Real Estate Information

10 Steps Home Buyers Should Expect Prior to the Closing of a Home

The final days before closing on a home is a busy and emotional period for both the homebuyer and seller. The home buyers may be wondering if they made the right decision or about making their new mortgage payment. The sellers may be worrying about all the paperwork on both ends being submitted and approved, and about moving into their new home.

Closing on a home means that the sale is complete, and all the terms and conditions of the purchase agreement have been met and the sellers give the buyers marketable title to the property. Closing costs are the total cost of completing the transfer of ownership of a home or property. These costs are extra fees and expenses aside from the purchase price.

On average, closing costs range from three percent to five percent of the total loan amount. For example, for a loan of $300,000, closing costs might run in the $12,000 range.

The signed sales contract and the signed loan commitment letter obligate both the homebuyer and seller to complete the transaction. Failure to do so will cause the buyer to forfeit the deposit, and perhaps be slapped with a lawsuit.

After the contract contingencies are settled, but before the close of the home sale, several tasks need to be completed. Beyond some obvious steps like setting up movers, forwarding your mail, and canceling your utilities, here are 10 steps you'll also want to expect prior to closing:

• Set the closing date - The closing date is set after your mortgage loan has been approved and you accept the commitment letter. Your agent will coordinate this date with you, the seller, your lender, and the closing agent. Your signature will have to be notarized when you sign closing documents, so remember to bring your driver's license or other accepted identification with you to the actual signing.
• Meet conditions of the loan offer - Understand the conditions of the loan offer that are stated in the mortgage lender's commitment letter. If the home you are buying has been found to be in violation of a building code or zoning regulation, the commitment letter may specify that those problems must be corrected before the closing. If the seller has agreed to make repairs required by the lender, you will want to make sure the work is finished (and done properly) before closing.
• Secure title services - Before the closing, a title search on the property is required. Mortgage lenders require a title search to ensure the borrower receives a clean title, establish that the seller is indeed the owner of the property, and confirm that there are no liens filed against the property. You'll also need to decide how you want to hold title to the property (e.g. in a trust). The way you hold title to property has estate planning and tax implications, so you may opt to consult with a specialized accountant or attorney.
• Title insurance - To further insure that the seller is handing over a clean title, the lender will require title insurance. There are two types of policies that the buyer can purchase: a lender's policy and an owner's policy. The lender's policy protects the lender in the event a flaw in the title is detected after the property has been bought. The owner's policy protects the buyer. Obtaining a combined lender's-owner's policy could save money.
• Termite certificate - When buying a home, a termite inspection may be required, depending on where you live. The seller usually covers the cost of this inspection. Once completed, the homebuyer receives a certificate stating that the property is free of termites and termite damage.
• Homeowner's insurance - Mortgage lenders require homeowner's insurance, which protects the buyer and the mortgage lender from loss in the event the house is damaged or destroyed. Ask your agent or mortgage lender, or get quotes on your own. If you do obtain insurance on your own, bring the insurance policy and paid receipt with you to the closing.
• Homeowner's warranty - When buying a new home, look into purchasing a homeowner's warranty, which protects against certain defects in your home. If buying an older home, or if you are a first-time buyer, you may especially want to be covered for repairs of major systems like plumbing, heating and air conditioning.
• Final walk-through inspection - Make sure that your contract allows you to examine the property within 24 hours prior to closing. This is the buyer's last chance to make sure that everything works, and that the seller has vacated the house, leaving the appliances or property in agreed upon terms. If, during the walk-through, the buyers find major problems or violations of the purchase contract, they have the right to hold up the settlement until things are fixed.
• House tour with seller - If the seller is willing, it is wise to tour the house with the seller either before or shortly after the closing to learn peculiarities of the home. Get the names and phone numbers of contractors, electricians, plumbers, roofers, and carpenters who have worked on the house. Also get copies of operating and instruction manuals for appliances, and security and irrigation systems.
• Final estimate of closing costs - The mortgage lender is required to give the buyer an estimate of closing costs soon after the loan application has been filed. The buyer will usually be required to pay the remainder of the down payment at this time, not including the deposit, and closing costs. Personal checks are not accepted so be prepared with a certified or cashier's check.

source: yahoo real estate

Here's a great article I found by Roger C. Doyle which provides a list of Real Estate terminology for First Timers. It's a great resource for anyone to have and read through.  I hope you find it helpful!

Real Estate Terminology for First Timers

First time buyers face a learning curve that can feel overwhelming if the right level of support and education is not available. It's not enough to merely educate one's self on buying strategies, mortgage application, and closing process. Buyers must also navigate through a sea of unfamiliar legalese, home building lingo and real estate specific jargon.

