BUYER’S BASICS: A Guide to Responsible Homeownership
ADRIAN SALGADO
legal, plugs and acknowledgements ©2011, DaSH—A Real Estate Company and Adrian Salgado. This work is licensed under the Creative Commons Attribution-Non Commercial-No Derivative Works 3.0 International License. If you like this book, you might want to check out Adrian’s real estate blog about Coral Gables at www.gablesmavens.com and his mobile photo blog at www.adriansalgado.mobi. If you want to talk to Adrian, you can reach him at adrian@gablesmavens.com or on Twitter at @adriansalgado.
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A special thank you to Raul Estrada, Jr. for being the captain of the ship. BIG thank you to Michael Gomez for reviewing my work and destroying it with red ink. It was great to feel like a 6th grader all over again.
Last, but certainly not least, thank YOU for reading this book. I hope it serves as a useful guide for purchasing your next home. If it helps just 1 person make the right decisions when purchasing a home, then my deed is done. I hope that person is you.
table of contents Contact & Connect …………………………………………………………………………………………………………………….... page 1 Summary …………………………….…………………………………………………………………………………………………………. page 2 Introduction Who We Are ……………………………………………………………………………………………………………………… page 4 Our Mission ……………………………………………………………………………………………………………………..… page 6 Core Values …………………………………………………………………………………………………………………….… page 7 The Flow Home Buying Process Flowchart …………………………………………………………...…………………………. page 9 Step 1: Evaluate Your Lifestyle & Finances Calculate a Monthly Payment ………………………………….……………………………………………………... page 11 Improving Your Mortgage Approval Chances ………………………………………………………………… page 11 Benefits of Buying a Home ……………………..……………………………………………………………………... page 12 You Should Continue Renting If ……………...……………………………………………………………………... page 13 Step 2: Choose a Real Estate Agent Your Team ………………………………………………..……………………………………………………………………... page 15 What is a Transaction Broker? ………………..……………………………………………………………………... page 16 What is a Single Agent Relationship? ……..……………………………………………………………………... page 17 What is a No Brokerage Relationship? ………………………………………………………………………..… page 18 What is an Exclusive Buyer Brokerage Agreement ….....……………………..…………………………... page 18 Who Pays the Buyer’s Agent? ………………....……………………………………………………………………... page 19 Step 3: Get Preapproved For a Loan Types of Lenders ………………………..…………....……………………………………………………………………... page 21 Are You Prequalified or Preapproved? …………………………………………………………………………... page 22
table of contents Documents Your Mortgage Professional Will Need From You …...…….…………………………... page 23 Questions to Ask a Mortgage Professional …….……………………………………………………………... page 24 Questions You Should Expect from a Mortgage Professional ……...………………………….…… page 25 What is a Conventional Loan? ………………………………………………………………………………..……… page 26 What is a Federal Housing Administration (FHA) Loan? ………………………………………………. page 27 What is a Veterans Affairs (VA) Loan? ………………………………………………………………………….. page 28 What is a HomePath Mortgage? …………………………………………………………………………………….. page 29 Should You Choose a Fixed-rate Mortgage or an Adjustable-Rate Mortgage? ………….... page 30 What Goes Into a Monthly Mortgage Payment? ……..……………………………………………………... page 32 Common Expenses When Buying a Home …...………………………………………………………………... page 34 Good Faith Estimate (GFE) …………………………....………………………………………………………….…...... page 35 Step 4: Research & Evaluate Neighborhoods Schools, Walkability, Crime, Neighborhood News, etc. ……………..…...………………………….…… page 37 Questions and Tips ………………………………………………………………………...………………………….…… page 38 Step 5: Identify a Home Create a Wish List …..……………………………………………………………………...………………………….…… page 40 Needs vs Wants ……………………………………………………………………………...………………………….…… page 41 What is a Condominium? …..…………………………………………………………...………………………….…… page 42 Pros and Cons of a Condominium ………...……………………………………...………………………….…… page 43 What is a Townhouse? …………………………………………………………………...………………………….…… page 44 Pros and Cons of a Townhouse ….………………………………………………...………………………….…… page 45 What is a Detached Single-Family Home? …..………………………………...………………………….…… page 46 Pros and Cons of a Single-Family Home ……………………………………...………………………….…… page 47
table of contents Understanding the Difference Between Short Sales, Foreclosures and Real Estate Owned (REO) ……...…………………………………………………………………………...…… page 48 Searching for a Home ….………………………………………………………………...………………………….…… page 50 Things to Look For ………………………………………………………………………...………………………….…… page 51 Step 6: Execute a Contract How to Write an Offer ………………………………………………………..……..…...………………………….…… page 53 Common Negotiable Terms …….……………………………………………………...………………………….…… page 53 What is the difference between the FAR Residential Contract and the FAR Residential Contract + As Is with Right to Inspect Addendum? ….….………………………………………….…… page 54 What is the difference between the FAR/BAR Residential Contract and the FAR/BAR As Is Residential Contract? ………………..……………………………………………………………..…………….. page 57 Contingencies & Disclosures …..……………………………………………………...………………………….…… page 61 How Much Do I Offer? ……...…………………………………………………………...………………………….….… page 63 Comparative Market Analysis …………………………………….…………………...………………………….…… page 63 Can the Seller Pay for the Buyer’s Closing Costs?…...…………………...………………………….…… page 65 Submitting the Offer ………………..……………………………………………………...………………………….…… page 66 Negotiations ……………………………..……………………………………………………...………………………….…… page 66 Step 7: Meet Post-Contract Contingencies Executed Contract …………………………………………………………………………………………………………… page 68 Earnest Money Deposit …….………………………………………..…………………...………………………….…… page 68 Loan Application ………………………..…………………………………………………...………………………….….… page 68 Schedule the Home Inspection ……………………………………………………...……………………….….…… page 69 Complete the Home Inspection ……………………………………………………...………………………….…… page 70 Negotiating Home Inspection Repairs ….………………………………………...………………………….…… page 71 Order and Complete a Home Appraisal ……...………………………………...………………………….…… page 72
table of contents Condominium/Homeowner’s Association Approval ……………...………………………………………… page 73 Land Survey ………….………………....……………………………………………………...………………………….…… page 75 Elevation Certificate ………………………………………………………………………………………………………… page 76 Homeowner’s Insurance …….……………...……………………………………...………………..……………….…… page 77 Flood Insurance …………………………………………………………………………………………………...………….. page 77 Wind and Hail Insurance ………...……………………………………………………...………………………….…… page 78 HO6 Insurance ………...……………………………………………………...………………………………………….…… page 78 What Your Insurance Agent Needs ……………………..………………………………………………….……… page 78 Title Insurance …………………………….………………………………………………...…………..……………….….… page 79 Title Search and Examination ………………………………………………………...………………………….…… page 79 Conditional Loan Commitment ……..………………………………………………...………………………….…… page 80 Firm Loan Commitment ……..…………………………………………………………...………………………….…… page 80 HUD-1 Settlement Statement …….…………………………………………………...………………………….…… page 81 Walkthrough Inspection …………..……………………………………………………...…….…………………….…… page 81 Schedule the Closing …………..……………………………………………………...…….………………….…….…… page 81 Step 8: Close the Transaction Closing the Property Transaction ……………………………..…………………...…………………………..…… page 83 Funding and Possession ………………………………………………………………...………………………….….… page 84 Post Closing ………..………………..….……………………………………………………...………………………….…… page 85 Mortgage Paid in Arrears ……………..………………………………………………...………………………….…… page 85 Review Your Home Inspection ……………...………………………………………...………………………….…… page 85 Inventory of Your Home ………….……………………………………………………...………………………….…… page 85
table of contents Thank You ….……………….……………………....……………………………………………………...…………………………….… page 86 Glossary ………………………………………………………………………………………………………………………………….…… page 87 Source Notes ……………………………….……………………………………………………...………………..……………….…… page 91
contact & connect
Contact
Connect
adrian salgado 305-491-7179 adrian@gablesmavens.com
www.gablesmavens.com www.facebook.com/gablesmavens
132 madeira ave coral gables, florida 33134
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summary The information in this guide is intended to provide you with an introduction to the home buying process. When it comes to buying a home, preparation and planning are the keys to success. Before beginning, it is important to educate yourself with the home buying process. We realize that the process of buying a home can be confusing and overwhelming. For that reason, we’ve broken down the process into eight steps: Step 1: Evaluate your lifestyle and finances Step 2: Choose a buyer’s agent Step 3: Get preapproved for a loan Step 4: Research and evaluate neighborhoods of interest Step 5: Identify a home Step 6: Execute a contract Step 7: Meet Post-contract contingencies Step 8: Close the transaction There is a wealth of information in this guide, but it is not everything you may need or want to know about the home buying process. It is important to gather additional information and input from your buyer’s agent. A buyer’s agent’s focus is to educate you while tying these 8 steps together. Tip
Words in gray bold type are defined in the glossary (page 87) in the back of this guide. Words or phrases highlighted in blue are hyperlinks. Clicking on them will guide you to a webpage with more information.
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introduction
who we are You’re buying a home. You’re selling a home. You’re renting. You’ve searched Realtor.com, advertised your home on Zillow, “googled” the neighborhoods, analyzed interest rates and sorted through tons of information. Who’s helping you put that information into perspective? Who’s guiding you through the intricacies of the process? That’s where we come in. Whether you’re looking to buy a home, sell your home or rent your first “place”, we can help. dash – real estate company (pronounced “dash, a real estate company”) We are a privately-owned real estate company in the North Ponce neighborhood of Coral Gables, FL. We educate consumers and facilitate the process of buying, selling and renting a home by listening to our customers and representing their best interests. Using an experienced and proven team approach, we’ve represented buyers and sellers in over 210 residential sales transactions and assisted landlords and tenants in over 45 residential rental transactions since establishing in October 2008. We’ve been described by some as a “boutique real estate company”. However, we prefer that you know us simply as the real estate professionals who don’t train for sprints, but do train for marathons. Adrian Salgado Adrian brings diversity and well-rounded talents to dash as a student of consumer behavior. Born and raised in Miami, Adrian is a graduate of Florida International University (FIU), earning a Bachelor of Arts degree in Business (major: International Business) in 2000. While attending FIU, Adrian managed the multi-million dollar inventory of Hewlett Packard’s Latin American Distribution Organization in Miami. It was there that he became fascinated with metrics, performance analysis and the visualization of data. Upon graduation, Adrian’s interest in real estate and public service led him to the Department of Property Appraisal in Miami-Dade County where he spent a little over four years learning about property valuation, the principles of mass appraisal, public records and condominium law in the department’s Condominium Division. While employed by Miami-Dade County, Adrian earned a Master of Public Administration degree from FIU and... In 2005, at the behest of his curiosity and adventurous soul, Adrian decided to utilize his creative talents to improve the quality of life in his hometown by sharing his knowledge and experiences with those looking to buy and sell a home. Adrian enjoys graphic design, reading, architecture, jogging with his 85 lb. dog, Jeter, visual and performing arts, breathing, yoga stretches, music, subplots, public spaces, airport bars, participating in subcultures and taking part in pseudo-intellectual conversations. He writes about the Coral Gables real estate market and neighborhood discoveries at www.gablesmavens.com. You can “follow” him on twitter at @adriansalgado.
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who we are Raul Estrada Raul brings close to nine years of experience in marketing, managing and helping human beings buy and sell residential real estate. Before becoming a full-time real estate agent, Raul had the pleasure to serve as a teacher for severely emotionally disturbed children for over four years in the Miami-Dade School Board system. The desire for a lifestyle change and a new challenge, coupled with the opportunity to manage a small start-up real estate company, paved the way for Raul’s entry into the full-time world of real estate in 2005. Two challenging years later, Raul assembled a team of real estate professionals and developed a niche in managing, marketing and selling Real Estate Owned (REO) properties commonly referred to as foreclosures. Their collaboration in the development of the REO niche led Raul and Adrian to join forces to give birth to dash – real estate company in 2008, where Raul serves as the broker of record and operations manager. When he’s not steering the ship, Raul enjoys fishing, donning wet suits and scuba gear, CrossFit training, paying attention to detail, spending Quality time with his family in the Appalachians, traveling on airplanes and watching paint dry on matte surfaces. Born in Miami and raised in Hialeah (yes, he speaks, writes and reads English fluently), Raul is a proud resident of Coral Gables, FL where he lives with his very supportive wife, two absolutely adorable daughters and their 14 lb. ferocious ball of fur, Sam. He holds a Bachelor of Science in Special Education for the Emotionally Disturbed from Florida International University (the 2010 Little Caesars Pizza Bowl Champs). You can “follow” Raul on twitter at @raulestrada or say “hi” at raul@gablesmavens.com.
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our mission Our mission at dash – real estate company is to:
provide a high level of service and customer support by listening to our customers and educating them in the processes of buying, selling and renting residential real estate. achieve a high rate of customer retention and word-of-mouth marketing by delivering an emotional impact on those we come in contact with. help our real estate agents achieve their goals through education, communication, technology, brand differentiation and business planning. In short, we want our agents to know that their individual needs are being met. allow all the people in our company to take ownership of their decisions and create a culture of openness that rewards people who show that they care about their customers, coworkers and colleagues.
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core values Focus on Customer We do not hire just anyone with a real estate license. We are not an average company. Our service is not average. We expect our real estate agents not to be average either. We only hire full-time agents who share our commitment to providing an unparalleled customer experience. Respect We respect our customers, our agents, other agents, other agents’ customers and all those we come in contact with. Aretha Franklin’s R&B hit, “R-E-S-P-E-C-T”, was a landmark for the feminist movement in 1967. In 2011, it’s a landmark for the real estate movement unfolding right before our eyes. The future begins right now. “Without feelings of respect, what is there to distinguish men from beasts?”
Confucius
Be Passionate Buying or selling a home is one of the most important and emotional transactions most people ever make. We value the passion, discipline, perseverance and sense of urgency necessary to produce positive results for our customers. A positive attitude inspires others to behave the same. We are passionate about delivering greatness in a manner that is unique and understated. Embrace Difference Individuality is important to us. We believe that people perform better when they can be themselves. We want our agents to express their individuality and their unique world views in their interactions with others and feel comfortable doing so. Branding results from the conscious decisions we make about what we want the world to remember about us. Market knowledge, experience, an exceptional customer experience, communication and a high level of competency help set us apart. Be Intellectually Curious We place a high premium on intelligence. Not the kind that necessarily produces a college degree, but the kind that challenges conventional wisdom and doesn’t accept the status quo. We are interested in how our real estate agents think about the world as a whole. Intellectual curiosity is underrated (and even discouraged) in a lot of places. Not here. Pursue Growth In Learning The cycle of growth never ends. We encourage our agents to challenge themselves and never stop improving, learning and growing. We never “get there”. Our work is never done.
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the flow
Home Buying Process Flow Chart Meet with your buyer’s agent to discuss your plans
Determine your needs & your wants
Select a mortgage program that works best for you
Consult with a mortgage pro & get preapproved
View & evaluate homes
Select a home & prepare an offer
Negotiate price & terms of the offer
Deliver earnest money deposit to escrow agent
Contact your lender & title company with the executed offer
Offer is accepted
Conduct property inspections; appraisal is ordered
Apply for HOA/Condo Association approval (if applicable)
Address loan underwriting conditions & clouds on title (if any)
Transaction funds & keys to home are exchanged
Sign loan & closing documents
This flow chart will help you better understand the steps involved in buying your home. Your buyer’s agent will tie these steps together for you and keep you informed every step of the way.
