THE COMPLETE GUIDE TO
B U YING A H OM E
PRESENTED BY
A PREVIEW OF LILLIAN MONTALTO SIGNATURE PROPERTIES INTERNATIONAL
LILLIAN MONTALTO BROKER
978.815.6300 LILLIAN@ANDOVERHOMES.COM PROFESSIONAL AFFILIATIONS
FOLLOW ME ON SOCIAL MEDIA Stay up-to-date on property listings, real estate trends, neighborhood updates and much more!
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Northeast Association of REALTORS®
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Massachusetts Association of REALTORS®
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New Hampshire Association of REALTORS®
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Michigan Association of REALTORS®
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National Association of REALTORS®
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Real Estate Brokerage Managers Council
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Residential Sales Council
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Employee Relocation Council (ERC)
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Northeast Builder’s Association of Mass, Inc., Board of Directions
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National Association of Home Builders
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Real Estate Buyer’s Agent Council
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Senior Advantage Real Estate Council
PROFESSIONAL DESIGNATIONS • CRB - Certified Residential Broker • CRP - Certified Relocation Professional
@LillianMontaltoSignatureProperties
• CRS - Certified Residential Specialist • GRI - Graduate Realtor Institute • ABR - Accredited Buyer Representative • CCIM - Certified Commercial Investment Manager • RCC - Relocation Certified Coordinator • SRES - Senior Real Estate Specialist • MILRES - Military Residential Specialist
Since establishing Lillian Montalto Signature Properties International in 2000, Lillian has been consistently ranked in the Top 5 of over 1,000,000 Realtors® for sales volume by REALTOR® Magazine. With a compartmentalized approach to real estate and almost 40 years of experience, Lillian offers clients a highly successful level of expertise and strong commitment to service. For an amazing customer experience, come visit Lillian’s brand-new state of the art office located at 32 Park Street in Downtown Andover, MA! Lillian and her husband, Bob, have been recognized on multiple occasions as one of “America’s Top 100 Art Collectors.” They collect African Art, Contemporary Turned and Carved Wood Art, Antique and Semi-Antique Persian Carpets, Chinese Antiquities, Contemporary Paintings, Chinese Ink Paintings, and Drawings. Lillian and Bob have published three books on their Wood Art collection, “The Fine Art of Wood,” “Nature Transformed,” and “Audacious, The Fine Art of Wood.” Their wood collection has toured in 2000, 2005, and again in 2006-2007 to the Detroit Institute of Art, Peabody Essex Museum, University of Michigan, Saginaw Museum, Museum of Art & Design in NY, Birmingham Museum of Art, and the Des Moines, Iowa Museum. More recently, in 2015 “Audacious, The Fine Art of Wood” had a five-month exhibit at the Peabody Essex Museum in Salem, MA.
THE RIGHT AFFILIATIONS Lillian Montalto Signature Properties International is a Charter Member of Leading Real Estate Companies of the World, a global network of the finest independent real estate companies representing the gold standard of service while generating referral, real estate, and corporate relocation business for the benefit of its subsidiaries, affiliates and, most importantly, the clients of Lillian Montalto Signature Properties International. Also, a member of Luxury Portfolio Fine Property Collection, the luxury component of Leading Real Estate Companies of the World. Luxury Portfolio affiliates include the most respected professionals in the industry. Luxury Portfolio’s talented leadership represents decades of experience in the high-end market. Presenting a gallery of the finest luxury properties and brokerages, the Luxury Portfolio brand is recognized throughout the world for its unrivaled standard of excellence. As a member of the largest international relocation networks, Leading Real Estate Companies of the World, Lillian partners with over 550 Real Estate Firms & 150,000 Sales Associates in more than 75 countries.
OUR MISSION To consistently and passionately provide business excellence and five-star service with a smile, in a unique environment, resulting in raving fans who expect the extraordinary.
STEPS TO BUYING A HOME There’s more to finding a home than meets the eye. We will take you through the home buying process, oversee the details, and guide you to the home of your dreams... every step of the way.
