Home Buyer's Information Packet

HOW I CAN HELP YOU FIND THE HOME OF YOUR DREAMS

Kathryn Alexander, Broker, ABR

360-281-4150 Direct

John Slocum, Broker

360-241-7232 Direct

Your Friendly RE/MAX Brokers!

Office Locations: Kathryn:

1301 SE Tech Center Drive #150 Vancouver, WA 98682

John:

7700 NE Greenwood Drive #100 Vancouver, WA 98662

MY ROLE AS YOUR BUYER’S AGENT Serve as your Experienced Negotiator 

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Research and review comparable sales to determine the approximate fair market value from recent sales in your area.

Prepare the written sales offer for presentation to the seller’s agent, giving special consideration to your specific needs.

When choosing a real estate agent, consider the following: 

Experience

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Explain the contract to you in detail.

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Represent your best interests in all negotiations, including any counter offers between you and the seller.

Knowledge of the local market

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Knowledge of the buying and selling process

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The types of marketing, advertising and sales tools available

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Compatibility with your personality

Act as your Transaction Coordinator 

Help you finalize the arrangements for the financing option you have chosen that is specifically tailored to your needs.

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Oversee the entire closing process and handle complications that may occur throughout the process, eliminating stress for you.

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Provide you with updates all along the way through closing.

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Examine all closing documents for accuracy.

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Help you and the seller arrange the closing and assist in synchronizing the transaction.

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Quality of service offered

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Review and explain all documents to help you better understand the closing process.

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References

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Schedule and conduct a final walk-through inspection on the property you are buying.

My job is to determine your needs, assist you in your search, and manage the transaction for you. Working full-time, all the time, to find the home of your expectations.

I’m here to help you find your way home with as little stress as possible.

THE PROCESS OF BUYING A HOME Decision to Move

CONTRACT with me, your RE/MAX equity group REALTOR速 , to represent you.

PRE-QUALIFY with a lender to find out your true buying power.

DETERMINE your home and area needs.

VIEW and EVALUATE available homes.

SELECT a home and PRESENT an offer.

NEGOTIATIONS BEGIN

The offer is ACCEPTED!

SUBMIT a loan application.

SCHEDULE a home inspection.

All closing activities are COORDINATED. A final WALK-THROUGH is taken.

DOCUMENTS are reviewed, LOAN is accepted.

Transaction is FINALIZED and CLOSED.

Even if you have bought or sold a home before, the process can still be confusing. This chart will help you better understand the steps involved in your transaction.

My job is to tie them together as smoothly as possible for you and to keep you informed every step of the way.

Make Your Move

UNPARALLELED SERVICE

You can expect a RE/MAX equity group Realtor® to go the extra mile to deliver you extraordinary service.

We work with integrity, in a spirit of cooperation, and always with the clear vision of providing you with a rewarding and satisfying real estate experience that is convenient, comfortable and exceeds your expectations. ®

What you can expect when you work with me, a RE/MAX equity group Realtor : 

Dependable, continual, timely communication

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Active listening to your needs and concerns

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Clear, understandable explanations of each step of the process

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Personal attention in which you and your goals are the priority

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Confidence that you are being fully informed and advised with integrity

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Superior problem-resolving skills based on proven experience and knowledge

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A real estate professional you can trust for all your real estate needs throughout the stages of your life.

RE/MAX EQUITY GROUP

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The Equity Group, Inc. REALTORS® was founded in 1984 by Kurt Dalbey and John Tachouet.

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Number One real estate company in Oregon since 1995.

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In 2000, formed a partnership with RE/MAX to become RE/MAX equity group producing a network of more than 89,000 agents in 84 countries.

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In 2003, was the first Oregon/Southwest Washington broker to surpass the $4 billion sales mark in real estate sales in one year.

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Now with 14 locations and more than 700 experienced professionals serving the greater Portland (OR)/Vancouver (WA) Metropolitan area and the Salem/Willamette Valley.

ANOTHER RECORD BREAKING YEAR

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Since 1995, RE/MAX equity group has bought and sold more homes than any other real estate broker in Oregon and Southwest Washington

RELOCATING & REFERRAL SERVICES Whether you are moving across the country or just across town, the services and resources available through our Relocation Department will help make your transition easy! Choose from any of the following resources for assistance: 

Household Goods Transportation — We have a number of van lines to recommend for cost effective, professional and excellent service. You can benefit from our corporate discount if you are moving between states!

