Article 01: Hazard or homeowners insurance
Article 02: Owner's title policy
Article 03: Types of loan costs
Article 04: How to dispute and correct report information
Article 05: Working with a realtor
Article 06: How sellers price their homes
Article 07: Moving checklist
Article 08: Change of address checklist form

 

Hazard or homeowners insurance
Buying a home is one of the biggest investments you will make in your lifetime. A lot of thought and effort goes into choosing just the right home for you and your family. It's important that similar care is taken in choosing the right homeowners policy to protect that investment. The standard homeowners policy covers your home, other structures such as detached garage or tool shed, your personal property and additional living expenses if a loss forces you from your home. It also provides personal liability protection for bodily injury or property damage that you or a family member might cause to someone else. In addition, there are a number of coverage plans available to expand the standard homeowners policy and provide broader coverage. One of the optional coverages is replacement cost coverage on personal property. This endorsement assures you of having your personal items repaired or replaced without depreciation when a loss occurs. For example, a wedding ring could be insured. The amount of insurance coverage that you carry on your home is extremely important. Your agent can help determine the approximate replacement cost of your home so it will be properly insured. They can also assist in getting a binder or policy issued to you and your mortgage company by the closing date. Other insurance to be considered is Mortgage Life Insurance and Mortgage Disability coverage.

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Owner's title policy
What an Owner's Policy of Title Insurance will attempt to protect against:

• Another party owns interest in the title
• A title-related document is not properly signed, sealed, acknowledged or delivered
• There is proof of forgery, fraud, duress, incompetency, incapacity or impersonation
• Title-related documents have been defectively recorded
• It is discovered that no legal right-of-access to and from the land exists
• There are covenants limiting the use of the land
• There are liens on the title due to: Mortgage or deed of trust issues, unpaid judgements, tax liens, special assessments or unpaid homeowner's association charges
• There are liens on the title for labor and/or material furnished before the policy date that the insured did not agree to pay
• Others have rights arising out of leases, contracts, options or easements
• The title is unmarketable, which means an interest or claim to the title has been revoked
• The insured is forced to remove any existing structure (other than a boundary or fence) because:
  • It extends beyond adjoining land or into an easement
  • It violated an existing zoning law

This insurance is limited by the exclusions, exceptions and condition contained in the actual policy. Check with your title company to see what they cover.

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Types of loan costs

Down Payment
Down payments vary depending on the type of loan program selected. Generally, the higher the credit score, the less down payment is required. A 700 plus or higher score may allow a borrower to put a 3% or even zero down payment. The 97% Flex or Alt 97 program allows the down payment to be a gift from a family member. These and other programs are designed for the first time home buyer. The minimum down payment on Conventional loans is typically 3-10%, depending upon the program. The borrower(s) must demonstrate with most programs that at least 5% of the down payment is his own money, unless he is receiving a gift of 20% of the sales price. At 20% down, most conventional loan programs do not require mortgage insurance. VA loans may be financed with zero down payment if the correct guidelines are met.

Closing Costs
Closing costs vary slightly with various loan programs. Many of the costs are related to appraisal fees, investor fees, broker fees and title company/closing fees. Please note that some of the costs are based on loan amount and will vary dramatically (i.e. origination, title insurance and mortgage registration tax). Most programs allow sellers to pay from 3 to 6% of the borrowers closing costs, prepaid expenses and/or points.

Prepaid Expenses
Funds used to set up escrow accounts for taxes, homeowners insurance and private mortgage insurance. Also includes hazard insurance premiums paid in advance and mortgage interest from closing to the end of the month. Escrows for taxes vary depending on month of closing.

