If you see any home that interests you, ask me about it. Whether it is advertised by sign, in the newspaper, a "For Sale by Owner," listed with another Realtor®, or not even on the market—I am able to best represent you in the pursuit of that property.

If you have any questions about how I work, please ask. Our professional relationship is critical to the successful purchase of your home.

• Who Pays for What?
• Rent Payments
• Advantages of Home Ownership
• Shopping for a Lender
• Getting Pre-Approved
• The Loan Process
• The Escrow Process
• The Inspection Process

The BUYER can generally be expected to pay for:

• Title insurance premiums
• Escrow fee
• Document preparation (if applicable)
• 1/2 of any city transfer/conveyance tax (according to contract)
• Notary fees
• Recording charges for all documents in buyer's names
• Property tax proration (from date of acquisition)
• Homeowner's transfer fee
• All new loan charges (except those negotiated to be paid by seller)
• Interest on new loan from date of funding to end of the month
• Assumption/change of records fees for take over of existing loan
• Inspection fees (roofing, property inspection, geological, etc.)
• Home warranty (according to contract)
• Closing costs usually total 3%-5% of the purchase price, and are in addition to your down payment

Rent Payments

Through the years, your rent payments add up fast.

Advantages of Home Ownership

If you are planning to buy a home, you probably have good reasons in mind, ranging from the purely personal to the very practical.

A Place of Your Own - Your home is the castle, as the old saying goes. A home is a place you can call your own. Perhaps you are ready to settle down in your community and want the feeling of permanence and involvement that comes with owning your own home. Perhaps you need more space in which to raise a family. Or, maybe you want more freedom than you have in a rental unit to adapt your living space to suit your individual taste and needs.

Financial Incentives - For many people, the motivation for home ownership is primarily financial. Owning your own home is a first-rate investment for a number of reasons:

• Scheduled Savings: When you buy a house, your monthly mortgage payments serve as a type of scheduled savings plan. Over time you gradually accumulate what lenders call "equity," an ownership interest in the property that you can often borrow against or convert into cash by selling the house. In contrast, renters must continue paying rent to a landlord for as long as they rent, without the opportunity to build equity.
• Stable Housing Costs: Another advantage of home ownership is that while rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged throughout the entire repayment period (typically 30 years). In fact, because of the effect of inflation, over the years you pay the same amount but with ever "cheaper" dollars.
• Increased Value: Houses typically increase in value, or "appreciate," over time. It's not unusual to find a house that is sold for $50,000 fifteen years ago to be valued at much more than the amount today. This increased value is as good as money in the bank to the homeowner.
• Tax Benefits: Homeowners also get significant tax breaks that are not available to renters. Most importantly, interest paid on home mortgage is usually deductible. These factor alone can save you a substantial amount each year in federal income taxes.

Shopping for a Lender

A very important part of purchasing a home is finding the right lender. Listed below are some characteristics you should look for when choosing a lender. Also, things you should not do when choosing a lender.

Questions to ask while shopping for a lender:

• What is his/her reputation within the community? How many loans do they close each year?
• Is the company well known in the area? How long has the company been in business?
• Does the lender have access to a wide variety of loan packages?
• Can the interest rates be locked in, and for how long?

What not to do when shopping for a lender:

• Do not call around asking for interest rate quotes.
• Rate quotes over the phone are rarely locked prices. This is one way the lender gets you to come to his office. Rates can be subject to changes unless they are predetermined for a specific period of time.
• Interest rates can change daily. A quote you get today may not be available tomorrow.
• The interest rate you are quoted over the phone may not be a program that will fit your needs or situation.

Getting Pre-Approved

Most Real Estate agents and Lenders recommend that home buyers get pre-approved with a lender before selecting a home to purchase. This way you will have the best information about the right price range for your pocket book.