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Temporary Housing — It’s not uncommon for a family to need a temporary place to stay while their home is still under construction or unavailable for occupancy. We work with several of the area’s best Temporary Housing providers to provide a home during this interim period.

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Relocation Packets — If you are new to the Portland/Vancouver, or Salem area ask for one of our relocation packets. It is complete with information on housing, schools, taxes, recreation, cultural activities, an area map and much more!

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“When I Move” Coloring Book — This is a great activity book for younger children to involve them in the different aspects of moving, helping them to adjust and anticipate the move in a fun and positive way. Crayons are included.

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Welcome to Portland, or Vancouver, or Salem Metro Interactive CD ROM — This CD has everything anyone ever wanted to know about your choice of these areas. Included are Multnomah, Washington, Clackamas, Clark (WA), Yamhill, Polk and Marion Counties. It’s easy, informative and fun to use. Even if you’ve lived in the area for years, this CD is a great resource for learning about different communities, licensing, voter registration, schools, settling in assistance and much more.

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Area Map — Our RE/MAX equity group custom area map is a great resource to keep in your car. With all of the major freeways and highways in a simple format, you’ll always be able to find the fastest route to your destination. It’s customized for the Portland, Vancouver and Salem metro areas.

MEET MY HOME WARRANTY REPRESENTATIVES America’s Home Warranty Company; an important part of our team

Purchasing a home is a major investment. Many of a home’s systems are hidden from view and are easily taken for granted—until something goes wrong. That’s when your investment can take an unexpected turn!

An American Home Shield (AHS) Warranty provides for the repair or replacement (for one full year) of an existing home’s covered mechanical systems and major appliances that break down due to normal wear and tear.*

Service Why settle for less than the best? AHS founded the home warranty industry in 1971 and has since brought responsive, high-quality protection to more than 6 million customers nationwide. On every key measure of service, from total dollars paid for repairs and replacements to the number of service calls, we continue to set the standard. AHS serves customers an average of 2.2 times a year and handles over 2.3 millions service calls per year—an average of 6,000 per day. Reliable service from the nation’s largest network of pre-screened, licensed contractors. Assurance of knowing you can call 24 hours a day, 365 days a year for service requests.

Technology AHS offers a full service website: www.ahswarranty.com. *Please read contract for specific coverage, exclusions and limitations.

Benefits of an AHS Home Warranty:  As a Seller you can

help protect yourself by avoiding unexpected bills on covered systems and appliances during the critical period your home is on the market and by reducing after-sale liability.  As a Buyer your

newly purchased home will provide the comfort and joy you were hoping for without the surprises of extra (and expensive) repair bills on covered systems and appliances.

THE POWER OF Did you know? 

In a business environment of mergers and acquisitions, RE/MAX is the only major real estate network still owned and directed by its founders, Dave and Gail Liniger.

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The RE/MAX balloon is the most widely recognized symbol in real estate, and one of the most widely recognized trademarks in North American business.

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RE/MAX has a National advertising campaign, including TV, radio and print ads.

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Team RE/MAX Racing participates in & sponsors ARCA and NASCAR events coast to coast.

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The RE/MAX network has grown every year since it began in 1973.

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There are now more than 89,000 RE/MAX Associates in more than 6,500 offices in 84 countries and eight territories, on six continents.

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RE/MAX Associates average more than 13 years in real estate.

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RE/MAX Associates were the first to be involved in more than one million transaction sides—an industry record. Nobody else was even close.

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RE/MAX University offers 24/7 educational and informational programming for its affiliates on a variety of platforms including the internet and smartphones to keep us ahead of our competition.

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Collectively, RE/MAX Associates hold a higher number of professional designations than any other company.

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RE/MAX has raised more than $100 million for the Children’s Miracle Network, and is also a National Sponsor of the Susan G. Komen Breast Cancer Foundation.

What does this mean for you? 

By choosing to work with a RE/MAX REALTOR®, you are choosing to work with real estate’s best.

