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Buyer Central Tips/Tools

Welcome! You are about to embark on the exciting journey of finding your new home. Whether it is your first home or your tenth home, a retirement home, or an investment property, these articles will help make your home-buying experience fun and exciting. Purchasing a home is a very important decision and a big undertaking in your life. In fact, most people only choose a few homes in their lifetime. These tips and tools are going to make sure that you are well equipped and armed with up-to-date information for your big decision. They will guide you through every phase of the home-buying process.

The Home Buying Process, In a Nutshell
  • Initial Consultation with your Realtor
  • Discuss areas and property types
  • Apply for loan
  • Confirm qualification and payments
  • Begin Home Search
  • Search for properties online
  • Tour open houses
  • Attend Brokers tour
  • Word of mouth
  • Identify a property
  • Evaluate Comparables
  • Evaluate Property Condition
  • Make an offer
  • Submit earnest money deposit
  • Sign contracts
  • Submit with lender approval letter
  • Upon offer acceptance:
  • Order home inspection
  • Review seller disclosures
  • Order appraisal
  • Order home warranty
  • Order homeowners insurance
  • After review of all disclosures and inspections
  • Negotiate seller repairs
  • Remove inspection contingency
  • After review of appraisal and loan underwriting:
  • Remove loan and appraisal contingencies
  • Schedule movers
  • Change over utilities effective on close
  • Deposit remaining down payment money with Title Company
  • Perform final walk-through several days before close of escrow to confirm completed repairs
  • Sign loan documents at Title Company
  • Loans will fund at Title Company 1 day before close
  • Property goes on record at the local County Recorders Office (Official Close of Escrow)
  • Keys are delivered to you, it's time to move!
Your Complete Home Buying Guide
Buying a home can be very exciting and scary at the same time. You will experience a full range of emotions as you go through the buying process. This is normal and expected as buying a home is one of the biggest decision you will make.
Getting Started
The first thing you need to decide is how much you can afford. Determining this early in the buying process will save you a lot of time and frustration. Not only will you have a better idea of the amount you can spend, but you can also eliminate all those homes that are not in your range. You can quickly determine what you can afford by getting pre-approved.
Tips on preparing for a loan
  1. Credit Report - Contact a credit bureau and get a credit report on yourself, just to make sure your report is accurate. If you don't like what you see, it's time to try to clean up any problem items or clear up any mistakes.
  2. Save Money - Skip a vacation, movie or dinner out to save money for a down payment and closing costs. Try not to buy anything on credit and if you do, pay it off quickly. Try to avoid taking on another large credit expense or even applying for another credit card.
  3. Get Pre-Approved for a Mortgage - - It pays to get pre-approved for a mortgage early in the process. Some think pre-qualifying for a loan is enough, but it's not. Pre-approval gives you more power when you've found that perfect house.
What's the difference between Pre-Qualification and Pre-Approval?
Pre-Qualification is a "guesstimate" of what a buyer might qualify for prior to actually submitting a mortgage application. Based on the unverified financial information you provide, the lender uses a quick calculation to arrive at a loan amount. Pre-Approval means that the lender has verified your financial information and has actually committed money in your name for a specific loan type and amount. With today's technology, you can receive loan pre-approval in minutes.
Advantages of being pre-approved rather than qualified:
  1. Buying Power. Lets you know in advance how much you can afford to spend on a home.
  2. More Control. You have the negotiating power of a "cash" buyer when you can prove that you have financing in place.
  3. Faster Closing. You can close in as little as 15 days compared to the average 45-60 days for those that are not yet approved.
  4. Saves Money. You can lock in an interest rate early for a faster closing and better rate.
Getting a Loan
