A Guide to Home Ownership
Dreams are made here!
Phone:
908-707-8900
Fax:
908-707-8917
© written by Lisa Payne , for U R Home rEalty tm
What happens first?
Imagine
this, you are driving along and see the “Home
of Your Dreams” with a “For Sale” sign in front of it, you immediately ride
around the block to make sure you are not mistaken. You are not “mistaken…. it’s for sale! The sign reads, “For Sale” U R HOME REALTY,” You pull
over and write down the telephone number of the Real Estate Company,
Then
of course, you call Lisa Payne.
You
get all your questions answered and now you want to see the inside, so you make
an appointment. Your excitement is growing in anticipation,and Lisa starts asking some questions,that
you feel are too personal to discuss, such as how much do you make,or how long
have you been employed or even,how is your credit? Why on earth would they want
to know all of this? As Realtor, Lisa is trying to HELP you. Lisa does want to show you the “HOME OF YOUR DREAMS” however you may
have a certain monthly payment or budget you want to be in. Let Lisa see if your Dream Home fits within your ideas of what you may want to spend,
many times Lisa sees the
disappointment someone can have, when they look at a home and later find out it
wasn’t in their price range or budget. So what should you do first?
Call Lisa, tell her you are interested in a
property and work with her to see if, and what, you are qualified to buy.
Spend
the time to discuss what it is, YOU NEED
to buy.
Do you
need three bedrooms?
Do you
need a garage?
Do you
need a single family home or do you want a multi-family home?
Would
you prefer a condo or town home?
These
are items that you need to look into and consider.
U R HOME will want to have you pre-qualified. The term pre-qualified
is very important when dealing with Realtors and Sellers. They need to know if
you, The Buyer, are qualified to buy
the house you want.
Lisa
will then want you to speak with a Mortgage Representative. You might have
heard that term before, Mortgage Representative
or Mortgage Consultant; they are one and the same. These are the people who
will assist you in obtaining the financing that you will need to purchase a
home. The Mortgage Representative will review your income, your assets and
credit information in order to determine if and how much you can afford.
The
Mortgage Representative will also ask You, The Buyer, how much you want to spend
in the purchase of your New Home.
Lisa
or the Mortgage Consultant will have also asked your permission to have a
credit report run on you. The Mortgage Consultant will want to speak to you.
You will be asked many questions, such as, how much money do you make? How long
have you been employed? How much money do you have available to you? They also
have to supply information such as the asking price of the home you are
interested in and the property taxes of the home.
The
credit report is done and the Mortgage Consultant now analyzes what you can,
and need to do, in order to obtain a mortgage loan. It is very important you
understand what is said to you by the Mortgage Consultant, ask him/her any
question YOU feel is important to
you. Remember, YOU ARE the person
who will be making the mortgage payments, so ask questions!!!
So
far, everything seems simple enough but we must go forward from here. Let’s
assume the Mortgage Consultant tells you everything is perfect and you are
pre-qualified to buy a home. Make certain you get, in writing a
pre-qualification certificate or letter stating the amount of money you are
qualified for, this figure will represent the mortgage amount you will be
paying. (for the purposes of this Guide we will use the the name Allan for the mortgage Consultant, You can choose whomever you wish.)
©
WHAT’S NEXT?
Now,
as you’re Realtor, Lisa will submit
your offer to purchase to the sellers of the house. You will sign a “Contract
of Sale” and be asked to give a deposit on your purchase. The deposit is to
show “Good Faith” to purchase on your part. Then, you may wait a few days to
find out if the seller accepts your offer. If your offer is accepted, you will
be called by Lisa and told the good
news.
Sometimes,
however; the seller wishes to sell the house for more than what you offered, so
they might give you a “Counter Offer”. This means, they will come back with an
increase to your initial price. Do not get upset. You can either accept the seller’s
price, or give the seller a counter offer or reject the offer completely. It is
important you let Lisa handle all of
these negotiations on your behalf.