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You will be working with a company recognized as the industry leader that is dedicated to providing our agents the finest resources and education available—that experience and education means RE/MAX Associates are better qualified to help you with all of your needs during your real estate transaction.

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Not only will you receive maximum exposure through the powerful network that RE/MAX has created, you will also be affiliated with a company that chooses to consistently give back to our communities.

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Making you: Ahead of the Game, and “Above the Crowd”.

“Our people make a difference, one move at a time.”

INDUSTRY LEADING TECHNOLOGY 

Integrated phone system — Allows you to connect to me by dialing ONE number.

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High Speed office connection — Allows all communications; e -mail, voice mail and faxes, to be managed from one inbox on my computer for quick and efficient responses to your questions about your home search as well as your transaction. This connection also allows me to quickly and efficiently search alll databases for homes matching your criteria and download housing information promptly.

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Web Page and E-mail forwarding — My web page has a “Contact Me” button on it that allows you to send an e-mail to my private account.

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Multiple Listing Service — This comprehensive database provides profiles of homes as well as tax records to help me better assist you. I will search this database to show you the newest listings on the market and watch for homes that fit your specific needs.

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Software products — Through RE/MAX equity group’s dedicated pledge to technology, we receive continual training on innovative software. Not only do I have access to Microsoft products that are constantly being upgraded, but also other crucial real estate software that allows me to better serve you. I am able to quickly and effectively incorporate these emerging technologies into my plans for helping you reach your real estate goals.

THE POWER OF THE INTERNET When you begin your home search, you will be able to utilize our powerful website to help in the process. There are literally thousands of real estate websites out there to look at, which can be very frustrating. Many have dated, incomplete information. While others are inundated with flashy advertising.

www.EquityGroup.com Our national award-winning web site was designed with input from actual homebuyers searching the web for information on homes in the greater Portland/Vancouver, and Salem areas. By combining the information consumers need, want, and ask for with the convenience and ease of the Internet, we help ensure that you will find any specific listing quickly and easily.

More Detailed Information Finding the right home only begins with the city, number of bedrooms and baths, the square footage and the price.

Our web site gives critical information you want, including: 

School Districts

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School Reports

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Interior and Exterior highlights

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Lot Size

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Garages

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Heating and Cooling

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And more...

WWW.EQUITYGROUP.COM Multiple Photos Often one photo just can’t show off all that a home has to offer. The RE/MAX equity group web site is now one of the only sites that allows you to see up to 99 photos of each property! These photos, added by RE/MAX equity group REALTORS® to their listings, help showcase all of the unique advantages of individual homes, thus speeding up your home search.

Virtual Tours Technology is available that allows you to tour properties at any time you want at no inconvenience to the seller through the use of a virtual tour. When a virtual tour is included as part of a home’s marketing plan, the link will be available on our web site with the listing.

Mapping By selecting the map button on the home details page, you will get a better idea of where the home is located—you can even print out driving directions.

WWW.EQUITYGROUP.COM School Reports Under the School Reports link, you can find all the public schools within each listing’s zip code. Statistics on each individual school can be found simply by clicking on the school name.

WWW.EQUITYGROUP.COM Open Houses The best way to view a home is in person. That’s why our web site includes an Open House page.

You can view not only the RE/MAX equity group Open Houses for the coming weekend but also those of other brokerages. When you find homes that are of interest, you can go to each home’s web page to see more detailed information. Choose the ones that interest you, print a map for each home and you’re ready to go!

Schedule a Showing Our web site even allows you to make an appointment to view homes directly from our site.

With a few simple steps, you schedule a time that’s convenient for you to have a private tour by your agent. This way, if you’re surfing the Internet in the middle of the night, you’ll be able to set up showings of the homes you like!

My Home Finder My Home Hunter enables you to tell us what type of home you are looking for and our site will do the searching for you. Our site will even notify you by e-mail when new listings come on the market that match those details. This helps ensure that you find out quickly about new homes that meet your basic criteria.

FINANCING YOUR HOME Equity Home Mortgage, LLC Financing is such an integral part of the home buying process. That’s why Equity Home Mortgage has a Senior Loan Consultant in every RE/MAX equity group office to answer your questions about the loan options available to meet your specific needs.