By now you should be well into your home search. If you haven't already been pre-approved for a loan, now is the time.
What Type of Loan Is Right For You?
When choosing a mortgage, find out about...
  • The down payment that is required
  • Both the interest rate and the annual percentage rate (APR)
  • Standard closing costs (and any extra fee, such as points, the lender may charge and why) There are many different types of loans available and below is a list of the most common. Be sure to consult your mortgage agent to discuss which loan is best suited for you.
    • Conventional Mortgages. A conventional mortgage offers a fixed rate. They typically come in 10, 15 or 30-year loans. The interest rate may be slightly higher than an ARM, but they will not change if interest rates go up.
    Adjustable Rate Mortgages. Adjustable rate mortgages carry an interest rate that changes to keep pace with current market rates. This is a good idea for buyers planning to stay in their home for a short time. If you plan to stay in the home for an extended period of time, you're better of locking in a fixed rate with a conventional loan. When deciding whether an ARM is right for you, determine the following:
  • Will I be able to afford higher mortgage payments if interest rates go up?
  • Will I be making other sizable purchases in the near future such as a car or college?
  • How long do I plan to own this home?
    FHA Mortgages. Loans through The Federal Housing Administration (FHA) help low-to-moderate income home buyers purchase homes with low down payments (approximately 3%). You can use a gift or unsecured loan for the down payment and closing costs. Also, these loans are usually assumable (along with the current interest rate) by the next qualified home owner when you sell your home, which is an added benefit when it comes time to sell.
    VA Mortgages. Veteran Affairs loans are great because they provide the opportunity to buy a home with no down payment. They are offered up to a predetermined loan amount (not more than $200,000) and are assumable by qualified buyers. To qualify for a VA loan, the veteran must be on active duty or have a discharge (other than dishonorable), along with one of the following:
  • 180 days active (not reserve) duty between September 16, 1940 and September 7, 1980
  • 90 days service during a war (Korean, Vietnam, Persian Gulf, etc.)
  • Six years service in the National Guard
    • Assumable Mortgages. An assumable mortgage is a loan that stays with the property. It is simply transferred to the qualified home buyer. This means considerable savings for the next buyer. It may include no points, no interest rate change and low closing costs. Assumable mortgages are often the most valuable part of a property. FHA loans given before December 1, 1986 and VA loans given before March 1,1988 are completely assumable to the qualified buyer. This means that you can take the loan along with the real estate, just as it stands.
    Beginning your home search
    Become familiar with the area where you're considering buying in order to determine if it meets your needs (e.g. near a park, shopping, public transportation, etc.) Drive around. Attend open houses. Talk to friends and colleagues. You may want to select two or three neighborhoods to broaden your options.
    You may also want to create a profile of what you're looking for in your next home.
  • Goals - why are you buying a home?
  • Features - what you need vs. what you want?
  • Location - is it close to work, in a particular school district, near shopping, etc.?
  • Style - what type of home fits your needs, lifestyle and taste?
  • Lot - what is the size? What does it feature (wooded, fenced in, etc.)?
  • General condition - is it in good shape?
  • Neighbors - try to get an idea of what kind of neighbors you will have.
  • Taxes - verify taxes and any current assessments on the home you're considering buying.
    How to find a house?
    Yard Signs. Hit the pavement and drive around neighborhoods that interest you.
    Internet. More than 80% of home buyers today begin their home search on the Internet.
    Open Houses. Open houses are a great way to view homes and become familiar with a particular neighborhood. Check out www.OpenHouseGuide.com to identify open houses you would like to attend. The nations premiere online open house search where you can find all open houses from for sale by owners and realtors. Save time finding your next home.
    Taking the next step