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evaluate your lifestyle & finances
evaluate your lifestyle & finances CALCULATE A MONTHLY PAYMENT Before you even begin to search for homes online, take a good look at your current lifestyle and financial situation. What stage of life are you in? Do you move a lot? Is employment stable? Are you financially and emotionally stable? Calculate a monthly mortgage payment you can afford. A common rule for mortgage affordability is to spend no more than 28% of your gross monthly income on home payments, which include loan principal & interest, property taxes, hazard insurance, homeowners association dues (if applicable) and private mortgage insurance (if applicable). Your total debt-to-income ratio, which includes credit card payments, student loans, car payments, etc. should not exceed 36%. You can also get a rough estimate of home affordability by multiplying your annual gross income by 2.5. For example, if your annual gross income is $40,000, you may be able to afford a home worth $100,000. IMPROVING YOUR MORTGAGE APPROVAL CHANCES
Cash: conserve your cash. You will need to show cash reserves in a bank account. Do not make out-of-the-norm deposits while you’re shopping for a home or are under contract to purchase a home before consulting with your mortgage professional first.
Employment: mortgage lender underwriters like to see a stable job history. It’s best not to switch jobs while you’re in the market to buy a home.
Credit: correct any errors on your credit report. Pay your bills on time. Do not make unnecessary purchases and add new debt or make changes to your credit profile without consulting with your mortgage professional first.
Education: if you’re in college, plan to complete a degree and work in the field that you studied.
Personal: finalize any lawsuits, divorce proceedings and paternity suits before you decide to buy a home.
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evaluate your lifestyle & finances BENEFITS OF BUYING A HOME The benefits of buying a home are as much psychological as they are mathematical. According to Christopher Mayer, a professor of real estate finance, “the value of a home is the value you get from living in it and two different people are going to get two different values from the same home. It’s a very individual decision.” That said, there are various benefits of buying a home vs renting:
Pride of ownership You can do things like paint the walls, add fixtures, change the flooring, plant a garden and let the dog roam freely (for the most part).
Fixed payments Rent historically increases over time. A fixed-rate mortgage locks in monthly payments for 15, 20 or 30 years.
Stability You can stay in your home for as long as you want.
Appreciation Although it may be difficult to believe right now, home values will go up again. Over the past 50 years, home values have consistently appreciated at a rate higher than the rate of inflation.
Build equity Monthly mortgage payments slowly increase the amount of equity you build in your home.
Tax shelters You can deduct expenses on your income taxes: property taxes, prepaid interest paid at closing, points charged to your loan, mortgage interest (largest portion of your payment) and mortgage insurance are all usually deductible.
Capital gain exclusion Under today’s tax laws, when you sell your home, you are exempt from paying taxes on a large portion of the appreciation. Speak to your accountant about this.
Note: The decision to buy a home should be considered from a long-term perspective. Although longterm perspective is relative to the market you are buying your home in, a general rule-of-thumb is at least 5 years.
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evaluate your lifestyle & finances YOU SHOULD CONTINUE RENTING IF:
You don’t plan on staying in a home for at least 5 years
You’re not sure that your job is secure
Your credit is damaged and can be improved in 6 months to 1 year (speak to a mortgage professional about this)
You don’t have enough cash reserves for at least 3 months worth of housing payments
Your area of interest is too expensive for you right now
You are in a relationship that is not stable
You like to move often
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choose a buyer’s agent
choose a buyer’s agent Buying real estate is a complex transaction. No two properties are alike. No two transactions are the same. Contract terms, financing options, inspection requirements and closing costs differ from one transaction to the next. There are many pieces to a real estate transaction. A buyer’s agent will help you decide where you want to live, establish an offer price, negotiate the best terms possible, use experience and skills to anticipate and avoid problems, and build a team of professionals that will provide you with the best home buying experience possible. Your team should include the following:
Buyer’s Agent
Mortgage Professional
Home Inspector
Escrow Agent
Title Company
Closing Attorney
Insurance Agent
Surveyor
Appraiser (independently chosen)
A buyer’s agent will educate you on the home buying process and look out for your best interests. We recommend that you hire an experienced buyer’s agent who works full time in real estate. The buyer’s agent you choose should understand market value and the various market nuances in your area of interest. Buying (and selling) real estate is the largest financial transaction most people ever make. Choosing a full time, experienced buyer’s agent does not cost you any more than hiring someone because you know her mother’s best friend. You don’t choose a heart surgeon because he’s your uncle’s drinking buddy. Choosing a buyer’s agent should be no different.
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choose a buyer’s agent BROKERAGE RELATIONSHIPS It is legally presumed that all real estate licensees are operating as transaction brokers unless single -agent or no brokerage relationships are established, in writing, with customers. What is a Transaction Broker? The duties of a transaction broker include the following: 1. Dealing honestly and fairly 2. Accounting for all funds 3. Using skill, care and diligence in the transaction 4. Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer 5. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensees otherwise in writing 6. Limited confidentiality, unless waived in writing by a party. The transaction broker may not reveal to either party the following information:
that the seller might accept a price less than the asking or list price that the buyer might pay a price greater than the price submitted in a written offer the motivation of any party for selling or buying property that a seller or buyer will agree to financing terms other than those offered
7. Any other information requested by a party to remain confidential 8. Any additional duties that are entered into the agreement or by a separate agreement
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choose a buyer’s agent BROKERAGE RELATIONSHIPS (continued) What is a Single-agent Relationship? A single agent represents, as a fiduciary, either the buyer or seller, but not both in the same transaction. The duties of the single agent include the following: 1. Dealing honestly and fairly 2. Loyalty 3. Confidentiality 4. Obedience 5. Full Disclosure 6. Accounting for all funds 7. Skill, care and diligence in the transaction 8. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing 9. Disclosing all known facts that materially affect the value of residential real property and are not readily observable
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choose a buyer’s agent BROKERAGE RELATIONSHIPS (continued) What is a No Brokerage Relationship? Licensees working with a customer without a brokerage relationship owe the customer the following duties: 1. Dealing honestly and fairly 2. Accounting for all funds entrusted to the licensee 3. Disclosing all known facts that materially affect the value of residential real property that are not readily observable A single agent for one party in a transaction (usually the seller) may decide to work with the other party (usually the buyer) as a non-representative. EXCLUSIVE BUYER BROKER AGREEMENT An Exclusive Buyer Brokerage Agreement is not a type of brokerage relationship. It is an agreement in which the buyer grants the broker the exclusive right to work with and assist the buyer in locating and negotiating the purchase of a home. The agreement specifies the type of property, location, price range and other terms and conditions acceptable to the buyer. When signing an Exclusive Buyer Brokerage Agreement, the buyer agrees to work solely with the broker and the agent the buyer selected. The buyer cannot ask a different broker to show the buyer property or write a purchase offer on the buyer’s behalf because the broker with whom the buyer signed the agreement is procuring cause. If the buyer is not satisfied with the job the buyer’s agent is performing, the buyer has the right to ask the broker to assign a new buyer’s agent. The agreement is with the broker, not the buyer’s agent.
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choose a buyer’s agent WHO PAYS THE BUYER’S AGENT? When a seller enters into a listing agreement with a listing agent to sell a home, the seller agrees to pay the listing agent a commission for the listing agent’s services. When the listing agent lists the home on the Multiple Listing Service (MLS), the listing agent agrees to pay the buyer’s agent (also known as the selling agent) a portion of that commission. The commission is negotiated between the seller and the listing agent. It is customary, but not necessary, for the listing agent to split the commission equally. The percentage or amount offered to the buyer’s agent is prominently displayed on the MLS listing for the home. For example, let’s say that the commission negotiated between the seller and the listing agent is 6% of the purchase price and that the listing agent agrees to split the commission equally. The listing agent is paid 3% of the purchase price at closing and the buyer’s agent is paid 3% of the purchase price at closing. Assuming that you have not entered into an Exclusive Buyer Brokerage Agreement and agreed to pay the broker a retainer fee, the buyer’s agent is compensated only when the transaction closes. You do not have to pay your buyer’s agent out of “your own pocket”. Note: Some brokerages charge the buyer a “processing fee” or a “transaction fee” at the time of closing. This fee can range anywhere from $195—$595. dash — real estate company does not charge any additional fees to the buyer at closing.
Shameless Plug
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get preapproved for a loan
get pre-approved for a loan You will be borrowing tens, if not hundreds, of thousands of dollars when buying a home. Choosing the right mortgage professional who can help you set goals and secure a loan that meets your needs, can make the difference between buying your dream home and having your loan application denied weeks into the transaction. Few things matter as much as choosing a mortgage professional that is knowledgeable and trustworthy. You need someone who is genuinely interested in educating you about your options and the costs involved with incurring a mortgage loan. All lenders will get paid for their services. Knowing which one is right for you at the beginning of the buying process will help save you time and money. TYPES OF LENDERS Mortgage Bankers handle the loan process themselves and close the loan with their own funds. Banks like Chase, Bank of America and Dade County Federal Credit Union are examples of mortgage bankers. They often have the best interest rates if you have excellent credit and job history. However, mortgage bankers do not offer a variety of loan programs to choose from and do not have access to wholesale lenders. They get paid from setup fees such as an underwriting fee, a document preparation fee, a processing fee, a document review fee, etc., and from the interest you pay over the life of the loan. Mortgage Brokers process your loan application and gather the documentation necessary to shop your loan to numerous wholesale lenders to find the right loan program for you. Mortgage brokers have access to wholesale lenders that do not lend directly to the general public. They typically charge you an origination fee equivalent to a “point” (one point is equal to 1% of the loan amount) to provide you a loan. That doesn’t necessarily mean that you pay more for the loan than if you went to a bank directly. Wholesale lenders can offer a wholesale rate to mortgage brokers, allowing a mortgage broker to pass on a better rate to you. In exchange, they charge you a “point” for their services. Mortgage brokers will include some setup fees as well. Correspondent Lenders are a combination of a mortgage banker and a mortgage broker. They can originate, underwrite and fund loans in their own name and then sell them off to a larger mortgage lender or broker transactions through the use of wholesale lenders. They typically charge an origination fee like a broker or charge a higher interest rate like a banker. Mortgage brokers and correspondent lenders can also receive a yield spread premium (YSP) from the bank for structuring a loan at a slightly higher interest rate. Ask your mortgage professional to explain to you how he/she gets paid.
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get pre-approved for a loan ARE YOU PREQUALIFIED OR PREAPPROVED? Although the two terms are used interchangeably, they are not the same. Prequalification When you provide a mortgage professional with verbal information regarding your income, savings, assets, debts, etc., and the mortgage professional provides you with an approximate loan amount that you qualify for. Prequalifications provide a vague and often inaccurate idea as to what price range of homes you should be looking for. Preapproval When a mortgage professional requests and verifies the following documentation:
Completed loan application that has been reviewed by an underwriter or submitted through Desktop Underwriter, Fannie Mae’s automated underwriting system that assists lenders in making informed decisions on conventional, non-conforming and government loans
A credit report
Documentation of income (pay stubs, W-2’s, tax returns for last 2 years, etc.)
Documentation of savings, reserves and liquid assets available to you (bank accounts, retirement accounts, 401k, investment accounts, etc.)
Documentation of gift funds (if applicable)
A letter of explanation and supporting documentation of irregularities like lapses in employment and/or variations in income
If your mortgage professional has not requested these documents from you, you are not preapproved. A prequalified buyer does not carry the same weight as a preapproved buyer in the eyes of a knowledgeable seller, listing agent and buyer’s agent (particularly in a competitive, multiple offer situation). A preapproval lets your buyer’s agent know what your financial parameters are. That allows your agent to spend more time showing you homes that fit your parameters and less time pursuing dead ends. Equally important, a preapproval strengthens your bargaining position with a seller.
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get pre-approved for a loan DOCUMENTS YOUR MORTGAGE PROFESSIONAL WILL NEED FROM YOU
Last 2 years’ W-2s. Issued by your employer stating how much you earned those years
Last 2 months’ bank statements. This includes all of your checking, savings, money market and/or certificate of deposit accounts to show what cash you have on hand
Pay stubs for the last 30 days. You’ll need to show at least the last 30 days’ worth of pay stubs to your lender
Investment & retirement account statements. Your lender can use investment and retirement accounts towards your qualifying ratios even if you don’t plan to use the money from those accounts for the purchase of your home
List of current and recent addresses.
You may also need to provide your mortgage professional with the following documents:
Last 2 years’ tax returns.
Copy of your college transcripts or degree. (if you’ve recently graduated)
Copy of your divorce decree. (if applicable)
Proof of New Employment. If you have recently changed jobs, a letter of explanation from your supervisor/human resources department, or a copy of a contract, if applicable
Documentation of any other assets or sources of income.
Salaried employees and self-employed individuals require different documentation. Explain your situation to your mortgage professional and ask your mortgage professional what documentation you will need to provide.
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get pre-approved for a loan QUESTIONS TO ASK A MORTGAGE PROFESSIONAL
What loan-related fees should I expect?
Can you explain the difference between the loan programs I qualify for?
What wholesale lenders do you work with?
Do you recommend a fixed or adjustable rate? Please explain why.
Is there a charge for locking-in my interest rate?
How long will my rate be locked-in for once it has been locked?
Will my loan have a prepayment penalty? If so, how much and how long is the penalty for?
Can you provide me with a timeline from loan application to closing?
After I apply for a loan, will I be in contact with you or an employee on your staff?
When do I pay for my appraisal? How much will it cost?
At what point is the appraisal completed?
What is the turn-around time for underwriting a loan from the moment I provide an executed contract and all the documentation requested?
If credit or debt-to-income ratio problems arise, will you be able to advise me on what steps I need to take in order to make my loan work?
How long is the loan commitment valid?
How do you get paid? Do you typically receive a “yield spread premium”, charge an origination fee or a combination of both?
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get pre-approved for a loan QUESTIONS YOU SHOULD EXPECT FROM A MORTGAGE PROFESSIONAL
How is your credit?
Have you ever filed for bankruptcy?
Has a lender ever foreclosed on a mortgage for a home you owned?
How long do you plan to keep this home?
How much money do you have saved for your purchase?
How long have you been employed by your current employer?
Are you going through a divorce or have you recently been divorced?
Do you receive or pay alimony and/or child support?
Will someone be gifting or loaning you money to buy a home?
Have you filed personal federal income tax returns in the last 2 years?
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get pre-approved for a loan TYPES OF MORTGAGE LOANS There are many different types of mortgage loans available that suit a number of different needs. It is important to fully disclose your needs and abilities when speaking to your mortgage professional so that he/she can accurately advise which type of mortgage loan is best for you. In the next four pages you will find a brief description of the most common types of mortgage loans available today. What is a Conventional Loan? A conventional loan is a mortgage loan not made or insured by a government entity. Conventional loans are the most common type of mortgage. They may be conforming or non-conforming. Conforming loans have terms and conditions that follow the guidelines set forth by the governmentsponsored enterprises, the Federal National Mortgage Association (commonly known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (commonly known as Freddie Mac). The guidelines establish the maximum loan amount (loan limits) in a specific geographical area, borrower credit and income requirements, and minimum down payment. New loan limits are announced every year. Fannie Mae and Freddie Mac only buy loans that are conforming. Conforming loans are packaged into securities and sold in the secondary market. Conforming loans with a loan-to-value (LTV) ratio higher than 80% require that the borrower pay for private mortgage insurance (PMI). Non-conforming loans are loans that do not meet Fannie Mae and Freddie Mac guidelines. Reasons include loan amounts higher than the conforming loan limit and lack of sufficient credit. Non-conforming loans typically have higher interest rates, and may carry additional upfront fees and insurance requirements. The best known type of a non-conforming loan is the jumbo loan. Jumbo loans are loans above the conforming loan limit for a given area. Because they are more difficult to sell on the secondary market, lenders offset their financial risk by charging the buyer a higher interest rate.
