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Buyer's Guide
This information is provided to answer your
questions and help guide you through the most important stages of
buying your home.
Whether you find a home by seeing an ad in the paper, driving by
a "For Sale" sign, visiting an open house, or hearing
about a home for sale, we can handle the sale for you (while being
paid by the seller)! Whether it is listed with another realtor firm
or whether it is for sale by owner.
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The Home Buying Process
This is an outline of the steps you will
be going through:
1). Prequalification
1A). Lender List
1B). Questions to Ask a Mortgage Banker
1C). Items Needed for Loan Application
1D). Selecting a Loan
2). Select a Realtor
3). Selecting a home
3A). Initial Meeting With an Agent
3B). Choosing Your Home
3C). Questions For Buyers
4). Writing an offer
5). The home inspection
6). The escrow process and closing
7). Possession
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1). Prequalification
The first step toward purchasing your home
is to get you prequalified! This is a very simple process which
can frequently be taken care of over the phone. The lender will
quickly be able to tell you how much of a loan you will be qualified
to receive. This information, along with your downpayment, will
determine the price range you will be searching in. Prequalification
is a free service. However, if a credit report must be run it will
cost somewhere between $50 and $79.
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1A). Lender List
Pacific Residential Mortgage:
Anette Sieverson 503-670-0525
Mortgage Advocates: Aaron Nawrocki 503-297-9900
Pacific Sunset Mortgage: Steve Emory 503-924-2828
National City Mortgage: Andrew Heath 503-255-1356
Pacific Guarantee Mortgage: Robb Severdia 503-243-2674
These are lenders that we have worked with and have liked their
performance. You are not limited by any means to these lenders.
"Let your fingers do the walking" in the Yellow Pages,
under mortgages.
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1B). Questions to Ask a Mortgage Banker
When talking to a mortgage banker prior
to making an application, it may be helpful to have the answers
to the following questions in order to make an informed decision.
-If private mortgage insurance is required,
at what point will it be unnecessary so that it can be dropped?
-Ask any mortgage banker for a client
reference list.
-Ask for a good faith estimate of all
costs involved.
-How many months worth of property
taxes and insurance are required for the reserve account?
-If obtaining an adjustable rate mortgage,
describe how and when the loan can be converted to a fixed rate
mortgage and what charges will be involved. Will another appraisal
be ordered?
-If obtaining an adjustable rate mortgage,
what is the margin, index, and anniversary for adjusting the payments?
-When is the house payment due and
when is the late fee incurred? What is the late fee?
-What is the up-front charge for private
mortgage insurance and the renewal?
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1C). Items Needed for Loan Application
Employment:
-Addresses for two full years.
-Gross monthly income.
-W-2's, if available.
-Proof of pensions, retirement, disability or Social Security.
-Proof of income from rentals, investments, etc.
-Proof of child support or alimony paid/received.
-Year to date pay stub.
Creditors:
-Each creditor's name, address and type of
account.
-Account numbers.
-Monthly payments and approximate balances.
-Amount of childcare expenses.
Banking:
-Names and addresses of saving institutions.
-Account numbers for all accounts.
-Type of accounts and present balances.
Miscellaneous:
-List of assets in stocks, bonds, land.
-Life insurance cash value (documented if used as cash down payment).
-If applicant is selling a home, a copy of sales contracts.
-Social Security numbers for all parties.
-Veterans - Certificate of Eligibility & DD-214.
-Cash or check to pay for application fee.
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1D). Selecting a Loan
Be sure to ask your lender about the advantages
and disadvantages of each type of loan available. Your selection
will be influenced by many factors.
FHA Financing (Federal Housing Administration)
The FHA has guaranteed the repayment of the
loan to the lender. Since there is less risk involved for the lender,
a smaller down payment is often possible. With FHA loans the borrower
is required to pay mortgage insurance premiums. The amount of the
premium will vary so check with your lender. Both adjustable and
fixed rate loans are available with FHA financing.
Conventional Financing
This type of loan refers to home loans that
have not been guaranteed by the FHA or VA. These loans may require
a larger downpayment, or the purchase of private mortgage insurance.
Both adjustable and fixed rate loans are available with conventional
financing.
VA Financing
This type of loan refers to home loans guaranteed
by the Department of Veterans Affairs. On primary residences, qualified
veterans may obtain mortgages from an approved lender without a
downpayment. Only fixed rate loans are available with VA financing.