    Congratulations! You've found the home of your dreams! Before you make a formal offer, you need to make sure the home is priced correctly. You don't want to overpay. Typically used when selling a home, a comparable market analysis (CMA) lists the recent sales information of nearby homes, including how long each home stayed on the market, how close the asking price was to the actual sales price, etc. It then compares the information regarding these houses with the one in question. If you're using an agent, they will do this for you to help you determine a realistic price. There are several online appraisal services that can provide you some of the same information as a CMA. Visit www.zillow.com for this service.

    As you go through this buying process, remember that everything is negotiable, and everything should be in writing. You should be very specific when you prepare your purchase offer, and the seller should be equally specific when they issue their counter offer. Don't forget to think ahead in terms of the top price you're willing to pay. It's a very emotional time and making some decisions early on is a good idea. Other tips include...

  • Base your offered price on facts, not emotions and remember you may need room to negotiate.
  • Include home inspections. Make sure you have an "out" written into the contract if the inspection turns up major repair problems that cannot be resolved with the seller. This is known as an inspection contingency.
  • Make sure the contract includes an "out" in the event you cannot secure financing. This is called a loan contingency.
  • If you're not using an agent, make sure you consult with a real estate attorney. Earnest money proves to house sellers that you're serious. After all, they're going to take their home off the market on your behalf. Earnest money is typically between 1-5% of the purchase price, but less is possible. The money should be held by an attorney or title company in escrow. Never give the money directly to the house seller. Such a deposit does not mean you're bound to the contract. Your full deposit is credited toward the down payment and closing costs.
    Once your offer is accepted, it becomes a binding contract, so be sure to include the necessary contingencies. Contingencies are clauses that, if not met, will render the contract null and void. Common contingencies are the sale being subject to approved financing, the sale of an existing home and/or a satisfactory home inspection and appraisal.
    Home Inspections
    You've made your offer. Now you need to have an expert verify "what you see is what you're buying." A formal inspection determines if anything needs to be repaired or replaced. If you're using a real estate agent, they'll arrange the inspection for you. If you're on your own, make sure the contract indicates who pays for the inspection and whether you or the seller is responsible for any necessary work. The contract should also include a contingency in case the inspection reveals any repairs that cannot be resolved with the seller. Licensed home inspectors inspect homes to determine what, if anything needs repairing or replacing. Typical inspections may include...
  • Termites - signs of termites in the home or foundation.
  • Plumbing - checks for leaks, dripping faucets, toilet tank leaks, etc..
  • Electrical - up to code? Checks that all light switches and wall sockets are working properly
  • Exterior - settling cracks, paint peeling
  • Interior - signs of leaks in walls or ceilings, structure and general condition
  • The Roof - checks for leaks or damage
  • Windows- good condition and sealed
  • Appliances - checks that they work along with heating and air conditioning units
  • Lead-Based Paint - some older homes may still have lead-based paint that can be hazardous if ingested
  • Asbestos - homes built in the early 1970s and before often had asbestos tile floors and asbestos ceiling tiles. This substance poses a health risk and must be removed The home inspector will write up an inspection report with all minor and major defects itemized. Good inspectors will find minor flaws in nearly any home. It's up to you to decide how important they are. It is also helpful to be present during the inspection. Inspectors often provide you tips on the maintenance and upkeep of the home and its systems.
    Now that the inspection is done, it's time to move into the title and closing phase.
    • Understanding Title Insurance, Appraisal and Homeowner's Insurance
    Some people can get confused about this area of the real estate transaction, but with a little knowledge and guidance, it's easy to understand. We'll break down the basics for you.
    Title Insurance
    When you buy a home, a title company examines the chain of titles (previous owners) to insure that there are no problems with obtaining clear title to the property. Parties other than the current owner of the home may have rights to it for things such as mortgages, liens due to unpaid taxes, lien claims to those who the owner owes money, etc. As a new owner, you may know nothing about these risks, but you are still vulnerable to such claims on your property. A deed is not sufficient protection. That's why title insurance is necessary.
    It is very common for title companies to also handle the escrow portion of the transaction, meaning they serve as a neutral party to exchange funds and make sure both parties adhere to the agreed upon terms of the contract.
    Home Appraisal
    Lenders require appraisals to confirm that the home for which they're providing you a loan is in fact worth the amount you're paying. Appraisers are independent agents normally hired by the lender. The fees appraisers charge vary and are typically built into your loan costs. In some areas, your lender may also require a Location Survey that certifies the house is within the boundaries of the lot. The lender often selects the surveyor, but you may have a choice. The lender usually pays for the cost of an appraisal. Then it's factored into the buyer's closing cost.