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get pre-approved for a loan TYPES OF MORTGAGE LOANS (continued) What is a Federal Housing Administration (FHA) Loan? The Federal Housing Administration (FHA) provides mortgage insurance on loans made by FHAapproved lenders throughout the United States. The FHA was created in 1934 in an effort to help more Americans secure loans to purchase their own homes. It is the largest insurer of mortgages in the world, insuring over 34 million properties. If a home buyer defaults on a FHA-insured loan, the FHA repays the lender for the loss. This eliminates most of the lending risk for financial institutions, encouraging them to make loans to home buyers. FHA loans must meet certain requirements established by the FHA to qualify for insurance. The FHA sets maximum loan amounts for every county in the United States every year. FHA loans are a good option for those who do not qualify for a conventional mortgage. Benefits of a FHA Loan:
Credit score requirements are lower than those of a conventional loan Buyers need only a 3.5% down payment to qualify FHA loans are assumable No pre-payment penalty
FHA loans require that borrowers making a down payment of less than 20% pay a monthly mortgage insurance, as well as an upfront mortgage insurance premium (MIP) equal to 1% of the loan amount. The upfront MIP is paid at closing. The monthly MIP schedule (as of October 2011) is as follows:
30-year 30-year 15-year 15-year
loan loan loan loan
term, term, term, term,
loan-to-value loan-to-value loan-to-value loan-to-value
> 95%: 1.15% MIP per year <= 95%: 1.10% MIP per year > 90%: 0.50% MIP per year <= 90%: 0.25% MIP per year
To calculate the FHA monthly MIP payment, multiply the starting loan amount by the corresponding insurance premium above and divide by 12. The monthly MIP payment continues until borrowers have made enough payments to have 22% equity in their home.
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get pre-approved for a loan TYPES OF MORTGAGE LOANS (continued) What is a U.S. Department of Veterans Affairs (VA) Loan? A mortgage loan guaranteed by the U.S. Department of Veteran Affairs (VA) signed into law by President Franklin D. Roosevelt in 1944 as part of the GI Bill of Rights. The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses (provided they do not remarry). The VA is authorized to guarantee loans made by private lenders, such as banks and mortgage lenders, to eligible veterans for the purchase of a home that is to be used as a primary residence. The guaranty means the lender is protected against loss if the borrower fails to repay the loan. All veterans must qualify for a VA loan. Eligibility is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. In a purchase, veterans may borrow up to 103.15% of the sales price or reasonable value of the home, whichever is less, without monthly private mortgage insurance or a second mortgage. A funding fee is paid to the VA at closing. The fee is currently 1.4% of the loan amount on no down payment loans for a first-time use. The funding fee for second time users who do not make a down payment is 2.8%. The funding fee may be financed by the borrower. Some veterans, such as those receiving VA compensation for service-connected disabilities, are exempt from paying a funding fee. VA loans allow veterans to qualify for loan amounts larger than traditional conforming conventional loans. VA insures a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income assuming the veteran has no monthly bills. Although VA loans do not have a maximum dollar amount, lenders who sell VA loans in the secondary market limit the size of those loans to the maximums prescribed by the Government National Mortgage Association (commonly known as Ginnie Mae). Maximum loan amounts are set for each county in the United States.
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get pre-approved for a loan TYPES OF MORTGAGE LOANS (continued) What is a HomePath Mortgage? HomePath Mortgage is a mortgage loan program created by Fannie Mae that allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal, no mortgage insurance and expanded seller contributions toward buyer’s closing costs. The down payment can be as little as 3% and can be funded by the borrower’s own savings, a gift, a grant or a loan from a nonprofit organization, state, local government or employer. HomePath financing is available to natural persons for primary residences, second homes and investment properties. Entities, including non profits and LLCs, do not qualify for HomePath financing. Fannie Mae waves all condo project review requirements for HomePath financing except verifying that the condominium carries adequate hazard insurance, homeowners 6 insurance (HO6 — page 78), flood insurance, if applicable, and that fidelity insurance exists.
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get pre-approved for a loan SHOULD YOU CHOOSE A FIXED-RATE MORTGAGE OR AN ADJUSTABLE-RATE MORTGAGE? Fixed-rate mortgages and adjustable-rate mortgages are the two primary types of mortgages available in the market. Fixed-rate Mortgage A fixed-rate mortgage charges a set rate of interest that does not change throughout the life of the loan. Although the amount of principal and interest paid each month varies from payment to payment, the total payment remains the same. Traditional lending institutions offer fixed-rate mortgages in a variety of terms. The most common offered are 30-year and 15-year fixed-rate mortgages. When deciding between the two, the 30-year fixed-rate mortgage is most commonly chosen by borrowers because it offers the lowest monthly payment. The trade-off for the lower payment is a higher overall cost. You will pay significantly more interest over the life of a 30-year fixed-rate mortgage than you will for a 15-year fixed-rate mortgage. The monthly payments for shorter-term mortgages are higher so that the principal is repaid in a shorter time frame. Also, shorter-term mortgages typically offer a lower interest rate, which allows for a larger amount of principal repaid with each mortgage payment. The main advantage of a fixed-rate mortgage is that you are protected from sudden and significant increases in monthly mortgage payments. Fixed-rate mortgages allow for predictability in your monthly housing payments. Adjustable-rate Mortgage The interest rate of an adjustable-rate mortgage (commonly referred to as ARM) varies over time. ARMs have a period of time during which the initial interest rate remains constant and then rises at a pre-arranged frequency. The initial fixed-rate period of an ARM can vary from 2 years to 10 years. All ARMs contain the following:
Adjustment Frequency — the amount of time between interest rate adjustments (monthly, yearly, etc.).
Adjustment Indexes — adjustments are tied to a specific index or benchmark such as the interest rates on Treasury Bills or the LIBOR rate.
Margin — the portion of the interest rate that is over and above the adjustment index rate. The margin is the portion retained as profit by the lender.
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get pre-approved for a loan SHOULD YOU CHOOSE A FIXED-RATE MORTGAGE OR AN ADJUSTABLE-RATE MORTGAGE? (continued)
Caps — the limit on the amount the interest rate can increase each adjustment period.
Ceiling — the highest interest rate that the adjustable rate is permitted to become during the life of the loan.
Adjustable-rate mortgages are attractive because:
the initial interest rate is set below the market rate of a comparable fixed-rate loan
initial payments are lower than those of a comparable fixed-rate loan
they may enable you to qualify for a larger loan
in a falling interest rate environment, they allow you to enjoy lower interest rates and monthly payments
There are significant downsides to an ARM, however. Interest rates can rise significantly in a matter of just a few years and your monthly payment may change and increase frequently over the life of a loan. A wide range of personal and economic factors need to be considered when deciding what mortgage loan is right for you. It is important that you discuss those factors with your mortgage professional so that you choose the type of loan that best suits your needs.
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get pre-approved for a loan WHAT GOES INTO A MONTHLY MORTGAGE PAYMENT? Mortgage Payment = Principal + Interest + Property Taxes + Insurance + Association Dues (if applicable) + Mortgage Insurance (If applicable) The mortgage payment is commonly referred to as PITI (pee eye tee eye) <—— “industry lingo” Principal A typical mortgage loan will have a portion of the monthly payment allocated to reducing the balance due and owing to satisfy the payoff of the loan. This allows the loan to eventually be paid off. Interest The amount of interest allocated each month varies based upon the interest rate and term of the loan.
Property Taxes Property taxes are determined by the assessed value of your property (assessed annually by the county property appraiser) minus any tax exemptions that the property may qualify for and the local millage rate (determined by municipalities, the county, community development districts, water management districts, etc.). Multiplying your taxable value by the millage rate will provide you with your annual tax amount due. Assessed Value -
Tax Exemptions = Taxable Value x Local Millage Rate = Tax Amount Due
Most lenders will collect property tax payments on a monthly basis. The funds collected are kept in an escrow account for future payment when property taxes become due in November. Property Insurance Your lender will require that hazard insurance, windstorm insurance (if applicable), flood insurance (if applicable), and HO6 insurance (if condo) be carried at all times on a home it has financed. Lenders require minimum coverage levels and will need to approve the policy you choose. Premiums for insurance vary greatly based upon home value, provisions and carrier. Most lenders will collect property insurance payments on a monthly basis. The funds collected are kept in an escrow account for future payment when renewal of your property insurance becomes due. Association Dues (if applicable) If the home you purchase belongs to a condominium association or a homeowner’s association, you will typically be required to pay monthly, quarterly or annual dues to your association. The money collected from all the homeowners in your community pays for maintenance of the common areas, certain utilities in those common areas, insurances and future expenses such as reserves for replacements.
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get pre-approved for a loan WHAT GOES INTO A MONTHLY MORTGAGE PAYMENT? (continued) Mortgage Insurance (if applicable) Certain lending options allow you to obtain financing with less than a 20% down payment. In those cases, lenders will often require you to obtain mortgage insurance which will protect the lender in case of default on the loan. You are responsible for paying the premium.
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get pre-approved for a loan COMMON EXPENSES WHEN BUYING A HOME When buying a home, you will incur closing costs and prepaid expenses. Closing costs are one-time expenses. Prepaid expenses are future costs including, but not limited to, homeowner’s insurance, property taxes, homeowner’s association dues and prepaid mortgage interest.
Earnest Money Deposit: a good faith deposit ranging from 1%-10% of the purchase price. The Earnest Money Deposit counts towards your down payment and closing costs, when applicable. Down Payment: depending on the loan program you qualify for, 3% to 25% of the purchase price is standard Appraisal: $350-$500 Home Inspection: $300-$600 Property Survey/Elevation Certificate: $300-$500 Credit Report: $0-$75 Application Fee: $0-$500 Origination Fee: 0-1% of the loan amount Underwriting Fee: $250-$750 Document Preparation: $0-$350 Processing Fee: $0-$500 Owner’s Title Insurance Policy: First $100,000 — $5.75 per $1,000; $100,000—$1,000,000 — $5.00 per $1,000; $1-$5 Million — $2.50 per $1,000 Lender’s Title Insurance Policy: $250-$700 Closing Fee: $200-$500 Attorney’s Fee: $0-$1,000 Recording Fees: $10 for first page; $8.50 for each additional page Flood Zone Certification: $15-$100 Documentary Stamps on Mortgage: $0.35 per $100 Intangible Tax on Mortgage: $0.20 per $100 Prepaid Interest: prorated interest paid in advance from the closing date to the end of the month Prepaid Property Taxes: your lender may require 6-12 months of property taxes to be held in escrow Homeowners Insurance: your lender may require that you pay a full year’s premium in advance
Note: Fees vary. Not all fees may apply. Consult your expenses with your buyer’s agent, mortgage professional and title agent.
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get pre-approved for a loan GOOD FAITH ESTIMATE (GFE) A mortgage professional must issue a good faith estimate (GFE) - a document that let’s you know the approximate terms your lender is willing to offer you, including the interest rate, loan type and your projected closing costs - no later than 3 business days after the loan originator receives an application or information sufficient to complete an application. Application is defined as the submission of a borrower’s financial information in anticipation of a credit decision relating to a federally-related mortgage loan. An application shall include the following:
borrower’s name borrower’s monthly income borrower’s social security number (to obtain a credit report) property address estimate of value of the property loan amount any other information deemed necessary by the loan originator
Note: When shopping for a mortgage, don’t worry about your credit score being affected by making several loan applications. The credit scoring process recognizes the multiple checks made in a short time period as a normal part of the mortgage loan-shopping experience.
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research & evaluate neighborhoods
research & evaluate neighborhoods When buying a home, always identify the best neighborhood you can afford, even if it means buying less of a home. While homes can be improved, fixing major problems in a neighborhood is not as easy. Today’s buyers are usually willing to pay more for homes located in a neighborhood that is within walking distance of shops, parks, cafes and transportation. Buyers with children often prefer a neighborhood that is close to schools. Employment opportunities and proximity and accessibility to a major metropolitan area usually have a positive impact on home values. All neighborhoods and communities have an identity and a character that give them value. Determining what makes a neighborhood “good”, however, is subjective. There are several factors you may want to keep in mind when considering what neighborhood you want to live in. SCHOOLS A major factor in determining value in a neighborhood is the quality of the schools in the neighborhood. The quality of the schools in your district is important (even if you don’t have children). Websites such as greatschools.org, education.com, schoolmatters.com and dadeschools.net can serve as valuable resources when researching schools. WALKABILITY Walkable neighborhoods offer benefits to the community, your health and your finances. Studies show that for every 10 minutes a person spends in a daily car commute, time spent in community activities falls by 10%. Walkscore.com will help you identify a neighborhood’s “walkability”. CRIME Your local police department and websites like spotcrime.com and crimereports.com provide valuable information regarding crime statistics and levels in a given area. NEIGHBORHOOD NEWS The best way to explore a neighborhood you like is to walk around or ride a bicycle while you visualize life in that neighborhood. Speak to the neighbors. Ask them how they like living in the neighborhood. Websites like everyblock.com and outside.in can serve as valuable resources for neighborhood news and information. HOMEOWNER’S/CONDO ASSOCIATION If you consider buying a home that belongs to a homeowner’s association, it is important to know what rules and regulations govern the community. Associations help improve the community, but also restrict what you are allowed to do. Review the Declaration of Condominium or the restrictive covenants that govern the association before purchasing a home that belongs to a condominium or homeowner’s association.
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research & evaluate neighborhoods QUESTIONS TO GUIDE YOU IN THE RIGHT DIRECTION?
How close do you want to be to your workplace?
How close do you want to be to family and friends?
What amenities — parks, public spaces, restaurants, bars, book stores, coffee shops, cafes, art galleries, museums — does the neighborhood offer?
How is the local school district?
How accessible are major thoroughfares and highways?
Is public transportation a feasible option?
Try the commute from a home you are interested in at different times of the day and different days of the week.
Talk to the neighbors. How long have they been in the neighborhood? Find out how they feel about the neighborhood. Find out how you feel about them.
What does the neighborhood feel like on a sunny day? Do streets flood on a rainy day?
What is the traffic flow like in the morning? How about late in the afternoon and in the evening? Is the street used by cut-through drivers during rush hours?
What are the street grids like? Are they designed with pedestrians and bicyclists in mind?
TIPS
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identify a home
identify a home Identifying a home is where the fun begins. You’ve visualized the pool, the lake out back and the jacuzzi tub in the master bath. However, don’t get carried away. Determining what’s important will allow you to start your home search based on your priorities. Creating a wish list will help you determine what those priorities are. CREATE A WISH LIST
How long do you plan to live in your new home?
Are you interested in a specific architectural style?
Do you like open floor plans or formally defined rooms?
Do you like older homes or newer homes?
How important are condition and finishes? Do you have the time, patience and money for repairs?
Is a homeowner’s association a concern?
How many bedrooms do you need?
How many bathrooms do you need?
Do you need a garage?
Do you need a large yard? Is green space important?
Is a swimming pool a must or is it a deterrent?
Is guest parking a concern?
How important is privacy?
Do you have physical needs that need to be met (e.g., wheelchair access)?
Do you have pets that require special facilities?