They also provide ON-SITE FastTrack Pre-Approval. Equity Home Mortgage is a fully operational mortgage “banking” company with local processing, underwriting and funding. This means that you get answers that really apply to your specific needs. The following pages provided for you were prepared by me in conjunction with Equity Home Mortgage. They are designed to help answer some questions you may have about financing your home.

Qualifying Which comes first, the home or the loan? Shopping for a home is easier when you know how much you can spend. Today’s lenders offer a wide variety of programs that will fit specific needs, so familiarize yourself first with the various loan options available. Ask yourself a few questions:  How quickly would you like to repay your loan? Within 15 years, 20 years, 30 years?  How long do you expect to live in the house?  How do you expect your income to evolve in the next few years?

Pre-qualification A preliminary estimate of your ability to obtain a loan, based on the information you provide. Prequalification will let you know how much you may qualify for, and will enable me to show you homes we know you can afford. Pre-qualification is based on unverified verbal information of your monthly debt, income, length of employment, etc. This is not a loan approval and information provided is subject to verification. Depending on your situation, your loan consultant might also want to run a credit report. This would require the completion of an application form and submission for Pre-approval.

Pre-approval This is the smart way to shop for your home. Underwritten pre-approval will define exactly how much the lender is willing to loan you, so you can begin your house hunting with the assurance your financing is ready and waiting. It is like shopping with cash in hand.

The best time to think about home financing is before you find a house to buy. Remember, you can speed up the process by collecting and organizing in advance all the documents necessary to process your loan.

FINANCING YOUR HOME Down payment How much is your down payment going to be? The down payment is the up-front cash you will pay toward the purchase of your home. Generally, the larger the down payment, the lower your monthly payments are going to be. Although down payments of 25 percent or more are common, home buyers can put down less than that. However, charges for Private Mortgage Insurance (PMI) usually will be added to loans with less than 20 percent down, and this will increase your monthly payments.

Mortgage Application Applying for a mortgage is much like applying for any other kind of loan. Because of the amount borrowed and the lengthy term of the loan, however, the approval process is more complicated than for other types of loans and it usually takes more time. Your loan application will be evaluated based on three factors: your income and assets, your credit history and the appraisal of the property you plan to buy. While verifying your application, your lender will request a credit history and a property appraisal to help in the decision-making process.

Items needed for application The information needed to process a loan application varies from case to case and with the type of mortgage. The following list is an example of what is typically needed; however, more information may be required (consult your lender). Remember, by bringing a complete set of documentation you may be able to speed up the loan application process:

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Filled-out loan application form

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Copy of sales contract with original signatures

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Applicant’s place of residence for at least the last two years

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Employers’ names, addresses and year-to -date pay stubs

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Information and account numbers on all cash assets: savings accounts, certificates of deposit, stocks, bonds, and cash values of life insurance policies

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Copies of verification of additional sources of income including pension, Social Security, alimony, child support, disability benefits, etc.

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Divorce decree, if applicable

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Social Security number

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Tax returns, including all schedules

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Information on liabilities: charge accounts, car loans, student loans & credit union loans

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If you are a veteran, discharge papers (Form DD-214) or certificate of eligibility

SELECTING A MORTGAGE THAT’S RIGHT FOR YOU Whether this is your first home purchase or you are trading up or scaling down, finding the right loan package can be time consuming. There are many options available, and this is where together your loan officer and I can help you make the right decision. It will facilitate the process if you have the information ready on your income, etc. Our Monthly Mortgage Budget Worksheet will assist you in your preparation, as well as answer some preliminary questions on the different types of loans available.

Monthly Mortgage Budget Worksheet Take a few minutes and complete our Monthly Mortgage Budget Worksheet. While your credit history and the type of loan for which you are applying may have some impact on the amount for which you will actually qualify, this worksheet will give you a good idea of the size of mortgage you could consider.

The major factors to help determine this amount are known as the qualifying ratios.

Your PITI (principal, interest, real estate taxes and homeowner’s insurance) should not exceed between 25% and 29% of your family’s gross monthly income. Your total monthly mortgage payment plus other monthly debt obligations, such as a car payment, charge accounts, etc. should not exceed between 33% and 41% of your family’s gross monthly income. Guidelines vary depending on the loan type and the amount of down payment. If you have any questions, or if you would like assistance in completing this form, please call one of our mortgage professionals.

