How to buy a house?
Are you considering buying a home in Las Vegas? Here are some accurate and useful information to serve as a guide.
What is an escrow?
An escrow is a process wherein the Buyer and Seller deposit written instructions, documents, and funds with a neutral third party until certain conditions are fulfilled. In a real estate transaction, the Buyer does not pay the Seller directly for the property. The Buyer gives the funds to an escrow company who, acting as an intermediary, verifies that title to the property is clear and all written instructions in the contract have been met. Then the company transfers the ownership of the property to
the Buyer through recordation and pays the Seller. This process protects
all parties involved.
The State of Nevada licenses and regulates all escrow companies. The Insurance Commissioner and the State Banking department can inspect a company’s records at any time, providing further oversight of the company’s management and position as an impartial third party to the transaction.
In Nevada, escrow services are generally provided by a title insurance company instead of an attorney. The stability, reliability and performance of your title and escrow company are vital to protect the interests of all parties to the transaction.
How is an escroW opened? Once you have completed the contract (or Purchase Agreement) and the Seller has accepted the offer, your real estate agent will open the escrow. The earnest money deposit and the contract are placed in escrow. As a neutral party to the transaction, First American can respond only to those written instructions agreed to mutually by all “interested” parties (Seller and Buyer); Escrow cannot otherwise alter the contract or create instructions, and that protects all interested parties.
How to hold the title. you should inform your escrow officer and lender as
soon as possible of how you wish to hold title to your home and exactly how your name(s) will appear on all documents. This allows your lender and title company
to prepare all documents correctly. (Changes later, such as adding or deleting an initial in your name, can delay your closing.) A comparison of the ways to hold title in the state of Nevada you may wish to consult an attorney, accountant or other professional before deciding how to hold title.
What happens at escrow? During the escrow period, our title department begins researching and examining all historical records pertaining to the subject property. Barring any unusual circumstances, a commitment for title insurance is issued, indicating a clear title or listing any items which must be cleared prior to closing. The commitment is sent to you for review. Your escrow officer follows instructions on your contract, coordinates deadlines, and gathers all necessary paperwork. For example, written requests for payoff information (called “demands”) are sent to the Seller’s mortgage company and any other lien holders.
What happens next For the Buyer?
Identity statement. You will be asked to fill out an Identity Statement that enables our title department to distinguish you from others with identical names during our search of County records. It also provides basic information that will be useful for your escrow officer.
home loan. unless you are paying cash, assuming a loan,
or the Seller is financing, you will need to apply for a home loan if you have not already done so. Your Real estate agent should be able to recommend several reliable sources for your loan. Apply as soon as possible to comply with the purchase contract and to avoid delaying the closing, response to seller’s notices. If directed by the contract, you will receive the following items which require a response from you. Your real estate agent can help you with your responses.
a. Seller’s Property disclosure Statement listing any existing problems known to the Seller.
b. Information pertaining to the home Owners Association (hOA) or Planned unit development (Pud), such as Covenants, Conditions and Restrictions (CC&Rs), if applicable.
c. Flood hazard disclosure if the property is in a flood area. d. Independent inspections, such as termite and septic,
and any repairs as required.
Title commitment. you will receive a copy of the title commitment when we complete the title search. See across for an explanation of the title package you will receive from First American. If you have questions about the title commitment, contact your real estate agent or your escrow officer.
Consider this. One escrow transaction could involve over twenty individuals including real estate agents, Buyers, Sellers, attorneys, escrow officer, escrow technician, title officer, loan officer, loan processor, loan underwriter, home inspector, termite inspector, insurance agent, home warranty representative, contractor, roofer, plumber, pool service, and so on. And often one transaction depends on another.
When you consider the number of people involved, you can imagine the opportunities for delays and mishaps. So, much like an airline pilot can’t prevent turbulence during a flight, your experienced real estate agent and escrow team can’t prevent unforeseen problems from arising. however, they can help smooth out the bumps and, whenever possible, get you safely through to a successful closing.
open escrow and deposit your “good faith” funds in a separate escrow account.
conduct a title search to determine ownership and status of the subject property.
issue a title commitment
and begin the process to delete or record items to provide clear title to the property.