    Homeowner's Insurance
    If you are not assuming the seller's homeowner's policy, you will need to buy your own. Title will not be transferred until you can prove you have the home covered by insurance. This protects you for things such as fire, flood, tornados, or any other damage to the home. You may also consider additional levels of insurance to cover natural disasters that are more prevalent in your area.
    Escrow and Closing
    Congratulations! You're only a few steps away from being in your new home! You've purchased a home, but you don't actually own it yet. You need to close escrow on it. This is known as closing or settlement.
    The escrow agent conducts the closing and is often affiliated with the title insurance company. Their job is to ensure the buyer obtains a clean title, the lender obtains a good mortgage, that the costs of the transaction are paid, that the seller's mortgage is paid off, and that the seller receives their proceeds.
    The escrow agent prepares a closing statement that outlines what the required funds are, who's paying and where the funds are going toward. They will not disburse funds until they can guarantee that the above noted items have been taken care of.
    Odds and Ends
    Utilities - Water, gas and electric meters will be read on the day of closing and the seller will owe for the utility usage up until that day. You may also need to make deposits with both the water and electric companies.
    Service Contracts - If you are taking over any service contracts from the home seller, you will owe the seller for the unused portion of those contracts that have been pre-paid. These could include pest control, pool and/or lawn services, home maintenance contracts, etc.
    The Check - The title/escrow company you are using will tell you how much you need to bring to closing. Personal checks are not accepted, so bring a cashier's check.
    Home Warranty - It's highly recommended that you purchase a home warranty. This will cover the repair or replacement costs in case items such as appliances break down after you purchase the home. The peace of mind is worth the expense.
    There's nothing like the American dream of homeownership. The pride and stability you feel when you come home to a place that you know is yours is hard to describe. We hope this guide provided you insight into and help with the home buying process.
    Tips for First-time Home Buyers
    The Benefits
    Owning a home is part of the American Dream. Your friends and family may be urging you to take the plunge into home ownership. So, after weighing your options, you've decided that owning a home is the best option for you. Now that you've made the decision, you're well on your way.
    Defining Search Criteria
    The National Association of Realtors has determined that almost 80% of all home searches today begin on the Internet. With just a few clicks of the mouse, home buyers can find an open house, search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and aerial shots of neighborhoods and homes. You've probably defined your goals and have a pretty good idea of the type of home and neighborhood you want. If you're still unsure of neighborhoods and types of properties that might work for you, you can start by visiting open houses. Log on to www.OpenHouseGuide.com to find open houses anywhere in the nation. Visiting open houses will help to familiarize you with neighborhoods and property styles in those areas.
    How Long Should It Take to Find a Home?
    In different markets, the process is different. In a seller's market, you often have to act quickly or someone else will and the house you loved will be gone with multiple offers. If you are motivated and see a house that works for you, don't hesitate to move forward, especially in a sellers market.
    In a buyers market, you may have a little room to breathe and sleep on your decision, but remember, if the house seems perfect for you, chances are, there may be others with the same thing in mind. If it's perfect, why wait? However, in a buyers market, you may have more room to negotiate the terms of your purchase. Consult your realtor as to the best way to approach each individual property.
    Good real estate agents will listen to your wants and needs and arrange to show only those homes that fit your particular parameters. Your agent should preview homes before showing them to you as well.
    How Many Homes Should I Expect To See?
    Although you are motivated and ready to see dozens of homes, it's exhausting and really not necessary. Be clear on what you are looking for and express this to your realtor. They will prescreen properties and show you things that fit your criteria. It is hard to see more than 6 or 7 in a given day and still remember anything about a specific property. After seeing too many, they all seem to blend together and will make your selection process more confusing. Narrow down the field and only view those you are truly interested in. If you are still unsure of your criteria, consider viewing more open houses. Search www.OpenHouseGuide.com for open houses that fit your criteria. Then, when you find the perfect home, buy it.
    Rate the Houses You've Seen
  • Take copious notes of unusual features, colors and design elements.
  • Pay attention to the home's surroundings. What is next door? Do 2-story homes tower over your single story?
  • Do you like the location? Is it near a park or a power plant?
  • Immediately after leaving, rate each home on a scale of 1 to 10, with 10 being the highest.
    View Top Choices a Second Time
    After touring homes for a few days, you will probably instinctively know which one or two homes you would like to buy. Ask to see them again. You will see them with different eyes and notice elements that were overlooked the first go-around.
