"Spirit Real Estate Services"
Spirit Real Estate Services Positive Results ~ Customer Satisfaction Specializing in Sugar Land, Texas and Fort Bend County Home Buyer’s Package Information to ensure your home buying experience is a good one! Welcome Home! I would love to be the “first” to say those words to you whether it is your first home, your tenth home or your retirement home. I am committed to making your home purchase experience as wonderful as possible. I will work hard to make sure the process is smooth and stress-free. With my knowledge of the area and my experience with the real estate market I will produce positive results! Purchasing a home is probably the biggest financial decision you will ever make. I am committed to make sure that you are well equipped and educated with up-to-date information in our rapidly changing market. I will guide you through each step of the home-buying process from selecting properties to view to greeting the moving van. I have prepared this packet for you to give you helpful information during and after your transaction. Although this packet will answer many of your questions, I am always just a phone call away and am happy to assist you. Jill Gibson, Realtor Spirit Real Estate Services 281-636-0822 281-277-6329 (fax) firstname.lastname@example.org Why do you need me to be your Realtor®? As a licensed real estate professional I provide much more than the service of helping you find your ideal home. Realtors® are expert negotiators with other agents, seasoned financial advisors with clients, and superb navigators around the local neighborhood. Realtors® are members of the National Association of Realtors (NAR) and must abide by a Code of Ethics and Standards of Practice enforced by the NAR. A professional Realtor® is your best resource when buying your home. What I will do for you – As a knowledgeable Realtor® and specialist in the area I can save you endless amounts if time, money, and frustration. With my knowledge and experience in the Sugar Land and Fort Bend County housing market I can make your experience smooth and as stress-free as possible. As a knowledgeable Realtor® I can help you with any home, even if it is listed elsewhere or if it is being sold directly by the owner. As a knowledgeable Realtor® I know the best lenders in the area and can help you understand the importance of being pre-qualified for a mortgage. I can also discuss down payments, closing costs and monthly payment options that suit you. As a knowledgeable Realtor® and area specialist, I am an excellent source for both general and specific information about the community such as schools, churches, shopping, and transportation plus tips on home inspections and pricing. As a knowledgeable Realtor®, I am experienced at presenting your offer to the homeowner and can help you through the process of negotiating the best price. I will bring objectivity to the buying transaction, and I can point out the advantages and the disadvantages of a particular property. And the best thing about me as your Realtor® is that all this help normally won’t cost you a cent. Generally, the seller pays the commission to the Realtor®. What is “Agency” and who works for whom? As you enter the real estate market you will begin to hear terms that may be confusing. Education is the key! It is my job to make sure you are familiar with all aspects of buying and selling real estate. The following will assist you in understanding how realtors work with you and others. Seller Agency (Single Agency) Agent will represent the best interests of the seller Agent will owe the seller fiduciary duties Agent must give the buyer all material facts so that the buyer can make an educated decision Buyer Agency (Single Agency) Agent will represent the best interests of the buyer Agent will owe the buyer fiduciary duties Agent must give the seller all material facts so that the seller can make an educated decision Transaction Broker (Dual Agency) Agent represents the buyer and the seller equally Agent’s objective is to get a mutually satisfactory agreement among all parties Agent gives all options to the buyer and the seller All parties have confidentiality. Agent may do nothing to the detriment of either the buyer or the seller Both the buyer and the seller have a right to counsel. Why have a Buyer Agency Agreement? I will take care of the hassles of everyday real estate transactions for you. I will let you concentrate on your full-time job, while I do my job. I will guide you through the home-buying process and exclusively represent your interest as I help you find a home, present your contract offer, negotiate, and close on your home! As your Buyer’s Agent I will get to know your real estate needs and concerns. This type of relationship is built through open communication at all times. As your Buyer’s Agent I will save you a lot of time by providing you all the details about any home before you see it. In addition, as your Buyer’s Agent I will listen to your feedback and concerns about each home. The advantage to allowing me to be your Buyer’s Agent is that you will have a professional agent working to find and secure the ideal home for you. It is nearly impossible to find a home that meets your needs, get a contract negotiated, and close the