Points
Points are dollars paid to lending institutions at the time of closing to allow leaders to make loans at rates lower than existing money market conditions warrant. Points balance the yield or rate of return lenders get on money they loan. One point equals one percent of a new loan amount. So, if a new mortgage calls for 2 points, it means that 2% of the amount of the loan needs to be paid to the lender at closing. Note that the points are calculated on the amount of the new loan, and not the selling price of the property. The cost of borrowing money fluctuates according to the demand for money and the supply of money available at any given lime. Heavy demands have a major effect on the availability of money. The result is that the supply of money for the home mortgage market is lessened, as. it competes for available funds. As the availability of money fluctuates, so do the points necessary to allow lenders to place their money in the home mortgage area at a certain interest rate. Points needed to obtain B/C, VA or Conventional financing may be paid by either the buyer or the seller, and are therefore negotiable. Most loan programs, however, limit the seller contribution to a maximum amount, usually a total of 3 to 6 points. In many instances, buyers cannot afford financing a home purchase if they must pay all of their closing costs and points. Therefore, sellers often see their best interest being served by agreeing to pay some or all of the buyer closing costs or points needed to make the sale. Again, most programs have some limitations to the amount of seller contributions. Consult with Marketplace Home Mortgage or the end investor during the pre-approval process. Points are generally tax deductible for the borrower whether they are buying or refinancing, but the rules may be different.

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How to dispute and correct report information

Trans Union, Experian (once known as TRW) and Equifax are the three main credit bureaus in the United States. Each is independent and needs to be contacted separately. Companies can report to 1, 2, or all 3 bureaus, it is totally up to the credit grantor. They may switch bureaus or not report at all, again, it is up to the credit grantor.

To correct inaccurate information on your credit report, contact each bureau that reports the information and in both spouses' names if regarding a joint account. The bureaus will ask you to fax or mail a copy of your Driver's License and Social Security Card for identification. This is for your protection. Send them any proof you have, such as cancelled checks, receipt of payment, etc. to prove the error in reporting.

Each bureau has 30 days to verify and correct the disputed information. Be sure to ask for your free copy of your corrected credit report when they complete their investigation.

Credit Bureau contact information:
Each of the three major bureaus will provide you with a copy of your credit report for a small fee. Below is contact information for each bureau.

TransUnion
phone: 800.888.4213
online: www.transunion.com
mail:
TransUnion
P.O. Box 1000
Chester, PA 19022

Experian
phone: 888.397.3742
online: www.experian.com
mail:
Experian
P.O. Box 9600
Allen, TX 75013

Equifax
phone: 800.685.1111
online: www.econsumer.equifax.com
mail:
Equifax
P.O. Box 740241
Atlanta, GA 30374

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Working with a REALTOR

How a REALTOR can save you time & assist you in home shopping:

• Pre-selecting homes that are within your price range and meet your requirements for size, location, etc.
• Scheduling appointments for you to see homes, usually when the owners are not there. This includes For Sale By Owner homes.
• Giving you current selling prices for houses similar to the ones you are considering
• Getting up-to-date information about taxes, school districts, and market conditions in the areas that interest you
• Handling negotiations over the price and terms of your offer
• Arranging for a home inspection, a necessary step in buying a home

Note: Many REALTORS also offer guidance in arranging financing.

What to look for in a REALTOR:

• Knowledge about the community you want to live in
• Experience
• Patience
• Full access to the area's multiple listing service (MLS). The MLS gives you the listings of all homes, not just those represented by your REALTOR'S company
• Ability to understand your wants, needs and personal tastes
• Honesty and trustworthiness
• Willingness to keep you informed of changes in the market, without trying to push you into buying before you are ready

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How sellers price their homes

How Much Should I Offer?
Agents are often asked by their clients, "How much under the listing price should we offer?" This is an excellent question. The answer is difficult. The main reason agents emphasize the education phase of looking at homes is because it is the best way for you to know value. When you review and study 40-60 (or more!) listings, then drive by 10-20 and look at 5-10, you will recognize the "Hot Listings." You'll also recognize the "dogs." Sellers price their homes differently for 4 basic reasons:

1. Ridiculously overpriced

These sellers have listened to a real estate agent over-inflate the value of their home in an effort to obtain a listing. There is a natural tendency on the part of sellers to list with the real estate agent who gives them the highest promise. There is a tendency by some real estate agents to give the seller a high "value" in an effort to obtain the listing.