Per contract, confirm that the lender has determined you, the Buyer,
are qualified for a new loan.
ask you to complete a beneficiary’s statement if you are assuming the Seller’s loan.
meet all deadlines as specified in the contract. request payoff information for the Seller’s loans,
other liens, homeowners association fees, etc.
prorate fees, such as property taxes, per the contract, and prepare the settlement statement.
set separate appointments:
Seller will sign documents; you will sign documents and deposit funds.
review documents ensuring all conditions and legal requirements are fulfilled; request funds from the lender.
When all funds are deposited, record documents at the County Recorder to transfer the subject property to you.
After recordation is confirmed, close escrow and disburse funds, including Seller’s proceeds, loan payoffs, Realtors®’ commissions, related fees for recording, etc.
prepare and send final documents to parties involved.
Explanation of Title Commitment
This explanation may help you understand the contents of the Title Commitment you receive from the escrow office.
Schedule A
This is the information submitted to our Title department by the escrow officer. It contains the basic information given to us by the Buyer or real estate agent, such as the legal description of the property, sale price, loan amount, lender, name and marital status of Buyer and Seller.
Schedule B
The Schedule B “exceptions” are items which are tied to the subject property. These include Covenants, Conditions and Restrictions (CC&Rs), easements, homeowners association by-laws, leases and other items which will remain on record and transfer with the property. They are referred to as “exceptions” because the Buyer will receive a clear title “except” the Buyer’s rights will be subject to conditions in the CC&Rs, recorded easements, etc. The Buyer is asked to sign a receipt for the Schedule B documents which states the Buyer has read and accepts the contents.
REQUIREMENTS
These are items that the escrow office needs to delete and/or record in order to provide a clear title to the property. Items that need to be addressed include:
- Current property-tax status,
- Any assessments that are owed such as
those for a homeowners association,
- Any encumbrances (or liens) on the property.
Sometimes items show up against a property because another person has a name similar to an involved party. This is one reason we ask for an Identify Statement, to determine if items are inaccurate and can be deleted.
NOTE
This is merely information given to us by the Clark County Recorder’s office that specifies the proper size, margins and print type to be used on documents to be recorded.
understanding TITLE INSURANCE
THE TiTLE INDUSTRy IN BRiEF. Prior to the development of the title industry in the late 1800’s, a homebuyer received a grantor’s warranty, attorney’s title opinion, or abstractor’s certificate as assurance of home ownership. The Buyer relied on the financial integrity of the grantor, attorney, or abstractor for protection. Today, title insurance companies are regulated by state statute. They are required to post financial guarantees to ensure that any claims will be paid in a timely fashion. They also must maintain their own “title plants” which house duplicates of recorded deeds, mortgages, plats, and other pertinent county property records.
What IS TITLE INSURANCE?
Title insurance provides coverage for certain losses due to defects in the title that occurred prior to your ownership. The Seller can give only those rights that previously have been received with “good title.” Title insurance protects against defects such as prior fraud or forgery that might go undetected until after closing and possibly jeopardize your ownership and investment.
Why TITLE INSuRANCE IS Needed?.
Title insurance assures the new Buyers that they are acquiring marketable title from the Seller. It is designed to eliminate risk or loss caused by defects in title from the past. Title insurance protects the interest of the mortgage lender as well as the equity of the Buyer for as long as they or their heirs have any interest in the property.
When IS the PREMIUM DUE?
It is a one-time premium which is paid at the close of escrow. It is customary for the Seller to pay for the Owner’s Policy. If there is a new loan, the Buyer pays for the Lender’s Policy. The policy has a perpetual term and provides coverage for as long as you are in a position to suffer a loss.
Do ALL TITLE COMPANIES OFFER ThE SAME PROTECTION?
