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Buyers Guide To Own or Not to Own? To Own or Not to Own? Obviously, if you're reading this, you're thinking about buying a new home. If you're undecided, consider the many good reasons for owning your own home. First are the financial advantages. Housing usually appreciates in value, and the fact of the matter is, real estate is about the only investment that almost never decreases in value. Tax breaks? The interest you pay on a mortgage loan is one of the few interest deductions you still get on your income tax. Real estate taxes are also deductible. So are many of the settlement costs associated with your purchase, such as points or prepaid interest (more on those later). Interest paid on home equity loans is another one of the few remaining tax deductions. You can use the equity you'll build as your home increases in value to borrow money for such things as a new car or even college tuition for your children. That equity could also mean a down payment if and when you want to buy another house. Each situation varies from person to person, and you'll want to check with your tax adviser, but as a general rule, a home owner can anticipate more tax deductions, which can reduce the income taxes you'll owe, because of the interest you'll be paying on your mortgage. By filing the proper form (usually the W-4) less tax can be withheld, and that can mean more take home pay. Whether you choose a single-family home, a town home, a condominium or a farmhouse, there's no feeling quite like having a place of your own. You can choose your community and your neighborhood. You can paint, repaint, decorate and redecorate as much as you want. It's your place, not the landlord's. Even adjustable rate mortgage payments are more predictable than rent payments.
Use a Sales Associate or Go It Alone? Make no mistake about it. Buying a home is a big deal, and it can be complicated. That's why an agent can help. A good one will make a big difference. To earn a real estate license, an agent, also called a sales associate, must complete several weeks of study in an approved course and pass a state-sponsored examination. Not every real estate agent is a REALTOR® or REALTOR-ASSOCIATE®. Only those sales associates who are members of the NATIONAL ASSOCIATION OF REALTORS® may use the REALTOR® or REALTOR ASSOCIATE® designation. These REALTORS® have committed themselves to that organization's standards for professionalism and ethics. Only you can make the final decision as to what you should offer for a house. However, because of their experience and training, a sales associate can be an invaluable source of advice and guidance as you select and purchase a home.
Experience Counts A sales associate is involved in more real estate transactions in six months than most of us are in a lifetime. Even if you've bought and sold several homes in the past, it's probably been several years since the last time you did. The last home sale in which a sales associate was involved may have been just a few days ago. If you're new to an area, a sales associate can help you get settled into your new home. After all, it's his/her hometown, too. It's not unusual for newcomers to become good friends with the sales associate who helped them find their new home! Once you've selected the home you want, your sales associate can be even more valuable. He or she knows what is negotiable in a contract and what is not. They can help you interpret the contract, put together your offer, find financing, and then guide you through the settlement process. In addition, because the buyer selects the professionals involved in the settlement, such as attorneys, '. you may want recommendation from your sales associate. (Note: In some states, escrow companies handle the settlement.)
MLS Through their association with a real estate firm such as independently owned REALTY WORLD® offices, sales associates have access to resources not available to the general public. One important resource is the Multiple Listing Service (or MLS), a subscription service available in most areas only to licensed brokers. The MLS is a database, and includes many houses that are never advertised in the classified section of the newspaper. Just as important, the MLS includes many more details about each home than could be included in any classified ad details such as real estate taxes and utilities. Because the MLS is a data base, the information quickly helps you narrow your search with a complete list of homes that meet your criteria for price, location, size and amenities. REALTY WORLD® Trinity River Realty is a member of MLS , giving our clients access to more than 20 counties in the area. Using the MLS, your sales associate can also tell you the recent sales prices of comparable houses in the same area.
You Can County on REALTY WORLD® Agents Your local REALTY WORLD® broker is a member of one of the largest real estate networks in North America with offices and agents located throughout the United States and Canada. Founded in 1974, the REALTY WORLD® System has helped and guided literally millions of buyers and sellers. Nearly all REALTY WORLD® agents are REALTOR® associates. Our high standards, combined with those of the National Association of REALTORS®, are your assurance that your REALTY WORLD® agent is an honest, skilled professional.
Finances Once you've made up your mind to buy a new home, a number of questions crowd into your mind. "How much can I afford?" is usually one of the first to arrive. You should be thinking about what you want and what you can afford at the same time. You start shopping for a loan about the same time you start shopping for a house. There aren't any mathematical gymnastics involved in figuring how much you can afford. It's simple addition. The amount of cash you can put up as a down payment, plus the amount of money you can qualify to borrow equals the amount you can afford. There are a few things to keep in mind when you figure how much you can afford for a down payment. You need to take into consideration other expenses such as closing points, repairs and miscellaneous expenses. Your REALTY WORLD® agent will help you estimate closing costs, but a good rule of thumb for most of the country is that closing costs will equal about 3% to 6% of the sale price of home.