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identify a home What are the most important qualities in a home to you? Creating a list of must-haves and a list of things you would like to have allows you to set priorities. Failure to create a list can make identifying a home a frustrating experience. Frustration leads to anger. Anger keeps you from making clear and informed decisions. NEEDS vs WANTS Needs are features that you must have and that you cannot easily and readily change:
gross living area (living space “underneath air conditioning”) number of bedrooms number of baths garage lot size closet space and storage area
Wants are features that you would like to have, but that you could change or add over time if they are not currently present in a home:
extra features like a swimming pool, spa, terrace or deck specific finishes like carpet, tile or wood floors remodeled kitchen and baths newer doors and windows moldings fenced yard lot privacy landscaping and gardening
Tip: If you’re having a difficult time finding a home in your area of interest, reduce your number of wants so that you can find the home that you need. When you want everything, oftentimes you end up with nothing.
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identify a home CONDOMINIUM, TOWNHOUSE OR SINGLE-FAMILY HOME? Not all real estate was created equally. In order to make an informed decision, you will need to familiarize yourself with the most common legal types of housing available in the marketplace. What is a Condominium? A condominium or condo is a form of ownership where a specified part of a piece of real estate known as a condominium unit is individually owned while the common elements are controlled by the condominium association. When you own a unit in a condominium, you own the interior of your unit up to, but not including, the walls. You also own a percentage of the common elements. Common elements are the driveways, hallways, roof, elevators, pools, laundry facilities, fitness centers, tennis courts, clubhouses, greenbelts, walkways and other exterior areas that may exist in a condominium complex. A condominium association, consisting of all the members (i.e., condominium unit owners), manages the condominium through a board of directors elected by the members. The legal description of the condominium units and the common areas and any restrictions on their use are found in a document known as the Declaration of Condominium. The Declaration of Condominium authorizes the board of directors to administer condominium affairs and to charge condominium unit owners for adequate maintenance. Rules of governance are covered under a separate set of bylaws that establish the responsibilities of the condominium association. A set of Rules & Regulations provides specific details of restrictions and conduct. You typically pay monthly dues to your condominium association. The money collected from all the condominium unit owners in your community pays for maintenance of the common areas, certain utilities, insurances and future expenses such as reserves for repairs and replacements. A condominium is typically thought of as a mid-rise or high-rise building. However, it is important to note that a condominium is not a type of architecture, building or structure; it is a form of ownership. You may find that detached homes, townhouses and other forms of residences are condominiums. The form of ownership, not the style of the home, is the key.
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identify a home Pros of Owning a Condominium Unit
Security features like controlled access to entryways, elevators, parking garages, etc.
The use of amenities and specialized services like pools, fitness centers, clubhouses, tennis courts, green areas, concierge service, valet parking, roving security, etc.
No need to maintain landscaping, pools and other common areas
No need to paint exterior walls, replace the roof, etc.
Cons of Owning a Condominium Unit
Restrictions on the size, number and type of pets you can keep
Restrictions on when and for how long you can rent out your unit
Possible increase in condo association fees due to increasing costs, mismanagement of the budget or high delinquency rates
Special assessments — if the condo association doesn’t have sufficient funds to pay for maintenance issues, they can assess all condo unit owners in order to pay for them
Noise — you may experience more noise from neighbors than in a detached home
A condominium of interest may not be approved for certain types of mortgage loan programs
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identify a home What is a Townhouse? A townhouse has no legal definition, but is commonly known as an attached home on a small footprint with multiple stories. Townhouses are usually, but not always, located inside a community with resort amenities such as a swimming pool, fitness center, clubhouse, lakes, green areas and playgrounds. The owner of a townhouse owns the property in fee simple, the most common form of real estate ownership in the United States. It is the most complete ownership interest possible in real property. As the owner of a townhouse, you are responsible for maintaining your own home, and repairing and replacing items such as the roof. Townhouses, more often than not, belong to a homeowner’s association. The homeowner’s association typically maintains and manages the common areas, entrances and amenities of the townhouse community. You pay monthly, quarterly or annual dues to your homeowner’s association. The money collected from all the homeowners in your community pays for maintenance of the common areas, certain utilities (at times) and future expenses, such as reserves for replacements. Townhouses vary greatly in what the homeowner’s association takes care of regarding maintenance, repairs and utilities. It is important that you become familiar with what a homeowner’s association takes care of before preparing an offer. The term “townhouse” is commonly associated with 2-story attached homes in gated complexes of medium to high density in suburban areas. The first level typically consists of a living/dining area, a kitchen and a half bath with a small patio in the rear (exterior). The second level consists of all bedrooms and full baths. Although it’s most common to find a townhouse in suburban areas, the demand for diversified housing is slowly bringing the concept of the townhouse back to the urban core. Think of a townhouse as being halfway between a condo and a single-family detached home.
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identify a home Pros of Owning a Townhouse
Generally less expensive than a single-family detached home
Availability of amenities and specialized services like pools, fitness centers, clubhouses, tennis courts, green areas, roving security, etc.
No need to maintain the common areas
Typically easier to resell than a condo
Cons of Owning a Townhouse
Restrictions on the size, number and type of pets you can keep
Restrictions on when and for how long you can rent out your unit
Restrictions on the color of exterior paint, roof type, landscaping, etc.
Possible increase in homeowner’s association fees due to increasing costs, mismanagement of the budget or high delinquency rates (although not as common as in a condo association)
Special assessments — although not as common as in a condo association, if the homeowner’s association doesn’t have sufficient funds to pay for maintenance issues, they can assess all the owners in the community in order to pay for them
Small lot size compared to a detached single-family home
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identify a home What is a Detached Single-family Home? A detached single-family home is a free-standing residential building usually occupied by just one household or family. The building does not share any walls with any other home. Most detached single-family homes are built on lots larger than the structure. That allows for green space in the exterior. The owner of a detached single-family home owns the property in fee simple, the most common form of real estate ownership in the United States. It is the most complete ownership interest possible in real property. As the owner of a detached single-family home, you are responsible for maintaining your own home. All maintenance and repair costs, interior and exterior, are at your expense. The detached single-family home is a relatively recent development related to increased automobile ownership, the proliferation of U.S. highways and cheaper building practices following World War II in the late 1940s and 1950s. For that reason, the detached single-family home is commonly associated with low-density suburban and rural areas. However, it is not uncommon to find detached single-family homes in original suburbs closer to urban areas. Coral Gables is an example of an original suburb.
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identify a home Pros of Owning a Detached Single-Family Home
Most desirable form of ownership
Easiest form of ownership to sell
Control over the color you want to paint your home, how you want to design the landscaping, etc.
No monthly association dues (for the most part)
No restrictions on pets, leases, etc.
Cons of Owning a Detached Single-Family Home
You are responsible for all maintenance and the expenses associated with the home
May lack the security features of a condominium (controlled access to entryways, elevators, parking garages, etc.)
May lack amenities and specialized services like pools, fitness centers, clubhouses, tennis courts, green areas, concierge service, valet parking, roving security, etc.
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identify a home UNDERSTANDING THE DIFFERENCE BETWEEN SHORT SALES, FORECLOSURES AND REAL ESTATE OWNED (REO) Short Sale A short sale occurs when a property is sold at a purchase price that is insufficient to cover the amount necessary to pay off any liens and encumbrances secured to the property and expenses associated with the sale. The lender must agree to accept a discounted payoff. In other words, the lender must be willing to receive less money from the sale of the property than is actually owed in exchange for releasing the “short seller” from the lien(s) on the property. Although a seller may accept the terms of your offer on a short sale, that does not mean that the seller’s lender will necessarily agree to the offer. Each lender has its own unique requirements to qualify for a short sale. Short sale situations demand the cooperation of the seller. The execution of a short sale depends on many different factors such as the seller’s individual circumstances, the nature of the seller’s mortgage loan(s) and the number and type of liens against the property, including, but not limited to, past due association fees, past due property taxes and municipal code violations. Short sales are everything but short. While some lenders are able to process short sales faster than others, most lenders can take long (usually anywhere from 90 to 180 days) to review short sale requests. In addition, the relatively low success rate of completion when compared to non-short sales causes many buyers to shy away from short sales and concentrate on more “sellable” inventory. Foreclosure A foreclosure is a legal proceeding in which the lien holder (usually a bank or financial institution) sells or repossesses a property due to the borrower’s failure to meet his/her contractual obligations—a default in payment of a promissory note secured by a lien on the property. When the borrower is delinquent on payments, the lien holder attempts to sell the property at a foreclosure auction after going through the legal process of foreclosing the mortgage or the lien. In cases where the remaining mortgage balance is higher than the actual value of the property (negative equity), the lien holder is unlikely to attract any bids at the foreclosure auction and, as a result, becomes the owner of the property. At this point, the property becomes Real Estate Owned (REO). The terms foreclosure and REO are used interchangeably, but do not mean the same thing.
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identify a home UNDERSTANDING THE DIFFERENCE BETWEEN SHORT SALES, FORECLOSURES AND REAL ESTATE OWNED (continued) Real Estate Owned (REO) Real Estate Owned, more commonly referred to as REO, is a class of property owned by a lender or other financial institution after an unsuccessful attempt to sell the property at a foreclosure auction. The owner (a lender in most cases) then attempts to sell the property through more traditional channels with the help of a real estate agent. The owner may remove some of the other liens and encumbrances attached to the property and repair some of the damages in order to make the property more marketable. In general, REO properties suffer from deferred maintenance or are in need of minor to extensive repair. However, in some cases, obtaining a property at a low enough purchase price may be enough to compensate for the condition of the property. Timelines for REO properties are much shorter than short sales. The seller usually responds to offers within 72 hours. Like everything in life, there are exceptions to this rule...especially when a mortgage insurance company must approve the sale of the property.
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identify a home SEARCHING FOR A HOME Internet This is where the home buying process begins for most. Why? Because it’s fun. Most people begin their search online. Realtor.com, Zillow, Trulia, Yahoo! Real Estate and FrontDoor are some of the more popular real estate search websites. FrontDoor, Zillow and Trulia provide rich user experiences. However, they do not list ALL of the homes available for sale. The information may not be updated or complete. You may be looking at homes that are no longer available for sale. Property addresses may not be displayed. Realtor.com has most of the homes available for sale. The user experience, although vastly improved, may not be as rich as the other websites (although their mobile apps have received rave reviews), and details and facts about the property may still be missing. Your Buyer’s Agent The most accurate way to access all of the homes for sale in your area of interest is to search the Multiple Listing Service (MLS). You’re probably wondering, “...but I don’t have access to the MLS”. You don’t, but your buyer’s agent does. Provide your buyer’s agent with your search criteria. Your agent will input the criteria into the MLS and set up a property alert for you. All listings will be emailed directly to you as soon as they come to the market. This is the only sure-fire way of guaranteeing that you don’t miss a listing and its details. Beat the Pavement No matter how much technology becomes a part of the home buying process, some things cannot be replaced. Photographs and video are tremendous resources when searching for a home on the internet. However, nothing can replace the experience of seeing a home and experiencing a neighborhood in person. Walk or bike around your area of interest and look for yard signs. If you see a home that interests you, take down the property address and let your buyer’s agent know that you’re interested in that property. Your agent will take it from there.
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identify a home Once you’ve identified the homes that you would like to see, inform your buyer’s agent so that your agent can facilitate the showing of those properties. THINGS TO LOOK FOR Looking at homes is a fun part of the process. However, it’s important that you keep a discerning eye while doing so. Don’t get distracted by “shiny objects”. Here are some things to look for:
How close are neighboring homes?
Do the neighbors keep their driveways and yards clean and free of debris?
How many vehicles are parked on the neighbors’ driveways?
Are there any functional issues with the home? Will guests have to enter and go through a bedroom in order to access a bathroom?
Are there any stains or patchwork evident on the ceilings?
Is there a lack of privacy in the back yard?
How much noise can you hear from inside the home while all the windows and doors are closed?
Is the home located on the top of a T-street causing headlights from approaching vehicles to shine into your home at night?
Is the home located on a highly traveled road?
Are neighborhood amenities accessible by foot or bicycle?
Are there any proposed changes in your neighborhood? Is there a new high school proposed for the large vacant parcel down the block? Is a big box retailer opening a store on the major thoroughfare that you must cross to get home everyday?
Is there on-street parking available for guests?
Take notes on the homes you’ve looked at and review them with your buyer’s agent when it’s time to make a decision. If you have a smart phone (iPhone, Android, BlackBerry, etc.) or tablet PC (iPad, Xoom, Galaxy, etc.), Evernote and Noterize are great applications (“apps”) for taking and sharing notes and keeping a record of the homes you see.
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execute a contract
execute a contract You’ve identified the home you want. Now what? It’s time to prepare an offer. HOW TO WRITE AN OFFER The real estate sales transaction begins with the offer. The offer must be made in writing to be enforceable. To make a formal offer, the buyer signs a real estate contract to be presented to the seller. The seller may then accept or reject the offer. A seller’s counter-offer is considered a rejection of the buyer’s original offer and a new offer for the buyer’s consideration. In Florida, there are three contracts that are widely used:
FAR Residential Contract FAR/BAR Residential Contract FAR/BAR As Is Residential Contract
The FAR Residential Contract is drafted by the Florida Association of Realtors. The FAR/BAR Residential Contract and the FAR/BAR As Is Residential Contract are drafted by the Florida Association of Realtors in conjunction with the Florida Bar Association. The FAR As Is With Right to Inspect Addendum is added to the FAR Residential Contract when a property is being sold in its “As Is” condition. These contracts are aimed at creating fair agreements by incorporating the most recent Florida real estate contract case law and legislative decisions and allowing for individual modifications to meet local and regional industry standards and practices. The type of contract used to make an offer depends on the type of property you are buying, such as a short sale, REO, new construction, vacant land, multi-family property, etc. Your buyer’s agent will let you know which contract to use. COMMON NEGOTIABLE TERMS
Offer Price Earnest Money Deposit Type of Financing (Conventional, FHA, VA, HomePath, etc) Time for Acceptance Loan Commitment Date Closing Date Timeframe for inspections and surveys Repairs Personal Property included in the sale Title Insurance — who pays for the policy and lien search? Closing Costs — is seller willing to pay for all or some of the buyer’s closing costs? Closing Agent — who chooses? Home Warranty Special assessments — who pays after closing?