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STEP 1
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OUR FIRST MEETING We will schedule a convenient time to meet for an initial consultation as soon as you contact us, where we’ll determine our compatibility, walk you through the process of how to buy a house, and help you become aware of your needs and wants.
MORTGAGE PRE-APPROVAL We will take the next step in ensuring your investment success by connecting you with a reputable mortgage lender. We work closely with one of the country’s top lenders; together, you will review your income, credit, debts, and other financial factors that will impact your approval rating.
STARTING YOUR SEARCH Once we know what you’re looking for and what your budget allows, we will set you up to receive a customized selection of the latest listings every day. When you see a home that interests you, we’ll review the listing information and recommend a visit to the neighborhood and property.
VISITING NEIGHBORHOODS Taking a drive by the home and through the area will provide with a first-hand insight into what your new potential community holds. If you’re still interested in the property after our neighborhood visit, we’ll schedule a time to view it together.
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VIEWING HOMES While at a showing, we will guide you through the property with an analytical eye to help you determine if it truly fits your needs and wants. We will provide you with information on local schools and amenities to give you a well-rounded education on the property and surrounding area.
SUBMIT AND OFFER Our team will work with you in the offer submission process and walk you through every step needed to have the most compelling offer sent.
CLOSING When your offer is presented, the process will continue with our closing department, who will professionally handle every step in the closing process. You will receive emails throughout the process to remind you of the next steps and what local professionals you can call to tie up any loose ends, such as transferring utilities and forwarding mail.
USE OUR MOVING TRUCK Our team will continue to be there for you, ensuring a smooth transition to homeownership. We will be just a call or email away, whether you need a moving service recommendation, answers to your real estate questions, or help with the future resale of your property.
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FOLLOW THE ROAD MAP
WELCOME TO BUYING A HOME Congratulations! You are about to embark on the exciting journey of finding your dream home. Whether it’s your first home, investment property, or retirement dream, Lillian Montalto Signature Properties International will make the experience of finding the perfect home fun, exciting, and successful. This will likely be one of the largest financial decisions in your life. I believe that for you to feel comfortable during this process, you will need to be well equipped and armed with up-to-date information. This guide contains helpful information on the home buying process, so you will know what to expect every step of the way. We look forward to guiding you on this exciting journey!
Best wishes for your exciting journey!
3 MAIN REASONS PEOPLE BUY HOMES
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TO IMPROVE YOUR STYLE OF LIVING Life is constantly changing and so do our residential needs.
INVESTMENT POTENTIAL The largest investment for most people is their home. In the long run, investments in homes far outpace inflation. Homeowners build equity and, in most states, can borrow against it.
TAX ADVANTAGES Property taxes and qualified home interest are deductible on Schedule A, for itemized deductions.
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STEP 1 : DEFINE YOUR GOALS
For an enjoyable home buying experience, you must first create a plan. Make a list of priorities that will lead to your objective: “A New Home.”
Establish a time frame. Let’s discuss the dates by which you would like to secure financing and move into your new home.
Gather information about your personal finances and get pre-approved by a lender first! Mortgage lenders will need names and account numbers of all creditors, employment contacts, and banking details.
Create a list of your “must haves” and your “wish list” for the home you hope to find. Number them in the order of their greatest importance to you. Include a detailed description of: • Architectural style • # Bedrooms • # Baths • Location • Price • Lot size • Garage • School system • Neighborhood • Privacy/fenced yard • Any other specifics
WHAT TO EXPECT FROM
P RI O R TO F I NDI NG YO U A H O ME. . .
AT THE TIME OF OF F ER...
• PROVIDE homebuyer’s guide.
• HELP you structure your best offer.
• EXPLAIN agency relationship and how we can work in your best interest.
• CONDUCT negotiations.
• HOLD an initial comprehensive needs assessment meeting.
• PROVIDE a Comparative Market Analysis (CMA) to make sure that you are always on target with the price that you are offering.
• ASSIST in finding the right mortgage lender to get your pre-approval.
• RECOMMEND inspectors and attend inspection.
• HELP you get pre-approved by a quality lender.
D U RI N G T H E S E A RCH. . .