Any standard American Land Title Association (ALTA) policy covers the same basic items. However, premium title insurance policies combine the easy-to-understand Plain Language Policy with additional coverages, including coverage for events happening after the policy date.**
Some examples:
- Post-policy Encroachment. The owner has been in his home for several years when a neighbor builds a patio cover on the property. They’ll provide legal defense.**
- Post-policy Forgery. Someone forges the homeowners name on a mortgage. We’ll provide legal defense.** - Building Permit violation. A room added prior to the closing date did not receive a city permit, and the new
The homeowner is being forced to remove the structure. We’ll pay for the removal, per policy limits.**
- Automatic Inflation Coverage of 150%, a 10% increase in the policy amount for each of the first five years.
Note: If you decide to sell your home in the future, new title insurance will be needed to protect your Buyer for the time prior to and during your ownership for any defects that may have occurred.
A home warranty is an insurance policy that covers a variety of mechanical, electrical, and plumbing items, as well as some appliances, inside the home. Optional coverage is available for more expensive systems such as air conditioners, refrigerators, pools and spas.
The Seller may purchase a home warranty plan prior to selling to protect against repairs needed during the listing period, and the Buyer may be able to assume the policy at the close of escrow. Or the Seller may offer to purchase a home warranty policy for the Buyer. Offering a home warranty plan may provide these benefits:
> Increase the marketability of your home by reassuring potential Buyers.
> help sell your home faster and at a higher price.
> Ward off potential disputes after the sale for repair and/or replacement of covered item
Most home warranty plans can be paid for at the close of escrow.
A copy of the invoice is presented to First American Title, and it becomes part of the Seller’s closing costs.
What to do before the closing appointment.
Your escrow officer or escrow technician will contact you to schedule your closing appointment and inform you of the funds you need to bring with you. Obtain a cashier’s check for that amount made payable to First American Title Insurance Company. If a wire transfer is necessary, arrange for it in advance with your escrow officer.
Escrow offices are required by law to have funds deposited before escrow funds can be disbursed. Expect delays if you submit a personal check! If you have questions or anticipate a problem, contact your escrow officer immediately. don’t forget your identification.
you will need valid identification with your photo; a driver’s license is preferred. This is necessary so that your identity can be sworn to by a notary public. It’s a routine step, but it’s important for your protection.
What happens next?
During your closing appointment at First American, you will sign loan documents and instructions to transfer the title of the home you are purchasing and you will present your identification so the documents can be notarized. you will review the settlement statement and give the escrow officer your cashier’s check. (The Seller will sign at a separate appointment.)
The signed loan documents will be returned to
the lender for review. Escrow office will ensure that all contract conditions have been met and
ask the lender to “fund the loan.” If the loan documents are satisfactory, the lender will send the check directly to the escrow office, usually within 24 hours. When the loan funds are received, Escrow will verify that all necessary funds have been received. We will then record the deed at the County Recorder’s Office and disburse escrow funds to the Seller and other appropriate payees. At this time, your escrow is closed!
You get the keys.
After the escrow is closed, we will notify your real estate agent who will give you the good news and arrange for you to receive the keys to your new home.
After the Closing
We recommend you keep all records pertaining to your home together in a safe place, including all purchase documents, insurance, maintenance and improvements.
loan payments and impounds. you should receive your loan coupon book before your first payment is due. If you don’t receive your book, or if you have questions about your tax and insurance impounds, contact your lender.
Home warranty repairs. If you have a home warranty policy, call your home warranty company directly for repairs. have your policy number available when you call.
Recorded deed. The original deed to your home will be mailed directly to you by the County Recorder, generally within two to three weeks.
title insurance policy.Escrow office will mail your policy to you in about two to three weeks.
property taxes. you may not receive a tax statement for the current year on the home you buy; however, it is your obligation to make sure the taxes are paid when due. Check with your mortgage company to find out if taxes are included with your payment. For more information on your property taxes, contact:
- Clark County Treasurer’s Office: 702.455.4323
- Clark County Finance department: 702.455.3543
> adJustable rate mortgage. A mortgage that has a rate that is adjusted at certain intervals during the loan period. The adjustment can either be higher or lower depending on the current market rate at the time adjustment is due.