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execute a contract What is the difference between the FAR Residential Contract and the FAR Residential Contract + As Is With Right to Inspect Addendum? WARRANTIES, INSPECTIONS & REPAIRS (FAR Residential Contract) In a FAR Residential Contract, the seller warrants that the following items are maintained in working condition until closing:
non-leased major appliances heating and cooling systems mechanical system electrical system septic and plumbing systems pool equipment (if any) security system (if any) sprinkler system (if any) machinery (if any) seawalls and dockage (if any)
The seller also warrants that the following items are structurally sound and watertight:
roofs doors & windows pool (if any)
The seller agrees to repair or replace the following items prior to closing the transaction:
torn or missing screens missing roof tiles
The seller is not required to repair cosmetic conditions unless the cosmetic condition resulted from a defect in a warranted item. You may have the warranted items inspected, at your own expense, by a person who specializes in conducting home inspections (known as a home inspector). If your home inspector determines that warranted items are not in the appropriate condition, you must deliver written notice and a copy of the inspector’s written report to the seller within the inspection period (usually 7 to 10 days after the effective date of the contract). If the cost to repair the warranted items is equal to or less than a pre-negotiated dollar amount known as the “repair limit”, the seller will have the repairs made by an appropriately licensed person. If the cost to repair the warranted items exceeds the pre-negotiated “repair limit”:
either party may cancel the contract unless either party agrees to pay the excess, OR
you may designate which repairs to make at a total cost not to exceed the pre-negotiated “repair limit” and accept the balance of the property in its “As Is” condition
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execute a contract WARRANTIES, INSPECTIONS & REPAIRS (FAR Residential Contract + As Is With Right to Inspect Addendum) When adding the As Is With Right to Inspect Addendum to the FAR Residential Contract, the seller agrees to keep the property in the same condition from the effective date of the contract to closing, except for normal wear and tear. The seller makes no warranties other than marketable title. Marketable title is one that can be transferred to a new owner without the likelihood that claims will be made on it by another party. It is a title that a prudent, educated buyer in the reasonable course of business would accept. You may have the property inspected, at your own expense, by a person who specializes in conducting home inspections. You may cancel the contract within the inspection period if the cost of treatment and repairs estimated by your home inspector is greater than a pre-negotiated dollar amount. PERMITS (FAR Residential Contract) In a FAR Residential Contract, you may have a permit search conducted, at your own expense, during your inspection period. You must deliver written notice to the seller within the inspection period if you discover open permits or that improvements were made to the property without required permits. The seller is responsible for closing any open permits and remedying any violation of any governmental entity prior to closing. The seller is also responsible for obtaining any required permits for improvements to the property while the property is under contract. If the cost to obtain new permits, close out open permits or remedy any violation of any governmental entity exceeds a pre-negotiated dollar amount known as the “permit limit”:
either party may cancel the contract unless either party pays the excess, OR
you can accept the property in its “As Is” condition with regard to building permit status
If you accept the property in its “As Is” condition, the seller agrees to credit you at closing for the amount of the pre-negotiated “permit limit” . PERMITS (FAR Residential Contract + As Is With Right to Inspect Addendum) When adding the As Is With Right to Inspect Addendum to the FAR Residential Contract, the permit limits are removed. You may cancel the contract within the inspection period if you discover open permits or improvements that were made to the property without required permits.
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execute a contract WOOD-DESTROYING ORGANISMS (FAR Residential Contract) In a FAR Residential Contract, you may have the property inspected, at your own expense, by a licensed pest control business to determine the existence of past or present wood-destroying organism (WDO) infestation and damage caused by infestation. You must deliver a copy of the inspector’s written report to the seller within the inspection period if any evidence of WDO infestation or damage is found. If the seller previously treated the property for the type of WDO found, the seller does not have to retreat the property if:
there is no visible live infestation AND
the seller transfers to you, at closing, a current full treatment warranty for the type of WDO found
Otherwise, the seller, at his/her own expense, may have the reported damage and corrective treatment estimated by a licensed pest control business. The seller agrees to have treatment and repairs made by an appropriately licensed person if the cost to treat infestation and repair the reported damage is equal to or less than a pre-negotiated dollar amount known as the “wood-destroying organism repair limit”. If the cost to treat infestation and repair any reported damage exceeds the pre-negotiated “wooddestroying organism repair limit”, either party may cancel the contract unless either party agrees to pay the excess. WOOD-DESTROYING ORGANISMS (FAR Residential Contract + As Is With Right to Inspect Addendum) When adding the As Is With Right to Inspect Addendum to the FAR Residential Contract, the seller makes no warranties other than marketable title. You may have the property inspected, at your own expense, by a licensed pest control business to determine the existence of past or present WDO infestation and damage caused by infestation. You may cancel the contract within the inspection period if the total cost of treatment and repairs estimated by your licensed pest control business is greater than a pre-negotiated dollar amount.
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execute a contract What is the difference between the FAR/BAR Residential Contract and the FAR/BAR As Is Residential Contract? WARRANTIES, INSPECTIONS & REPAIRS (FAR/BAR Residential Contract) In a FAR/BAR Residential Contract, the seller warrants that the following “general repair items” are and will be free of leaks, water damage and/or structural damage until closing:
ceiling roof (including fascia and soffits) exterior and interior walls doors windows foundation
The seller agrees to keep the following items in working condition until closing:
non-leased major appliances heating & cooling systems mechanical system electrical system septic and plumbing systems pool and pool equipment (if applicable) security system (if applicable) sprinkler system (if applicable) machinery (if applicable) seawalls and dockage (if applicable)
The seller agrees to repair or replace the following items prior to closing the transaction:
torn screens (including pool and patio screens) fogged windows missing roof tiles or shingles
The following are not considered defects that the seller must repair or replace, so long as there is no evidence of actual leaks, leakage or structural damage:
cracked roof tiles curling or worn shingles limited roof life
The seller is required to make repairs necessary to bring the items into “working condition”. He/she is not required to repair “cosmetic conditions”, unless the cosmetic condition resulted from a defect in an item the seller is obligated to repair or replace. You may have all general repair items and other items the seller is obligated to repair and/or replace inspected, at your own expense, by a home inspector.
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execute a contract You must deliver written notice and a copy of the inspector’s written report to the seller within the inspection period if:
the general repair items are not free of leaks, water damage and/or structural damage
the items agreed to be kept in working condition are not in working condition
any torn screens, fogged windows and/or missing roof tiles or shingles need to be repaired or replaced
The seller can:
have the reported repairs estimated by an appropriately licensed person and deliver a copy to you OR
have a second inspection made by a home inspector and provide you with a copy of the report and estimates of repairs
If your inspection report differs from the seller’s inspection report, and the differences cannot be resolved, you and the seller must choose a third inspector whose written inspection report will be binding on you and the seller. The cost of hiring the third inspector will be split equally between you and the seller. If the costs to repair the items is equal to or less than a pre-negotiated “general repair limit”, the seller will have the repairs made. If the cost to repair the items exceeds the pre-negotiated “general repair limit”:
the seller may elect to pay the excess OR
you may designate which repairs to make at a total cost not exceeding the prenegotiated “general repair limit” and accept the rest of the items in their “As Is” condition
The seller agrees to maintain the property in the condition existing as of the effective date of the contract until closing, except for ordinary wear and tear and casualty loss. WARRANTIES, INSPECTIONS & REPAIRS (FAR/BAR As Is Residential Contract) In a FAR/BAR As Is Residential Contract, the seller makes no warranty and representation as to the physical condition or history of the property. You may have the property inspected, at your own expense, by a home inspector. You may cancel the contract within the inspection period if you determine that the property is not acceptable to you.
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execute a contract PERMITS (FAR/BAR Residential Contract) In a FAR/BAR Residential Contract, you may have a permit search conducted, at your own expense, during the inspection period. You must deliver written notice to the seller within the inspection period if you discover open permits or improvements that were made to the property without required permits The seller agrees to have all open and expired building permits closed by the applicable governmental entity prior to closing. The seller also agrees to obtain and close any required building permits for any improvements or repairs to the property while the property is under contract. The seller must provide you with written notice that all open and expired building permits have been closed out and that he/she has obtained the required building permits for any improvements or repairs made to the property while it was under contract. If the cost to close open or expired building permits or to remedy any permit violation of a governmental entity exceeds a pre-negotiated dollar amount known as the “permit limit”:
the seller may pay the excess OR
you may accept the property in its “As Is” condition with regard to building permit status
If you accept the property in its “As Is” condition with regard to building permit status, the seller agrees to credit you at closing for the amount of the pre-negotiated “permit limit”. PERMITS (FAR/BAR As Is Residential Contract) In a FAR/BAR As Is Residential Contract, you may have a permit search conducted, at your own expense, during the inspection period. You may cancel the contract within the inspection period if you discover open permits or improvements that were made to the property without required permits. The seller agrees to deliver to you any plans, written documentation and other information relating to improvements to the property that are the subject of open or required permits. The seller also agrees to cooperate in good faith with your efforts to obtain estimates of repairs or other work necessary to resolve such permit issues. He/She agrees to execute any authorizations, consents or other documents necessary for you to conduct inspections and have estimates for repairs or other work prepared.
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execute a contract WOOD-DESTROYING ORGANISMS (FAR/BAR Residential Contract) In a FAR/BAR Residential Contract, you may have the property inspected by a licensed pest control business to determine the existence of past or present wood-destroying organisms (WDO) infestation and damage caused by infestation. You must deliver a copy of the inspector’s written report to the seller within the inspection period if any evidence of WDO or damage is found. If the seller previously treated the property for the type of WDO found, the seller does not have to retreat the property if:
there is no visible live infestation AND
the seller transfers to you, at closing, a current full treatment warranty for the type of WDO found
Otherwise, the seller may have the reported damage and corrective treatment estimated, at his/her own expense, by a licensed pest control business. The seller agrees to have treatment and repairs completed by an appropriately licensed person if the cost to treat infestation and repair the reported damage is equal to or less than a prenegotiated dollar amount known as the “wood-destroying organisms repair limit”. If the cost to treat WDO and repair the reported damage exceeds the pre-negotiated “wooddestroying organisms repair limit”:
you may agree to pay the excess OR
you may designate which wood-destroying organisms repairs to make and accept the rest of the property in its “As Is” condition with regard to wood-destroying infestation and damage
The seller agrees to maintain the property in the condition existing as of the effective date of the contract until closing, except for ordinary wear and tear and casualty loss. WOOD-DESTROYING ORGANISMS (FAR/BAR As Is Residential Contract) In a FAR/BAR As Is Residential Contract, the seller makes no warranty or representation as to the physical condition or history of the property. You may have the property inspected, at your own expense, by a licensed pest control business to determine the existence of past or present WDO infestation and damage caused by infestation. You may cancel the contract within the inspection period if you determine that the property is not acceptable to you.
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execute a contract CONTINGENCIES & DISCLOSURES A contingency in a real estate contract is a formal clause that sets forth particular conditions that you or the seller must meet to proceed to the next step in the contract. Contingencies protect your interests and those of the seller. They are found in all three types of contracts. Most contingencies allow you to cancel the contract and get the earnest money deposit back. Not all contingencies may apply to your transaction. It is important to review the contract with your buyer’s agent and identify the contingencies that apply to your transaction. Common Contingencies Financing — allows you time to get full loan approval and stipulates that you will make every effort to obtain a mortgage for a particular amount, at a prevailing interest rate, within a specified period of time. The financing contingency is satisfied if you are successful in obtaining a mortgage loan. You may cancel the contract without penalty if you fail to obtain a mortgage within the financing contingency period. Appraisal — allows you and the seller to renegotiate the price or cancel the contract without penalty if the appraisal of the property obtained by your lender is insufficient and does not meet the purchase price of the home. Title Insurance — allows you to cancel the contract without penalty if the seller is unable or unwilling to cure specific defects that render title unmarketable. Other Possible Contingencies Condominium/Homeowner’s Association — allows you to cancel the contract without penalty if association approval is required and you are unable to obtain approval within a specified period of time. It also allows you to cancel the contract without penalty within 3 days after the execution of the contract and upon review of the declaration of condominium, articles of incorporation, bylaws and rules of the association and a copy of the most recent year-end financial information. Short Sale — allows you to cancel the contract without penalty if the sale is not approved, within a specified period of time, by the seller’s lender(s) and all other lien holders. It also allows you to cancel the transaction without penalty if the home is sold at a foreclosure sale during the term of the contract prior to obtaining approval for a short sale. Mold Inspection — allows you to cancel the contract without penalty if a mold inspection reveals a significant presence of mold in the home that requires professionals to remove the mold. Homeowner’s Insurance — allows you to cancel the contract without penalty if you are unable to obtain homeowner’s insurance coverage from a standard carrier or Citizen’s Insurance Corporation.
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execute a contract CONTINGENCIES & DISCLOSURES (continued) Sale of Buyer’s Property — allows you a specified period of time to sell your current home before buying the new one. You may cancel the contract without penalty if your current home does not sell within the specified period of time and you do not or cannot buy the new home without the sale of your old home. Attorney Approval — allows you and/or the seller the right to have your attorneys review the contract and approve it before it becomes official. You or the seller may cancel the contract without penalty if either attorney disapproves of the contract. Note: multiple or unreasonable contingencies by either you or the seller tend to weaken the position of each. The more contingencies you request, the less likely your offer will be accepted. Disclosures Lead-Based Paint Disclosure — notifies every purchaser of any interest in residential real property on which a home was built prior to 1978 that such property may present exposure to lead from lead-based paint. Property Disclosure Statement — makes the offer contingent on the seller completing, signing and delivering a written real property disclosure statement that discloses to a buyer all known facts that materially affect the value of the property being sold and that are not readily observable. You may cancel the contract if the statement discloses any material information about the home that is unacceptable to you. Chinese/Defective Drywall Disclosure — notifies you that defective drywall reportedly emits levels of sulfur, methane and/or other volatile organic compounds that cause corrosion of air conditioner and refrigerator coils, copper tubing, electrical wiring, computer wiring and other household items. It also notifies you that defective drywall creates noxious odors that may pose health risks.
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execute a contract HOW MUCH DO I OFFER? The amount of your offer depends on the basic laws of supply and demand in your area of interest. Sellers are more likely to get a full price offer and, at times, above-asking price when buyer demand is strong (a.k.a seller’s market). When buyer demand is weak (a.k.a. buyer’s market), sellers are more likely to accept offers below asking price. Keep in mind that all real estate is local. You may read reports and news a rticles stating tha t “prices are down 10%” at the county level . However, it is not uncommon for prices to depreciate a t the county level (macro) and have certain neighborhoods within the county (micro) bu ck the ma cro trend a nd appreciate cons iderably. COMPARATIVE MARKET ANALYSIS (CMA) A comparative market analysis (CMA) will help you estimate the market value of the property in which you are interested. Your buyer’s agent will prepare a CMA report detailing the following:
Comparable Sales — similar properties that have sold recently in your area of interest.
Comparable Listings — similar properties that are actively listed for sale or under contract in your area of interest. They allow you to apply the economic principle of substitution when determining an offer price for the property you are interested in.
Your agent should use the following guidelines when determining which properties to use for the CMA:
Date of Sale — the date of the comparable sales should be as close to the current date as possible. In a stable market (no more than 3% appreciation/depreciation in the last 6 months), comparable sales should be no more than 6 months old. In a rapid market (more than 3% appreciation/depreciation in the last 6 months), comparable sales should be no more than 3 months old.
Location — the location of the comparable sales and comparable listings should be as close to the subject property as possible (when available) for townhouses and single-family homes. Comparable sales and comparable listings inside the subject subdivision are best. For condos, comparable sales and comparable listings inside the subject complex or building are ideal. Comparable sales and comparable listings should not exceed a 1 square mile radius from the subject property unless no other comparable sales and comparable listings are available.
Gross Living Area — the gross living area of the comparable sales and comparable listings should be as similar to the subject property as possible. The gross living area of the comparable sale should not exceed:
+/+/+/+/-
25% 20% 15% 10%
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the the the the
property property property property
measures measures measures measures
1 - 1,000 SF 1,001 - 2,000 SF 2,001 - 3,500 SF 3,501+
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execute a contract COMPARATIVE MARKET ANALYSIS (continued)
Lot Size — the lot size of the comparable sales and comparable listings should be as similar to the subject property as possible. The lot size of the comparable sales and comparable listings should not exceed +/- 25%.
Age — the age of the comparable sales and comparable listings should be as similar to the subject property as possible. The age of the comparable sales and comparable listings should not exceed +/- 10 years.
Physical Characteristics — the bed/bath count and total room count of the comparable sales and comparable listings should be the same as the subject property. The bed/bath count of the comparable sales and comparable listings should not exceed +/- 1 and the total room count should not exceed +/- 3.