    At this point, your agent should call the listing agents to find out more about the sellers' motivation and to double-check that an offer hasn't come in, making sure these homes are still available to purchase.
    Making the Next Move
    Congratulation! You've found a house you love, now what? Consult with your realtor to start the process of making an offer. Once you've made your decision, don't hesitate. The last thing you want is to have spent all the time and energy, find the perfect house and miss it because you hesitated! Go for it, you'll be glad you did!
    Eight Reasons to Buy a Home
    If you're like most first-time home buyers, you've probably listened to friends', family's and coworkers' advice, many of whom are encouraging you to buy a home. However, you may still wonder if buying a home is the right thing to do. Relax. Having reservations is normal. The more you know about why you should buy a home, the less scary the entire process will appear to you. Here are eight good reasons why you should buy a home.
    1. Pride of Ownership
      Pride of ownership is the number one reason why people yearn to own their home. It means you can paint the walls any color you desire, turn up the volume on your CD player, attach permanent fixtures and decorate your home according to your own taste. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.
    2. Appreciation
      Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated. Many people view their home investment as a hedge against inflation.
    3. Mortgage Interest Deductions
      Home ownership is an outstanding tax shelter and our tax rates favor homeowners. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is generally the largest component of your mortgage payment.
    4. Property Tax Deductions
      IRS Publication 530 contains tax information for first-time buyers, Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. In California, the passage of Proposition 13 in 1978 established the amount of assessed value after property changes hands and limited property tax increases to 2% per year or the rate of inflation, whichever is less.
    5. Capital Gain Exclusion
      As long as you have lived in your home for two of the past five years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains. You do not have to buy a replacement home or move up. There is no age restriction, and the "over-55" rule does not apply. You can exclude the above thresholds from taxes every 24 months, which means you could sell every two years and pocket your profit--subject to limitation--free from taxation.
    6. Preferential Tax Treatment
      If you receive more profit than the allowable exclusion upon the sale of your home, that profit will be considered a capital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment. Consult your CPA or tax accountant for more information.
    7. Mortgage Reduction Builds Equity
      Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation. The way amortization works, the principal portion of your principal and interest payment increases slightly every month. It is lowest on your first payment and highest on your last payment. On average, each $100,000 of a mortgage will reduce in balance the first year by about $500 in principal, bringing that balance at the end of your first 12 months to $99,500.
    8. Equity Loans
      Consumers who carry credit card balances cannot deduct the interest paid, which can cost as much as 18% to 22%. Equity loan interest is often much less and it is deductible. For many home owners, it makes sense to pay off this kind of debt with a home equity loan. Consumers can borrow against a home's equity for a variety of reasons such as home improvement, college, medical or starting a new business. Some state laws restrict home equity loans.
    WHAT EVERY BUYER SHOULD KNOW BEFORE PURCHASING
  • Property taxes and qualified interest are deductible on an individual's federal income tax return.
  • Often, a home is the largest asset an individual has and is considered one of the most valuable investments available.
  • A portion of each amortized mortgage payment goes to principal which is an investment and contributes to your equity.
  • A home is one of the few investments that you can enjoy by living in it.
  • A REALTOR can usually show you any home whether it is listed with a company, a builder, or even a For Sale by Owner home.
  • Working through a REALTOR to purchase a For Sale by Owner home can be very advantageous because someone is looking out for your best interest.
  • Your Real Estate professional can provide you with a list of items you'll need to complete your loan application so you'll be prepared.
  • A homeowner can exclude up to $500,000 of capital gain tax if married and filing jointly or up to $250,000 if single or filing separately. The home must have been the taxpayer's principal residence for the previous two years.
  • Beginning with May 07, 1997, there is no longer a requirement to purchase another home more expensive than the one sold. Homeowners are free to buy up or down with no tax consequences assuming their gain is less than the allowable amounts.
  • Ask the Real Estate professional if they are familiar with the neighborhoods where you want to live.
  • Ask the Real Estate professional whom he/she is representing in the transaction.
  • Ask the Real Estate professional what he/she will do to keep you informed.
  • Your Real Estate professional should provide you with the highest level of service and advice.
    Demand Inspections and Disclosures
    You can never be too trusting when it comes to buying real estate. The buyer is entitled to know what he/she is getting for their money. The buyer should insist on an inspection and full disclosure of the house being purchased.
    Why Do You Need an Inspection?