transaction without an experienced agent. You won’t need to spend endless evenings and weekends driving around looking for homes or trying to search computer networks by yourself. Leave that to me and when you tour homes you will already know that the homes meet your criteria and are within your price range. Why Should I buy a Home? Credit – Owning a home helps you establish financial credibility Investment – A mortgage allows you to buy a home after having saved only a relatively small amount of its value, and to reap the financial gains as its value grows over the years. Pride – Owning a home can provide you a source of pride, enjoyment and satisfaction. Security – A home can provide security against inflation because the value of your home increases as prices go up. Tax Advantages – Interest on your mortgage loan is deductible on your yearly personal income tax. Many of the closing costs associated with purchasing your home are deductible, as are your property taxes. What do I have to do to buy a home? Contact a Realtor Meet for a Consultation Obtain Pre-Approval from Your Financial Institution Select Properties View Properties Write an Offer to Earnest Money Purchase Check Submitted Negotiate and Counteroffer Remove Accept the Contract Inspections Contingencies Complete the Credit Report Appraisal Verifications Mortgage Application Secure Underwriting Conditions Obtain Loan Approval Information Contact Title Title Commitment Survey Submitted as Company Requested Close on the Property You Now Own Your Home! What do I need to know before purchasing a home? Property taxes and qualified interest are deductible on an individual’s federal income tax return. Most of the time a home is the largest asset an individual has and is considered one of the most valuable investments available. A portion of each amortized mortgage payment goes to the principal which is an investment. A home is one of the few investments that you can enjoy living in it. A Realtor® can usually show you any home whether it is listed with a company, a builder, or even a For Sale By Owner home. As your real estate professional I can provide you with a list of items you’ll need to complete your loan application so you’ll be prepared. A homeowner can exclude up to $500,000 of capital gain tax if married and filing jointly or up to $250,000 if single or filing separately. The home must have been the taxpayer’s principal residence for the previous two years. As of May 7, 1997 there is no longer a requirement to purchase another home more expensive than the one sold. Homeowners are free to buy up or down with no tax consequences assuming their gain is less than the allowable amounts. What does being pre-qualified or pre-approved mean and why should I do this? In today’s market it is very important for buyers to apply for a loan and obtain approval before they find the home they want to buy. Pre-qualifying will help you in the following ways: Generally, interest rates are locked in for a set period to time. You will know in advance exactly what your payments will be on offers you choose to make. You won’t waste time considering homes you can’t afford. Pre-approval will help you in the following ways: A seller may choose to make concessions if they know that your financing is secured. You are like a cash buyer, and this may make your offer more competitive. You can select the best loan package without being under pressure. How much home can you afford? There are three key factors to consider: The down payment Your ability to qualify for a mortgage The closing costs associated with your transaction What are my down payment requirements? Most loans today require a down payment of between 3.5% and 5.0% depending on the type and terms of the loan. If you are able to come up with a 20%-25% down payment, you may be eligible to take advantage of special fast-track programs and possibly eliminate mortgage insurance. What are closing costs? You will be required to pay fees for loan processing and other closing costs. These fees must be paid in full at the final settlement, unless you are able to include them in your financing. Typically, total closing costs will range between 2%-5% of your mortgage loan. How do I qualify for the mortgage? Most lenders require that your monthly payment range between 25% - 28% of your gross monthly income. Your mortgage payment to the lender includes the principal on the loan (P), the interest on the loan (I), property taxes (T), the homeowner’s insurance (I). Your total monthly PITI and all debts should range between 33%-38% of your gross monthly income. These key factors determine your ability to secure a home loan: Credit Report, Assets, Income, and Property Value. What will I need to apply for a mortgage? The following is a list of typical items needed for your mortgage application. These items are needed depending upon the type of mortgage you’re interest in. Your ability to provide these items can greatly speed your application process. Employment Name address of employers for the past two years Copy of pay stubs for the previous 30 days Copy of last two years W-2 forms OR Copy of last two years complete tax returns if income earned by commissions Self-employed Copy of last two years tax returns (personal and corporate) Year