The VA charges the borrower a processing fee.
Consider a fixed rate loan if:
-You want the security of knowing your house
payment will never change.
-You expect interest rates to go up while you are in the home.
-Your income will stay about the same.
Consider an ARM (Adjustable Rate Mortgage)
if:
-You want to afford more house than a fixed
rate loan will allow.
-You expect interest rates to stay the same or go down while you
are in the home.
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2). Choosing a Realtor
The sale or purchase of a home or any real
property involves a major investment decision. The individual you
select to assist you in the real estate transaction can make a big
difference in how well you fare in the transaction, from both a
financial and a liability standpoint.
Why a REALTOR®?
First of all, you should choose a REALTOR®.
In a way, the term REALTOR® has become the generic term for
a real estate licensee. In reality, the term REALTOR® refers
specifically to a real estate licensee who is a member of the Local,
State, and National Associations of REALTORS®, locally, the
Portland Metropolitan Association of REALTORS® (PMAR). REALTORS®,
unlike generic licensees, are held to a strict Code of Ethics which
measures their behaviors even more strictly than does the law. The
Association educates its members about the Code of Ethics and, ultimately,
enforces its members' behavior through a due process complaint procedure.
In addition to ethical standards, REALTORS®, by virtue of their
Association, have an organized network which allows them to disseminate
information about real property through their state-of-the-art on-line
Multiple Listing Service (MLS). As a compliment to the MLS, REALTORS®
have a secure Lockbox system which allows them maximum access to
listed real property. Finally, REALTORS® are more in tune with
recent changes in development and zoning issues; disclosure, agency,
and fair housing laws; regulatory issues; financing options; and
much more through their commitment to ongoing education programs
many have made the commitment to obtain professional designations.
For all of these reasons and many others, it always pays to work
with a REALTOR®!
How to Choose a REALTOR®.
When choosing a REALTOR®, it is important
to realize that you actually hire a REALTOR® to do a specific
job for you...either to market and sell your home or to assist you
in purchasing a piece of real property. A first good step is to
ask friends or acquaintances who've had recent experiences in a
real estate transaction to recommend a particular individual or
firm to you. It is also a good idea to make a list of three to five
REALTORS® to interview. When you consider the importance of
the real estate transaction to you financially, you begin to understand
the value of interviewing each candidate individually. If you want
to call several firms with which you are familiar, you can request
that the Broker recommend particular REALTORS® who specialize
in your area of need. Some companies even have Relocation Departments
or Customer Service Departments which handle requests of this nature
on a regular basis.
When preparing for your interview, it is wise
to make a list of questions for each individual and to pose those
same questions to each candidate. The following questions are important
to consider:
1) How long has the REALTOR® been in the
real estate profession?
This question obviously helps to assess
the experience level of the agent you are considering.
2) Can the REALTOR® supply you with a list of past customers
and clients that you could call for references?
Checking references is often the best way
to assess performance. Many companies routinely have their clients
evaluate or rate service and performance.
3) In what areas/price ranges does the REALTOR®
specialize?
By knowing the REALTOR'S® niche, you can
more easily match your needs with his/her expertise.
4) Is the candidate a full-time REALTOR®?
Full-time REALTORS® often are more
readily available because they are not distracted by other work
interests.
5) What specialized education has the REALTOR®
received? Is the REALTOR® an Associate Broker? Does the REALTOR®
have a designation?
This helps you assess the level of commitment,
professionalism, and experience of the individual you are considering.
If you're looking to buy a piece of property,
then the following questions are important:
1.) Does the REALTOR® offer buyer representation?
2.) Has the REALTOR® received any special training in buyer
representation?
3.) How does the REALTOR® work with buyer clients?
4.) Does the REALTOR® employ a Buyer Specialist to assist you?
When buying property, it is in your best interest
to select a REALTOR® who will enter into a buyer brokerage agreement
with you. This means the REALTOR® must represent your interests
in all instances and negotiate on your behalf. A buyer representative
can help advise you in writing the contract and selecting an appropriate
price to begin negotiations, evaluating the properties you view,
and should be more than willing to do a market study of the property
to determine its value in the market place.
Assess Your Personal Comfort Level.
