Home Buyer Info

Most of the following information for home buyers is generally applicable to all buyers, while information about closing costs is tailored for home buyers in San Antonio, Texas. If you need information related to these costs in other states, try this Google search for closing costs. To find information specific to your state, add your state's name to the criteria in the search box (outside the quotation marks). Then click the "Search" button again.

The best general advice for home buyers that I encountered on the Web is available on Prudential Texas Properties. Be sure to review their Financing Guide as well. Granted, this is a real estate brokerage franchise site, but the advice is sound. Real Estate ABC is also a good source of info.

And don't overlook the Articles of Interest linked below. They provide insight to important, though obscure, bits of information.

The information in this section includes: Advice for first-time home buyers (includes assistance programs for low income and first time buyers) A baker's dozen of the worst mistakes home buyers make Home Buyer FAQ Closing Costs Articles of Interest

You can also search the MLS listings for San Antonio homes for sale and the national MLS database—without registering! This is the actual REALTOR.com MLS search.

Advice for First-Time Buyers

It may be that the following advice should be read by any home buyer, but first-time home buyers will almost certainly benefit from it—whether a young single or couple, or an established family that has finally reached an income level that they believe makes them ready for home ownership.

  1. The Home buying process—Buying a home is not a complicated pursuit, though some of the details can be a little complicated. The process and many of those details are covered on the Common Questions About an FHA Loan pages of the FHA Web site. Note that the process is the same for other types of loans as well.

  2. Assistance programs—There are many assistance programs for first-time buyers and people who need financial assistance:

          The Local Homebuying Programs pages of the FHA Web site lists these programs by state.
          The Homeownership: Texas page has the links to the assistance programs and other
            information for those of you who live in Texas.
          In San Antonio, see the Homeownership Incentive Program pages of the City of San Antonio
            Neighborhood Action Web site for information about assistance for low income households.
          Other assistance programs are available on the SABOR Down Payment Assistance Programs
            Web page.
          Funds for your down payment may also be available through the Nehemiah Corporation.

  3. Waiting should not be an option—Buying a first home is an intimidating consideration with too many uncertainties for many first-time buyers. For this reason, far too many put off making the decision to buy a home. It's natural and common to put off doing something fraught with uncertainty. Meeting with a professional can however put those uncertainties into perspective, and get you started taking advantage of the benefits of home ownership. Whether sooner or later, you will need to take this step, and you run the risk of not being represented in the negotiations if you wait until you meet with an agent at a property you called about. See mistake #2 in the following section for more about buyer representation.

  4. Give yourself a buffer—Buying all the way up to your qualifying limit without a buffer that will help you cope with unexpected financial demands can result in hardship. The possibilities for personal disaster range from accidents that result in the loss of the use of the principal vehicle (or income due to injury) to unexpected additions to the family, or the need to replace and air-conditioning system and natural disaster requiring extensive repair to the house or its systems. At times, even combinations of the preceding can occur. Buying 5% – 10% or more below your qualifying limit, and putting the difference away for a rainy day, can make the difference between on-going enjoyment of your new home, or a forced sale or foreclosure.

  5. Be wary of adjustable-rate mortgage loans—Adjustable-rate loans can be great in a market with high interest rates that are expected to come down—or for buyers who expect their incomes to increase more than the potential for the increase in the rate of the loan—but the reverse is also true. Like the advice above, borrowers need to consider possible future demands on their finances, and be realistic about their prospects for growth in their income.

A Baker's Dozen of the Worst Mistakes Home Buyers Make

  1. Buying without becoming informed—Knowledge empowers, and learning as much as you can is in your best interest. Magazines, books and the Internet abound with helpful information for home buyers—and your agent and other professionals are important sources of information. Direct your legal questions to an attorney, your questions about structural features to an inspector and so on.

