For Buyers
Get The Answers To Buying A Home
Real estate is a complicated business. There are a million details that must be handled on a timely basis in order to provide the quality of Service that you deserve. Our professional input will help prepare your home for sale or we will "search the world over" for the home of your dreams. We have grown and developed our own marketing and servicing strategies to insure that our customers and clients receive memorable real estate service...not just satisfactory, but MEMORABLE!
Buying a home is certainly one of the most rewarding experiences most of us ever have; it's also one of the most challenging. If you're buying for the first time, the process may seem overwhelming. And even if you've been through it several times, every move is different, and presents new challenges. So one clear advantage of enlisting the help of the First Professional Realty Group is simply that you don't have to "go it alone." First Professional Realty Group has the training, the know how, and the experience to help you through each step of the process, and make the process of finding, buying, and moving into your new home as smooth, quick, and enjoyable as it can be.
Another advantage is that the First Professional Realty Group represents a valuable source of information about market trends, communities and neighborhoods, and especially, homes for sale throughout the front range. Remember, not every home seller runs an ad in the local paper or puts a sign up in the yard; you could be driving by some outstanding properties that may be just what you're looking for in a home. First Professional Realty Group, on the other hand, offers you access to complete, regularly updated information about every home listed by area brokers through the IRES/MLS.
Get The Answers To Buying A Home
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The rent you pay could build equity in your own home. Do you realize how much you pay in rent over a period of years? In addition to the monthly payment, you should figure in the amount you would have accumulated had you invested your payments and earned 10% interest. This gives you a total picture of what's happening to your money. The rent you pay adds up to a sizeable sum.
Using this chart, find you per month rental payment and you can determine how much money you are "giving away" in rent and interest over 10, 15, 20 or 30 years...money which could be used to build equity in your own real estate.
Chart courtesy of: Bill Schmitz, Security Title Guaranty Co., Longmont, CO Pride In Owning Most people buy homes to have control over where they live. Although investment features are important, the psychological reasons for buying—the satisfaction of owning and freedom from paying rent—are at least as important. In a survey done by the National Association of Realtors of 6,000 homeowners and 2,000 renters—perhaps the largest ever of attitudes toward home ownership—showed that 76% of owners and 66% of renters considered pride of ownership an important reason for buying. Dislike Paying Rent Almost equal portions of owners and renters, close to 7 in 10, said a dislike of paying rent was an important reason to buy. Renting offers a lifestyle that's nearly maintenance-free. That may appeal to you, but consider that renting offers you no equity, no tax benefits, and no protection against regular rent increases. Writing a check is just like watching your hard-earned money sail away! Settling Down More than 6 in 10 renters said "settling down" was an important reason to buy. Good Investment Fully 76% of owners and 69% of renters said the investment aspect of ownership was important. Tax Advantages Property taxes and qualified home interests are deductible on Schedule A, for itemized deductions. Long-term Appreciation People consider home ownership a good investment because they view it as a long-term venture. Historically, home prices have risen at relatively steady rates. Existing home prices rose an average of 4% per year between 1980 and 1992. Leverage Investment People borrow a great deal to buy a home, yet they receive the full benefits of price appreciation. In the long run, investments in homes far outpace inflation. Source of Savings Home ownership always has and continues to comprise the single largest source of savings for American households. Homeowners build equity and can borrow against it. Sacrifices Are Worth It Almost 7 in 10 renters in the National Association of Realtors home ownership survey said they planned to buy a home in the future. More than three-quarters of these people said they were willing to sacrifice to do that. |
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The Home Buyer Workbook
We have designed The Home Buyer Workbook to assist you with the purchase of your new home. We understand the many questions and concerns of home buyers and how this information will be useful throughout the transaction. We assure you that is is our goal to provide you with the most professional and informative service available. We are always just a call away when you have questions.
Steps To Owning Your Home
1. Consultation to analyze your needs
2. Establish a working relationship
3. Financial Pre-qualification of Pre-approval
4. Select properties
5. View properties
6. Write an offer to Purchase
a. Earnest money
7. Acceptance of Contract
a. Inspections
b. Removal of contingencies
8. Mortgage Application
a. Credit report
b. Appraisal
c. Verifications
9. Submittal to Underwriting
a. Acceptance or rejection
b. Conditions
10. Loan approval
11. Remove contingencies
12. Title Company
a. Title exam
b. Title insurance
c. Title survey
13. Assemble documents
14. Closing
a. Filing of Deed
15. Possession
16. House keys
First Professional Realty Group will:
w Review your financial position to determine the price most suited to your ability to pay and comfort level. Pre-qualifying will help you in the following ways:
Interest rates are usually locked in for a set period of 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 cannot afford.