The Down Payment The amount of down payment is something to consider seriously There are advantages to both large and small down payments. For example, a large down payment means a lower mortgage amount (less money you have to borrow) and smaller monthly payments. It could also mean lower interest rates and no mortgage insurance payments. On the other hand, with a small down payment, you invest less cash, leaving you more money for other expenses. Also, a larger mortgage payment means more dollars paid per year in interest and therefore a bigger mortgage interest tax deduction. If you qualify for a loan backed by the Veteran's Administration (a "VA loan"), you can usually get a loan (up to a specified limit) with little or no down payment. There are several ways to get cash for a down payment Two of the obvious ones are savings accounts or profits from the sale of another home. Depending on the type of policy you have, you may be able to borrow from your, life insurance. Parents are often a source of money for down payments through gifts, loan on the equity in their home or even advances on inheritance. Perhaps you can borrow from a company savings program at work. You might even want to consider a private investor whom you can buy out later. Your REALTY WORLD® agent may be able to suggest other sources for your down payment.
Borrowing Once you know how much you can afford for a down payment, you need to know how much you can borrow. There are a couple of tried-and-true rules that you can use: The 28% and 36% tests are commonly used by lenders to qualify applicants. The 28% test allows for no more than 28% of your gross monthly income on all of your housing costs-which include loan principal, interest, taxes and insurance (PITI.) and any condominium or homeowner's association fees. For example, with a gross monthly income of $4,000, a lender would allow you to be spending $1,120 on monthly housing expenses. (28%) The 36% test covers both your PITI and other long-term debts you may have such as other loans, alimony, school loans and credit card accounts. The $4,000 income noted above would allow for $1440 a month in total housing and long term expenses. (36%) So, using our $4,000 example, you could afford about $1,120 a month for a mortgage payment, but no more than $1,440 when combined with other debt. Two other very general approaches to estimating loan amounts are to multiply your annual gross income by 2%, or to add your down payment to an amount double your an with your own and expense figures to determine you affordable price range.
Loan Types The type of loan you use to finance your purchase can affect how much you pay, how much cash you will need for settlement, and how much you have left over. Your REALTY WORLD® agent will help you determine the best mortgage program for you, but it's worthwhile to look at them now There are five main mortgage loan types. With a variety of options available within each of these types, the range of financing programs is wide indeed. You( REALTY WORLD® agent or mortgage company will help you determine your best mortgage option. They are: Fixed Rate Conventional Mortgage, 15-Year Mortgages, Adjustable Rate Mortgage, FHA Loan and VA Loan. Please feel free to use our mortgage calculator and expense figures to determine your affordable price range.
Time to Shop Once you know how much you can afford to spend on a home, it's question and answer time. Before you and your agent start looking at homes, you've got to spend some time asking yourself some serious questions about what you want. Emotion is important in choosing a home, but so are the facts. Think of it as 'zeroing in' on your new home. It's out there somewhere. All you have to do is find it. Start with the community and work your way into the specifics, such as number of bathrooms. When you have the answers, your REALTY WORLD® agent will be in a better position to help you find your home.
Begin at Home "The best time to sell your home is when you buy it" is a time-honored real estate motto that means you should be considering resale qualities when you select a home. Likewise, the best way to determine what you want in a community, a neighborhood or a home is to look around at what you have now Take stock of where you live now and make notes of what you like and don't like. The more you know about what makes you happy, the better prepared you'll be. These questions will help. The answers to some of them will be more important to you than others. And you'll probably have other of your own. But if you use this as a guide, you'll be prepared for the actual search.
Community Maybe you've got a choice of community and maybe you don't. If you are relocating to, or live in, a major metropolitan area, you can probably choose from a number of communities in and around the city. Surprisingly, suburban communities on different sides of a city can have very different characteristics. Don't assume that moving from one county to another in the same region won't change your lifestyle.
Neighborhood Your neighborhood is part of your home. Your neighbors will be your friends, and they will have an influence on your life and the way your children grow up. You may consider your neighborhood just the street where you live, or the area around the local school. However you define it, think of your neighborhood as the "outside part" of your home.
As you consider a neighborhood, walk around. Take pictures and talk to the people who live there. This is no time to be shy.