  2. Not making sure that you are represented in the negotiations—Home buyers generally pay less when they are represented in a transaction, and need to know whether they have an agency relationship with the agent who helps them make a purchase offer (see Real Estate Agency Info). If a buyer calls a number on a sign in front of a property for sale, the agent who shows them the property will be representing the seller, not the buyer. Finding a good agent early on in your search for a home is incredibly important to you.

  3. Trying to be a "wheeler-dealer"—Going into negotiations with the expectation that you will make the deal of the century can result in disappointment. Remember, sellers and their agents likely know what they are doing, and your objective is to find a home that suits your wants and needs at the best possible price. Once you find the home you want, you can make an offer a little below what you think a seller will accept, but get ready to negotiate.

  4. Putting flash ahead of functionDon't overlook how a house will function for your family, or other factors that may diminish your enjoyment of home ownership. Each room in a house diminishes the space available for the other rooms. If entertaining guests includes formal dinner parties, a formal dining room may be a necessity—but it may not be if entertaining means that you throw large parties or the gang comes over on Sunday afternoons to watch the football game on your wide-screen TV. How about location? Is the house on a through street, and do you have small children? What about the property that backs up to yours? Is it vacant, used for some commercial purpose, or on an uphill slope that allows the home behind a full view of your back yard?

  5. Declining a home inspection—Even homes that are just a few years old can have foundation problems, and many another problem that could be difficult for the untrained eye to detect. Declining a home inspection is too often a far more expensive decision than paying for it.

    Some considerations, like mold and radon gas, are often not included in a home inspection. HUD News Release 04-087 provides information about how to clean up and prevent mold, and
    information about the hazards of Radon gas and what you can do about it is available in the "Home Buyer's and Seller's Guide to Radon" (PDF download y En Espñaol) and "Consumer's Guide to Radon Reduction" (PDF download) published by the Environmental Protection Agency Web site.

  6. Declining a home owner's warranty—If you paid for an inspection, you will know the serviceability of the systems in the home at the time of the inspection, but the systems in a house can go south in a heartbeat. Replacing the hot water heater will cost only a little more than the warranty, but do you want to risk replacing the air conditioning system?

  7. Not doing the homework on the businesses that inspect and warrant the propertyCheck with the Better Business Bureau to see what kinds of complaints may have been filed against the inspectors and, more importantly, whether the complaints were resolved. In Texas, inspectors are licensed by the Texas Real Estate Commission (TREC), and you can also check their records on the TREC Web site for complaints.

  8. Not checking out the builder's reputation when buying a new homeAsk three or four people who live in the builder's homes whether they were satisfied with the builder's workmanship and performance. Were there many flaws, or hidden flaws? How responsive was the builder to complaints?

  9. Waiting to see what else may be available after finding "the right" homeTake the time necessary to satisfy yourself that the home is what you are looking for and priced right, but act quickly once you decide that it is. As individual as your wants and needs may be, they are probably not especially unique—and someone else may act before you do. Even if the home does not go under contract before you act, you could find yourself bidding against another buyer.

  10. Waiting for a better housing market and interest ratesThe difference between a "buyer's market" and a "seller's market" is nominal, but home values are likely to appreciate more quickly during the later. If the trend endures, you could end up paying more when you do buy and foregoing the full increase in equity afforded by the current market. If you are in a financial position to buy and wait for better interest rates, any number of events could cost you what you would otherwise have gained—and refinancing is an option if the long term drop in interest rates is significant.

  11. Acquiring other debt in advance of buying a home—Is your car paid off, but costing you a couple hundred dollars every few months to keep it on the road? In most instances, these costs are simply an annoyance, and cost less than the payment on a new car—and the repair cost is not figured into your qualifying ratios. This situation is one of life's trade-offs, and you will need to set your priorities. Is the effect on your qualifying ratios of the cost of the new car worth it?

  12. Not buying when the time is rightIf you are thinking about it and you can afford a home, but continue to rent, you will be helping your landlord build the equity and take the tax advantages that could have been yours.