P R IO R TO C LOSIN G AN D AT SE TTL E ME NT...
• IMPLEMENT the Lillian Montalto Signature Properties International detailed Buyer Plan.
• HANDLE every detail of the closing process on your behalf.
• DAILY email updates on newly listed properties.
• MONITOR that contingencies are completed in a timely manner (i.e., inspections, loan approvals, etc.).
• EASY ACCESS to your agent to discuss any questions, offers, problems, and details. • USE every method available to help find the perfect property for you.
• SET UP and attend the final walk-through with you. • ACCOMPANY you to closing to allow for a smooth transaction.
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STEP 2 : SELECT A REALTOR THE ADVANTAGES OF WORKING WITH A REAL ESTATE PROFESSIONAL
YOUR INTERESTS ARE PROFESSIONALLY REPRESENTED Enlisting the services of a real estate professional is similar to using an accountant to help you with your taxes, a doctor to help you with your health care, or an attorney to help you with any legal issues. Lillian Montalto has devoted over 40 years to perfecting real estate service. Continuous education, market expertise, and vast experience are combined with an excellent team of talented professionals who will find you the perfect home. Lillian and her team will guide you through the home buying process and exclusively represent your interests as they help you find a home, present your contract offer, negotiate, and hold your hand all the way to closing. YOU WILL GET A GREAT HOME QUICKLY AND CONVENIENTLY It’s nearly impossible to find a home that meets all your needs, negotiate a contract, and close the transaction without an experienced agent. Lillian and her team leverage the best technology to ensure you only tour homes that meet your specific needs and price range.
YOU GET A PERSONAL SPECIALIST THAT KNOWS YOUR NEEDS Lillian and her team get to know your real estate needs and concerns by maintaining open communication at all times, and by touring homes with you in order to best understand your feedback.
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STEP 3: GET PRE-APPROVED MANY BUYERS APPLY FOR A LOAN AND OBTAIN APPROVAL BEFORE THEY FIND A HOME. BUT WHY?
THE BENEFITS OF APPROVAL OR PRE-COMMITMENT 9 You only look at the homes in the right price range. 9 You save money dealing with a seller who is comfortable knowing your financial qualifications. 9 You can close more quickly. 9 You minimize the trauma of not knowing whether or not you qualify.
A pre-approval is different than a pre-commitment, which can be used in competitive bidding situations. Ask your buyer agent if you should consider getting a pre-commitment.
SIGNING A BUYER AGENCY AGREEMENT Entering into a buyer agency agreement has countless advantages and no disadvantages. When you sign a Buyer Agency Agreement, you are simply agreeing to “hire” a personal representative who, by law, must represent your best interests to the best of his/her ability. All of this personal service is available at absolutely NO RISK TO YOU! With Lillian Montalto Signature Properties International, you get an entire team of real estate professionals devoted to protecting your needs to help you make one of the most important investment decisions of your life!
THE LENDING PROCESS FIND A LENDER YOU CAN TRUST Allow us to assist you in finding an experienced lender. Start the loan process as soon as you begin looking at homes so you know what you can afford. Lillian Montalto Signature Properties International can recommend several trusted and qualified lenders. We work with the best because we are the best! MORTGAGE COMPANY The lender begins processing your loan application, ordering credit reports, appraisals, and performing verifications once you have found your dream home and have an accepted offer. UNDERWRITING When your application is completed and verified, the file goes to the Underwriting Department for final approval.
LOAN APPROVAL When you have the final lender approval, you can seriously concentrate on finding a home that you know you can qualify to buy immediately. TITLE, ASSEMBLE PAPERS Now that you have a home under contract, the lender processes the necessary paperwork. Your attorney or title company secures a title search and processing is completed. CLOSING The Listing Office or Seller’s Attorney drafts legal transfer documents for local jurisdiction, and now you are ready to go to your closing to secure the keys to your new home.
LOAN TYPES Mortgage loans vary, and each type is designed for different situations. Choosing a loan type affects how much you will need for a down payment, the total cost of your loan (including interest and mortgage insurance), how much you can borrow, and the house price range you can consider. SOME TYPES OF LOANS TO CONSIDER:
• Conventional • FHA • VA Discuss with your lender your options and which loan will work best for you.