to date P&L and Balance Sheet through the most recent quarter Liabilities Name and account numbers for all revolving and installment accounts Name and account number for all mortgage loans for the previous two years Name and address for landlords for the previous two years Assets Name, address, and account number for all bank accounts Name, address and account numbers for all brokerage accounts Copies of statements covering last 3 months on asset accounts Copy of most recent statement for 401K, Savings Plan, etc. Miscellaneous Copy of driver’s license and social security card Copy of fully executed divorce decree if applicable Copy of signed earnest money contract Copy of lease agreements on rental properties Copy of DD 214 and Eligibility Certificate if Veteran Ask for the cost of your credit report and appraisal that you will be charged The Ten Commandments when applying for a Real Estate Loan 1. Thou shalt NOT change jobs, become self-employed or quit your job. 2. Thou shalt NOT buy a car, truck or van (or you may be living in it)! 3. Thou shalt NOT use charge cards excessively or let your accounts fall behind. 4. Thou shalt NOT spend money you have set aside for closing. 5. Thou shalt NOT omit debts or liabilities from your loan application. 6. Thou shalt NOT buy furniture. 7. Thou shalt NOT originate any inquiries into your credit. 8. Thou shalt NOT make large deposits without first checking with your loan officer. 9. Thou shalt NOT change bank accounts 10. Thou shalt NOT co-sign a loan for anyone. Should I use a Realtor® when I am buying a new home directly from a home builder? YES! The advantages of having me help you purchase a new home are the same as those for purchasing a resale home. Knowledge of the market Help in finding the perfect home quickly Expertise in contract writing/negotiation Closing assistance The builder has a professional representative watching out for their needs, and you need the same expert representation. Buying a new home is a little more difficult and time-consuming than buying a resale. I can professionally guide you through this process. It is very important that your interests be professionally represented when you are entering into a contract for a custom home. These transactions are complex and the contract details must be exact in order to protect you and to ensure you get exactly the home you want. The Builder requires that your Agent accompany you on your first visit to the Builder’s sales office. My offer was accepted now what? Now that you have decided to buy your home, what happens between now and the time you legally own the home? A Title company may handle the following items. NOTE: in different parts of the country attorneys, lenders, escrow companies and other persons who are independent of title companies perform some or all of these functions. Earnest Money – An agreement to convey starts the process once it is received at the Title Company. This is the signed contract and the earnest money check. Loan Application – Once you submit the loan application, it is usually subject to a credit check, an appraisal and possibly a survey of the property if one does not exist. Tax Check – The Title Company contacts the various assessor collectors to determine what taxes are owed on the property. Title Search – The Title Company obtains copies of documents from various public records determining deeds, deeds of trusts, various assessments and matters of probate, heirship, divorce and bankruptcy. Examination – Verification of the legal owner and debts owed. Document Preparation – Appropriate forms are prepared for conveyance and settlement. Settlement – An Escrow Officer oversees the closing of the transaction: seller signs the deed, you sign a new mortgage, the old loan is paid off and the new loan is established. Seller, Realtors, attorneys, surveyors, Title Company and other service providers for the parties are paid. Title insurance policies will then be issued to you and your lender. Title Insurance – There are two types of title insurance: Coverage that protects the lender for the amount of the mortgage Coverage that protects your equity in the property. Both you and your lender will want the security offered by title insurance. For a one-time charge at closing, title insurance will safeguard you against problems that even an extensive search did not reveal. I am moving. Help! As your realtor, I will also be here to assist you with your tough, but exciting task of moving. Approximately two weeks before moving you will need to contact your utility companies and notify them of your move. You will also need to sign up for services at your new address. I will provide you with a contact list for all of your utilities and services for your new neighborhood. Remember as you are packing to pull all of your financial records and documentation and place them in an easy to access place. You may need these throughout the loan application process. One week before moving inform the post office of your upcoming move. Send the change of address cards the post office provides to the following: Banks, insurance companies, credit card companies, and other financial institutions Magazines and newspapers Doctors, lawyers, accountants and other service providers State and federal tax authorities