Architectural Style — the architectural style of the comparable sales and comparable listings should be the same as the subject property. Adjust the comparable sales and comparable listings positively or negatively if the architectural styles are not similar.
View — the view of the comparable sales and comparable listings should be similar to the subject property’s view. Adjust the comparable sales and comparable listings positively or negatively if the views are not similar.
Condition — the condition of the comparable sales and comparable listings should be similar to the subject property’s condition. Adjust the comparable sales and comparable listings positively or negatively if the condition is not similar.
If there is a lack of comparable sales or comparable listings in your area of interest, your buyer’s agent will expand the search criteria one at a time starting with the criterion that has the least impact on price.
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execute a contract CAN THE SELLER PAY FOR THE BUYER’S CLOSING COSTS? It is not uncommon for a buyer to ask the seller to pay for some of his/her closing costs and prepaid expenses. A seller contribution (aka seller concession), can help a buyer who does not have enough cash for a down payment and closing costs. A seller contribution must be fully disclosed in writing in a contract. Different loan programs allow for different contribution limits. Allowable limits normally range between 3% and 6% of the purchase price. Ask your mortgage professional how much the seller is allowed to pay toward closing costs and prepaid expenses before preparing an offer. Keep in mind example, let’s ask the seller the seller will
that sellers will consider how much it costs them to pay for your closing costs. For say that a home is listed for $100,000. You make a full price offer for $100,000 and to contribute $3,000 toward your closing costs. The net sales price is $97,000 since not be keeping the $3,000 given to you toward closing costs.
Note: Asking the seller to pay for all or part of your closings costs in a seller’s market will weaken your position when purchasing a home. Your monthly mortgage payments will also be higher than if you had paid the closing costs out-of-pocket because you are technically financing a portion or all of your closing costs.
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execute a contract SUBMITTING THE OFFER Your buyer’s agent will prepare the documents necessary to submit an offer on your behalf once you have decided on an offer price. After he/she prepares the documents, you should review all terms and contingencies with your agent, initial, sign and date the documents where applicable, and return the documents to your agent as soon as possible. A copy of your preapproval letter and DU Approval (if financing the purchase) or proof of funds (if purchasing all cash) must be presented with your offer. Proof of funds can be presented in the form of a bank letter signed by a bank officer stating that you have sufficient funds to purchase the home or a copy of your most recent bank statements showing that you have sufficient funds to purchase the home. When presenting bank statements, make sure your full name, the name of the financial institution, the date of the statement and the last 4 digits of the bank account number are clear and legible. Note: we use electronic signatures via DocuSign when possible. DocuSign is a web-based eSign solution that is legally compliant with the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN). DocuSign is easy to use, convenient (available to anyone with an email address and an internet connection) and secure (AES Encryption of all Customer Information Assets). There are instances in which the seller (e.g., a lender or asset management company) or the buyer’s lender does not accept electronic signatures. In those instances, you will be required to initial, sign and date the old-fashioned way. NEGOTIATIONS Once you return the signed documents to your buyer’s agent, your agent will present your offer to the seller’s listing agent to start negotiations. The seller must accept the offer in its entirety and provide a notification of acceptance via email, fax or hand delivery in order for a contract to be valid and binding.. If a term is not acceptable to the seller, the seller may present a counter-offer changing the terms with which the seller does not agree. If the offer or counter-offer is agreeable to all parties, a valid and binding contract is executed. The date on which the last party signs, initials and sends notification of acceptance of the final offer or counter-offer becomes the effective date of the contract. The effective date is very important because it is the date from which all contingency timelines are determined.
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meet post-contract contingencies
meet post-contract contingencies Your offer has been accepted. Now what? Having your offer accepted is a great feeling. However, don’t start celebrating just yet. It is only the beginning. There is still plenty to do before you get to the closing table. EXECUTED CONTRACT Your buyer’s agent will deliver a copy of the executed contract to all parties involved in the transaction: the seller’s listing agent, your mortgage professional, the escrow agent, the title agent, the closing agent, your attorney and you. EARNEST MONEY DEPOSIT Earnest money funds are deposited according to the instructions on the contract. The buyer may deposit the earnest money funds at the time that the offer is presented, upon the seller’s acceptance of the offer or within a pre-negotiated number of days of the effective date of the contract. The earnest money deposit is made payable to and delivered to the escrow agent named on the contract. Your buyer’s agent will contact the escrow agent to verify the acceptable forms of payments, such as personal check, cashier’s check or wire transfer. Once the earnest money is deposited, the escrow agent will provide your buyer’s agent with an escrow letter certifying that he/she is holding the earnest money deposit in his/her escrow account. The earnest money deposit is applied to your down payment at closing. Any money left over is applied to your closing costs. LOAN APPLICATION You typically have 3-5 business days after the contract has been executed to “apply” for a mortgage. If you were preapproved in the beginning of the home buying process, your mortgage professional should have most, if not all, of the information and documents necessary to complete your loan application. Some documents may be time sensitive and you may need to provide your mortgage professional with updated copies of those documents. Contact your mortgage professional immediately after executing a contract and ask him/her what documents you need to move forward with your loan application. Discuss with your mortgage professional your options for locking or “floating” your interest rate at this time.
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meet post-contract contingencies SCHEDULE THE HOME INSPECTION Schedule the home inspection immediately after executing the contract. Inspection periods vary, but you typically have 5-15 days to complete your inspection, review the results of the inspection, negotiate repairs and cancel the contract. Scheduling the home inspection immediately should provide you sufficient time to review the inspection report with your buyer’s agent and decide how you would like to proceed. You should ask your home inspector to complete an Insurance Certification Inspection Report as well. You will need an Insurance Certification Inspection Report when ordering homeowner’s insurance. Payment for the home inspection is usually due upon completion of the inspection. Ask the home inspection coordinator when payment is due and what forms of payment are acceptable. Note: before scheduling your home inspection, consult with your buyer’s agent about which inspections you should consider.
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meet post-contract contingencies COMPLETE THE HOME INSPECTION A home inspection provides you with a good understanding of the condition of the property. It is important that you attend the home inspection. Home inspections are more than just finding out what specific repairs the home needs. An experienced home inspector can provide a wealth of information regarding maintenance schedules, the estimated life expectancy of certain items, energy efficiency, and the local history of construction and materials used. A home inspection can take about two hours or longer depending on the size and extra features of the home. Use this opportunity to take a closer look at the home. Measure room sizes, visualize the positioning of furniture, open the closets, check the kitchen cabinet drawers and doors and get a sense of the space in the home. You can also use this time to ask your home inspector any questions you may have. While a home inspector cannot look through the walls of a home, an experienced home inspector may be able to tell you what may exist behind the walls based on the age, style and construction materials used to build the home. A general home inspection typically includes:
roof inspection structural inspection (foundation, walls/ceilings, crawl space, roof framing) mechanical inspection (HVAC) electrical inspection plumbing inspection inspection of all appliances inspection of all windows and doors wood-destroying organisms inspection pool inspection (if applicable)
Additional inspections may include:
mold inspection Chinese drywall inspection septic tank inspection
No home will be problem-free. Some of the problems buyers may encounter are moisture build-up in attics and crawl spaces, additions and conversions not completed to local building code specifications and poor workmanship. Your home inspector will go over his/her findings at the end of the inspection. If there are any major issues with the property, the home inspector will notify you at that time.
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meet post-contract contingencies NEGOTIATING HOME INSPECTION REPAIRS Upon receiving a copy of the home inspection report, review it with your buyerâ&#x20AC;&#x2122;s agent immediately. A seller should expect the home not to be problem-free. Depending on the type of contract executed, some buyers request for certain repairs to be completed after the home inspection. However, you should not expect a seller to address everything the home inspector includes in the inspection report. Your buyerâ&#x20AC;&#x2122;s agent will guide you on reasonable requests for repair. If the home is owned by a seller with positive equity, you are more likely to get the seller to agree to some repairs. If the seller is a lender or an owner in a short sale situation, negotiating repairs is more difficult.
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meet post-contract contingencies ORDER AND COMPLETE A HOME APPRAISAL A home appraisal is an opinion of value by a licensed property appraiser. The home appraisal is for your lender. The property appraiser’s role is to provide an objective, unbiased opinion on the value of the home that will be used to secure the mortgage loan. The property appraiser will visit the home you are buying in order to gather facts and take photographs of the property before preparing the appraisal report. Your lender decides when the appraisal is ordered. Neither you nor the seller have control over this process. You are responsible for paying for the appraisal. Ask your mortgage professional when payment for the home appraisal is due and what forms of payment are acceptable. Your lender will provide you a mortgage based on the lesser of the purchase price or the appraised value of the home. If the appraised value is less than the purchase price of the home, the seller can:
agree to lower the contract purchase price of the home to the appraised value
request that you pay the difference between the appraised value and the contract purchase price (or a newly agreed-upon purchase price) OR
cancel the contract without penalty to you if you and seller cannot come to an agreement
If the appraised value of the home is higher than the purchase price, lenders will not lend you the difference for closing costs or your down payment. Note: Appraisals for FHA and VA loans can be more particular about the condition of the home than an appraisal for a conventional loan. A FHA and VA lender may require that certain repairs and safety concerns be addressed and corrected before the closing. Your mortgage professional will let you know if any repairs and safety concerns need to be addressed and corrected before the closing.
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meet post-contract contingencies CONDOMINIUM/HOMEOWNER’S ASSOCIATION APPROVAL (if applicable) If the home you are purchasing is located in a community that is controlled by a condominium or homeowner’s association, you may need to be approved by the association before you close the purchase of your home. Condominium or Homeowner’s Association Disclosure The Condominium or Homeowner’s Association Disclosure that amends the purchase contract will notify you if association approval is required and, if so, when you should apply for approval with the association. The Condominium or Homeowner’s Association Disclosure also notifies you that the seller, at his/her expense, must provide you with a current copy of the declaration of condominium or restrictive covenants, articles of incorporation of the association, bylaws and rules of the association, financial information and the document titled “Frequently Asked Questions and Answers” three days after the effective date of the contract. You may cancel the contract without penalty to you (with written notice to the seller) within three business days after receipt of the documents stated above should you not agree with anything upon review of those documents. Note: When the seller is a lender (REO), the seller’s addendum usually states that the seller will not provide a copy of the documents stated above. Your buyer’s agent will assist you in acquiring those documents in the event that the seller does not provide them. There may be a fee for acquiring those documents. Association Approval Application Your buyer’s agent will contact the association or the property management company to obtain a copy of the association approval application and find out how much the application fee is, what forms of payment are acceptable and to whom payment should be made. You typically have 5-12 days after the effective date of the contract to turn in your application for association approval. Once you have reviewed and completely filled out the association approval application, return it to your agent along with payment for the application fee. Your buyer’s agent will submit the application and payment, and include a copy of the executed contract. In addition to the executed contract, you may need to submit:
personal financial statements personal reference letters employment reference letters photographs of pets pet vaccination records vehicle registration information
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meet post-contract contingencies CONDOMINIUM/HOMEOWNERâ&#x20AC;&#x2122;S ASSOCIATION APPROVAL (continued) Most associations will perform a credit check and a criminal background check as part of the approval process. They may also require you to interview with a member of the board of directors. Timeline For Association Approval Approval timelines vary. It can take anywhere from 5 to 20 business days for an association to approve a buyer. It is important that you find out how long the approval process takes before you go under contract so that you can plan accordingly. A certificate of approval is granted once the association approves you. If denied, the denial should be provided in writing. If the association does not approve you, you may cancel the contract with no penalty to you.
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meet post-contract contingencies ORDER THE LAND SURVEY & ELEVATION CERTIFICATE (if applicable) Land Survey A land survey supplies a title company and lender with location data necessary to issue title insurance. A land survey:
defines the dimensions of a lot defines the positions of easements and building setbacks identifies other conditions affecting the property
A land survey is typically ordered by your title company and is completed according to American Land Title Association (ALTA) standards within 3-5 business days from the date it is ordered. The cost of a land survey varies ($300-$500) depending on the scope of the work being performed and other factors like the size of the property. Ask your title company if it will order the land survey, how much it will cost, if it is payable in advance or at closing on the HUD-1 Settlement Statement and how long it will take to be completed. You should have a land survey completed on a home you are purchasing even if it is not required by a lender (e.g., all cash transaction). Without a ALTA certified land survey you have no recourse if, at a later date, it is found that your fences encroach on a neighbor’s property or that there are rights to easements by a utility company. These are just two examples of what can occur. A land survey will also be beneficial if you plan to add a patio, pool, driveway, garage or building additions at a later date. Note: If you are buying a condominium unit, you will not have to obtain a separate land survey of your unit. The land survey should have been completed as part of the plans that were recorded with the Declaration of Condominium.
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meet post-contract contingencies ORDER THE LAND SURVEY & ELEVATION CERTIFICATE (continued) Elevation Certificate An elevation certificate determines the elevation of various sections of a building or land. It provides information on elevation, building type, flood map location and additional information used to determine the proper flood insurance premium rates. The elevation certificate is completed by a licensed surveyor and is issued by The Federal Emergency Management Agency (FEMA). Your insurance agent will need a copy of the elevation certificate to quote flood insurance rates, if applicable. Note: If you are buying a condominium unit, you will not have to obtain an elevation certificate. The elevation certificate should have been completed as part of the plans that were recorded with the Declaration of Condominium.
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meet post-contract contingencies INSURANCES Homeowner’s Insurance Homeowner’s insurance, commonly referred to as hazard insurance, is a package policy that protects you financially against covered losses that occur to your home and personal property. It provides protection against accidental physical losses directly caused by:
fires burglary severe storms earthquakes other natural events
Homeowner’s insurance may also provide liability protection for certain bodily injuries that occur on your property. If you are legally liable for bodily injuries that are covered by your policy, your homeowner’s insurance pays compensatory damages up to your policy limit. Most lenders will require you to purchase a full one-year homeowner’s insurance policy prior to closing. Discuss this with your mortgage professional. Flood Insurance Most homeowner’s insurance policies in Florida do not cover flood losses. A standard flood insurance policy covers direct physical damage to your property caused by flooding. Flood insurance is federally backed by The National Flood Insurance Program (NFIP). Your lender will require you to purchase flood insurance if the property is located in a floodplain. The elevation certificate determines if your property is located in a floodplain. You may purchase flood insurance for your home regardless of whether the property is in a floodplain. The average cost of a flood insurance policy is approximately $500/year. A flood insurance policy normally will not go into effect until 30 days after you purchase the policy. Discuss the cost and effective date of your policy with your insurance agent.