  13. Not becoming familiar with the CC&Rs, By-Laws, and Association Fees—These restrictions within a residential subdivision or condominium community related to a real property’s design, maintenance and use can be extensive. In acreage land development, they may dictate the size and composition of building materials used in construction. What kind of vehicles may be parked and where they may be parked, the extent of any landscaping and the maintenance of the lot, and even the color and composition of roofing materials and garage doors are commonly regulated. In condominiums, the CC&Rs often stipulate what physical changes may be made to a unit, and ban such things as hanging laundry in public view (over a balcony rail) and even the color of drapes visible to the exterior. If you are an independent trucker or own an RV, wouldn't you want to know whether you can park your vehicle on your property?

Home Buyer FAQ

How do I know what the value of a real property is?
How do I know how much I can afford to pay?
Should I borrow as much as I can afford to pay?
Should I lock in the rate quoted by the lender?
Should I use an agent?
How much do buyers' agents charge & who pays them?
How do I find a good agent?
What's the advantage of using an experienced agent?
Should I form a buyer's agency relationship with a REALTOR®?
Can I get a better deal from a FSBO?
Can I ask the seller to pay my closing costs?
How much will my closing costs be?

Closing Costs

Buyers, especially first time home buyers, want to know how much cash will be need at closing. Most of the questions raised will be answered by the following frequently asked questions:

What are typical closing costs for buyers? The information on most Web sites will tell you, but the fact is that there is no such thing. They differ significantly enough between cash, conventional loans, FHA loans and VA loans that they should each be outlined. The following will explain what most buyers want to know, and there are links to PDF and Microsoft Excel documents that will provide a fair estimate of the bottom line for each type of financing.

Some closing costs, especially those associated with the loan application, are actually paid in advance of the closing. Others are "prepaid" items that are collected for the lender's escrow account to assure that adequate funds will be on hand to pay the insurance and taxes. These are all included in the downloadable documents available below.

The following closing costs are estimates of those that are customarily paid by the buyer in the San Antonio area. A seller can however be asked to pay some or all (unlikely) of them to help a cash-strapped buyer, or as bargaining points in the negotiations. Any calculation made based on the following will be an estimate. Your actual closing costs may be higher or lower. Because you will need to provide a cashier's check at closing, you will be provided with the actual closing costs prior to closing on a transaction.

How much down payment is needed for a home purchase?

Will I need mortgage insurance?

How much earnest money is customarily offered?

What are "points," and are they worth paying?

What is an origination fee, and should you pay it?

What is an escrow account?

What is "prepaid interest"?

What is a Title Policy

Homeowners Insurance—Though lenders require only that borrowers secure hazard insurance, most home owners enjoy the greater protection afforded by a homeowner's policy. As a "rule of thumb," figure about 0.7% of the value for the annual rate. Factors like type of policy, the distance from fire hydrants, the composition of the exterior materials or the fire resistance of materials and construction features, and the amount of the deductible, among many other considerations, make insurance rates vary widely. In addition to the up-front cost for the first year's coverage, two months "prepaid" insurance will be collected at closing for next year's premium. In Texas, click the following links for types of policies available and other good info, helpful information about shopping for an insurer and rate comparisons from the Texas Department of Insurance.

Taxes Escrow— Property taxes will vary widely, depending on the closing date (taxes are prorated), whether a property is located within a municipality, the school district in which it is located and the current assessed value. As a "rule of thumb," figure about 1.5% to 2% of the value for the annual rate. The total tax will be prorated, and "prepaid" tax (for the remainder of the month, plus the taxes for the following month) will be collected at closing for the end-of-year tax bill.

For more precise information about tax rates, see the Bexar County Tax Rate Tables.

Click the link below to download the Microsoft Excel spreadsheets for the monthly payment and closing costs , as well as the Department of Housing and Urban Development pamphlet, Buying Your Home: Settlement Costs and Helpful Information. The download is a compressed .zip file that contains each of the documents.
       MP&CCs.zip (454 KB)

Articles of Interest



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