MORTGAGE CHECKLIST THE FOLLOWING INFORMATION IS REQUIRED DURING THE LOAN PROCESS: F Copy of Driver’s license (both borrowers) F Current pay stubs for the last 30 days (w/ YTD earnings, name, and SS#) F Last 2 years of W-2s F If self-employed, your tax returns for the past two years F Transcript or diploma (if you were a student in the last two years) F Award letter and most recent check (if you receive Social Security, retirement/disability income) F 2 year residence history (if renting, landlord’s name and phone number) F Bank statements for the past two months (all pages); any large deposits will need to be sourced F Investment and/or retirement account statements for the past two months F Divorce decree (if you pay/receive child support or alimony) F Credit card, auto loan, and personal loan account information F Relocation Agreement if applicable F Bankruptcy and discharge papers if applicable F If applying for a VA loan, you will need your original Certificate of Eligibility and DD214
IF YOU CURRENTLY OWN REAL ESTATE: F Mortgage account information F Home insurance policy information F Copy of Sales Contract & Settlement Statement (if you are selling your present home)
WHY DO YOU NEED AN ATTORNEY? ATTO R N E Y ’ S GOALS
F I NA NC ING CO MMIT ME NT
9 To legally protect your interest 9 To identify issues as to buyer, seller and lender 9 To negotiate and resolve any and all legal issues 9 Represent the jurisdiction
Your Attorney can also represent the lender and will: 9 Assist with the clearing of conditions 9 Prepare for closing based on lender instructions
P RE -C LO S ING P UR CHA SE & SA LE AGREEM ENT Your Attorney will confirm the details of the offer to include, but not limited to: 9 What is included and what is not? 9 Contingencies: • Finance — how much, how long • Home inspection • Title V Septic-certifications (MA only), new regulations • Radon • UFFI • Underground oil tanks 9 Default provisions 9 Title problems 9 Final inspections 9 New house-building plans, specifications, and additional provisions
9 Review title prior to closing 9 Obtain deed from seller’s attorney and review prior to closing 9 Assist in resolving any last minute problems prior to closing 9 Prepare all closing documents
C LO S ING 9 Preside over closing activities 9 Provide full accounting for transaction 9 Explain title insurance
This is for informational purposes only and should not be relied upon as legal advice. Please contact your attorney for further information.
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STEP 4: THE PROPERTY SEARCH THE INTERNET 95% of all buyers use the Internet to start their search for homes. If you see a property you want to look at, let us know and we will send you complete information. Always call us for a showing appointment — never call the seller or the Listing Agent directly. YOUR REALTOR After your initial appointment, we will have a good idea of your wants, needs, price range, and location. We will assist you in narrowing your search by reviewing your ‘must-haves’ and ‘would-likes’ and making recommendations based on our experience and local knowledge. TECHNOLOGY We will automatically send you a list of properties matching your criteria within 24 hours of listing, which will allow you to view hot new listings ahead of other buyers. VIEWINGS We will make arrangements to show you homes that meet your requirements. We strongly suggest you drive by the homes first and rate them on a scale of 1 to 10, with 10 being the best house in the best location. If you visit a sales center, new development, or open house, it is critical that you present our business card or inform the salesperson that you are working with us prior to registering.
B U I L DI N G A H O U S E H UN TI N G CH E CK LIST During your search, it’s easy to forget the details or become overwhelmed by all the choices and homes you have visited. Use this checklist to help you stay organized and focused on the important criteria during your visit: CO MPA R E 9 Style of home
LOOK B E YO ND T H E S U RFAC E
9 Age of home
9 Envision how you would use the space – does it fit your every day needs?
9 Square footage
9 Will your furniture fit?
9 Positioning of the living spaces
9 Floor plans are a great way to see the flow and how changes can be made.
9 General size of rooms 9 Kitchen and appliances 9 Bedrooms 9 Bathrooms 9 En-suites 9 Garage space(s) 9 Type of heating/air conditioning 9 Backyard 9 Fencing/Landscaping
9 Check out the true storage space – open cupboards, doors, attics, and storage cabinets. 9 Lift up rugs and investigate for damage. 9 Look at every detail from floor to ceiling. 9 Look outside – note the layout of other homes around the property, traffic, parking, noise, etc. 9 View the property at different times of the day. 9 Who are your neighbors? 9 Do you feel an emotional connection?