The Great House Hunt Searching for a home on the World Wide Web has never been easier. REALTY WORLD® Trinity River Realty exclusive site, www.TrinityRiverRealty.com, gives you extensive information about the community, as well as properties for sale. View a presentation of both the inside and outside of the house, all in the comfort of your own living room. You know how much you can afford and you know what you want. Your REALTY WORLD® Trinity River Realty Sales Associate has selected several homes that meet your needs. It's time to get started. Don't go alone. Take your sales associate with you. He or she will help you ask the right questions. There are two parts to your evaluation of any home -physical (the house itself) and financial (the price, down payment and financing options available to you). Let's deal with the physical evaluation first.
The Physical Evaluation Fact sheets may be available at each house you visit, but you should take you own checklist and rate each home yourself. You may do nothing more than assign a number rating on a one-through-ten scale, but don't try to rely on your memory. After you've seen several homes, they'll start to run together. Your REALTY WORLD® Trinity River Realty agent will give you a property selection sheet so you can easily rate each home. Take pictures. A picture may not be worth a thousand words, but it certainly will make it easier for you to compare homes later. Look at the automobile traffic at different times of the day to determine whether traffic flow changes. A quiet street at high noon may be a busy commuter route during rush hour. Scout the yard and evaluate it in terms of your own interests and desires. Determine how much work will be required to maintain it. Weeding extensive flower gardens may or may not be your cup of tea. Do you need a fenced yard to contain man's best friend? Is the roof in good shape? How old is it? If the roof is in bad shape or near the end of its life cycle, be aware that new ones can cost a lot of money Look at the condition of the paint on the outside of the house. Note the condition of the shutters and the trim. A brick home that has been painted will have to be repainted at regular intervals. Examine decks and porches. Look for signs of rotting or termite infestation. Make sure you know what sort of storage space is available for things such as lawn mowers and bicycles. A word you'll start to run across is 'convey'. Something that conveys stays with the house as part of the package and something that doesn't convey leaves when the owner does. You should note what conveys. As a general rule, anything that is built-in appliances will stay. But don't assume that such things as fireplace fixtures or washing machines will be there when you move unless you spell it out in your offer. (see "What's in the Contract?") Some will be negotiable. This is where your REALTY WORLD® Trinity River Realty agent will help. Note the age and working condition of the major systems such as heating, cooling and plumbing. If the house is not air-conditioned, is the electrical system heavy-duty enough to allow you to install it later or use window units? Perhaps you'll want to install a microwave. Make sure the circuits will allow it. You should also know that the electrical system is up to current safety standards. What type of fuel do the heating and cooling systems use? A fact sheet or MLS summary should tell you the utility costs of a home but if not, be sure to ask what it costs to heat and cool the home. What condition are the major appliances in? (Stove, refrigerator, oven, dishwasher, etc.) Look for the signs of water leakage in the basement and around windows and sinks. Look in the attic and see what kind of insulation is there and if it is adequate. You should also consider health factors like asbestos insulation or radon leakage. Determine if major improvements are necessary or desirable to accommodate your family and lifestyle. If you want to remodel, can you? Are there physical or zoning limitation? Note the number and location of such things as phone jacks and wall outlets. Is the house wired for cable television? Note the home's orientation to the sun. Do you want the sun in your eyes first thing every morning? Be sure you know whether the home you are considering is covered by local homeowners' association restrictions. These association guidelines that govern what you can or cannot do to the outside of you home, even down to whether or not you can erect a basketball net are designed to ensure neighborhood standards. These types of restrictions have survived several court challenges. Such restrictions have good points as well as bad, but what it boils down to is this: If you don't want anybody telling you what you can and can't do to your house-for any reason-avoid communities with these restrictions. There are also some special considerations to keep in mind for condominiums. Ask to see a copy of the By-Laws and Master Deed or other covenants, and a current statement of financial condition of the homeowner's association. You will be bound by these if you move in. You'll also share the responsibility for upkeep on the major systems, such as heating and plumbing, so find out what condition they are in. Find out exactly what your association fee covers. There are also special things to consider when evaluating newly constructed homes. Since they are usually under construction when you buy, you may be able to choose options like paint, wallpaper, carpet, or patios. You also can check on the work as it progresses. Take pictures. Keep an eye out for poor workmanship in all aspects of the construction. See that the yard is graded properly to avoid low spots or basement leakage. Commit this word to memory as you conduct your home search: Patience. You're going to live in your new home for a long time. Take all the time you need to make the right decision.