The
negotiations are finally over. A price has been decided upon and your offer has
been accepted. You will then be given a “Contract of Sale” which now has both
your signature and the sellers on it. The “For Sale” in the Multiple Listing
Service and with the Listing Office will now State: Under Contract!
U
R Home tm ©
nOW THAT WE’VE COME
THIS FAR WHERE DO WE GO FROM HERe?
After
you receive your signed contract, you have a three day attorney review period.
What does this mean? It means, if you choose to have an attorney represent you
for the closing, your attorney must be given the contract to review. The
attorney will have three days to completely review the contract and make any
changes necessary.
If
your attorney suggests changes, make certain you understand the reasoning
behind the changes. Have the attorney explain everything being done in detail.
Once again, there may be additional negotiations back and forth between your
attorney and the seller’s attorney. Once the attorney review period is over and
any changes have been accepted, you must obtain the financing in order to
complete the purchase of your home.
What happens now?
Now
you meet Allan, the Mortgage
Consultant we talked about earlier. You will need to set up an appointment for
a mortgage application. Allan will
make an appointment that is convenient for you. The mortgage application will
take approximately an hour to an hour and an a half, make certain you are not
rushed at this time. This is when you will find out extremely important
information. Allan will ask you to
bring many documents with you for the application process. You may elect to
choose another mortgage consultant, we have several mortgage companies
available to you, or you may already have a consultant you prefer to work with.
For the purposes of our guide book, we will refer to Allan.
You will need to bring items such as:
Pay
stubs for the past month
Checking
Account statements for the past three months
Saving
Account records for the past three months
Rent
receipts for the past 12 months or paid receipts if paid in cash
A
listing of all your credit bills to include monthly payments, loan numbers and
balances due (car loans, credit cards, etc.) if you don’t have this, Allan may
retrieve this information from your Credit Report
Your
IRS W-2 forms for the past two years
Your
income tax return forms for the past two years
Copy
of your Social Security Card
If you
are a veteran you will need to bring you Certificate of Eligibility and your DD214 discharge papers
Go to
your mortgage application meeting with as much information as possible. It will
make the process much easier for You the
Buyer, the Realtor, the Mortgage Consultant and the Seller.
Now, the financing of your home
begins.
FINANCING YOUR HOME
During
the mortgage appointment Allan,
your Mortgage Consultant, will perform a few different functions. He will
complete an application form and have you sign many documents. Allan will review each form you sign
with him. He will review each document you give him and ask you many questions.
He is not asking you these questions to be nosey or invade your privacy, he is
asking you because he wants you to be approved and obtain financing. He will be
working for you to obtain a loan, not against you. Work with Allan and question him as much as you need to. The most important issue that
will be discussed is the type of financing you need.
In today’s
world, mortgage companies have many fancy loan programs and just as many
interest rates as you can think of. Make certain you know exactly what kind of
loan you are applying for and what you will need to pay for that loan. The most
common used program terms are:
FHA-
This is a loan program that is offered by the Federal Government. Your loan
must meet the guidelines set forth by the Federal Housing Administration and
your loan will be insured by the FHA. The down payment requirements can be as
little as 3.5%
Conventional– This is a loan program that is not insured by any
government agency, and can have a down payment requirement that ranges from 5%
to 20% depending on your employment and credit history.
There
are many different programs available; the ones above are examples of some. Even
if you didn’t think you could qualify, speak with Allan to learn which type you may be able to obtain.
Allan
will suggest the loan program he feels best suits your individual needs.
Remember, as a Mortgage Consultant, Allan
is much more experienced in obtaining financing. Work with him and listen to
his suggestions and reasoning for selecting a loan program for you. Again, it
is you that will be making the payments.
Also
during the mortgage application process, Allan
will be making certain you have the money you need to purchase your home.
There are different charges involved in purchasing a home so you need to know
what the typical closing costs will be.