The glossary below is by no means complete and is no substitute for the careful guidance of an experienced real estate agent, but it can serve as a good primer for consumers getting their feet wet in real estate for the first time.

Agency - The relationship of trust that exists between buyers or sellers and their agents. The agency is formed via a written contract.

Amortization - The process of paying the principal and the interest on a mortgage through regularly scheduled payments.

Appraised Value - A licensed appraiser's opinion of the current market value of a property.

Assessed Value - A tax assessor's determination of the value of a home in order to calculate a tax base.

Breezeway - A roofed passage way with open sides.

Capital improvement - Any improvement that extends the life or increases the value of a piece of property.

Comparable sales - Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps."

Contingency - A provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One example is a buyer's contractual right to obtain a professional home inspection before purchasing the home.

Dry Rot - Decay of seasoned wood caused by fungus.

Earnest Money Deposit - A deposit made by the potential home buyer as evidence of good faith that he or she is serious about buying the house.

Easement - A right or interest in the use of the land of another which entitles the holder to some use, privilege or benefit, such as to place power lines, pipe lines or roads.

Egress - The exit point from a property.

Escrow - An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

Energy Star - A joint program through the U.S. Environmental Protection Agency and the U.S. Department of Energy that sets energy efficiency guidelines for products, homes and businesses.

Equity - A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

Fixtures - Those parts of a property affixed to structures or land, usually in such a manner that they cannot be independently moved without damage to themselves or the property housing supporting or pertinent to them. Fixtures are usually included in a sale and commonly include but are not limited to items such as carpets and awnings.

Full Disclosure - In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose identified defects in the property for sale or lease.

Green building - Also known as sustainable building or environmental building, this definition varies depending on the agency or group. Generally it means to construct a building to the highest environmental standards by minimizing the use of energy, water and materials. A green building, for example, might have skylights, recycled building materials and solar panels.

Ingress - The entry point to a property.

Lien - A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.

MLS (Multiple Listing Service) - An MLS is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers. MLS's are local or regional.

Private mortgage insurance (PMI) - Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI when the amount borrowed exceeds 80% of the purchase price or home's value.

Plat - A plan, map or chart of a tract or town site dividing a parcel of land into lots.

Subdivision - An area of land laid out and separated into lots, blocks, and building sites, and in which public facilities such as streets, alleys, parks, and easements for public utilities are also planned.

Sweat equity - used to describe the contribution made to a project by people who contribute their time and effort.

Title - A legal document evidencing a person's right to or ownership of a property.

Title company - A company that specializes in examining and insuring titles to real estate.

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Here's a great article I found that contains tips for healthy living in your home. With most people going green these days, this article has some great ideas to make any home enviromentally sound for you and your family.

Consumers are more conscientious about healthy living than ever before and this awareness is making its way to the homebuilding industry, particularly in the custom home market, says Michael Lenahen who owns Ponte Vedra, Fla.-based Aurora Custom Homes.

“As more consumers begin to realize how much their home affects every aspect of their health, they are beginning to see the importance of improving its environmental quality with products to benefit their health and that of their family,” Lenahen said. “The new emphasis toward healthy living focuses around four main categories – air, water, odor/fumes and lighting.”

According to the U.S. Green Building Council, pollutants are often two to five times higher indoors than outdoors and this can significantly affect air in the home causing breathing problems and respiratory diseases. When it comes to the quality of the air, Lenahen said several products are available on the market that homeowners should incorporate into their home such as:

-Advanced allergy filters to control dust particles and pollutants
-Dehumidification devices to manage the humidity in the home
-Variable speed air handlers to maintain the circulation of air throughout the home and ventilation fans to introduce fresh air into the home while removing stale, humid air

Improving the water quality in a home is just as important as the air quality, Lenahen said. Several products are available to improve the quality and efficiency of a home’s water flow and usage, including:

-Carbon filter and reverse osmosis units to purify drinking water by removing particulate matter and harmful minerals
-Whole-house water softeners to remove calcium and other harmful minerals while providing added benefit to the home’s appliances and pluming fixtures. Water softeners also improve skin tone and texture by removing calcium, magnesium and iron from the water.
-Underground cisterns to collect rainwater from the gutter and downspouts to use for irrigating the lawn and landscapeHealthy home living is also improved by the use of low Volatile Organic Compound (VOC) materials, which emit lower levels of gasses into the home from everyday materials such as paints, sealants, cabinets and flooring materials. Lenahen said homeowners should use the lowest emitting VOC products for custom homebuilding and remodeling projects, thereby reducing the negative health impact the products may have on the occupants. Low VOC products will have labeling to help homeowners find the healthiest option.