Reasons to get pre-approved:

• It strengthens your offer to the seller. In today's market, without preapproval, many sellers will not consider your offer.
• With preapproval, you can determine which loan program best fits your need.
• You will know exactly for how much you are approved. It's no fun to find your "ideal home" and then find out you can't afford it.
• Your monthly payment will be set. This will allow you to budget your money before making this large investment.
• You can accurately estimate your down payment and closing costs.
• If you are a first-time buyer, you may be able to qualify for a special first-time buyer program which may allow you to afford more home for your money.
• If you feel you would like and can afford a higher mortgage payment, but are not able to meet the lender's income qualifications, you may be able to arrange for a co-borrower or co-signer for your loan.

The Loan Process

As your real estate professional, I will recommend reliable local mortgage lenders. Once you have made your decision, these are the steps of the process:

The Application - The key to the loan process going smoothly is the initial interview. At this time, the lender obtains all pertinent documentation so unnecessary problems and delays may be avoided. Various fees and down payments are discussed at this time and the borrower will receive a Good Faith Estimate (GFE) and a Truth-in-lending statement (TIL) within three days which itemizes the rates and associated costs for obtaining the loan.

Ordering Documentation - If the lender has not already done so in the pre-qualification stage, he will order a credit report, verifications of employment and funds to close, mortgage or landlord ratings, a preliminary title report and any other necessary supporting documentation. Once your inspections are completed, the lender will order an appraisal on the property.

Awaiting Documentation - Within one to two weeks, the lender receives the supporting documentation from your employer, landlord and banks. As it comes in, the documentation is checked for any irregularities, and any additional items needed are requested.

Loan Submission - Once all the necessary documentation is in, the loan processor puts the loan package together, your loan agent prepares a cover letter, and your completed file is submitted to a lender for approval.

Loan Approval (Underwriting) - Loan approval, or underwriting, generally takes anywhere from 24 to 72 hours, and it can take slightly longer if mortgage insurance is required. "Mortgage insurance underwriting" occurs when the borrower has less than 20 percent of the loan amount to put towards a down payment. All parties are notified of the approval and any loan conditions that must be received before the loan can close. You may then remove your financing contingency. Often, a lender will issue loan approval with conditions (i.e. evidence of insurance, confirmation of gift, etc.)

Documents are Drawn - Within one to three days after loan approval, the lender prepares your loan documents (including the note and deed of trust), which are sent to the title company. The escrow officer will call you to set up an appointment when the papers are ready for your final signature. At that time, you will be told how much money you will need to bring in to close the loan. Keep in mind that you will need to bring a cashier's check.

Closing - Once all parties have signed the loan documents, they are returned to the lender and the package is reviewed. If all the forms have been properly executed, the lender sends the loan funds by wire transfer. At this point the escrow is ready to close. The deed is recorded and you get the keys to your new home.

Components of a Mortgage Payment

Your monthly mortgage payment is made up of several components. This housing expense is commonly referred to as "PITI" or principal, interest, taxes and insurance. PMI (see below) and homeowner's association dues may also make up a portion of your total payment.

Principal - The original balance of money loaned, excluding interest. Also the remaining balance of a loan, excluding interest. The interest is calculated on the principal.

Interest - The charge for the use (loan) of money.

Taxes - The county assessor charges property tax based on the value of your home. Two tax installments are due each year. The first installment is due November 1 and is delinquent on December 10. The second installment is due February 1 and is delinquent on April 10.

Insurance (Hazard) - A contract that pays for loss on a home from certain hazards, including fire. You obtain homeowner's insurance from your own insurance agent. The standard policy pays replacement costs, minus depreciation based on actual cash value. Talk to your insurance agent about the different types of insurance available. Hazard insurance may be impounded.

NOTE: Taxes and insurance may be impounded, depending on the amount of your down payment. Anything less than 20 percent down may require an impound account. An impound account is a trust account set up by the lender. A portion of the monthly payment is credited so that funds will be available for the payment of taxes and insurance. This way, the lender actually pays your tax bill for you.