You can select the best loan package without being under pressure.
Seller may choose to make concessions if they know that your financing is secured, and this may make your offer more competitive.
w Estimate purchase costs and explain them in detail.
w Explain financing alternatives to help you select the one best suited for you.
w Discuss home styles, availability, location, schools and any specific features that you desire.
w Explain the Contract To Buy And Sell Real Estate in detail, as well as the IRES/MLS.
w Prepare a market report, pricing recommendations and an estimate of equity from the sale of you present home, if applicable.
w Provide you with information on all properties currently for sale, including new and pre-owned homes, single family homes and condominiums.
First Professional Realty Group Will:
w Discuss the benefits and drawbacks of each home in relation to your specific needs.
w Keep you informed on a regular basis.
w Check the MLS data base and with other brokers daily for new listings that meet your criteria.
w Prepare an itinerary and "tour" map on which all homes meeting your criteria have been located.
w Keep you up to date on changing financial conditions that may affect the housing market.
w Be available to answer your questions or to offer assistance regarding your home purchase.
w Discuss market trends and values relative to properties which may be of interest to you.
w Assist you with homes offered by "For Sale By Owner."
A homeowner trying to sell their home themselves is usually doing so in hopes of saving the commission. Coincidentally, this is the reason a buyer wants to deal directly with a homeowner. Many times a homeowner will work with an agent, even though his home is not listed, if the agent introduces the buyer to the property. If you should see a FSBO and want the advantages of our services, please let us contact the owner and set the appointment.
w Show you new homes as well as pre-owned homes if you desire.
w Introduce you to local builders to discuss building your next home. We can work with most builders and can get all the information you need to make any decision, but we will need to accompany you to the property on the initial visit. By letting us help you with builders, you get all the services offered in this presentation and those offered by the builder as well. You'll get more, but you won't pay more for it.
First Professional Realty Group Will:
w Prepare a Contract To Buy And Sell Real Estate agreement and explain each detail.
w Provide you with copies of all the documents involved in the purchase contract and financing.
w Assist you in determining the appropriate financing and help you select the best financial institution to handle your mortgage.
w Accompany you to the loan application if you so desire.
w Provide you with a loan application checklist.
w Provide you with an estimated cost of closing or settlement including points, title insurance, appraisals, credit reports, etc. prior to the loan application.
w Make arrangements for the mortgage application.
w Coordinate any necessary inspections of the property to evaluate the major elements of the home.
w Assist in securing interim financing if you present home has not yet sold.
Offer and Acceptance
In negotiating the purchase of your new home, the initial step will be to make an offer to purchase. This offer WILL be in writing and accompanied by an earnest money check to show good faith. The offer will include:
The offer will be written on a standard contract form approved by the State of Colorado Real Estate Commission. If the initial offer is not accepted by the seller, further negotiations generally reach terms agreeable to both buyer and seller. When buyer and seller agree on terms, the buyer immediately applies for financing and arranges for inspections.
Earnest Money Deposit
At the time a written offer on a property is initiated, you will be required to make a deposit in the form of a personal check or cashier's check. The amount deposited will be kept in a trust fund account of each affiliate broker and will not be turned over to the seller. This money represents your sincerity in the attempt to purchase and is fully refundable if the offer is not accepted, if your loan is not approved or if some other condition of the contract is not met by the seller. You should anticipate a minimum of $1,000 for homes ranging up to $150,000. In homes over this price range, expect to deposit one to five percent of the purchase price. This earnest money will be credited to you at closing as part of your down payment and/or closing costs. Your earnest money will be transferred to the closing agent—typically a title company—just prior to the close of escrow.
Title Insurance
When property is sold or refinanced, the lender and/or Buyer needs a preliminary title report to see exactly what liens and encumbrances are against the property. Items that a preliminary title report show include:
When the sale of the subject property is final and the title company has recorded the necessary documents, they then will issue a title insurance policy to the new lender and the buyer showing clear title to the property.