> amortized loan. A loan that is paid off—both interest and principal—by regular payments that are equal or nearly equal.
> amendment. A change—either to alter, add to, or correct—part of an agreement without changing the principal idea or essence.
> appraisal. An estimate of value of property resulting from analysis of facts about the property; an opinion of value.
> apr (annual percentage rate). The yearly interest percentage of the loan based on the actual interest paid on the loan. The APR is disclosed as a requirement of federal truth in lending statutes.
> assessed value. value placed upon property for property tax purposes by the tax collector.
> assessment. A levy against property in addition to general taxes. usually for improvements such as for streets or sewers, etc.
> assumption. Taking over another person’s financial obligation; taking title to a property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the property.
> balloon payment: A note calling for periodic payments which are insufficient to fully amortize the face value of the note prior to maturity, so that a principal sum known as a “balloon” is due at maturity.
> beneficiary. The recipient of benefits, often from a deed of trust; usually the lender.
> buy down. A fixed rate loan where the interest rate and payment are reduced for a specific period of time by paying the interest up front to subsidize the lower payment.
> clear title. Real property in which there are no liens
> close of escrow. The date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.
> cloud on title. A claim, encumbrance, or condition that impairs the title to real property until disproved or eliminated through such means as a quitclaim deed or a quiet title legal action.
> comparable sales (comps). Sales that have similar characteristics as the subject property, used for analysis in the appraisal.
> conventional mortgage. A mortgage that is not obtained from a government subsidized program such as FHA or VA.
> conveyance. An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.
> covenants, conditions and restrictions (cc&r’s). Restrictive limitations which may be placed on a property.
> deed of trust. An instrument used in many states in place of a mortgage.
> discount points. A negotiable fee paid to the lender to secure financing for the buyer. discount points are up from interest charges to reduce the interest rate on the loan over a life, or a portion, of the loan’s term. One discount point equals one percent of the loan amount. > deed restrictions. Limitations in the deed to a property that dictate certain uses that may or may not be made of the property.
> earnest money deposit. down payment made by a purchaser of real estate as evidence of good faith; a deposit or partial payment.
> easement. A right, privilege or interest limited to a specific purpose that one party has in the land of another.
> equity. The market value of real property, less the amount of existing liens
> FHA. Federal housing Administration is a federal agency that insures first mortgages, enabling lenders to loan a very high percentage of the home price.
> fannie mae (fnma). A private corporation dealing in the purchase of first mortgages, at discounts.
> freddie mac (fhlmc). A mortgage that has a rate that is adjusted at certain intervals during the loan period. The adjustment can either be higher or lower depending on the current market rate at the time adjustment is due.
> ginnie mae (gnma). A federal association, working with FHA, which offers special assistance in obtaining mortgages, and purchases mortgages in a secondary position.
> hazard insurance. Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance
and extended-coverage for personal property.
> impounds. A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.
> legal description. A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.
> lien. A form of encumbrance that usually makes a specific property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.
> lis pendens. A legal notice recorded to show pending litigation relating to real property, and giving notice that anyone acquiring an interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation.
> mechanics lien. A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construc- tion or repair of improvements to land, and which attaches to the land as well as the improvements.
> mortgage. The instrument by which real property is pledged as security for repayment of a loan.
> mortgagee. The party lending the money and receiving the mortgage. Some states treat the mortgagee as the “legal” owner, entitled to rents from the property. Other
states treat the mortgagee as a secured creditor, the mortgagor being the owner. The latter is the more modern and accepted view.
> mortgage insurance. Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sale price. The Federal government writes this form of insurance through the FHA and VA.
> mortgagor. The party who borrows the money and gives the mortgage.
> note. A unilateral agreement containing an express and absolute promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified
date or on demand. usually provides for interest and, concerning real property, is secured by a mortgage or deed of trust.
> notice of default. A notice filed to show that the borrower under a mortgage or deed of trust is in default (behind on the payments).