Better lighting solutions can also foster healthier living. Traditional light fixtures typically include high wattage bulbs, which waste electricity while adding excessive heat into the home. Suggested improvements include:

-Decorative light fixtures with less wattage requirements and soft-light emitting globes
-Compact florescent light (CFL) bulbs or L.E.D. fixtures and bulbs for longer life usage
-Next generation skylights, such as Velux Sun Tunnel or Solatube, that bring natural light into the home, reducing the need for artificial light and energy consumption

“These are just some of the many changes that can be made to current homes or built into new homes that will greatly improve the quality of life and health of its occupants,” Lenahen said. “The more consumers become aware of the positive affects of healthy living within the home, the more products will enter the mainstream of standard building practices.”

Here's an informative article I found about various options for Mortgage Loans. 

"What type of home loan should I get?"

This is one of the most common home buying questions among home buyers -- especially with first-time home buyers. It's a common question for good reason. Choosing a type of home loan is one of the most important decisions you'll make during the home buying process, second only to the home itself.

Believe it or not, choosing the right type of home mortgage loan is fairly straightforward, once you understand the pros and cons of each type of home loan. It's just a matter of thinking ahead and considering your financial situation.

This article will help you do the kind of thinking necessary to choose the best type of home loan for your unique situation.

What is a Home Mortgage Loan?

We like to be thorough here at the Home Buying Institute. So we'd like to start off with a mortgage definition, just so we're all on the same page. Of all the books and articles I've read on the subject of home loans, the best mortgage definition I've read was in Home Buying for Dummies, by Eric Tyson and Ray Brown.

In their book, Tyson and Brown explain that "a mortgage is nothing more than a loan that you obtain to close the gap between the cash you have for a down payment and the purchase price of the home..."

You have a certain amount of money. The home costs a certain (larger) amount of money. The home mortgage loan covers the distance between the two.

It's important to start thinking in these "distance" terms, because a lot can happen to the economy during the life of your home mortgage loan. How much these factors affect your mortgage depends on the type of mortgage loan you choose. Aha! Now it all starts to come together.

The Major Types of Home Loans

Let's start with the biggest difference between home loans … fixed-rate vs. adjustable-rate. With a fixed-rate mortgage loan, your interest rate will never change, regardless of what the economy does. On the contrary, adjustable-rate mortgages (ARMs) have interest rates that adjust periodically during the life of the loan.

Terminology note: Adjustable-rate mortgage are also referred to as having a "variable rate." But the more common usage is adjustable-rate mortgage, or the acronym ARM.

There are many different types of home loans, but to an extent they can all be classified as either fixed-rate or adjustable-rate. So the important thing is to be sure you understand the definitions, as well as the pros and cons, of fixed-rate and adjustable-rate home loans. If you start with a good grasp of this concept, things will be much simpler as we continue learning about the types of home loans.

Fixed-Rate Mortgage Loan: Pros & Cons

As the name suggests, a fixed-rate mortgage is a mortgage where the interest rate stays the same over the life of the loan. As a result, your monthly mortgage payment does not change.

Certainty is the primary benefit of a fixed-rate mortgage loan. You always know what your interest rate will be, regardless of what the economy does. The downside is that you'll pay a premium for this predictability, in the form of a higher interest rate.

Tip: Are you ready to move forward with the mortgage process? Get up to 4 offers at LendingTree.com.

When a mortgage lender grants a fixed-rate loan for a long period of time (like 30 or 40 years), they take on a certain amount of risk. If the prime interest rate goes up during the life of your loan, you will not have to pay the difference -- the lender will. This is why they charge a higher interest rate than with an adjustable-rate mortgage (next topic).

Learn More About Fixed-Rate Loans

•  
  • Fixed-Rate Mortgages: Pros and Cons
  • Fixed-Rate vs. Adjustable-Rate
  • Which Fixed-Rate Mortgage Do I Want?

Adjustable-Rate Mortgage (ARM) Loan: Pros & Cons

These days, most adjustable-rate mortgages start off with a fixed rate for an initial period of time, usually 3, 5 or 7 years. During this introductory period, the interstate rate is fixed and will not change. After the introduction period, however, the loan converts to an adjustable-rate.

Overall, the interest rate on this type of home loan is lower than a traditional fixed-rate mortgage. The downside is that you can never predict the interest rate it will adjust to after the introductory period. So in this regard, you can think of the initial period as a reward for the uncertainty of the adjustable period. You will start off with a lower interest rate than a regular fixed-rate loan, but you have the uncertainty of the adjustment phase.

During the adjustable phase of the mortgage, your monthly payments will rise and fall with average interest rates. It would be great if they fell, but bad if they rose. The important thing to remember is that you'll have no way to predict the average interest rates in advance, so the adjustable nature of the loan is something of a gamble.