Gift Money-Often Buyers will not have enough money to purchase a home,
however a close relative will be willing to Gift money to a buyer. Gift money is allowed when purchasing a home,
it does require what is called a gift letter. Ask Allan to supply you will a gift letter form should you need one.
CLOSING COSTS
(closing costs and fees vary this is estimates only as of 02/2014)
(closing costs and fees vary this is estimates only as of 02/2014)
What
are closing costs? Closing Costs are the fees that will be incurred to purchase
a property. In order to purchase a home many different things are needed, and
of course have to be paid for. The items normally charged at or prior to
closing are: REMEMBER often times when You the Buyer doesn’t have enough money
to cover the down payment and the closing costs, the Seller sometimes will
contribute to your purchase of their home, thus reducing your costs. There are
also programs available from time to time that you as a Buyer may qualify for
that will also reduce your costs when purchasing a Home. Don’t let the big
money number scare you until we know the bottom line.
CREDIT REPORT FEES- This is the cost of the credit report they will run. You will
be supplied with a credit report upon request.
APPRAISAL FEE- The property you are purchasing must be appraised by a
licensed appraiser to make certain it is worth what you are paying for it. These fees can run from $375.00 to $450.00 for
a single family. Multifamily prices are slightly higher
APPLICATION FEE- Is not charged on FHA.
This is normally charged on Conventional Loans and can range from $295.00 to
$450.00 depending upon the type of property you are purchasing
ATTORNEY’S FEE- If you have an attorney representing you at closing, the
attorney will charge a fee that will be set by your attorney.
TITLE INSURANCE-Title Insurance is an insurance policy on the title of your
property.
A
title company runs what is called a title search. The title company checks all
public records to make sure there is nothing wrong with the title to your
property. After all, you wouldn’t want to purchase a home, and find out after
closing that someone else owned it first or placed liens against the property
and now they need to collect. The title company insures that you have what is
called “clear title” to your home. The cost of the title insurance is based on your
loan amount.
SURVEY- A survey of your land must be performed to make sure the
property you are purchasing is exactly correct. It will show you your property
lot lines and boundaries. The average cost of a survey is approximately
$450-$750 depending on the size of your lot.
RECORDING FEES- In order for your deed and mortgage to be placed on record
in the County Clerks Office. The County Clerks
Office also charges a recording fee. This varies from county to county, your
Attorney will advise you on this charge.
DISCOUNT POINTS- A discount point is a fee charged by the mortgage lender.
The discount points are charged based upon the cost of the interest rates. The
lower the interest rate the more you will pay in discount points. Each discount
point charged is equal to 1% of the loan amount.
Along
with closing costs, you will be asked to pay “pre-paid expenses”. Pre-paid
expenses are required by the mortgage company to set up your escrow account.
Your escrow account is used to pay your taxes each quarter, and your homeowners
insurance each year as it becomes due. Normally the mortgage company will collect
3-4 months of your property taxes, and interest from the day of the closing to
the end of the month. Prior to closing you will be asked to pay for one year of
the homeowners insurance and supply the paid receipt for same.
There
are charges that you may incur, but we have listed the most common. During the
mortgage application Allan your Mortgage Consultant will explain the
charges to you and give you a total estimate of what everything will cost. This
is the reason the Mortgage Consultant will want to make certain you have
sufficient money to purchase the house. Again, if you do not understand what
you are being told by the Mortgage Consultant, it is important that you ask
questions until you do understand what is being explained to you.
Well,
so far, Lisa has submitted your
offer to purchase, your contract to purchase has been accepted, your attorney
has done his review and Allan has
taken your mortgage application
THE MORTGAGE
PROCESS
What
is the mortgage process? Well, Allan
will take your application and all the paperwork back to his office
for your loan to be processed. Allan
gives all the information to a “loan processor,” it is the processors job to
make certain that all your paperwork is correct. All the figures done by the Mortgage Consultant are accurate and
gather additional information on you.