> origination fee. A fee made by a lender for making a real estate loan. usually a percentage for the amount loaned, usually one percent.
> PITI. A payment that combines Principal, Interest, Taxes and Insurance.
> proration: To divide (prorate) property taxes, insurance premiums, rental income, etc. between the Buyer and Seller proportionately to time of use, or the date of closing.
> power of attorney. A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”
> prepayment penalty. A penalty under a note, deed of trust, or mortgage imposed when the loan is paid before it is due.
> purchase agreement. The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.
> quitclaim deed. A deed operating as a release, intending to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title by the grantor.
> recording. Filing documents affecting real property with the County Recorder as a matter of public record.
> special assessment. Lien assessed against real property by a public authority to pay costs of public improvements (sidewalks, sewers, street lights, etc) which directly
benefits the assessed property.
> trust: A fiduciary relationship under which one holds (real or personal) for the benefit of another. The party creating the trust is called the settler, the party holding the property is the trustee, and the party for whose benefit the property is held is called the beneficiary.
> trustee. One who is appointed, or required by law, to execute the trust. Another definition is someone who holds title to real property under the terms of the deed of trust.
> trustor. The borrower under a deed of trust.
> v.a. (veterans Administration): An agency with the Federal government which, among other things, insures and guarantees loans for veterans.
> warrantY deed. A real estate oriented document used to convey fee title to real property from the grantor (usually the Seller) to the grantee (usually the Buyer).
> wrap-around mortgage. A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage. The mortgage under the wrap-around collects a payment based on its face value then pays the first mortgagee. It is most effective when the first has a lower interest rate than the second, since the mortgagee under the wraparound gains the difference between the interest rates, or the mortgagor under the wraparound may obtain a lower rate than if refinancing.
How to buy a house? First time home buyer.
To begin this buying process, we must first understand the following home search criteria:
Price ranges of home
This is determined by the mortgage qualification, monthly payments, or cash amount you are willing to pay.
Minimum size of a home
Determine the number of bedrooms and square feet of each room.
Location
If you are new to the Las Vegas area, we should start with a broad section of the valley until you become acquainted with the neighborhoods. This is where you will provide feedback on which properties you like and dislike. Determine which features and neighborhoods to emphasize and which to exclude from the search.
As we begin to narrow the search results, we can add additional search criteria to further narrow the search if there is still a lot of inventory in your results.
Additional home features to consider include a pool, a second car garage, and so on.
The Las Vegas Real Estate Market
It is critical to understand our real estate market. There are numerous distinctions in this market that will influence how you shop.
When it comes time to start looking at properties, you may be surprised to learn that lock boxes are not used in the Las Vegas area and that each viewing is personally scheduled for you by your realtor.
When you choose a home to view, your realtor contacts the Seller's realtor at least 24 hours in advance to set up an appointment. The Seller's agent meets you at the property to give you access and answer any questions you may have.
Needless to say, many people are involved in ensuring that you see the properties that are right for you.
Check out our most recent Real Estate Market Report for information on sales, prices, and days on the market.
Plan a successful home shopping trip
Shopping for a home in the Las Vegas area is more involved than reality TV shows may portray, and you will almost certainly have more than three options.
Long before you start looking at homes, you've probably visited the area, determined your needs and budget, and hired a realtor to begin looking at listings. You and your realtor will begin narrowing down the list of properties that meet your needs in the weeks leading up to your trip to Las Vegas.
The properties that fit your demands and budget will be scheduled for tours with the seller's agent by your real estate agent. All you have to do is show up on time for the trip, be well-rested, and be prepared to learn a lot.
For those who enjoy the great outdoors, arts and culture, nightlife, and entertainment, as well as having a pet and kids who need a lot of room to run around and play, Las Vegas is the perfect place to call home.
How to buy a house in the Las Vegas area? Vegas' endless sunny days, and friendly people offer a quality of life that’s hard to beat. The thought of buying any property anywhere is very exciting and a major investment.
Whether you’re looking to purchase a primary residence, a snowbird home, an investment property or that perfect vacation getaway there are many factors to consider and decisions to make.