MONTHLY MORTGAGE BUDGET WORKSHEET Step #1 - Compute Your Monthly Income Place monthly income figures in A through D (be sure to include each borrower’s income).

A. Gross salaries, commissions, wages __________________ B. Part-time work (2-year average)

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C. Bonuses (2-year average)

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D. Other

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E. Total monthly income

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F. Portion of monthly income available for your mortgage payment - Multiply total on line E by .28 __________ __ Step #2 - Compute Your Monthly Debts G. Monthly car payments __________ _ H. Other monthly loan payments (include loans with more than 10 mos. remaining) ________________

I. Credit cards and charge accounts (minimum payments or 5% of outstanding unpaid balances) ________________ J. Total monthly debts

________________

K. Portion of your monthly income available for payment of your monthly debts including principal, interest, taxes and insurance - Multiply total on Line E by .36 =

________________

L. Now subtract Line J from Line K __________ _ Step #3 - Determine Whether Your Debts Are In The Proper Amount Now look at the totals shown on Line F and Line L. The smaller of these two figures is the one you may qualify for to cover monthly payments for principal, interest, taxes and insurance on your new home. Note: If the amount on Line F is greater than the amount on Line L, you might consider paying off some of your debts. This will increase the amount you have available for your monthly mortgage payment.

ADJUSTABLE RATE MORTGAGES When is an adjustable rate mortgage the best choice? 

When you plan to be in your home for just a few years: Given the lower initial rate on an adjustable rate mortgage (ARM), your payments for the first few years often add up to be less than what you would have paid on a fixed rate loan for the same period of time.

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If your income is likely to increase and you feel you will be able to afford potentially larger mortgage payments in the future: You can maximize your purchasing power right away with an ARM and grow into higher mortgage payments when you can better afford them.

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When you want to qualify for a larger mortgage amount: Because of the lower initial interest rate, you can qualify for a larger mortgage amount than would be possible under a fixed rate plan.

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If you feel rates will come down in the future: If rates do drop, the rate on your ARM may decrease on the adjustment date without your having to pay any of the costs associated with refinancing. Additionally, borrowers who have chosen the convertibility option may be able to switch to a fixed rate loan that has a better rate than was possible at the time of their closing.

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If you have a special need for ready cash over the next few years: Perhaps you have educational or medical expenses, investments or other financial planning costs that need to be addressed right away. You can choose an ARM loan to minimize your monthly mortgage obligation, which will help provide you with the extra money you require.

FIXED RATE MORTGAGES Confidence and flexibility The fixed-rate mortgage is the traditional form of home financing. Fixed rates offer borrowers payment consistency and security, the main reason the majority of homeowners continue to choose this form of financing. Principal and interest payments remain constant. The first payment is the same as the last. Even though the rate is “fixed,” the fixed-rate loan is far from rigid.

10-, 15-, 20- and 30-year terms Most fixed-rate loans are paid over a term of 30 years. However, you may also choose a payback schedule of 20, 15 or 10 years. You might think this would substantially increase the payment. The fact is, the monthly obligation for P&I rise only moderately, but interest costs during the life of the loan are drastically reduced. For example, for a $100,000 loan at an 8% fixed rate, the monthly P&I payment and overall interest cost would be: Term 10-year 15-year 20-year 30-year

Monthly Payment $1,213 $ 956 $ 836 $ 734

Life of Loan Interest $ 45,593 $ 72,018 $100,746 $164,161

Shorter term mortgages They are not for everybody. Not all borrowers can afford or will want to make the higher payments. You should consider your personal and financial situation before you choose a term.

First-time buyers and middle-income families benefit from the lower payments of the 30 year mortgage. This helps them qualify for a larger loan amount, keeping monthly mortgage costs down. Repeat buyers who may have higher incomes often prefer shorter terms. Fast equity buildup means homes that are paid for by retirement age.