Probably the most important thing you need
to consider when selecting a REALTOR® is how comfortable you
feel with that individual and if he or she seems to have a quick
grasp of your needs. It is imperative that you work with a REALTOR®
who listens to what you say and responds accordingly. The REALTOR®
with whom you are working can save you time by selecting properties
that meet your criteria. It is not necessary to view every property
on the market in a given price range. Many properties can be ruled
out by evaluating the individual property characteristics and amenities
as they relate to your specific needs. A good REALTOR® will
navigate you through this process easily.
Once you've selected a REALTOR® to assist you with a real estate
transaction, it is important to hold them accountable to do what
they said they would do for you. Giving a REALTOR® feedback
helps most REALTORS® do an even better job for you. Open communication
is essential in making the whole process smooth and enjoyable.
A sense of rapport and trust is also important when selecting the
REALTOR® to market your property. It is important to feel a
sense of faith and trust in your REALTOR®; this can make the
total experience a more positive one. It is appropriate to hire
a new REALTOR® as long as they have good training and company
support. If you hire an experienced REALTOR®, look for a solid
success level, terrific recommendations, proven performance, attention
to detail, interest in you, and the time to do the job for you.
A REALTOR® brings familiarity with the experience of home buying
and selling that will make the process less confusing for you, the
home buyer or seller who is involved in such a transaction only
once or twice in a lifetime. The network of ethical professionals
with which REALTORS® are affiliated can guide you through the
process and help you avoid potentially costly errors or omissions.
Everyone who buys or sells property has the right to feel terrific
about the end result once the transaction closes. Working with a
dedicated professional who has chosen to be a REALTOR® gives
you better odds that your goals will be met.
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3). Selecting a Home
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3A). Initial Meeting
We go over the buyers guide with you.
We explain how our team works and what this means to you.
You inform us of your needs and wants.
You receive any information or clarification needed about the home
buying process.
Provide your agent with your lender's letter of pre-qualification.
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3B). Choosing Your Home
Your agent will give you computer printouts
of homes that meet your criteria. You help narrow the search.
You can either drive by these homes to determine which ones you'd
like to see or have your agent preview the homes for you.
You tell your agent about your schedule so she can set up appointments
for you to tour the homes of your choice.
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3C). Questions for Buyers:
Tell me about your past experiences of buying
and selling real estate.
Why have you decided to buy/move now?
What price range are you looking in?
Do you need to sell your current home prior to moving into your
new home?
What things are most important to you in a home? What style of home
do you prefer?
When do you want to move in?
Will you be using financing?
Have you spoken with a lender to determine what the maximum monthly
house payment your budget will allow?
What do you most like about your current home? The least?
In what order of importance would you rank area, condition and size?
Is lot size an issue?
Is the age of the home critical (new versus lived in)?
What are the features of an area or subdivision that are important
to you?
What is the longest distance you will commute to work?
Where do you want to live? Are schools important? If so, which ones
and why?
How many bedrooms? Bathrooms? How much living area do you need?
When is the best time to look at homes?
Does anyone else have to approve of your purchase?
If we found the right house for you today, would there be anything
that could keep you from buying it?
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4). Writing an Offer
Once you find a property that you are interested
in, your agent will write the offer with you to purchase the property.
We use the standard Portland Board of Realtor's Sale Agreement that
all Portland Realtors use. You must give a check or promissory note
for earnest money at the time of writing the offer. This amount
is approximately 1% of the sales price (i.e., $150,000 house= $1,500
of earnest money), but you can offer more or less depending on how
favorable you want your offer to appear.
Our team has written over a thousand of these agreements and will
give you guidance and advice on how to structure your offer. You
should be completely candid with them about how seriously you want
the property and how disappointed you imagine you'll be if you end
up losing the property to another buyer. This will help them to
guide you with the best strategy for your situation.
Once the offer is written, your agent will contact the listing agent
and try to present your offer personally, but this is sometimes
not possible due to out-of-state owners, or seller's preferences.
If your offer is not accepted you can always write another better
offer or you can continue the search for a different property.
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5). The Home Inspection
After your earnest money offer is accepted,
you should schedule your home inspection as soon as possible. There
is always a time limit for approving your home inspection--usually
seven business days.
The home inspection is a thorough visual
examination of the property. The process
usually takes between two and three hours. The inspection includes
observation and, when appropriate, operation of the plumbing, heating,
air conditioning, electrical, and appliance systems, as well as
structural components: roof, foundation, basement, exterior and
interior walls, chimney, doors, and windows.
Findings should be provided to you
in the form of a written, comprehensive report.