Lifestyle and Priorities
Understanding the lifestyle you want to live and know what your priorities are is essential to making a home purchase decision.
Budget
Are you buying with cash, loan or combination from a previous home sale. First is to establish the loan pre-approval to know the monthly payments and purchase price range. This will start the search with all houses in that price range with the features and minimum size requirements.
Select a Real Estate Professional
It is essential to find the “right” real estate agent for you. Your agent should be viewed as your trusted adviser and not as a “salesperson” and the relationship you establish with your Real Estate Agent must make you feel comfortable. An agent representing you with experience, education in finance, economics of real estate markets through out several up and down real estate cycles.
The right Real Estate Agent will work with you to help assess what you’re really looking for in a home; help you understand current market conditions and trends and locate those homes that suit your needs.
When that perfect home has been found, they will work with you to establish an offer and will negotiate on your behalf to get you the best possible price. They will be there throughout the process right to when you get the keys. But the right Real Estate Agent does not stop there. They will continue to assist you as you become comfortable in your new home. The right Real Estate agent often has already become your friend.
Understand the local Las Vegas markets
Take your time when purchasing a property in Las Vegas. It takes only moments to make an offer on a property, but it can take a whole lot longer if the property turns out to not be right for you.
How to buy a house? Start your buying process down by learning all you can about the area, the communities within and how you plan to live and enjoy your new home.
The first step is to receive a customize search listings delivered to your email. Get familiar with how much the homes are selling and asking in each different area. Use dollar per square foot as a general guide to start referencing values. Identify what is important to you in a home and if paying a higher $ per SF if worth it to you to live in one neighborhood versus another.
To start this buying process, we need to know the following home search criteria:
Price range of homes. This is determined with the mortgage qualification, the monthly payments or cash amount you are willing to pay.
Minimum Size of the home: number of bedrooms and square feet.
Location: If you are new to the Las Vegas area, we should start with a wide section of areas across the valley until you are familiar with the neighborhoods. This is when you will give feedback about which properties your like and don’t. Identify the feature and neighborhoods to focus and which to eliminate from the search.
As we start to narrow the search results, we can additional search criteria to narrow the search down further if there is still plenty of inventory in your results.
Additional home features to add to the search could be : pool, 2rd car garage, etc.
The Las Vegas Real Estate market
Understanding our Real Estate market is very important. The are many differences in this market that will affect how you shop.
When it is time to begin viewing properties it may surprise you to learn that lock boxes are not used in the Las Vegas area and each viewing is personally scheduled for you by your realtor.
When you select a home you would like to see, your realtor contacts the Sellers realtor at least 24 hours in advance to schedule a time. The Seller’s realtor meets you at the property to provide access and answer any questions you may have.
Needless to say, there are many people involved in making sure you see the properties that are right for you.
Check our latest Real Estate Market Report for information sales, prices, days on market.
Plan a successful home shopping trip
Shopping for homes in the Las Vegas area is more involved than reality TV shows may portray, and you certainly will have more than three property choices to pick from.
Long before you begin to look at homes, you probably have visited the area, have come to understand your needs and budget and have engaged a realtor to start looking at listings. In the weeks before your trip to Las Vegas, you and your realtor will begin narrowing down the list of properties to ones that meet your needs.
Your realtor will schedule tours with the Seller’s agent of those properties that meet your needs and budget. All you need to do is be on time for the tour, well rested and ready to take in a lot of information.
> real estate agent.
A real estate agent is licensed by the state to represent parties in the transfer of property. > listing agent.
A listing agent forms a legal relationship with the homeowner to sell the property, and places the property in the Multiple Listing Service.
> buyer’s agent.
A Buyer’s agent or Buyer broker is an agent hired by the Buyer. Generally, the Buyer broker is paid from the commission fee agreed to by the Seller.
> multiple listing service (mls).
The MLS is a database of properties listed for sale by licensed real estate agents who are members of the local Board. Information on an MLS property is available to thousands
of licensed real estate agents.