Additional principal payments There is seldom, if ever, any penalty for making additional payments to principal. By doing so, you will automatically reduce the term and interest cost of your mortgage. For example, on a 30year fixed-rate loan of $100,000 with an 8% rate, the monthly P&I payment is $734. Increasing the payment only $50 a month will pay off the loan in less than 24 years rather than 30, saving $53,564.48 in interest. Making additional principal payments, periodically or on a regular basis, is an excellent option if you’d like to have your home paid for in less than 30 years but can’t afford the higher payment required by a shorter term loan.

FIXED RATE MORTGAGES continued Buydowns You can lower your monthly payment for the first few years. Your monthly payment will increase annually at a predetermined pace until it reaches a level equal to the amount required by the loan’s fixed interest rate. For example, for a 30-year fixed-rate loan of $100,000 at 8%, a “2/1” buydown makes the following possible: 1st-year payment: $600 (equal to 6% rate) 2nd-year payment: $665 (equal to 7% rate) 3rd-year payment: $734 (equal to 8% rate) Some advantages of a fixed rate loan with a buydown…  You always know exactly what your payments will be from year to year and exactly when those payments will change.  Depending on the type of buydown, the buydown payment changes annually only one, two or three times.  The payment on a buydown does not go up more than 1% a year, making the increases less dramatic and more manageable than those of an adjustable rate mortgage (ARM).  You may qualify for a higher loan amount than you might otherwise have at the current fixed rates.

Q&A: FHA & VA LOANS Q: Who’s eligible?

A: Anyone, regardless of income, may apply for a Federal Housing Administration (FHA) loan.

However, the mortgage amount an applicant may qualify for differs from standard conventional loans. Talk with your lender before you submit an offer. VA Loans are open to all veterans who served a minimum number of active duty days during any one of the following eligibility periods: Eligibility Period Minimum Days 09/16/40 to 07/25/47 90 07/26/47 to 06/26/50 181 06/27/50 to 01/31/55 90 02/01/55 to 10/04/64 181 Berlin Crisis, 1961 181 10/05/64 to 05/07/75 90 05/08/75 to 09/08/80 181 09/09/80 to present 730 VA loans are also available to veterans with six years of duty in the National Guard or Reserves.

Q: What’s the minimum down payment?

A The minimum down payment on an FHA loan is 3.5% of the sales price. In many instances, a veteran can obtain 100% financing. This means no down payment is required.

Q: How much can I borrow?

A: FHA maximum loan amounts vary significantly by County. Call Equity Home Mortgage for the maximum amount available in your area. Maximum VA loan amounts are contingent upon the VA limits in effect at the time of application and upon the veteran’s unused entitlement amount.

Q: Who pays discount points?

A: Discount points vary according to the interest rate selected. The points required fluctuate according to the supply and demand of money. A point is 1% of the loan amount. Discount points on FHA and VA loans may be paid by either buyer, seller or any third party. FHA and VA loans may be quoted with no points at all.

Q&A: FHA & VA LOANS continued Q: How about closing costs?

A: “Allowable� closing costs on FHA and VA loans may be paid by the borrower, seller or lender.

Non-allowable closing costs may not be charged to the borrower. Contact your professional Equity Home Mortgage Loan Consultant for additional information and breakdown of these costs.

Q: What is the funding fee on a VA loan?

A: Depending on the down payment, the funding fee ranges between 2.15% and 3.30% of the loan. It may be paid by anyone and may even be added to the mortgage amount. The funding fee is waived if the borrower is VA disability exempt.

Q: What is M.I.P. and who pays for it?

A: Mortgage insurance premium (MIP) is a one-time fee paid at the closing of an FHA loan. It may be paid by anyone in a lump sum or may be financed into the mortgage. An annual MIP premium is also paid monthly along with the monthly payment.

Q: Are FHA and VA loans assumable?

A: FHA and VA loans are assumable by any qualified borrower. A buyer need not be a veteran to assume a VA loan.

Q: Is there any prepayment penalty?

A: Neither FHA nor VA loans have a prepayment penalty.

Q: How many times may I use my VA entitlement to get a VA loan?

A: Under certain circumstances, you may use your VA entitlement more than once. Contact Equity Home Mortgage for details.

Q: Anything else I should know?

A: Although 15 and 30 year fixed rate loans are the most popular, ARMs and Buydowns are available under the FHA and VA loan Program. Call Equity Home Mortgage for specific details.