Mortgages used to be simple. You made a down payment on the house of your dreams and borrowed the balance at a fixed rate of interest, promising to pay it back in regular monthly payments over a period of years.
Today you must make choices. Do you want the traditional 30-year fixed rate mortgage with its guarantees of unchanging monthly payments? Perhaps a fifteen-year loan would be better? Or would you prefer an adjustable rate mortgage with monthly payments that can rise and fall in accordance with an index reflecting economic conditions?
Below is a brief synopsis and the pros and cons of some of today's most popular mortgage loans.
|
TYPE |
DEFINITION |
ADVANTAGES |
DRAWBACKS |
COMMENTS |
|
30-Year Fixed Rate |
A long-term loan in which principal and interest are amortized over 30 years; both interest rate and amount of monthly payment remain unchanged for the life of the loan. |
-Considerable tax benefits, especially in early years. -Payments never rise, regardless of inflation |
Slow Equity build-up. |
The most common mortgage in the U.S., a particularly good investment when rates are low. |
|
15-Year Fixed Rate |
As above but payback period is 15 years |
- Usually lower interest rate than 30-year mortgages. - Faster equity build-up. - Less interest paid out over life of loan. |
- Higher monthly payments. - Less tax deductible interest. |
An excellent option for middle aged and older buyers. |
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ARM (Adjustable Rate Mortgage) |
A mortgage whose rate changes over time according to terms specified by the lender, usually according to short-term Treasure Bill rates. |
- Low initial interest rate, sometimes below market - Payments may decrease over time. |
- Payments may increase over time. - Risky if rates rise significantly. |
Good option for buyers whose income will rise and/or when rates are expected to drop. |
| FHA/VA Mortgage Loans | Government-insured or guaranteed mortgages that can make purchase more affordable than conventional loans. |
- Little or no down payment required. - Marginally better rate than conventional 30-year mortgages. |
- Lower limits on the maximum that can be borrowed. - VA requires current or past military service. |
Good option for first time buyers with little to invest in a down payment. |
Once the purchaser(s) and the seller(s) have agreed on the price an terms of a contract, the next step is the loan application. First Professional Realty Group can recommend several lenders who have earned our trust and with whom we've had good experiences in the past.
Then, a preliminary loan application is completed with a loan originator. The loan originator's goal is to expedite all the necessary paperwork and information, including ordering a credit report and appraisal of the property. It is very important for you to get the appraisal as soon as possible. You will need to furnish the lender with the information as outlined on the following section, "Items Needed for Loan Application."
The information you provide the lender is confidential. The application generally takes place at either the lender's office or at First Professional Realty Group's office. All people who will be on the title as new owners should be present. The application normally takes about one hour. At this time, you will be required to pay in advance for your credit report (usually $45-50) and the appraisal (usually $250-350), which is required by the lender to determine that the amount of the loan does not exceed the value of the property. These are normally the only charges required by the lender prior to the closing.
Your loan originator understands your concerns and is there to help with the approval of your loan. Feel free to ask questions at the loan application about anything that you do not fully understand. Also, you will receive a GOOD FAITH ESTIMATE OF CLOSING COSTS at this time so you won't have any surprises at the time of closing.
Total time from loan application to loan approval averages between 20 and 45 days or more, depending on the loan type, market conditions and/or the complexity of verifying the borrower's information and qualifications.
Homeowner's Hazard Insurance
A Homeowner's Insurance Policy (or a Binder), also referred to as Hazard Insurance, will be required to be brought to and paid for at closing. This is true in absolutely all cases when financing of any type is involved. Even if you are paying cash for the home, and no one is requiring the insurance, it would be foolish not to protect your investment with Hazard Insurance. There are many variables to consider in choosing which insurer and which policy best meets your individual needs and preferences. These variables should be carefully discussed with your insurance agent before purchasing the policy.