PMI (Private Mortgage Insurance) - Depending on the amount of your down payment, you may be required to have PMI. Anything less than 20 percent may require PMI. Because loans with small down payments involve substantially more risk for the lender, they need protection in case the loan goes into foreclosure. Because this insurance is available, lenders can offer loans with lower down payments.

PMI may require an up front fee which is payable as a part of your closing costs, and is also required to be paid monthly with your payment. The cost of PMI varies according to the amount of your down payment.

FHA charges a fee for mortgage insurance called MIP or Mortgage Insurance Premium. An up front fee (which may be financed) and a monthly fee are assessed. VA charges a funding fee which may also be financed.

The Escrow Process

What is an Escrow? - When opening an escrow, the Buyer and Seller of a piece of property established terms and conditions for the transfer of ownership of that property. These terms and conditions are given to a third, disinterested party known as the Escrow Holder. The Escrow Holder in turn has the responsibility of seeing that the terms of the escrow are carried out. The escrow is an independent neutral account and the vehicle by which the interest of all parties to the transaction are protected.

How Does the Escrow Process Work? - The escrow is a depository for all monies, instructions and documents necessary for the purchase of your home, including your funds for down payment and your lender's funds and documents for the new loan. Generally, the Buyer deposits a down payment with the Escrow Holder and the Seller deposits the deed and any other necessary papers with the Escrow Holder. Prior to close to escrow, the Buyer deposits the funds required and agreed upon by the parties to the sale with the Escrow Holder to deliver the monies to the Seller when the Escrow Holder:

1. Records the deed,
2. Delivers to the Buyer a policy of title insurance, which shows title to the property, signed over to the Buyer.

The escrow Holder is authorized to deliver the deed to the Buyer when the Buyer has deposited the agreed-upon purchase price and fulfilled any other conditions specified in the escrow instructions. The Escrow Holder handles the prorations and adjustment on any fire/hazard insurance, real estate taxes, rents, interests, etceteras, based on the escrow instructions of both parties.

The Escrow Holder thus acts for both parties and protects the interests of both within the authority of the escrow instructions. Escrow cannot be completed until the instructions have been satisfied and all parties have signed escrow documents. The Escrow Holder takes instructions based on the terms of the purchase agreement and the Lender's requirement.

How Do I Open an Escrow? - Your Real Estate Agent will open the escrow for you. As soon as you execute your purchase agreement, your agent will place your initial deposit into an escrow account at a Title Company.

How Will I Know Where My Money Has Gone? - Written evidence of your deposit is generally included in your copy of the purchase agreement (sometimes called an agreement to purchase and receipt for deposit). Your funds will then be deposited in your separate escrow or trust account and processed through your local bank.

What Information Will I Have to Provide? - You may be asked to complete a statement of identity as part of the necessary paperwork. Because many people have the same name, the statement of identity is used to identify the specific person in the transaction through such information as the date of birth, social security number, and etceteras. This information is kept confidential.

What Do I Need to do Before My Appointment to Sign Escrow Papers?

• Cashier's Check: Obtain a cashier's check made payable to your Title Company in the amount indicated to you by your Escrow Officer. A personal check may delay the closing. Wired funds are another method of expediting your closing.
• Lender's Requirements: Make sure you are aware of your Lender's requirements and that you have satisfied those requirements before you come to the title company to sign your papers. Your Loan Officer or Real Estate Agent can assist you.
• Hazard/Fire Insurance: If you are purchasing a single family, detached home, or in some cases, a townhouse, be sure to order your hazard/fire insurance once your loan has been approved. You should immediately begin looking for an agent; not all companies can write fire/hazard insurance. Then call your Escrow Officer with the Insurance Agents name and phone number so that so that he/she can make sure the policy complies with your Lender's requirements. You must have your insurance in place before the Lender will fund money to the Title Company. If you do not have an Insurance Agent, your Real Estate Agent can help you.
• Identification: Please bring either your valid state identification card, driver's license or passport with you to the Title Company. These items are needed to verify your identity by a notary public. It is a routine, but necessary, step for your protection.
• Title to Home: Decide how you wish to hold title to your home. You will need to make this decision prior to your escrow appointment. We suggest you consult an attorney, tax consultant, or other qualified professional before you decide.