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meet post-contract contingencies INSURANCES (continued) Wind and Hail Insurance Damage caused by wind, hail, rain, wind-driven rain and lightning is usually covered in homeowner’s insurance policies. However, if your property is located inside the Wind-Borne Debris Region (WBDR), there is a great chance that wind is specifically excluded from your homeowner’s insurance policy. The WBDRs are areas in hurricane-prone regions within one mile of the coastal mean high line where the basic wind speed is 110 miles per hour or greater or where the basic wind speed is equal to or greater than 120 miles per hour. Insurance companies can exclude wind damage coverage for homes located inside the WBDR. In the event that wind damage is excluded from your homeowner’s insurance policy, you must purchase a separate “wind policy” through Citizens, a not-for-profit, tax-exempt corporation whose public purpose is to provide insurance protection to Florida property owners throughout the state. Your insurance agent will inform you if you will need a separate “wind policy”. HO-6 Insurance Policy Under the recent overhaul of condominium lending guidelines by Fannie Mae and the Federal Housing Administration (FHA), lenders now require condominium unit owners to purchase a HO-6 insurance policy that must provide coverage for no less than 20% of the condominium unit’s appraised value. HO-6 insurance policies usually have a small deductible and are fairly inexpensive. HO-6 insurance policies can:
provide coverage for the interior of a unit and a homeowner’s personal property, such as furniture, computer equipment and clothing fill in the gaps of the condominium association’s master insurance policy and cover losses under the master policy deductibles provide coverage for interior walls, floor coverings, improvements and upgrades provide coverage for personal liability
What Your Insurance Agent Needs Your insurance agent will need the following from you in order to provide you with insurance quotes and bind your insurance policy:
Insurance Certification Inspection Report (also known as Four Point Inspection) Elevation Certificate (if applicable) Mortgagee Clause (if financing the purchase of your home) Appraisal
Provide a copy of the Homeowner’s Declarations to your mortgage professional once your homeowner’s insurance is bound.
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meet post-contract contingencies TITLE INSURANCE Owner’s Title Policy When purchasing real estate, it is important to receive clear title to the property. You must be informed of any existing rights or claims that may threaten your title and possession to the property in the future. There may be parties like governmental bodies, contractors, lenders, judgment creditors, individuals or corporations that have rights to or claims on the property that you are buying. The property may be sold to you without the knowledge of such parties. Those rights and claims remain attached to the property that you are buying unless they are extinguished. Title insurance is a unique form of insurance. It provides coverage for future claims or future losses due to title defects created by a past event. An owner’s title insurance policy protects you for the full value of the property. If a claim is made against your insured title, your title company protects you by defending your title in court at no cost to you. The original premium paid at closing is your only cost for the entire time you own the property. There are no annual payments necessary to keep your owner’s title insurance policy in force. Lender’s Title Policy Mortgage lenders require buyers to purchase a lender’s title policy to protect their interest in your property. The lender’s title policy protects the lender from loss as a result of title defects. The original premium paid at closing is your only cost for the entire time you own the property. There are no annual payments necessary to keep the lender’s title insurance policy in force. Title Search and Examination The title company will conduct a public records search of any documents associated with the property to determine the status of title. The title company will then examine the documents to determine if there are any rights or claims that may have an impact on the title to the property. A title search can reveal the existence of recorded defects, liens or encumbrances upon the title. Those recorded defects, liens or encumbrances are reported to you prior to your purchase of the property. Any problems that exist can be accepted, resolved or extinguished prior to the closing. Title insurance protects you from any recorded defects, liens or encumbrances upon the title that are unreported to you and are within the coverage of the title insurance policy. Title insurance also provides coverage for any hidden risks, rights or claims that do not appear in public records and are not discoverable. Hidden risks could provide a basis for a claim after you have purchased your property. Some of the more common hidden risks covered under owner’s title insurance include false impersonation of the true owner, confusion caused by similar names, forged deeds, errors in recording legal documents, invalid divorces and undisclosed or missing heirs.
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meet post-contract contingencies LOAN COMMITMENT Conditional Loan Commitment A conditional loan commitment means that a lender will provide a mortgage loan as long as certain conditions, such as an appraisal that ensures that the property’s value offers sufficient collateral in relation to the loan amount, are fulfilled. All loans are conditional in the early stages of going under contract. Conditions are fulfilled progressively as the loan moves through processing and underwriting. A strong preapproval removes most of the borrower-related conditions for a loan commitment. In that case, only property-related conditions must be met for a firm loan commitment. Firm Loan Commitment A firm loan commitment is the document an underwriter issues once a loan is approved. It is usually the last contingency that is satisfied in the home buying process. Once you and the property meet ALL of the lender’s specified conditions, your lender will issue a firm loan commitment and provide the “clear to close” the transaction. The firm loan commitment has an expiration date. If you do not close the transaction within that period, the firm loan commitment expires and you will need to reapply for the loan. Once you have a “clear to close” from the lender’s underwriter, the lender creates the mortgage loan package and sends it to the closing agent. This can be done by overnight delivery, e-mail or fax.
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meet post-contract contingencies HUD-1 SETTLEMENT STATEMENT Once the closing agent receives the mortgage loan package from your lender, the closing agent will prepare the HUD-1 Settlement Statement and send it to all parties (buyer, seller, listing agent, buyer’s agent, lender, attorney) for review and approval. The HUD-1 Settlement Statement is the standard real estate settlement form in all transactions in the United States.. It itemizes all charges imposed upon a buyer and seller for a real estate transaction and gives both parties a complete list of their incoming and outgoing funds. The HUD-1 Settlement Statement will provide you with the exact amount of money you will need to “bring” to closing. The Real Estate Settlement Procedures Act (RESPA) states that you should be given a copy of the HUD-1 Settlement Statement at least 24 hours prior to closing. Once you receive a copy, review it with your buyer’s agent, mortgage professional and attorney. If you have any questions, this is the time to ask them. If there are any errors on the HUD-1 Settlement Statement, inform the closing agent so that he/she can correct them. WALKTHROUGH INSPECTION You should visit the home at least one day before closing to make sure that the property is in the same condition that it was in on the date the contract was executed. Has all personal property been removed as agreed? If repairs were made to the property after you went under contract, were the repairs completed as agreed? Were permits necessary for the repairs completed? Were the necessary permits closed? SCHEDULE THE CLOSING Once you have reviewed and approved the HUD-1 Settlement Statement and completed your walkthrough inspection, contact your closing agent to confirm a date, time and place for the closing.
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close the transaction
close the transaction The closing is a meeting at which the transaction is consummated. It usually takes place at the closing agent’s office and is attended by:
You (the buyer) the seller the closing agent your buyer’s agent the listing agent (seller’s agent) your mortgage professional your attorney (if different from closing agent) the seller’s attorney
The closing process can take anywhere between 1-2 hours. Be sure to bring a photo ID to the closing. CLOSING THE PROPERTY TRANSACTION The funds you must “bring” to closing for your down payment and closing costs (outlined on the HUD-1 Settlement Statement) should be wire transferred the day before or the morning of closing so that the transaction funds and closes at the same time. You will spend a great portion of your time signing documents at closing. The closing agent will provide you with a brief explanation of the documents you will be reviewing and signing. Some of those documents include, but are not limited to:
HUD-1 Settlement Statement
Mortgage: legal document that secures the note; contains all the terms and conditions of the loan agreement. It allows the lender to foreclose on the property if you default.
Promissory Note: legal document that represents your unconditional promise to pay a specific amount of money to the lender at a fixed or determinable future time. It states the amount, interest rate and the terms of the loan.
Truth-in-Lending Statement (TIL): legal document required by federal law that discloses the annual percentage rate (APR) of your mortgage. The APR includes any points and fees charged to you by the lender at closing.
Deed: legal document that transfers ownership from the seller to you. The seller is the only party that signs the deed.
Affidavits: written statement or declaration made under oath before an attorney or a licensed individual, such as a notary public. Your lender and/or your closing agent will require you to sign various affidavits (e.g., affidavits of incumbency, 1099 affidavit, affidavits of no lien, special affidavits regarding title, etc.).
Once you have signed all the documents, the closing agent will send a portion of those documents to your lender for review. Once the lender receives and reviews those documents, your lender will release the funds to finalize the closing.
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close the transaction FUNDING & POSSESSION Once your lender approves the documents you signed at closing, your lender will wire the funds borrowed to purchase your home to the closing agent’s escrow account. It is NOT u ncommon for the buyer and seller to s ign the closing documents before the lender funds the purchase. It is important to note that possession is not granted to the buyer until the funds necessary to close the transaction are available in the clo sing agent’s escrow account. The closing agent will turn over the keys, garage door openers, etc. to the buyer once the funds are available in the closing agent’s escrow account. The closing agent will send the deed and mortgage to the local office of the Clerk of Courts to be recorded. You will receive a copy of the recorded deed and mortgage approximately 4-6 weeks after closing. You will also receive a copy of the title insurance policy approximately 10-12 weeks after closing.
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close the transaction POST CLOSING Congratulations! You are now a homeowner. Now what?
Change all the locks on the doors of your new home
Contact your local utility companies to start service for electricity, water & sewer and propane gas (if applicable)
Contact your local cable television company or satellite provider
Notify the post office of your address change and request that all mail be forwarded to your new home
Notify your creditors, child’s school, employer and friends (at least those you want to know) of your new address
Update the address on your driver’s license
MORTGAGE PAID IN ARREARS Unlike rent payments, which are paid in advance, your mortgage payment is made in arrears. When you close on your home, the closing agent collects interest in advance for the rest of the month. As a result, your first mortgage payment typically isn’t due until the month after the month in which you close. For example, if your closing date is October 15, you will be charged prorated daily interest from October 15 through October 31 on the HUD-1 Settlement Statement. Your first mortgage payment will be due on December 1. Your December 1 payment pays for the interest for November. Interest is always paid approximately 30 days in arrears. REVIEW YOUR HOME INSPECTION Create a plan and estimate a budget for taking care of the items of repair noted by your home inspector on your home inspection report. INVENTORY OF YOUR HOME Document all the belongings in your home. An accurate record of your possessions lets you know how much insurance you need to protect your possessions. It also helps you should you have to file a claim. Take digital photographs and video to support your documentation. A great free online tool for asset management is EZasset.appspot.com.
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thank you Thank you for taking the time to read our residential real estate buyer’s guide. Our goal is to provide you with the latest resources and the tools you need to make your home buying experience a pleasurable one. While a lot of the information we provide will remain relevant to most residential real estate markets, it is important to note that economic factors, legislation and mortgage loan programs are constantly changing and affect how the residential real estate market works. We will continue to work hard to update this guide with the most up-to-date information available. FEEDBACK, COMMENTS, QUESTIONS, CONCERNS We’d love to hear about your experience using this guide. Feel free to email me at adrian@gablesmavens.com. What did you like? What can be improved? Is it too much? Not enough? We’d love to know. If you have any questions about what you read in this guide or if you need assistance buying a home, contact us today or visit us at our canine and pedestrian-friendly, caffeine-fueled store-front location: 132 madeira ave coral gables, fl 33134 adrian salgado 305-491-7179 c adrian@gablesmavens.com http://www.twitter.com/adriansalgado raul estrada 786-586-5844 c raul@gablesmavens.com http://www.twitter.com/raulestrada P.S. You’ll love our coffee!
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glossary American Land Title Association (ALTA): a national trade association representing the interests of the abstract of title and title insurance industries. Members search, review and insure land titles to protect home buyers and mortgage lenders who invest in real estate. assessed value: an annual determination of the just or fair market value of a property. bind: to bring an insurance policy into effect by an oral or verbal agreement of coverage issued by an insurance company before a policy has been officially issued. building setback: the minimum required distance between any structure and a specified line such as a lot, public or private right-of-way, easement, future street right-of-way as identified through an official control or buffer line that is required to remain free of structures. casualty loss: damage or loss that is sudden, unexpected or out of the ordinary such as the loss of property in a fire or storm. certificate of approval: a certificate issued to a buyer or lessee by the Board of Directors of a condominium or homeowner’s association upon approval by the association; the certificate must be recorded in the public records along with the deed. Citizen’s Insurance Corporation: a government-owned, not for profit insurer of last resort created in 2002 by the Florida state government to provide property insurance for homeowners who cannot obtain insurance elsewhere. coastal mean high line: the intersection of the land with water surface at the elevation of high water. compensatory damage: an award of money paid to compensate a claimant for loss, injury or harm suffered as a result of another’s breach of duty. cosmetic condition: aesthetic imperfection that does not affect the working condition of an item. deferred maintenance: the act of postponing the upkeep of real property that leads to asset deterioration and impairment. earnest money deposit: a payment towards the purchase of real estate made by a buyer to demonstrate that he/she is serious about completing the purchase. easement: a certain right to use real property of another without possessing it. effective date: the date upon which an agreement is considered to take effect. encumbrance: anything that affects or limits the title of a property, such as a mortgage, lease, easement, lien or restriction. equity: the difference between the home’s fair market value and the outstanding balance of all liens on the property. escrow: money held by a third party on behalf of the other two parties in a transaction.
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glossary Fannie Mae: a public government-sponsored enterprise (GSE) chartered by Congress in 1938 to keep money flowing to mortgage lenders, help strengthen the United States housing and mortgage markets, and support affordable homeownership. Federal Emergency Management Agency (FEMA): an agency of the US Department of Homeland Security created to coordinate the response to a disaster that has occurred in the United States and overwhelms the resources of local and state authorities. Florida Association of Realtors (FAR): a real estate trade association in the state of Florida with a mission to advance Florida’s real estate industry by shaping public policy on real property issues; encouraging, promoting and teaching consistent standards for ethical practice and professionalism; and building on the efforts of local Boards/Associations to provide the information and tools REALTORS® need to succeed. Florida Bar Association: a statewide professional organization of lawyers licensed by the Supreme Court of Florida to practice law in the state that serves as an advocate and intermediary for attorneys, the court and the public. Freddie Mac: a public government sponsored-enterprise (GSE) chartered by Congress in 1970 to provide competition to Fannie Mae. Its purpose is to keep money flowing to mortgage lenders, help strengthen the U.S. housing and mortgage markets, and support affordable homeownership. Ginnie Mae: a wholly owned government corporation within the Department of Housing and Urban Development (HUD) established in 1968 to expand affordable housing in the United States by channeling global capital into the nation’s housing finance markets. government-sponsored enterprise (GSE): privately held corporations with public purposes created by Congress to enhance the availability and reduce the cost of credit to targeted borrowing sectors, such as agriculture, home finance and education. hidden risk: a cloud on title that is not disclosed by a search of public records. lien: a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. listing agent: a real estate agent hired by the seller of real property to market the property and represent the seller during the sale. loan-to-value ratio: a ratio that expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. millage rate: the amount per $1,000 used to calculate taxes on property; multiplied by the taxable value of a property to arrive at the property tax amount due. Multiple Listing Service (MLS): a suite of services that enables real estate brokers to establish contractual offers of compensation, facilitates cooperation with other broker participants, accumulates and disseminates information to enable valuations and serves as a facility for the orderly correlation and dissemination of listing information to better serve broker’s clients, customers and the public.
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glossary National Flood Insurance Program (NFIP): a program created by the Congress of the United States in 1968 that enables property owners in participating communities to purchase insurance protection from the government against losses from flooding. Private Mortgage Insurance (PMI): insurance that lenders require from most homebuyers who obtain mortgage loans that are more than 80% of their new homeâ&#x20AC;&#x2122;s value. It protects a lender against loss if a borrower defaults on a loan. The buyer is responsible for paying for the policy. procuring cause: the uninterrupted series of causal events that leads to a successful real estate transaction. property tax exemption: instrument that allows a certain amount of the assessed value of a property to be legally excluded to reduce taxation. Real Estate Settlement Procedures Act (RESPA): an act passed by the Congress of the United States in 1974 which prohibits kickbacks between lenders and third-party settlement service agents in the real estate settlement process. secondary market: financial market where previously issued securities and financial instruments, such as stocks, bonds, options and futures are bought and sold. securities: a financing or investment instrument issued by a company or government agency that denotes an ownership interest and provides evidence of a debt, a right to share in the earnings of the issuer or a right in the distribution of a property (e.g., bonds, debentures, notes, options, shares and warrants). seller contribution: payment by the seller or any other interested party of some or all of the buyerâ&#x20AC;&#x2122;s usual closing costs. selling agent: a real estate agent that represents the buyer when he/she purchases a home. substitution: economic principle that states that a buyer would not pay more for a property than it would cost to acquire another property that would provide equal or greater economic utility to the buyer. taxable value: the amount on which a property owner pays property taxes. underwriter: mortgage lenderâ&#x20AC;&#x2122;s employee responsible for determining if the risk of offering a mortgage loan to a particular borrower is acceptable. warrants (verb): to guarantee to be as represented watertight: of such tight construction or fit as to be impermeable to water except when under sufficient pressure to produce structural discontinuity. Wind-Borne Debris Region (WBDR): areas along the Atlantic and Gulf Coasts where the design wind speed is 120 miles per hour or above, within one mile of the coastal mean water line where the wind is 110 miles per hour or above.