Learn More About ARMs

•  
  • Understanding the ARM Loan
  • Adjustable Rate Mortgages 101
  • Consumer Handbook on Adjustable-Rate Mortgages

Balloon Loans

A balloon loan (also referred to as a "reset mortgage") starts with a fixed interest rate for a certain number of years. But unlike traditional fixed-rate mortgages, the interest rates on balloon loans are nearly as low as those found on adjustable rate mortgages (ARMs).

The problem with balloon loans is the term. The initial fixed-rate period of a balloon is usually 7 to 10 years. After that, you have to pay off the loan's remaining balance in full. Obviously, that's a large sum of money to pay at one time! Typically, people refinance their balloon loans prior to this stage, but there's no guarantee what interest rate you'll get when refinancing.

Learn More About Balloon Loans

•  
  • Balloon Home Loans - Be Careful
  • Balloon Loans - Understanding the Basics

Additional Mortgage Resources

We hope this tutorial has helped you better understand the different types of home loans. More importantly, we hope it has put you on a path to learn even more about the different types of home loans, because you can never know too much about something as important as a mortgage loan. Here are some additional resources we'd like to leave you with:

•  
  • Our Mortgage Learning Center
  • Home Buyer's Guide to Mortgage & Credit
  • Types of Mortgage Loans
  • Mortgage Loans - A Comparison Chart
  • Pros and Cons of Different Mortgage Types
  • Selecting Mortgage Features - A Tutorial

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Here's a great article from the San Diego Business Journal about a renewed interest in High-End Homes! Is the worst behind us?!

REAL ESTATE: Building Plans for Upscale Properties Begin to Gain Momentum

The market for high-end homes costing more than $800,000 has slipped since the end of the housing boom, but builders say there are increasing signs of a turnaround.

“The market in my mind has stabilized,” said longtime San Diego builder Bill Davidson, president of Davidson Communities. “It is not falling like it was last year, and that is very important. No one wants to buy a house when they think the market is falling.”

With prices stabilizing, Davidson has begun to prepare for a real estate rebound.

“We are actively trying to buy more land now because we can price our homes profitably,” he said.

His company has upscale production homes under construction in La Costa and Del Sur in North County. They range in price from the $700,000s to more than $1 million. Tight credit has made it more difficult for upper-end buyers to secure loans, however. Conditions were much different just a few years ago, when loan underwriting standards were looser and customers bought big homes “with all of the gadgets and luxuries that we could pile on,” Davidson said. Since the recession hit, high-end buyers have been seeking smaller, simpler dwellings.

At McCullough-Ames Development Inc., Principal Monty McCullough typically builds custom $1 million, estate-style homes on 1-acre lots. Most of the firm’s recent projects are in North County, near the coast and along the state Route 56 corridor, between the Del Mar area and Poway. Even these buyers are looking for ways to stretch a dollar. McCullough presses his subcontractors for the best prices and passes the savings along to customers.

“Everybody has been hit by the recession,” he said. “… I felt my business starting to tail off by the summer and fall of 2004. Since the spring of 2009 we have built 15 homes, under contract or just finished.”

“The average home is right at or under 5,000 square feet,” he said. Not long ago, 6,000-square-foot to 9,000-square-foot homes were common in the custom market.

Custom builder Terry Wardell of Wardell Builders Inc. estimates that the size of the upper-end market had declined by about 50 percent from its peak. Wardell builds most of his homes in La Jolla, Del Mar, Rancho Santa Fe, Point Loma and Mission Hills.

“I think 2010 will be stronger than 2009, but it is still going to stay pretty flat,” he said. “Construction prices probably are 25 percent off their peak.”

Analyst Russ Valone, president and CEO of the MarketPointe Realty Advisors research firm, has been tracking $800,000-plus home sales. In 2005, such homes made up 49 percent of the detached housing market here. In 2006, the percentage was 44 percent. Last year, the share was down to just 20 percent.

Recent upscale buyers have taken advantage of reduced prices, Valone said. Some of them “were able to acquire homes that were designed to sell for hundreds of thousands of dollars more.” Those buyers likely will realize large gains in home value as the recession ends.

Optimism Returns

Lora Heramb, vice president of sales and marketing for Brookfield Homes, noted that her company now is selling high-end production homes at the Serenity community east of Scripps Ranch. Prices range from just under $900,000 to just under $1 million.

There is a perception among many buyers that prices have stabilized, Heramb said. “Some of our buyers have been waiting for the right community and the right time.”

Borre Winckel, president and CEO of the Building Industry Association of San Diego, said sales of upper-end homes will grow as the economy improves.

“People have faith again,” he said. “People believe that the worst is behind us.”

What a difference a year makes! Click here to check out the 2009 Year in Review!