    An inspection is an opportunity to have an expert give you an oral and written report as to the condition of the property you are purchasing.

    After researching recent sales in the area, you decide that 30-year-old home for $180,000 is worth the money. You make an offer, which is accepted. The next step would be to hire an inspector. The report shows that the concrete foundation is cracked. The roof and plumbing need to be replaced. The cost for repairs adds up to $40,000. Your inspection contingency would let you back out of this deal or negotiate.

    Remember to accompany the inspector during the visit. He/She will give oral comments that give more specifics as to the problems of the property. When writing a report, the inspector must abide by certain legalities on paper. He/She will be more open in person.

    Why Do You Need Disclosures?

    In most states, the law requires the seller to disclose any knowledge about the condition or history of their home to the buyer. For example a seller would disclose information ranging from a leaking roof to their house being built on a sacred Indian burial site.

    Disclosure contingency gives you protection. Upon discovering the roof needs replacing, you can either back out of the deal or renegotiate for the cost of repairs.

    It also makes the seller responsible legally. A seller may go on record saying nothing is wrong with the house. You move into your newly purchased house only to discover that cracks in the foundation that were filled in and painted over. A court of law can view the disclosure statement as evidence that you had no prior knowledge. The seller is held liable for the repairs.

    How Do You Get an Inspection?

    The inspection is written in as a contingency in your offer. Many real estate contracts automatically have an inspection written into the terms.

    The buyer is responsible for the inspector's fee. Ask your real estate agent to recommend a list of local inspectors. Please check references carefully. This type of service may not be regulated in your area. A retired city or county building inspector may be your best bet.

    There are two national trade organizations. One is the American Society of Home Inspectors (ASHI) or the National Association of Home Inspectors (NAHI).

    How Do You Get Disclosures?

    In California, the law states that a disclosure statement is provided to the buyer; then the buyer has three days to approve or disapprove. If the buyer does find the defects acceptable then the agreement is broken. Your agent or attorney can clarify the laws pertaining to disclosures in your state.

    If there is no statutory procedure in your area, the buyer must request it as a contingency in the list of terms. Your investment is not worth being jeopardized. Insist on a home inspection and full disclosure. Make your purchase contingent on approving the results of both.

    A "final walk-through" is not a home inspection. Structural problems are only revealed with a home inspection. A walk-through is designed to make sure the seller has not damaged the property since your first visit.