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glossary wood-destroying organism (WDO): arthropod or plant life, including termites, powder-post beetles, oldhouse borers and wood-decaying fungi, that damages or infests seasoned wood in a structure. working condition: operating in the manner in which an item was designed to operate. yield spread premium (YSP): money or rebate paid to a mortgage broker for giving a borrower a higher interest rate on a loan in exchange for lower upfront costs.
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source notes 11
Lending Tree. (n.d.). Calculating your debt-to-income ratio. Retrieved from http://www.lendingtree.com/mortgage-loans/advice/qualifying-for-a-loan/calculating-debt-to-income/
11
Axness, D., & Axness D. (2011). Getting Your Financial House in Order. Retrieved from http://fearlesshomebuyer.com/lesson/getting-your-financial-house-in-order/
12
Weintraub, E. (n.d.). Before You Buy a Home â&#x20AC;&#x201D; Look at Eight Reasons to Buy a Home. Retrieved from http://homebuying.about.com/od/buyingahome/bb/buyhome.htm
12
Axness, D., & Axness D. (2011). Top 9 Benefits of Homeownership. Retrieved from http://fearlesshomebuyer.com/lesson/top-9-benefits-of-homeownership/
13
Axness, D., & Axness D. (2011). The Benefits of Renting vs Buying a Home. Retrieved from http://fearlesshomebuyer.com/lesson/the-benefits-of-renting-vs-buying-a-home/
15
McCormack, K. (December 28, 2010). How to choose a real estate agent: The definitive checklist [Blog Post]. Retrieved from http://blogs.reuters.com/prism-money/2010/12/28/how-to-choose-a-real-estate-agent-the-definitive-checklist/
15
Axness, D., & Axness D. (2011). Do I Need a Buyers Agent?. Retrieved from http://fearlesshomebuyer.com/lesson/who-pays-for-my-buyers-agent/
16
Florida Association of Realtors. (July 2006). Transaction Broker Notice. Retrieved from http://www.floridarealtors.org
17
Florida Association of Realtors. (July 2006). Single Agent Notice. Retrieved from http://www.floridarealtors.org
18
Florida Association of Realtors. (July 2006). No Brokerage Relationship Notice. Retrieved from http://www.floridarealtors.org
18
Florida Association of Realtors. (November 2009). Exclusive Buyer Brokerage Agreement. Retrieved from http://www.floridarealtors.org
19
Axness, D., & Axness D. (2011). Who Pays for My Buyer's Agent?. Retrieved from http://fearlesshomebuyer.com/lesson/who-pays-for-my-buyers-agent/
21
Types of Mortgage Lenders. (n.d.). Retrieved from http://www.thetruthaboutmortgage.com/types-of-mortgage-lenders/
21
Axness, D., & Axness D. (2011). What Type of Lender Should I Use?. Retrieved from http://fearlesshomebuyer.com/lesson/what-type-of-lender-should-i-use/
22
Mortgage Prequalification and Preapproval. (n.d.). Retrieved from http://www.ourfamilyplace.com/homebuyer/prequal.html
22
Axness, D., & Axness D. (2011). Are You Prequalified or Preapproved?. Retrieved from http://fearlesshomebuyer.com/lesson/loan-prequalification-vs-preapproval/
22
Surfrate.com. (April 16, 2008). Home Mortgage Pre-Qualification, Pre-Approval and Loan Commitment. Retrieved from http://www.surfrate.com/home-financing-guide/home-mortgage-pre-qualification-pre-approval-and-loan-commitment.html
23
SmartEdge by General Motors Acceptance Corporation. (n.d.). Mortgage Tutorial: Meeting with a Mortgage Lender. Retrieved from http://www.gmacsaic.com/SmartEdge/en/mortgage/financing/lender_mortgage.html
23
Axness, D., & Axness D. (2011). What Your Mortgage Professional Needs. Retrieved from http://fearlesshomebuyer.com/lesson/what-will-a-mortgage-pro-need-from-me/
24
Axness, D., & Axness D. (September 2010). Interview questions to ask your prospective Mortgage Professional [Portable Document]. Retrieved from http://fearlesshomebuyer.com/wp-content/uploads/2010/09/Interview-questions-to-ask-your-mortgage-pro.pdf
25
Axness, D., & Axness D. (September 2010). Questions a Mortgage Professional should ask you [Portable Document]. Retrieved from http://fearlesshomebuyer.com/wp-content/uploads/2010/09/Interview-questions-to-ask-your-mortgage-pro.pdf
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Redfin. (January 7, 2011). Conventional Loan. Retrieved from http://www.redfin.com/definition/conventional-loan
26
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26
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27
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27
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27
Green, D. (April 14, 2011). How To Beat The April 18, 2011 FHA Mortgage Insurance Increase. Retrieved from http://themortgagereports.com/6018/FHA-mortgage-insurance-increase-April-2011
28
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28
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28
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29
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29
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30, 31
Freddie Mac. (2011). Fixed or Adjustable Rate?. Retrieved from http://www.freddiemac.com/corporate/buyown/english/mortgages/selecting/fixed_or_adjustable.html
30, 31
McWhinney, J.E. (2011). Mortgages: Fixed-Rate Versus Adjustable-Rate. Retrieved from http://www.investopedia.com/articles/pf/05/031605.asp
32, 33
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32, 33
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34
Axness, D., & Axness D. (2011). Closing Cost & Prepaid Expenses. Retrieved from http://fearlesshomebuyer.com/lesson/buyers-closing-costs-prepaids/
34
U.S. Department of Housing and Urban Development (n.d.). Shopping for Your Home Loan: HUD's Settlement Cost Booklet [Portable Document]. Retrieved from http://www.respanews.com/media/mediamanager/settlement%20booklet%20revised.pdf
35
Porter, R. (February 18, 2010). Loan Officers: Stop Your Crying...Let's Love the Good Faith Estimate [Blog Post]. Retrieved from http://www.mortgageporter.com/reportingfromseattle/2010/02/loan-officers-stop-your-cryinglets-love-the-good-faith-estimate.html
35
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37
Axness, D., & Axness D. (2011). How to Checkout a Neighborhood. Retrieved from http://fearlesshomebuyer.com/lesson/how-to-checkout-a-neighborhood/
38
Axness, D., & Axness D. (2011). Deciding Where to Buy a House is Critical. Retrieved from http://fearlesshomebuyer.com/lesson/where-should-you-buy-a-house/
92
source notes 40
Axness, D., & Axness D. (2011). What's Important to You in a Home?. Retrieved from http://fearlesshomebuyer.com/lesson/create-your-wish-list-for-a-house/
40
U.S. Department of Housing and Urban Development (n.d.). Wish List [Portable Document]. Retrieved from http://www.hud.gov/buying/wishlist.pdf
41
Axness, D., & Axness D. (2011). Why the Big Fuss about Wants vs Needs?. Retrieved from http://fearlesshomebuyer.com/lesson/why-you-must-divide-wants-vs-needs/
42
Florida Statutes 718 - Condominiums. (n.d.). Retrieved from http://www.ccfj.net/condo718statutes.html
42
Bennet, D.S. (March 2010). Condominium Homeownership in the United States: A Selected Annotated Bibliography of Legal Sources [Portable Document]. Retrieved from http://works.bepress.com/cgi/viewcontent.cgi?article=1009&context=donna_bennett
43, 45, 47
Axness, D., & Axness D. (September 2010). Positives & Negatives of Condos, Townhomes & Detached Homes [Portable Document]. Retrieved from http://fearlesshomebuyer.com/wp-content/uploads/2010/09/checklist-to-compare-condos-townhouse-house.pdf
48, 49
Salgado, A. (December 24, 2007). Top 3 Real Estate Related Terms for 2008 in South Florida [Blog Post]. Retrieved from http://realestatemiami.wordpress.com/2007/12/24/top-3-real-estate-related-terms-for-2008-in-south-florida/
50
Axness, D., & Axness D. (2011). Where Should Your Home Search Begin?. Retrieved from http://fearlesshomebuyer.com/wp-content/uploads/2010/09/Checklist-of-what-to-research-around-a-house.pdf
51
Axness, D., & Axness D. (September 2010). Checklist: What to Investigate Around a House [Portable Document]. Retrieved from http://fearlesshomebuyer.com/wp-content/uploads/2010/09/Checklist-of-what-to-research-around-a-house.pdf
53—56
Florida Association of REALTORS. (April 2007). Residential Sale and Purchase Contract [Portable Document]. Retrieved from http://www.floridarealtors.org/
53—56
Florida Association of REALTORS. (January 2009). As Is With Right to Inspect [Portable Document]. Retrieved from http://www.floridarealtors.org/
53, 57 58—60
Florida Realtors & Florida Bar. (June 2010). Residential Contract For Sale and Purchase [Portable Document]. Retrieved from http://www.floridarealtors.org/
53, 57 58—60
Florida Realtors & Florida Bar. (June 2010). "AS IS" Residential Contract For Sale and Purchase [Portable Document]. Retrieved from http://www.floridarealtors.org/
61
Florida Realtors & Florida Bar. (June 2010). Condominium Association Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
61
Florida Association of REALTORS. (January 2009). Condominium Association Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
61
Florida Realtors & Florida Bar. (June 2010). Homeowners' Association /Community Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
61
Florida Association of REALTORS. (January 2009). Homeowners' Association Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
61
Florida Association of REALTORS. (December 2010). Short Sale Addendum to Purchase and Sale Contract [Portable Document]. Retrieved from http://www.floridarealtors.org/
61
Florida Association of REALTORS. (October 2005). Seller's Mold Addendum to Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
61
Florida Association of REALTORS. (January 2009). Insurance Disclosure [Portable Document]. Retrieved from
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Florida Realtors & Florida Bar. (June 2010). Homeowner's Insurance Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Association of REALTORS. (January 2009). Sale/Lease of Property Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Realtors & Florida Bar. (June 2010). Sale of Buyer’s Property Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Realtors & Florida Bar. (June 2010). Buyer’s Attorney Approval Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Realtors & Florida Bar. (June 2010). Seller’s Attorney Approval Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Association of REALTORS. (January 2009). Pre-1978 Housing Lead-Based Paint Warning Statement [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Realtors & Florida Bar. (June 2010). Lead-Based Paint Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Association of REALTORS. (January 2009). Property Disclosure Statement [Portable Document]. Retrieved from http://www.floridarealtors.org/
62
Florida Association of REALTORS. (May 2009). Chinese/Defective Drywall Addendum to Contract [Portable Document]. Retrieved from http://www.floridarealtors.org/
63, 64
National Association of BPO Professionals. (2010). Broker Price Opinion Standards & Guidelines [Portable Doucment]. Retrieved from http://nabpop.org/bposg-v4.pdf
65
Axness, D., & Axness D. (2011). Negotiating Who Pays Your Closing Costs. Retrieved from http://fearlesshomebuyer.com/lesson/getting-the-seller-to-pay-closing-costs/
68, 69 71
Florida Association of REALTORS. (April 2007). Residential Sale and Purchase Contract [Portable Document]. Retrieved from http://www.floridarealtors.org/
68, 69 71
Florida Realtors & Florida Bar. (June 2010). Residential Contract For Sale and Purchase [Portable Document]. Retrieved from http://www.floridarealtors.org/
68, 72
DellaLogia, A. (February 20, 2011). Real Estate - From Contract to Close of Escrow [Blog Post]. Retrieved from http://raincityguide.com/2011/02/20/real-estate-from-contract-to-close-of-escrow/
70
Axness, D., & Axness D. (2011). It’s Time to Get to Know Your New Home!. Retrieved from http://fearlesshomebuyer.com/lesson/the-general-home-inspection/
70
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71
Axness, D., & Axness D. (2011). Negotiating Home Inspection Repairs. Retrieved from http://fearlesshomebuyer.com/lesson/negotiating-home-repairs/
72
Fannie Mae. (March 2010). Home Valuation Code of Conduct Frequently Asked Questions [Portable Document]. Retrieved from https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvccfaqs.pdf
73, 74
Florida Realtors & Florida Bar. (June 2010). Condominium Association Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
94
source notes 73, 74
Florida Association of REALTORS. (January 2009). Condominium Association Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
73, 74
Florida Realtors & Florida Bar. (June 2010). Homeowners' Association /Community Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
73, 74
Florida Association of REALTORS. (January 2009). Homeowners' Association Disclosure [Portable Document]. Retrieved from http://www.floridarealtors.org/
75
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75
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76
Barhorst, S. (May 31, 2008). What is an Elevation Certificate?. Retrieved from http://www.floodhappens.com/home/index.php?option=com_content&view=article&id=50:what-is-an-elevation-certificates&catid=39:flood-related&itemid=64
77
Homeowners Insurance. (n.d.). Retrieved from http://allinsuranceinfo.org/property/
77
National Association of Insurance Commissioners. (March 2008). Flood Insurance - National Flood Safety Awareness Week Good Time to Review Your Flood Insurance Policy. Retrieved from http://www.naic.org/documents/consumer_alert_flood_insurance.htm
78
Florida Department of Consumer Affairs. (2007). Wind-Borne Debris Region [Portable Document]. Retrieved from http://www.dca.state.fl.us/fbc/maps/Wind_borne_MAP_081208.pdf
78
Citizens Property Insurance Corporation (2011). Policyholder Destinations. Retrieved from https://www.citizensfla.com/policyholder/index.cfm
78
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79
American Land Title Association. (n.d.). Home Closing 101: Protecting Your American Dream. Retrieved from http://www.homeclosing101.org/index.cfm
79
Chicago Title Company (n.d.). Information Library. Retrieved from http://www.chicagotitle.com/DesktopDefault.aspx?tabid=113#
80
Brock, C. (May 2008). Your Commitment Letter: Firm or Conditional?. Retrieved from http://www.mortgageloan.com/your-commitment-letter-firm-or-conditional-1913
83
McNutt Jr., P. (n.d.). HUDâ&#x20AC;&#x2122;s New RESPA Rules for HUD-1: With Q & A [Portable Document]. Retrieved from https://www.titleresources.com/uploadedFiles/TRGCTX/Content_Blocks/Education_n_Training/Internet_Conference_Training/RESPA_Rules_HUD-1-ppt.pdf
83
Swedal, B. (September 6, 2010). The Closing Table [Blog Post]. Retrieved from http://www.bruceswedal.com/blog/denver-co-first-time-home-buyer-series-the-closing-table-part-10.html
85
Weintraub, E. (n.d.). When is Your First Mortgage Payment Due?. Retrieved from http://homebuying.about.com/od/financingadvice/f/051509_Mortgage-Payment.htm
85
Axness, D., & Axness D. (2011). Your First Steps as a New Homeowner. Retrieved from http://fearlesshomebuyer.com/lesson/what-happens-now-that-im-a-homeowner/
95