These homes can be 10-20% overpriced. These sellers may need a "dose of reality" for a few months before they begin to realize that their home is way overpriced as compared to others in the area.

The longer an overpriced home is for sale, the more likely you can get the seller to face reality and sell at a fair price.

2. A little overpriced

These sellers fall into 2 categories:
• Those that feel their home is worth every penny of their asking price
• Those that want to leave a little "negotiating" room
These homes can be 4-10% overpriced. Perhaps 75% of all homes for sale are priced in this range.
3. Priced at fair market value

These sellers have carefully and realistically studied other homes for sale. They have priced their homes very competitively. These homes usually sell within a couple of weeks at or very near the listed price.
4. Priced below fair market value

These homes are priced below value. Perhaps the seller wants a fast sale. Perhaps the real estate agent recommended too low of a price. These homes usually sell within 3 days, at or above the listed price. There are usually competing offers.

Appraisal/Protection
Even by carefully studying homes for sale, it's difficult to establish Fair Market Value. If you're obtaining a new home loan you'll be protected because a professional home appraisal will be completed. Home lenders want to make sure that you don't over-pay for a home. If the home does not meet value in the eyes of the bank appraiser, you'll be informed. At that time, you can renegotiate the sale price or void the agreement and get your earnest money deposit refunded.

Your Agent's job is to ensure that you have the tools and information you need to make an informed decision, and then to help you prepare the offer and present it to the seller on your behalf.

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Moving checklist:

One month before moving

• Fill out change of address order form for post office
• Fill out an IRS change of address form.
• Make arrangements with moving company or reserve a rental truck
• Make travel arrangements, if necessary, with airlines, buses, car rental agencies and hotels
• Transfer memberships in churches, clubs and civic organizations
• Obtain medical and dental records, x-rays and prescription histories. Ask doctor and dentist for referrals and transfer prescriptions
• Set up a checking account in your new city
• Check into the laws and requirements of your new city regarding home-based businesses, professional tests, business licenses and any special laws that might be applicable to you
• Take inventory of your belongings before they're packed, in the event you need to file an insurance claim later. If possible, take pictures or video tape your belongings. Record serial numbers of electronic equipment
• Make arrangements for transporting pets
• Start using up food items, so that there is less left to pack and possibly spoil

One to two weeks before moving

• Switch utility services to new address. Inform electric, disposal, water, newspaper, magazine subscription, telephone and cable companies of your move
• Arrange for help on moving day
• Confirm travel reservations
• Reserve elevator if moving from an apartment
• Have appliances serviced for moving
• Clean rugs and clothing and have them wrapped for moving
• Plan ahead for special needs of infants
• Close bank accounts and have your funds wired to your new bank. Before closing, be sure there are no outstanding checks or automatic payments that haven't been processed
• Collect valuables from safe-deposit box. Make copies of any important documents before mailing or hand carry them to your new address
• Check with your insurance agent to ensure you'll be covered through your homeowner's or renter's policy during the move
• Defrost freezer and refrigerator. Place deodorizer inside to control odors
• Give a close friend or relative your travel route and schedule so you may be reached if needed

On moving day

• Double check closets, drawers, shelves, attic and garage to be sure they are empty
• Carry important documents, currency and jewelry yourself, or use registered mail
• Carry travelers checks for quick, available funds

After arriving at new home

• Renew your driver's license, auto registration and tags
• Shop around for new insurance policies, especially auto coverage
• Revise your will and other legal papers to avoid longer probate and higher legal fees
• Locate the hospitals, police stations, veterinarian and fire stations near your home

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Download the change of address checklist form
(Acrobat/.PDF format)

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