> commitment is a two-way street.
Your licensed real estate agent will make a commitment to spend valuable hours finding the right home for you: researching listings, previewing properties, visiting homes with you, and negotiating your contract. honor that commitment by staying with the real estate agent you’ve selected until you purchase your home. Be sure your experienced real estate agent accompanies you on your first visit to all new homes and open houses, too.
It won’t cost you a penny!
The licensed real estate agent who helps you how to buy a house is traditionally paid by the Seller.
Many more home choices.
Your licensed real estate agent has thousands of homes to choose from through the Multiple Listing Service (MLS), so you’re more likely to find the home that’s just right for you and find it quicker. In fact, a majority of the homes for sale are listed by real estate agents and aren’t available to you unless you are working with a licensed real estate agent.
A number of transactions fall out.
Unfortunately, it’s true. Some transactions fall apart before closing.
An experienced real estate agent may be able to resolve problems and see your transaction through to a successful closing.
Knowledge of new home construction developments.
New home subdivisions will welcome you and your licensed real estate agent If you’re interested in buying a new home, take your agent with you on your first visit to each subdivision. Your professional real estate agent is an important source of information who can supply background on the builder, nearby subdivisions, and the local community.
It’s a major investment.
You use a professional for your legal, financial and health needs. Why gamble on what may be your biggest investment without a professional at your side?
Help with For Sale By Owner.
If you consider a “For Sale By Owner,” take your experienced real estate agent along to help negotiate the contract. The owner may not only agree to your terms, but also agree to pay the agent’s commission.
Less liability.
You will have more protection from legal and financial liability, especially as real estate transactions become more complicated.
The paperwork..
Your experienced real estate agent will negotiate and prepare the purchase contract for you and assist you throughout the escrow process.
Obtaining a new loan
When and where to apply for a loan?
There are many sources for home loans including banks, credit unions, mortgage companies, and mortgage brokers. Your real estate agent may give you several names of lenders who have proven reliable in their previous transactions.
Apply for your loan as soon as possible. In fact, it’s probably a good idea to know what you can afford before you begin looking for your new home. It can give you more bargaining power when negotiating with a Seller, especially in today’s market. A lender can pre qualify you for
a certain price range and help you avoid disappointment later.
Your lender will mail out verification requests and order an appraisal on the property you are buying. If your lender asks for additional items, please comply promptly with those requests to avoid delaying loan approval.
What is hazard (or fire) insurance?
Hazard insurance covers the dwelling itself and is required by the lender to protect their “risk” in your home. your lender or real estate agent will explain the necessary hazard insurance coverage to you. If you are buying a condominium, a master policy already exists which includes your unit—but it does not cover your personal belongings.
contact Your insurance agent early in the process, because this coverage must be provided so the lender can release loan funds to the escrow office. Hazard insurance is one of the items frequently postponed until the last minute, and this can result in delaying the closing for a day or more. Order your insurance as soon as your loan is approved; then furnish your escrow officer with the agent’s name and phone number.
When you talk with your insurance agent, be sure to ask about additional coverage in a homeowner’s policy to insure your personal belongings and to protect against liability for such events as injuries to visitors.
What happens after loan approval?
After loan approval and just prior to your planned closing date, the lender will send loan documents to the escrow, and your escrow officer will prepare an estimated settlement statement. This statement indicates what funds go where, and at this time your escrow officer can tell you how much money you need to bring to the closing appointment. Be aware that this amount may be higher or lower than previously estimated due to changes in such items as prepaid interest, prorated fees, courier fees, and impound accounts.
What You May Need For The Loan Application
Be prepared to provide some or all of these items to your loan officer.
Addresses of residences for last two years
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Social Security Number
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driver’s License or other valid Id
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Names and addresses of employers for last two years
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Two recent pay stubs showing year-to-date earnings
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Federal tax returns for last two years
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W-2’s for last two years
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Last two months statements for all checking and savings accounts
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Loans: Names, addresses, account numbers, and payment amounts on all loans
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Real estate loans: Names, addresses, account numbers, and payment amounts
on all loans for other real estate you own
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Credit cards: Names, addresses, account numbers, and payment amounts on all credit cards
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Addresses and values of other real estate owned •
value of personal property. your best estimate of the value of all your personal property (autos, boats, furniture, jewelry, television, stereo, computer, other electronics, etc.)