and any other government agencies as needed Workplace, schools, and alma maters Don’t forget to change your address on your driver’s license. You can do this on-line and save yourself a wait in line! What does that mean? Acceptance: The date when both parties, seller and buyer, have agreed to and completed signing and/or initialing the contract. Adjustable Rate Mortgage: A mortgage that permits the lender to adjust the mortgage’s interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change. Amortized Loan: A loan which is paid in equal installments during its term. A.P.R. (Annual Percentage Rate): A term used in the Truth in Lending Act. It represents the relationship of the total finance charge (interest, discount pointes, origination fees, loan broker commission, etc.) to the amount of the loan. Appraisal: The process through which conclusions of property values are obtained. Appreciation: An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation. Assumable Mortgage: Purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage. Bill of Sale: Document used to transfer title (ownership) of personal property. Closing Statement (HUD): A financial statement given to the buyer and seller at the time of transfer of ownership showing all cash received, all charges and credits made and all cash paid out in the transaction. Cloud on the Title: Any condition that affects the clear title to real property. Comparable Sales: Sales that have similar characteristics as the subject property and are used for analysis in the appraisal process. Contract: An agreement to do or not to do a certain thing. Consideration: Anything of value to induce another to enter into a contract, i.e., money, services, a promise. Counteroffer: A new offer made as a reply to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offer’s repeating it. Deed: A written instrument which when properly executed and delivered conveys title to real property. Discount Points: A loan fee charged b a lender of FHA, VA or conventional loans to increase the yield on the investment. One point = 1% of the loan amount. Earnest Money Deposit: An amount of money deposited by a prospective buyer as evidence of good faith under the terms of a contract, that is to be forfeited if the buyer defaults but applied on the purchase price if the sale is closed. Easement: The right to use the land of another. (example: utilities) Encumbrance: Anything that burdens (limits) the fee title to property such as a lien, easement, or restriction of any kind. Equity: The interest or value that an owner has in his or her property over and above any mortgage indebtedness. Escrow Payment: That portion of a mortgagor’s monthly payment held in trust by the lender to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due. Fannie Mae: Nickname for Federal National Mortgage Corporation (FNMA), a tax-paying corporation created by congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages. Federal Housing Administration (FHA): An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing. FHA Insured Mortgage: A mortgage under which the Federal Housing Administration insures loans made, according to its regulations Fiduciary relationship: A relationship of trust and confidence, as between principal and agent. Fixed Rate Mortgage: A loan that fixes the interest rate at a prescribed rate for the duration of the loan. Foreclosure: Procedure whereby property pledges as security for a debt is sold to pay the debt in the event of default. Freddie Mac: Nickname for Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages. Graduated Payment Mortgage: Any loan where the borrower pays a portion of the interest due each month during the first few years of the loan. The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its life. Lease Purchase Agreement: Buyer makes a deposit for future purchases of a property with the right to lease the property for the interim. Loan to Value Ration (LTV): The ratio of the mortgage loan principal (amount borrowed) to the property’s appraised value (selling price). Example – on a $100,000 home, with a mortgage loan principal of $80,000 the loan to value ratio is 80%. Mortgage: A legal document that pledges a property to the lender as security for payment of a debt. Mortgage Insurance Premium (MIP): The amount paid by a mortgagor for mortgage insurance. This insurance protects the investor from possible loss in the event of a borrower’s default on a loan. Mortgagor: The borrower of money or the giver of the mortgage document. Note: A written promise to pay a certain amount of money. Origination Fee: A fee paid to the mortgagee for paying the mortgage before it becomes due. Also known as prepayment fee or reinvestment fee. Realtor: A member of local and state real estate boards, which are affiliated with the National Association of Realtors (NAR). Second Mortgage/Second Deed of Trust/Junior Mortgage or Junior Lien: An additional loan imposed on a property with a first mortgage. Generally a higher interest rate and shorter term than a “first” mortgage. Survey: The process by which a parcel of land is measured and its area ascertained. Title Insurance: An insurance policy which protects the insured (purchaser or lender against loss arising from defects in the title).