It should include an objective evaluation
of the condition of the home, clearly relating the existing defects
and indicating potential problems.
The home inspection is not an appraisal.
An appraisal is the formal process
of estimating a property's value as it relates to a mortgage loan
or mortgage insurance. An appraisal does not itemize defects or
reflect potential problems in the house.
The home inspection is not a warranty.
Since the home inspection is a visual
examination of the home and the operating systems, it is not technically
exhaustive. There is no assurance, expressed or implied that equipment
will not break down at some future date.
The home inspection does not detect
every conceivable flaw. It
is an inspection of those areas and items that can be seen. Home
inspectors cannot see through foundations, floors, or walls and
cannot inspect areas that are inaccessible.
The home inspection is not mandatory.
However, we strongly advise you to hire a professional home inspector
so that you will be as informed as possible as to the condition
of the house. The house will have some flaws. If you know what the
flaws are, you can decide if you want to go through with the purchase,
or you can back out of the transaction by disapproving of the home
inspection within your time limit.
We will recommend several home inspectors that our clients have
had good experiences with, but the ultimate choice of who will inspect
your home is yours.
What if the home inspection reveals
a material defect?
If a material defect is revealed, you can either back out of the
transaction and simply continue your search for another home, or
you can write an addendum (a written document that is in "addition"
to your earnest money offer, which if accepted, becomes part of
your offer) which spells out how the defect will be corrected (i.e.,
who will pay for the repairs, who will perform the repairs, etc.).
The house can then be re-inspected to ensure that the repairs have
been completed correctly.
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6). The Escrow Process and Closing
Loan application
You, the buyer, will make loan application
as soon as possible after the earnest money agreement has been accepted
by the seller. There is always a time limit for this-usually 3-5
business days.
Lender
Your lender will take a credit application,
get work history, and salary information from you. It takes most
lenders about four weeks to process your loan. Appraisals and title
searches also have to be completed. This can be an extremely frustrating
time because everything seems to be out of your control. Don't worry,
because we will be in touch with everyone involved, including you,
on a regular basis.
Escrow
What is escrow and why is it necessary?
Escrow is an arrangement in which a neutral third party, called
and escrow holder, holds documents and funds on behalf of a buyer
and seller, and distributes them according to the buyer and seller's
instructions.
What the buyer does in the escrow process:
-Deposits funds required, in addition to any
borrowed funds, to pay the purchase price with the escrow holder.
-Deposits funds sufficient for home and title insurance.
-Arranges for any borrowed funds to be delivered to the escrow holder.
-Approves any inspection reports, title insurance commitments, etc.,
called for by the earnest money agreement.
-Fulfills any other conditions specified in the escrow instructions.
What the seller does in the escrow process:
-Deposits the executed deed to the buyer with
the escrow holder.
-Deposits evidence of pest/dry rot inspection and any required repair
work.
-Deposits other required documents such as tax receipts, addresses
of mortgage holders, insurance policies, equipment warranties or
home warranty contracts, etc.
What the lender does in the escrow process:
-Deposits proceeds of the loan to the purchaser.
-Directs the escrow holder on the conditions under which the funds
may be used.
What the escrow holder does:
-Opens the order for title insurance.
-Obtains approval from the buyer on the title insurance report,
pest and other inspections.
-Receives funds from the buyer and/or lender.
-Prorates insurance, taxes, rents, etc.
-Disburses funds for title insurance, recording fees, real estate
brokerage, lien clearances, etc.
-Prepares final statement for each party, indicating amounts to
be disbursed for services and any further amounts necessary to close
escrow.
-Records deed and loan documents, delivers the deed to the buyer,
loan documents to the lender, and funds the seller, closing the
escrow.
What Kundalini and her team does in the escrow
process:
-We recommend experienced, knowledgeable,
efficient loan officers, escrow and title companies.
-We continually stay in contact with all parties involved in the
escrow process to make sure everything gets done in a timely fashion.
-We stay in close communication with the listing agent to solve
any problems that may arrive
Closing the escrow:
Once all terms and conditions of the instructions
of both parties have been fulfilled, and all closing conditions
are satisfied, the escrow is closed and the safe and accurate transfer
of property and money has been accomplished.
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7). Possession
You will take possession of your home after
you and the seller sign all of the closing documents and the closing
documents are recorded with the county. Recording may occur the
same day as closing but usually takes one or two extra days.
Congratulations! You can now move in!
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