediate attention as well as items that could cause infestation, and if not corrected, could casue damage.

PHYSICAL INSPECTION: Encompasses roof, plumbing, electrical, heating and any other accessible area of the structure. A detailed report will be written with recommendations for repair or for any further inspection needed by a specialist.

OTHER TYPES OF INSPECTIONS

  • Geological Inspection

  • Water Conservation & Energy Audit

  • Well & Septic

  • Hazardous Materials

  • Zoning & Building Permit

  • Compliance

  • Contractor's Home Inspection

  • Fireplace Inspection

  • Heating & Air Conditioning

  • Structural Inspection

 

ESCROW AND THE CLOSE OF ESCROW

Once your offer has been accepted, both the buyer and the seller are now in contract and escrow is opened.

WHAT IS ESCROW?

Escrow is the process by which the interests of all parties in a real estate transaction are protected, ensuring that all conditions of the sale have been met, before the property and money change minds. Escrow is an independent depository wherein all funds, instructions and documents for the purchase of your home are held, including your down payment, your lender's funds, documents for the new loan, hazard and title insurance, inspection reports and the grant deed from the seller. At the close of escrow, the escrow officer delivers these items to the appropriate parties, dispursese the funds and handles the associated paperwork.

WHAT ARE BUYER'S DUTIES?

Throughout escrow, it is the buyer's duties to remove all contingences stated in the offer if up to buyer's standards. For example, this would mean securing a loan and having an appraisal or completing all pest and contractor's inspections. Mary will see to it that all inspections are scheduled and removed within a timely manner. Mary is always present at all meetings to help you make educated decisions.

WHAT ARE ESCROW OFFICER'S DUTIES?

  • Serves as the neutral professional and the liasion between all parties involved

  • Requests a preliminary title search to determine the status of title to the property

  • Requests a beneficiary statement of debt or obligations that will be taken over by the buyer

  • Requests a payoff demand from beneficiaries when the seller is paying off debts

  • Complies with the lender's requirements as specified in their instructions to escrow

  • Secures releases of all contingencies of other conditions imposed on the escrow 

  • Prepares or secures the deed and other documents related to escrow

  • Prorates taxes, interest, insurance and rents

  • Prepares escrow instructions

  • Receives purchase funds from the buyer and receives loan funds from the buyer's lender

  • Closes escrow pursuant to instruction supplied by the seller, buyer and the lender

  • Records the deed and any other documents

  • Disburses funds as authorized by the instruction, including charges for title insurance, recording fees, real estate commissions and loan payoffs

  • Prepares final statement for all parties involved that account for the disposition of all funds in the escrow account

WHAT ARE BUYER'S FEES?

About three days prior to close of escrow, Mary will take a final walk through inspection of the property with you. A signing is then scheduled seperately for you and the seller to sign and review all closing documents associated with the sale.

Listed below are some typical closing costs that a buyer may incur as part of a transaction. When you apply for a loan, you will receive a "good-faith" estimate of closing costs and settlement charges, along with a booklet explaining all costs.

  • APPRAISAL: This is a one-time fee

  • TITLE AND ESCROW FEES: Generally, each party is responsible for the cost of fees incurred on their behalf unless otherwise negotiated. Some common exceptions include title policy and escrow fees, city and county transfer fees and real estate commissions

  • DOCUMENT PREPARATION FEE: There may be a separate fee that covers the preparation of the final legal documents

  • TAX PRO-RATION (FROM DATE OF ACQUISITION) AND HAZARD INSURANCE: You may be required to reimburse the seller for property taxes. These can be prorated depending on the month in which you close. You will also need to pay a year's hazard insurance premium up front. Also, you might be required to put a certain amount for taxes and insurance into a special reserve held by the lender

  • INSPECTION FEES

  • HOME WARRANTY

  • INTEREST: Depending on the time of month your loan closes, the per-diem charge may vary from a full month's interest to that of a few days. If your loan closes at the end of the month, you may pay interest for only a day or so

  • LOAN ORIGINATION FEE: The lender's administrative costs in processing the loan are covered by this fee

  • PMI INSURANCE: You may be required to pay an upfront fee for mortgage insurance, depending on the amount of your down payment. Lenders may also require monies be placed into a reserve account

 

BUYER'S RESOURCES

Now that escrow has closed, now it's time to move! Here are some resources to help make your transition as easy as possible.

UTILITIES

  • PG&E: (800) 743-5000
  • SF WATER DEPARTMENT CUSTOMER SERVICE: (415) 551-3000

PHONE/CABLE/TV

  • AT&T: (800) 310-2355
  • COMCAST: (800) 436-1999
  • DIRECTV: (800) 238-7177

GARBAGE

  • GOLDEN GATE DISPOSAL: (415) 626-4000
  • SUNSET SCAVENGER: (415) 330-1300

HOME SERCURITY

  • ADT: (800) 238-2727
  • BAY ALARM: (800) 610-1000