9 Condition of roof and exterior 9 Storage space 9 Laundry
REVI E W MARKE T VALU E
9 Natural light
9 How long has the house been on the market?
9 Special features (i.e. fireplaces, balconies)
9 Is it priced to sell? 9 Compare its price to others sold nearby 9 What is the resale potential?
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STEP 5: NEGOTIATE AN OFFER When you have found the right home, it is time for your REALTOR® to prepare and draft an Offer to Purchase. An offer can be drafted with or without conditions. An offer WITHOUT conditions is known as a firm or subject-free offer, and an offer WITH conditions is known as a conditional offer (and in effect, protects one party with the placement of certain conditions on the purchase.)
OFFERS MUST INCLUDE: • The earnest money deposit • The amount you are offering to pay • Financing terms and conditions • Any personal property specifically included or excluded • Loan commitment date • Closing and occupancy date • Other contingencies, including building inspections
If the initial offer is not accepted by the Seller, further negotiations generally reach terms agreeable to both Buyer and Seller. When Buyer and Seller agree on terms, the Buyer immediately applies for financing and arranges for a home inspection.
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STEP 6: HOME INSPECTION
During a home inspection, a professional home inspector will survey the premises for the integrity of the internal and external components of the dwelling. With this small investment now, you may save substantial money in the future.
AREAS HO ME I NSP ECTO R S LO O K AT:
OTH ER I N S PE CT IO NS TO CO NS ID E R :
• STRUCTURAL Internal and external
• Pest inspection
• ELECTRICAL Outlets, fuses, breaker box, wiring
• Radon testing
• PLUMBING Mechanical systems and fixtures, look for leaks, drips • BUILT-IN APPLIANCES Ensure they are functioning properly • SAFETY HAZARDS Survey any dangerous conditions • MISCELLANEOUS Possible inspection of septic systems, roofs, drainage problems, wood decks, patios or other exterior structures
• Geological or land subsidence surveys • Lead-based paint/hazards (for homes built prior to 1978)
THINGS TO KNOW WHEN BUYING A FORECLOSURE IN ORDER TO MAKE AN OFFER, YOU MUST HAVE THE FOLLOWING READY: • Pre-approval letter stating that your income, assets, and employment have been verified. • Proof of Funds (statements showing account balances) • A deposit check of $500 - $1,000, which is fully refundable prior to end of review period. • Fully signed and completed Contract for Purchase and Sale.
IF THERE ARE MULTIPLE OFFERS, HOW CAN MY OFFER STAND OUT? • Having a large deposit • Waiving the financing contingency • Showing proof of funds CHOOSE THE RIGHT AGENT: Team Lillian Montalto is experienced in working with banks and will represent your best interests.
WHAT IF MY LENDER CANNOT CLOSE ON TIME? You may be charged late fees for any extensions. This is why it is imperative that you are pre-approved.
WHAT IF REPAIRS ARE NEEDED? The bank WILL NOT make any repairs. They sell the property AS-IS. For this reason, you have a due diligence period to make sure the property is suitable. You should schedule a home inspection after your offer is accepted.
HOW DID THE BANK ARRIVE AT THE PRICE AND IS IT A GOOD DEAL? The bank will consult with their real estate agent and set the price. The list price has nothing to do with the price the bank will accept. We will research prior mortgages on the property so that you can estimate the minimum the bank might be willing to accept.
HOW MUCH WILL THE BANK TAKE? Typically, the bank looks for a price that is within 5% of the asking price. If they do not get their desired price, they will lower it every few weeks until they receive an offer close to the list price.