Home Inspection Whether you are buying a condo, a previously owned home or a new one, you should consider having a professional home inspection. It costs money, but it is worth every cent. A qualified home inspector (look for membership in the American Society of Home Inspectors) will thoroughly examine the property. They know about major systems and can spot problems you can't see. A home inspector can find things that could be expensive problems later. You should accompany the inspector when he makes his inspection. He will also provide you with a written report when he is finished. In many cases he can estimate the costs to make repairs he has suggested. You can assume that an inspection by a qualified home inspector will be a complete one, but don't assume that the seller will agree to make any or all repairs your inspector recommends. This is another time your REALTY WORLD® Trinity River Realty agent will help. Many times such repairs are negotiable and the purchase price may be adjusted to reflect the findings of a home inspector. The seller, however, many be perfectly willing to let you slip away rather than making any repair or price adjustments. Then you have to decide whether to take the house as is' or move on. Either way, you're ahead of the game with a home inspection. It's money well spent whenever you are making a home purchase.
The Financial Evaluation Consider whether the homes you are looking at fit your needs and still allow you to stay within your budget. Is the existing mortgage assumable? This may be a beneficial way for you to purchase the home. What is the required down payment? What financial method will the seller accept? What are the annual property taxes? Find out if there are any local bonds or special assessments you will be required to pay. Do you really need 3 full baths or will 2 baths do?
Making an Offer You've done your homework, roadwork and legwork. You've found the home you want, and you're ready to make an offer. If you thought your REALTY WORLD® Carolinas Properties agent was valuable before, you haven't seen anything yet! There are two parts to actually making an offer. Preparing it and presenting it. Let's deal with these one at a time.
What's in the Contract You and your agent will want to carefully consider all the aspects of the home you have selected, and put together an offer based on your evaluation of the property and the asking price. You may be offering a different price than the seller asked, or including some contingencies. In any case, all the details of your offer are contained in a document that spells it out. You'll include what you are offering, how you expect to pay for it, and other significant details. When the seller agrees to your terms (often after some negotiation) and signs the document, it becomes the sales contract. It becomes binding for both parties. So make sure you understand it and are happy with it. Ask your REALTY WORLD® Trinity River Realty agent a lot of questions. You may want to hire a settlement attorney. Get a copy of a standard sales contract from your agent. Read it. Ask questions until you understand it. Once you and the seller both sign it, you're bound by it. It's important that your contract proposal is complete, so pay attention to things like:
The Price If you don't think the home you want to buy is worth the full asking price, don't offer it. If the seller rejects your offer, you can always make another (unless it is so low you've insulted him or her). When determining your offer, take into consideration the cost of any improvements or repairs you want to make.
Earnest Money (Deposit) You'll usually be expected to deposit some money in an escrow account when your offer is accepted, and that amount should be spelled out in the contract. This will be credited to you at settlement. If the contract is voided, you'll get your deposit back.
Down Payment The amount of the down payment is often determined by the type of financing you expect to get.
Contingencies Contingencies are protection devices in the sales contract that let either you or the seller declare the sale null and void under certain circumstances. A financing contingency is one that protects you. Simply put, if you can't get the financing to purchase the house, you aren't obligated to buy it. A satisfactory home inspection is another contingency that protects you. You have probably inspected the house closely yourself, but you can't be expected to do so with the skill of a qualified home inspector. A third protection for you that the seller may accept is making the sale contingent on you selling your current home. Unless you want the possibility of two mortgages and two houses, better try for this one. Don't get carried away. Frivolous contingencies, or too many, can kill the sale.
What Conveys Any personal property that you want included in the sale of the home must be written into the contract. This will help eliminate any misunderstandings.
Termite Inspection You should pay for a termite inspection, and require the seller to remove any infestation that may be found, and repair any damage the little devils may have caused.
Repairs The seller is obligated to have all the major systems such as heating and plumbing in working order at the time of settlement, unless the home is sold 'as is'. If you have included a home inspection contingency, you should state in your contract that you expect all repairs which have been deemed to be the seller's obligation to be completed before closing.
Settlement Attorney or Title Insurance Company The buyer selects the escrow company, settlement attorney, title attorney, or insurance company to conduct the settlement. Be sure the lender approves the title insurance company.
Closing and Occupancy Dates This is a very important consideration. This is the date that the home is yours and you can move in (and the seller moves out). It will take 2-3 weeks for a loan to be approved and settlements are usually 4-6 weeks after a contract has been accepted. If necessary, you can negotiate a rental agreement with your seller to allow him to occupy the property after settlement. The timing of settlements is critical when the buyer and seller are also involved in buying and selling other property. It is not unusual for both parties to arrive at settlement with their belongings packed in a moving van.