    WHY YOU NEED A REALTOR?
    As licensed real estate professionals, they can provide much more than the service of helping you find your ideal home. Realtors are expert negotiators with other agents, seasoned financial advisors with clients, and superb navigators around the local neighborhood. They are members of the National Association of Realtors (NAR) and must abide by a Code of Ethics and Standards of Practice enforced by the NAR. A professional Realtor is your best resource when buying your home.
    LET THEM BE YOUR GUIDE -
  • As a knowledgeable Realtor, they can save you endless amounts of time, money, and frustration.
  • As a knowledgeable Realtor, they know the housing market inside and out and can help you avoid the "wild goose chase".
  • As a knowledgeable Realtor, they can help you with any home, even if it is listed elsewhere or if it is being sold directly by the owner.
  • As a knowledgeable Realtor, they know the best lenders in the area and can help you understand the importance of being pre-qualified for a mortgage. They can also discuss down payments, closing costs, and monthly payment options that suit you.
  • As a knowledgeable Realtor, they are an excellent source for both general and specific information about the community such as schools, churches, shopping, and transportation - - plus tips on home inspections and pricing.
  • As a knowledgeable Realtor, they are experienced in presenting your offer to the homeowner and can help you through the process of negotiating the best price.
  • As a knowledgeable Realtor, they bring objectivity to the buying transaction, and can point out the advantages and the disadvantages of a particular property.
    And the best thing about using a Realtor is that all this help normally won't cost you a cent. Generally, the seller pays the commission to the Realtor.
    THE TEN COMMANDMENTS When applying for a Real Estate Loan
    1. Thou shalt not change jobs, become self-employed or quit your job.
    2. Thou shalt not buy a car, truck or van (or you may be living in it)!
    3. Thou shalt not use charge cards excessively or let your accounts fall behind.
    4. Thou shalt not spend money you have set aside for closing.
    5. Thou shalt not omit debts or liabilities from your loan application.
    6. Thou shalt not buy furniture.
    7. Thou shalt not originate any inquiries into your credit.
    8. Thou shalt not make large deposits without first checking with your loan officer.
    9. Thou shalt not change bank accounts.
    10. Thou shalt not co-sign a loan for anyone.
    Helping Children Cope with the Move
  • Show the children the new home and their new room prior to moving. If this is not possible, pictures or videos will help them visualize where they are going.
  • Assure children that you won't forget their friends.
  • Make a scrapbook of the old home and neighborhood.
  • Throw a good-bye party. At the party have their friends sign a t-shirt.
  • Have your children write good-bye letters and enclose their new address. You may wish to call the other children's parents so that they will encourage return letters.
  • When packing, give your children their own box and let them decorate it.
  • Start a scrapbook for your new home.
  • Visit your children's new school, park, church, etc... Take a camera.
  • Help your children invite new friends over to your new home.
  • Let your children choose a new favorite restaurant. This will help them feel in control of their New World.
  • Encourage them to send letters about their new home to their friends.
  • Involve your children in groups, sports, and activities like the ones they used to participate in.
  • Remember, even if you only lived in a home for a few years, to a young child it is nearly their entire lifetime.
    GLOSSARY COMMON REAL ESTATE TERMS
    ACCEPTANCE: The date when both parties, seller and buyer, have agreed to and completed signing and/or initialing the contract.
    ADJUSTABLE RATE MORTGAGE: A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change.
    AMORTIZED LOAN:A loan, which is paid in equal installments during its term.
    A.P.R. (ANNUAL PERCENTAGE RATE):A term used in the Truth in Lending Act. It represents the relationship of the total finance charge (interest, discount points, origination fees, loan broker, commission, etc.) to the amount of the loan.
    APPRAISAL: An estimate of real estate value, usually issued to standards of FHA, VA, and FHMA. Recent comparable sales in the neighborhood is the most important factor in determining value. This should be contrasted against the home inspection.
    APPRECIATION:An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