DON’ T WAIT TO BUY A HOME The housing market recovery has been nothing short of remarkable. Many experts agree the turnaround from the nation’s economic pause is playing out extremely well for real estate, so it’s framing up to be an ideal time to buy a home for those who are ready to make a purchase. Here are some of the biggest wins for current home shoppers: MO RTGAGE RATES AR E LO W • In 2020, mortgage rates hit all-time lows more than a dozen times, falling below 3% for the first time ever. • Continued low rates have set buyers up for significant long-term gains. • Essentially, it’s less expensive to borrow money for a home loan today, which is a huge opportunity for buyers to capitalize on before rates start to rise.
B U Y IN G I S MO RE AFFO RDA B L E TH A N REN TI N G
EQ UITY IS G R O W ING • According to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity, and 42.1% of all homes in this country are mortgagefree, meaning they’re owned free and clear. • CoreLogic notes the average equity mortgaged homes have today is $177,000. With this much equity in place for the typical homeowner, the chance of the market seeing a rush of foreclosures is not likely. • Today’s homeowners have many options to avoid foreclosure, such as selling their homes and leveraging that equity to protect their investment.
• This trend toward low mortgage rates has made the typical monthly payment less expensive for buyers. • Buying a home vs. renting may be a game changer, as it amplifies long-term savings for homeowners. • When paying a mortgage, that money is reinvested back in your favor. • Instead of contributing to your landlord’s savings, you’re contributing to your own net worth. This is a term called equity, and it is one of the biggest financial benefits of owning a home.
H O M E PRIC E S A R E A P P R E C IAT ING • According to leading experts, home prices are forecasted to continue appreciating. • Knowing home values are increasing while mortgage rates are so low should help you feel confident that buying a home this year is advantageous from a price perspective, and a strong long-term investment.
HOME BUYER’S GLOSSARY When buying a home, it’s important to understand some of the key concepts and terms. Throughout the purchase process, your REALTOR® will be available to explain any unfamiliar terms you encounter. That said, here is a short list of terms you’ll want to know: ABSTRACT OF TITLE – A complete historical summary of the public records relating to the legal ownership of a particular property from the time of the first transfer to the present.
CLOSING COSTS – The costs to complete a real estate transaction in addition to the price of the home, may include: points, taxes, title insurance, appraisal fees and legal fees.
ADJUSTABLE RATE MORTGAGE (ARM) – Also known as a variable-rate loan, an ARM is one in which the interest rate changes over time.
CLOSING DATE – This is usually the date that the legal ownership of the property transfers from the seller to the buyer.
AGREEMENT OF SALE – Also known as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller and buyer agree to transact under certain terms spelled out in writing and signed by both parties.
CONDITIONS OR "SUBJECTS" – Items that are usually put in place to protect a party’s interests upon selling or buying the property and refer to things that must occur or be in place before the sale closes. Some of these conditions could be “subject to financing approval,” “subject to the buyer’s house selling,” “subject to seller finding suitable housing,” etc.
AMORTIZATION – The process of reducing the principal debt through a schedule of fixed payments at regular intervals of time, with an interest rate specified in a loan document. APPRAISAL – An appraiser’s estimate of the market value of a property based on local market data and the recent sale prices of similar properties. ASSESSED VALUE – The value placed on a home by municipal assessors for the purposes of determining property taxes. CLOSING – The final steps in the transfer of property ownership. On the Closing Date, as specified by the sales agreement, the buyer inspects and signs all the documents relating to the transaction and the final disbursements are paid. Also referred to as the Settlement.
CONTINGENCY – A clause in the purchase contract that describes certain conditions that must be met and agreed upon by both buyer and seller before the contract is binding. COUNTER OFFER – An offer, made in response to a previous offer, that rejects all or part of it, while enabling negotiations to continue towards a mutually-acceptable sales contract. CONVENTIONAL MORTGAGE – One that is not insured or guaranteed by the federal government. DEBT-TO-INCOME RATIO – A ratio that measures total debt burden. It is calculated by dividing gross monthly debt repayments, including mortgages, by gross monthly income.