After
the processor reviews your paperwork you are normally sent a letter and an
estimate of the closing costs we discussed earlier. Your processor will ask
information that is needed to obtain your approval. If you did not bring all
papers to the application appointment, it will be asked for at this time. Your processor will send out verification
forms to be completed by banks and employers. The processor becomes the main
source of information at this time. The processor works with you, the Realtor,
the Mortgage Consultant, the appraiser and your attorney to make certain
everything goes according to schedule. If you are asked to supply additional
information or explanations, please do
so as quickly as possible. The quicker you supply information requested,
the quicker your loan will be approved. If at any time during the mortgage
process you don’t understand why or what is being asked of you, have the
processor explain it to you or your Mortgage Consultant. It is the processors
overall job to get your loan approved as quickly as possible and to coordinate
concerns with your transaction.
Remember,
anything that you don’t understand please ask. You have a variety of
experts at your disposal . You have Lisa the Realtor, And Allan, your Mortgage Consultant, your Loan
Processor, and you’re Attorney.
After
all your paperwork is received by the loan processor your mortgage application
is then packaged and submitted to an underwriter for approval. It is the underwriter’s job to determine that
your loan meets all requirements necessary for the loan program you have
chosen. As long as you have provided all that was asked of you, your mortgage
application will be APPROVED.
The
mortgage process can take anywhere from 2 weeks to 60 days depending on you, The Buyer. If you supply everything
when asked for , the process will be quick . If you don’t then it will take
longer than usual to complete. Now that we have obtained a loan approval, what
else do we need to do?
PREPARE FOR CLOSING
Upon
obtaining a loan approval you will be sent a written Mortgage Loan Commitment.
This commitment will advise you of the loan program you have been approved for
and also let you know any conditions needed in order to close your loan. If
conditions are required from you, please supply them as quickly as possible.
At
this time, Lisa or you will be
obtaining final documents for the mortgage lender, your attorney will be
working with the title company to get your title work done, your survey will be
ordered and the final stages are approaching. After each party completes their
paperwork, they forward it to the loan processor who will then review all
papers received and prepare to release your file for closing.
Once
all paperwork is reviewed and cleared, your closing date will be set. Normally
the day before closing Lisa will
take you for a final walk through inspection of your new home so you can see
that “all is as it should be” your
Attorney will then advise you of the amount of money needed to finalize the
deal and of the time this is to take place, also there may be some final
details your Attorney will need to review with you. Once you have closed on
your property,
LISA WILL THEN HAND
YOU THE KEYS TO YOU NEW HOUSE!
CONGRATULATIONS!!!
© U R Home Realty tm
U R HOME !
 |
Dreams are Made
Here!
U R
Home Realty
Proudly
Serving the Central Jersey Area
©
WHEN BUYING A HOME REMEMBER!
Make sure you don’t change your current
job!!
You
have been approved according to your current job. Changing a job may make a big
difference in your approval or delay your closing. Seek your Mortgage Consultants advice if you are thinking of changing jobs.
Make sure you make all your credit card
and any other type loan payments are on time!!
If you
miss a payment or pay late on any bills, credit cards, or car loans you will jeopardize
your chances of getting a loan to buy your home.
Make sure rent is paid timely and you
save your receipts or checks!!
.
Make sure you do not go out and buy a
new car or apply for new credit!!
Applying
for new credit while trying to obtain a mortgage can seriously affect your
buying power. The same is true for buying a new car at this time. Mortgage
lenders go by what is called a FICA
Score, you must make sure you Do Not
over extend your credit and make it difficult to purchase a home, speak with your Mortgage Consultant for more explanation about this.
Make sure don’t make any large
deposits!!
Should
you make any large deposits in your accounts make copies of checks or make sure
you can secure documentation on this. Prior to making any large deposits ask your Mortgage Consultant about it before doing so.
If Your Mortgage Consultant can’t be reached for whatever
reason, do not hesitate to contact Lisa
with your questions or concerns. No question is too big or small we will work
hard to answer them all.
© Written
for U R Home Realty tm
