Prime Network Realtors, S



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U R Home Realty llc

P.O Box 727 Neshanic Station NJ 08853

1200 Route 22 Suite 2000 Bridgewater NJ 08844

Ph. (908)707-8900 Fax (908)707-8917

WWW.

We Are

The little Company with the BIG Results!

Dreams are Made Here!

A Guide to Home Ownership

Lisa M. Payne & Dave Griswold

Real Estate Brokers/Owners

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© TM URHOMEREALTY LLC

Written expressly for U R Home Realty llc

L.Payne 9/2006

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 Agency, Then of course, you call Lisa Payne and Dave Griswold. 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 Dave and Lisa start 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, Dave and Lisa are trying to help you. Dave & Lisa want to show you the “HOME OF YOUR DREAMS” but perhaps you have a certain monthly payment or budget you want. If your dream home doesn’t work out then Dave and Lisa will show you ones that will.

What should you do first?

Call Dave & Lisa, tell them you are interested in a property and work with her to see if, and what, you are qualified to buy. Also spend the time to disucss 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. Dave & 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 you need to purchase a home. The Mortgage Representative will do an analysis of your income, assets and credit information in order to determine your eligibility for a mortgage.

Dave & Lisa or the Mortgage Consultant will then request your permission to have a credit report run. 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? You 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 purchase price.

WHAT’S NEXT?

Now, as you’re Realtor, Dave & 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 Dave & 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 Dave and 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” sign now changes to Under Contract!!!!!

NOW THAT WE’VE COME THIS FAR WHATS NEXT?

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 a mortgage Representative, The Mortgage Consultant we talked about earlier. You will need to set up an appointment for a mortgage application. Make an appointment that is convenient for you. Often you can do this appointment via telephone or submit the application electronically. The mortgage application will take approximately an hour to an hour and a half, make certain you are not rushed at this time. This is when you will find out extremely important information. Your Mortgage Rep. we’ll call him Joe for the purposes of this booklet. Joe will ask you to bring many documents with you for the application. 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 Joe.

You will need to bring items such as:

Pay stubs for the past month

Bank statements for the past three months

Passbooks

Rent receipts for the past 12 months/or a letter from your current landlord saying you’ve paid your rent on time for 1 year.

A listing of all your credit bills to include monthly payments, loan numbers and balances due (car loans, credit cards, etc...)

Your IRS W-2 forms for the past three years (unless otherwise stated by Joe) in a stated loan this is not necessary

Your income tax return forms for the past three years (unless otherwise stated by Joe) in a stated loan this is not necessary

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

Copy of your Driver’s License

Note: if you’re doing a no documentation loan, that’s a loan where you don’t need your income tax forms, W-2’s, or Pay stubs.

Go to your mortgage application meeting with as much information as possible.

It will make the process much easier for You the Buyer, for the Realtors, the Mortgage Consultant and the Seller.

Now, the financing of your home begins.

FINANCING YOUR HOME

During the mortgage appointment Joe, your Mortgage Consultant, will perform a few different functions. He will complete an application form and have you sign many documents. Joe 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 Joe 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 3.0 % normally it’s 3.5% down.

VA- This is a loan that if you are a qualified veteran of the USA you may be able to purchase with no money down

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 Joe to learn which type you may be able to obtain.

Remember Don’t think you can Buy? Think Again!

Joe will suggest the loan program he feels best suits your individual needs. Remember, as a Mortgage Consultant, Joe 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, Joe 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.

• Please remember in some cases you won’t need nearly as much money as you think, so please let us help you in figuring out how much if any money you will need to buy your home.

• Even if your credit is less than perfect ask Dave or Lisa for help in this area. They are experts in finding ways to help you restore your credit or increase your ability to buy a home. So don’t worry if you don’t qualify now or, if you think you can’t buy. Where there’s a way there’s a will, and U R Home will work hard to find ways to help you purchase a home.

• Dave and Lisa will show you how to buy a how and have the Seller help you pay for your closing costs.

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:

CREDIT REPORT FEES- This is the cost of the credit report they will run. You will be supplied with a credit report upon request. Usually about $45.00

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 range between $395.00 to $550.00

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. Generally, between $900.00 and 1800.00

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 ensures 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 $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.

ORIGINATION FEE- An origination fee, is usually a fee charged by the mortgage lender for originating your loan. The cost of the originating fee is usually 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 Joe 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, Dave & Lisa has submitted your offer to purchase, your contract to purchase has been accepted, your attorney has done his review and Joe has taken your mortgage application.

THE MORTGAGE PROCESS

What is the mortgage process? Well, Joe will take your application and all the paperwork back to his office for your loan to be processed. Joe 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 Dave & Lisa the Brokers, And Joe, your Mortgage Consultant, your Loan Processor, and your 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 3 weeks to 60 days depending on you, The Buyer. If you supply everything when asked for, the process will be quicker. 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, Dave & 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 Dave & 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 if any 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,

DAVE & LISA WILL THEN HAND YOU THE KEYS TO YOUR NEW HOUSE!

CONGRATULATIONS!!!

U R Home!!!

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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 Joe’s advice in this 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!!

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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 Joe for more explanation about this.

Make sure you 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 Joe about it before doing so.

As always if Joe is not available you can call Dave and Lisa with your questions both are very familiar with mortgages and different ways to proceed with the purchase of your Home.

Dave is a seasoned Mortgage Consultant who works with the mortgage companies to insure the best possible loan for you.

© TM URHOMEREALTY LLC

Written expressly for U R Home Realty llc

L.Payne 9/2006

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