Equity Home Mortgage is an FHA direct endorsement lender and VA automatic lender. Your FHA and VA loan can be approved at our office, saving you a substantial amount of waiting time.

FREQUENTLY ASKED QUESTIONS Q: What Is Home Owner’s Insurance?

A: Your mortgage lender requires you to have minimum insurance coverage to insure their investment and yours. One year’s prepaid homeowner’s insurance must be obtained prior to closing. The original copy of the policy and the paid receipt must be presented at or before closing. Many people choose to buy broader coverage than the minimum. You will want to investigate additional coverage with your insurance agent.

Q: Will I Need Flood Insurance?

A: The lender may require you to buy flood insurance if the property is located within a designated flood plain as determined by flood plain maps or the Department of Housing & Urban Development.

Q: When Do I Arrange For Utilities?

A: About two weeks before closing you will need to call the utility companies to have the gas, electric, water and sewer, garbage, telephone services, etc. turned on as of the closing date.

The seller usually will have turned some utilities off by the closing date, and you will want hot water, heat and electricity when you move in.

Q: When Is The Final Walk-Through?

A: A few days prior to closing, we will schedule a final “walk-through” of the property for you to determine that everything is in working order and in the same condition as when the contract was signed.

Q: When Is The Actual Closing?

A: Closing is the act of transferring ownership of a property from the seller to the buyer. The title company or escrow agent will see to it that all terms and conditions of the transaction are met. Once all the conditions have been met by both parties and all contingencies satisfied and verified by the escrow agent, the closing begins. Before signing the final papers, I will notify you of the final dollar amount you will need to bring to the closing. The title company will provide me with these figures which I will review with you. The money must be in the form of a certified check, cashier’s check or bank draft.

Q: What Does the Closer Do? Accept & coordinate the flow of documents  Collect closing costs & down payment funds  Make sure all documents are signed  Prepare a closing statement of entire correctly transaction  Secure title insurance or title option  Arrange recording of the deed and mortgage 

GLOSSARY OF TERMS Adjustment period: The frequency at which the interest rate of an ARM loan changes, e.g., every 6 months, once a year, once every 3 years, etc.

CAPS: Consumer safeguards limiting the amount of payment increases and adjustment periods over the life of the loan, regardless of future market conditions.

Conversion option: Refers to the ability of many ARM loans to be converted to a fixed rate mortgage.

Cost of funds: Monthly average cost of borrowings reported by members of the Federal Home Loan Bank system, calculated on either a national or regional basis. The COFI (Cost of Funds Index) is one of the indexes that a lender can use to determine the rate adjustments on ARM loans.

Fully indexed accrual rate: The sum of the index plus the margin.

Index: ARM rate adjustments track the fluctuations of a nationally known barometer or index, which is a measure of prevailing economic conditions. The index is an independent, published interest rate figure, easy for a borrower to verify and beyond a lender’s control. (See “Cost of Funds” and “Treasury Securities.”)

Margin: A premium, typically between 2% and 3%, that is added to an ARM’s index to establish the loan’s actual interest rate.

Negative amortization: What occurs when mortgage payments are not enough to cover the amortization of the gradual reduction of principal over a set period of time. When this happens, the mortgage amount increases causing “negative amortization”, and the borrower owes more money than at the beginning of the loan. Our ARM loans do not have negative amortization.

Qualifying ratios: Equations used to evaluate family income, existing debt and credit history in determining the amount of loan for which a borrower qualifies. Some ARM loans require the borrower to be qualified at a higher rate than the initial teaser rate. You will be notified what your payments will be from year to year, and exactly when those payments will change. 

Depending on the type of buydown, the buydown payment changes annually only 1, 2 or 3 times.

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The payment on a buydown does not go up more than 1% a year, making the increases less dramatic and more manageable than those of an Adjustable Rate Mortgage.

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You may qualify for a higher loan amount than you might otherwise have at the current fixed rates.

Teaser rate: An ARM typically begins with a discounted, low initial rate which is not to be confused with the fully indexed accrual rate. While a “teaser rate” might be 6%, the fully indexed accrual rate at the same time might actually be 8%, or 5% index plus 3% margin.

Treasury securities: Treasury bill yields are another index that a lender can use to determine the rate adjustments on ARM loans.