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For a VA loan, Certificate of Eligibility or dd214s •
divorce decree if applicable
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Funds to pay upfront for the credit report and appraisal
What to avoid during the loan process
Do Not Change jobs. A job change may result in your loan being denied, particularly if you are taking a lower paying position or moving into a different field. don’t think you’re safe because you’ve received approval earlier in the process, as the lender may call your employer to re-verify your employment just prior to funding the loan.
Don’t pay off existing accounts UNLESS the LENDER REQUEStS it.
If your Loan Officer advises you to pay off certain bills in order to qualify for the loan, follow that advice. Otherwise, leave your accounts as they are until your escrow closes.
Avoid switching banks or moving your money to another institution.
After the lender has verified your funds at one or more institutions, the money should remain there until needed for the purchase.
Don’t make any large purchases.
A major purchase that requires a withdrawal from your verified funds or increases your debt can result in your not qualifying for the loan. A lender may check your credit or re-verify funds at the last minute, so avoid purchases that could impact your loan approval.
Adjustable Rate Loan.
Adjustable or variable rate refers to the fluctuating interest rate you’ll pay over the life of the loan.
The rate is adjusted periodically to coincide with changes in the index on which the rate is based. The minimum and maximum amounts of adjustment, as well as the frequency of adjustment are specified in the loan terms. An adjustable rate mortgage may allow you to qualify for a higher loan amount but maximums, caps and time frames should be considered before deciding on this type of loan.
Assumable Loan. A true assumable loan is rare today! This loan used to enable a buyer to pay the seller for the equity in the home and take over the payments without meeting any requirements. Assumables these days generally require standard income, credit and funds verification by the lender before the loan can be transferred to the buyer.
Balloon payment Loan. A balloon loan is amortized over a long period but the balance is due and payable much sooner, such as amortized over 30 years but due in five years. The loan also may be extendable or it may roll into a different type. This could be an option if you expect to refinance before the loan is due or you plan to sell before that date. discuss this option carefully with your Loan Officer before accepting this type of loan.
Buy-Down Loan. If you have cash to spare, you can pay a portion of the interest upfront to reduce your monthly payments.
Down Payment Assistance Programs. This program is designed to assist first-time buyers by offering a fixed rate and a low down payment, such as 3 to 5% down. The program doesn’t require cash reserves, and qualifying ratios are more lenient; however, the buyer’s income must fall within a certain range and a training course may be necessary if required by the program. Ask your Loan Officer if this program is available in your community and whether or not you might qualify.
Conventional Loan. This simply describes a loan that is not obtained under any government-insured program, secured by investors. It could be any type: fixed rate, adjustable, balloon, etc.
FHA Loan. This program is beneficial for buyers who don’t have large down payments. The loan is insured by the Federal Housing Administration under housing and urban development (hud) and offers easier qualifying with less cash needed upfront but the condition of the property is strictly regulated. The Seller will pay a portion of the closing costs that would typically be paid by the buyer in a conventional loan program.
Fixed Rate Loan. This loan has one interest rate that is constant throughout the loan.
GRADuATED PAyMENTS. This is a mortgage that has lower payments in the beginning that increase a predetermined amount (not based on current rate fluctuations as with an adjustable) usually on an annual schedule for a specific number of years.
No-qualifying. A no-qualifying loan may be an option for those who can afford a larger down payment, generally 25% to 30% or more. Since the risk for the lender is virtually eliminated, the borrower doesn’t have to meet normal lender requirements such as proof of income.
VA loan. People who have served in the u.S. Armed forces can apply for a vA loan which covers up to 100% of the purchase price and requires little or no down payment. The seller pays much of the closing costs but those fees are added to the sales price of the home.