| 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. - Year to date pay stub - If self-employed a.) Two years 1040 Tax Returns b.) Current year profit and loss statement |
| Creditors |
- Each creditor's name, address and type of account - Account numbers - Monthly payments and approximate balances - Amount of child care 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 |
| Real Estate Agents |
- Copy of sales agreement - Copy of listing on property - Instructions on how appraiser is to gain access to property |
| Application Fee: | Fee charged by lender to offset fixed costs related to mortgage loan processing such as appraisal, credit report, and underwriting. |
| Closing Fee: | The fee charged by the closing agent who prepares the closing documents and closes the loan on behalf of the lender. |
| Commitment Fee: | This is often called an origination fee and is generally computed at 1% of the mortgage amount. |
| Discount Points: | Each point is equal to 1% of the mortgage amount. Points are used by the lender to adjust the yield on the mortgage when it is sold to an investor. By paying more points, the borrower can obtain a lower mortgage interest rate. |
| Funding Fees: | Normally applicable on VA loans only, equal to 1% of the loan amount. The fee is due at closing or may be added to the loan amount and financed. |
|
Homeowner's Insurance: |
One year premium is due in advance at time of closing |
|
Mortgage Insurance: |
Insurance required by the lender when the down payment is less than 20%. In the case of loan default, this insurance reduces the lender's loss. |
| Pre-payables: | Adjustment to escrow accounts from the date of closing to the date of the first payment. Interest is paid through the end of the month of closing, taxes are paid through the end of the month of closing plus the following month. Two months of PMI (Principle Mortgage and Interest) are collected. Two months of homeowner's insurance may be collected. A homeowner's insurance policy must be provided along with a receipt showing that the first year's premium is paid. |
| Processing Fee: | Fees charged by the escrow processor, either working for the escrow company, title company, or real estate company, for administrative escrow services performed from the point of contract through closing. |
| Recording Fee: | Fees charged by state or municipal entities for entering the closing documents into the public record. |
| Survey Fee: | Is usually required and is used by the lender to check for encroachments from within or from outside the subject property. |
| Title Insurance: | Provides protection for lenders and homeowners against financial loss resulting from legal defects in the title. |
| Underwriting Fee: | Usually included in the application fee. However, practices vary from lender to lender. |
First Professional Realty Group will:
w Confirm the mortgage loan approval, which may include the following:
Loan Commitment
Credit Report
Appraisal
Verification of Employment
Verification of Assets
PMI (Private Mortgage Insurance)
Submission to underwriter
Verbal approval
Need to: Amend/Extend Contract
w Provide you with a transaction checklist of items to prepare for the closing.
w Coordinate the following as applicable to your transaction:
Occupancy permit
Survey
Home Warranty Application
Special agreements
Amendments
Escrow agreements
Lien Waivers
City Letters
Title Policy
Closing/escrow statement
Affidavits
Authorization to deliver deed
w Provide you with a closing checklist of items to prepare for the final closing settlement.
w Remind you to coordinate the following one week prior to final closing or settlement:
Transfer utilities
Check keys
Check electric garage door openers
If the seller does not provide a home warranty policy, the buyer may purchase one at the time the contract is accepted. First Professional Realty Group can facilitate your purchase of a Blue Ribbon warranty.
Why Blue Ribbon warranty is so important to your peace of mind:
If You're buying a home, your expenses only begin at closing. Most people have lots of renovations to make. Or furniture to buy. And so on. So the last thing you want is to have to spend additional money for repairs due to unexpected mechanical failures of certain working components in the home. With so much that could go wrong, the odds are against you.
Benefits when you're the buyer:
Your home is one of the biggest investment of your life. Why take chances: Be covered against the expense of an unexpected repair or replacement for a full year after closing, less standard deductible. Thank about it. No matter how closely you inspect a home before you buy, you just can't predict certain things. Like breakdowns from normal wear and tear, or the possibility of mechanical failure during the first year of ownership. Things like internal plumbing, electrical wiring, or vital parts of the air conditioning and heating systems. Working components such as the washer, dryer, oven, refrigerator, and other items. Only a good home warranty program can give you the protection you need.
Coverage by one of the largest providers of home protection plans:
When the major systems and appliances in your home are protected by Blue Ribbon warranty, both buyer and seller can relax. Because Blue Ribbon protection is solid and reliable. The kind you can count on for the peace of mind you want in your home. Blue Ribbon is Colorado's #1 Home Warranty.
Toll-free, 24-hour claim service:
What could be easier when something goes wrong than making a single, toll-free phone call? When your home is protected by Blue Ribbon, that's how easy it is--24 hours a day, seven days a week. As soon as Blue Ribbon receives your call, the claim is entered into their state-of-the-art computer system. They'll notify a contractor in your area who contact you for an appointment. When the contractor arrives at your home, he/she will verify the claim, prepare a repair or replacement estimate and call their claims department. he/she is then authorized to complete the necessary repairs or replacement on covered items.