DEPOSIT – The amount of money provided from the buyer to the seller as a token of the buyer’s assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. Your agent can assist you in proposing a certain and appropriate amount for the deposit. DISCLOSURES – Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property. Seller disclosures range from knowledge of issues with the home. They serve to inform buyers, they can protect the sellers from future legal action. It is the seller’s chance to lay out anything that can negatively affect the value, usefulness or enjoyment of the property. DOWN PAYMENT – The money paid by the buyer to the lender at the time of the closing. The amount is the difference between the sales price and the mortgage loan. Requirements vary by loan type. Down payments less than 20% usually requires mortgage insurance. EARNEST MONEY – A deposit given by the buyer to bind a purchase offer and which is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does not fulfill all contract obligations, the deposit may be forfeited. EQUITY – The value of the property, less the loan balance and any outstanding liens or other debts against the property.
EASEMENTS – Legal right of access to use a property by individuals or groups for specific purposes. Easements may affect property values and are sometimes part of the deed. ESCROW – Funds held by a neutral third party (the escrow agent) until conditions of a contract are met and the funds can be paid out. Escrow accounts are also used by loan services to pay property taxes and homeowners insurance. FIXED-RATE MORTGAGE – A type of mortgage loan in which the interest rate does not change during the entire term of the loan. HOME INSPECTION – Professional inspection of a home, paid for by the buyer, to evaluate the quality and safety of its plumbing, heating, wiring, appliances, roof, foundation, etc. HOME WARRANTY - Service contract that covers the repair or replacement of home system components and appliances that break down. HOMEOWNERS INSURANCE – A policy that protects you and the lender from natural disasters, and liabilities such as a visitor injury, or damage to your personal property. INCLUSIONS AND EXCLUSIONS – Specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures, and decorative pieces. LIEN – A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the Title to your property if you don’t make the mortgage payments.
MARKET VALUE – The amount a buyer would pay a seller for a home. An appraised value is an estimate of the current fair market value. MORTGAGE INSURANCE – Purchased by the buyer to protect the lender in the event of default (typically for loans with less than 20% down). Available through a government agency like the Federal Housing Administration (FHA) or through private mortgage insurers (PMI).
PURCHASE PRICE – The amount that the buyer is offering to pay for the property, usually dependent on market conditions and may differ from the seller’s current asking price. There is no “normal” amount or percentage that a price will differ from its asking price as the final price will be determined by many factors, including the seller’s motivation and how close the asking price is to actual “market value”.
POSSESSION AND ADJUSTMENT DATES – When the buyer takes possession as specified in contract of purchase sale and adjustments are made for prepaid taxes, maintenance fees, etc. They are usually the same date.
TERMS – An offer includes certain “terms”, which specify the total price offered and how the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller’s mortgage (assumability).
POSSESSION DATE – The date, as specified by the sales agreement, that the buyer can move into the property. Generally, it occurs within a couple days of the Closing Date.
TITLE – The right to, and the ownership of, property. A Title or Deed is sometimes used as proof of ownership of land. Clear title refers to a title that has no legal defects.
PRE-APPROVAL LETTER – A letter from a mortgage lender indicating that a buyer qualifies for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.
TITLE INSURANCE – Insurance policy that guarantees the accuracy of the title search and protects lenders and homeowners against legal problems with the title.
PRINCIPAL – The amount of money borrowed from a lender to buy a home, or the amount of the loan that has not yet been repaid. Does not include the interest paid to borrow.
TITLE SEARCH – A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers of ownership or if there are any claims or encumbrances on the title to the property.
PURCHASE CONTRACT – A detailed written document which makes an offer to purchase a property, and may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the Purchase Offer becomes a legally-binding sales agreement.*
TRUTH-IN-LENDING ACT (TILA) – Federal law that requires disclosure of a Truth-In-Lending statement for consumer loans. The statement includes a summary of the total cost of credit. *The Purchase Offer and contract procedures vary by region.
YOUR NEIGHBORHOOD EXPERTS. Real Estate is WHAT we do; Relationships are WHY we do it.
978.815.6300 | LILLIAN@ANDOVERHOMES.COM