    ASSUMABLE MORTGAGE:Purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage.
    BILL OF SALE:Document used to transfer title (ownership) of PERSONAL Property.
    CLOSING STATEMENT (HUD1):A financial statement rendered to the buyer and seller at the time of transfer of ownership, giving an account of all funds received or expended. CLOUD ON TITLE: Any condition that affects the clear title to real property.
    COMPARABLE SALES:Sales that have similar characteristics as the subject property and are used for analysis in the appraisal process.
    CONTRACT:An agreement to do or not to do a certain thing.
    CONSIDERATION:Anything of value to induce another to enter into a contract, i.e., money, services, a promise.
    DEED:Written instrument, which when properly executed and delivered, conveys title to real property.
    DISCOUNT POINTS:A loan fee charged by a lender of FHA, VA or conventional loans to increase the yield on the investment. One point = 1% of the loan amount.
    EASEMENT:The right to use the land of another.
    ENCUMBRANCE:Anything that burdens (limits) the fee title to property, such as a lien, easement, or restriction of any kind.
    EQUITY:The value of real estate over and above the liens against it. It is obtained by subtracting the total liens from the value.
    ESCROW PAYMENT:That portion of a mortgagor's monthly payment held in trust by the lender to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due.
    FANNIE MAE:Nickname for Federal National Mortgage Corporation (FNMA), a tax-paying corporation created by congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages.
    FEDERAL HOUSING ADMINISTRATION (FHA):An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
    FHA INSURED MORTGAGE:A mortgage under which the Federal Housing Administration insures loans made, according to its regulations
    FIXED RATE MORTGAGE:A loan that fixes the interest rate at a prescribed rate for the duration of the loan.
    FORECLOSURE:Procedure whereby property pledges as security for a debt is sold to pay the debt in the event of default.
    FREDDIE MAC:Nickname for Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages.
    GRADUATED PAYMENT MORTGAGE:Any loan where the borrower pays a portion of the interest due each month during the first few years of the loan. The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its life.
    INVESTOR:The holder of a mortgage or the permanent lender for whom the mortgage banker services the loan. Any person or institution that invests in mortgages.
    LEASE PURCHASE AGREEMENT:Buyer makes a deposit for future purchases of a property with the right to lease the property for the interim.
    LOAN TO VALUE RATION (LTV):The ratio of the mortgage loan principal (amount borrowed) to the property's appraised value (selling price). Example - on a $100,000 home, with a mortgage loan principal of $80,000 the loan to value ratio is 80%.
    MORTGAGE:A legal document that pledges a property to the lender as security for payment of a debt.
    MORTGAGE INSURANCE PREMIUM (MIP):The amount paid by a mortgagor for mortgage insurance. This insurance protects the investor from possible loss in the event of a borrower's default on a loan.
    MORTGAGOR:The borrower of money or the giver of the mortgage document.
    NOTE:A written promise to pay a certain amount of money.
    ORIGINATION FEE:A fee paid to the mortgagee for paying the mortgage before it becomes due. Also known as prepayment fee or reinvestment fee.
    PRIVATE MORTGAGE INSURANCE (PMI):See Mortgage Insurance Premium.
    PROMISSORY NOTE:A written contract containing a promise to pay a definite amount of money at a definite future time.
    REALTOR:A member of local and state real estate boards, which are affiliated with the National Association of Realtors (NAR).
    RENT WITH OPTION:A contract, which gives one the right to lease property at a certain sum with the option to purchase at a future date.
    SECOND MORTGAGE/SECOND DEED OF TRUST/JUNIOR MORTGAGE OR JUNIOR LIEN:An additional loan imposed on a property with a first mortgage. Generally, a higher interest rate and shorter term than a "first" mortgage.
    SEVERALTY OWNERSHIP:Ownership by one person only. Sole ownership.
    SURVEY:The process by which a parcel of land is measured and its area ascertained.
    TENANCY IN COMMON:Ownership by two or more persons who hold an undivided interest without right of survivorship. (In event of the death of one owner, his/her share will pass to his/her heirs.)
    TITLE INSURANCE:An insurance policy which protects the insured (purchaser or lender against loss arising from defects in the title).
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