When and Where Do I Sign Escrow Instructions? - Your Escrow Officer or Real Estate Agent will contact you to make an appointment for you to sign your escrow instructions and final loan papers. At this time, the Escrow Officer will also tell you the amount of money you will need (in addition to your loan funds) to purchase your new home. The Lender will send your loan funds directly to the Escrow Holder. You may sign your escrow instructions and loan documents at a Title Company or another agreed upon location.

What's the Next Step After I've Signed the Closing Escrow Papers? - After you have signed all the necessary instructions and documents, the Escrow Officer will return them to the Lender for a final review. This review usually occurs within a few days. After the review is completed the Lender is ready to fund your loan and informs the Escrow Officer.

How Long is an Escrow? - The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months. An escrow averages 30 to 45 days.

The Inspection Process

When you make an offer on a home, your Purchase Contract will often contain provisions allowing you various inspections of the property. The purpose of these inspections is to educate you as to the physical condition of the property you are purchasing. While these inspections do not provide guarantees of the condition of the property, they do provide valuable information to you as a Buyer. It is important to remember that your Purchase Contract may provide for withdrawal from the contract if these reports are unsatisfactory. Inspections should not be considered an open door to renegotiate the purchase price, or a way to "weasel" out of the contract.

Structural Pest Control Inspection - Often referred to as a "Termite Report," the Structural Pest Control Inspection is conducted by a licensed inspector. In addition to actual termite damage, the Pest Report will indicate any type of wood destroying organisms that may be present, including Fungi (sometimes called "dry rot"), which generally results from excessive moisture.

Section 1 Conditions - Most Pest Reports classify conditions as Section 1 or Section 2 items. Section 1 conditions are those which are "active" or currently causing more damage to the property.

Section 2 Conditions - Those which are not currently causing damage but are likely to if left unattended. A typical Section 2 item is a plumbing leak where the moisture has not yet caused fungus decay.

Who Pays? - Your Purchase Contract will specify who is responsible for the cost of the inspection and making these corrections. Typically, a seller will provide a pest inspection with their other disclosure documents. Does this work have to be done? Most lenders do not require a "clearance". If you are buying the property without Section 1 work being performed, there should be no reference to the pest control report in the contract.

Physical Inspection - The Physical Inspection clause in your Purchase Contract allows you the right to have the property thoroughly inspected. This is usually done through a General Home Inspection. While Home Inspectors are not currently required to have a license, most are, or have been, General Contractors. The inspection and the resulting report provides an overall assessment of the present condition of the property. We only recommend inpectors who are members of American Society of Home Inspectors(ASHI) or the California CREA.

What is Inspected - The Home Inspection covers items such as exterior siding, paint, flooring, appliances, water heater, furnace, electrical service, plumbing, and other visible features of the property. This is a general inspection and will often call for additional inspections by specific trades, such as roof and furnace inspections.

Further Inspections - If conditions warrant, the Home Inspector may recommend a structural engineer's report, a roof inspection or an inspection by an electrician, plumber, or mold/moisture expert. Such a report would identify structural failures or other unsatisfactory conditions and detailed recommended for corrections. Many times, they will include cost estimates or ranges.

Who Pays? - Typically, these inspections are paid for by the Buyer.

Geological Inspection - You may also elect to have a geological inspection to educate yourselves as to the soil conditions at the home you are purchasing. This inspection is performed by a geotechnical engineer and involves not only physically inspecting the property, but also researching past geological activity in the area. The primary purpose of a geological inspection is to determine the stability of the ground under and around the home.

Who Pays? - Typically the Buyer pays, but as with other inspections, this is negotiable according to the contract.

Home Warranty - Home Protection Plans are available for purchase by a Buyer or Seller. Such plans provide additional protection of certain systems and appliances in your new home. I will provide you with brochures detailing different companies and options.