Presenting the Contract Your REALTY WORLD® Trinity River Realty agent will take your offer to the seller for you. Your agent will discuss your offer and be able to get a feeling for what the seller will accept and/or negotiate. Once your agent has presented the offer, three things can happen:
Once you agree to the contract and everybody signs on the dotted line, the house cannot be sold to anyone else unless your contract is invalidated. Remember, your agent is the person who will keep things moving smoothly along. This is a negotiation and your REALTY WORLD® Trinity River Realty agent has been through a lot of them. He or she will usually be able to suggest strategies to make it work. A repeated word of caution -- Patience. Don't be rushed into anything by anybody, not even yourself. As we said at the beginning of this guide, buying a home is a really big deal! Take your time and do it right.
Finding the Loan 1. Credit Unions You can refer to the list of interest rates for mortgage money in your local newspaper's real estate section or ask your agent to compare interest rates. When you shop for mortgage money, remember, you're the customer. Don't be intimidated. Ask a lot of questions when you talk to lenders. Questions like:
After you've selected a lender, it's his turn. You should be prepared to provide information about:
Once you have completed your application, the lender will verify the information you have provided, get a credit report, order a property appraisal to determine the appraised value of the home, perform a title search, and verify hazard insurance. When these items are completed, the loan review committee will determine whether or not your loan is approved. Once it is you will be notified in writing, with details about the loan amount, interest rate and monthly payment included. Your total monthly payment includes the principal, interest, taxes and insurance. In some areas, you can pay your property taxes directly, and some lenders will allow you to make your insurance payments directly. Check with your agent for local restrictions.
Protect Your Investment Your home is an investment. Protect it. There are all sorts of insurance programs available to you. Some of them will be required by your lender before they will make the loan. Others are simply good sense. The lender will require you to purchase a hazard insurance policy, (sometimes called homeowners insurance) to protect your home and the lender's investment against fire, theft, vandalism, etc. That policy should also include liability coverage for you in the event that a visitor is injured. The minimum coverage will equal the mortgage amount, but you should investigate more coverage. Title insurance provides protection in the event a defect puts your title to the property in jeopardy. Lenders require title insurance to protect their investment, you may consider an owner's policy as well. Such a policy may be less expensive if you purchase it at the same time you buy the lender's mortgage.
Home Warranty Plan A home warranty plan is coverage you can purchase to protect you from major repair bills on most major appliances and mechanical systems during the first year you own your new home. With a home warranty plan, you won't have to keep as much of your cash in reserve to cover surprise repairs on covered items during the first year in a new home. This could let you put more cash into your down payment. You can also invest in a previously owned home with more confidence, knowing that a home warranty plan will protect most major appliances and systems during the first year. REALTY WORLD Trinity River Realty offers a home warranty plan.
Wrapping Things Up The Walkthrough In some areas, it's customary to have a "walkthrough" inspection of the home to make sure everything is according to your sales contract. This is not the time to come up with new demands. If an inspection is available to you, take your REALTY WORLD® Trinity River Realty agent with you. Make sure you have a checklist of the items that were noted in the contract.
Don't Forget the Odds and Ends There are things that sometimes are forgotten and can ruin your first night in a new home, such as having the power put into your name, or connecting the phone line and the water. If the seller has contacted the gas and electric companies and has had the service taken out of his name, it may be stopped altogether if you don't have it put in yours. A deposit may be required by the local utility to start service. That first night celebration could otherwise take place in the cold and the dark.
Settlement Day The settlement or closing day varies from place to place. In some areas, the buyer, the seller, the agents and the other professionals handling the settlement gather together to transfer the property. In others, buyers and sellers come to the settlement or attorney's office separately for the transaction. In any case, you'll need to make sure you have a few receipts, documents and fees. Bring to the settlement: A certified or cashier's check for the balance of the down payment and closing costs. Have the check made out to you, and endorse it over to the seller, settlement attorney, or closing company. The settlement professional can determine closing costs ahead of time. Your homeowner's insurance policy and a receipt showing that you have provided for the first year's coverage. Your checkbook for any incidental expenses that may crop up.
Closing Costs Closing cost are those expenses paid at settlement that are not included in your mortgage. They vary depending on your situation and location. Your REALTY WORLD® Trinity River Realty agent will be able to help you estimate your costs. Typical closing costs paid by the buyer come under a few main headings. Here are some highlights: Items You Pay in Connection with the Loan
Reserves Deposited with the Lender Usually, the lender will be paying your hazard insurance and property taxes out of your PITI monthly payments. These reserves are the amount deposited into an account to ensure that the money will be there when those obligations are due.
Title Charges
Government Fees
Other
What Happens at Settlement? The real estate attorney will be the leader at the transaction. Again, ask questions. You're about to sign your name on several documents, so know what you are signing. You can usually get a sample copy of a settlement sheet from your sales associate or the settlement professional ahead of time. Also, the Real Estate Settlement Procedures Act (RESPA) requires that the lender provide you with an estimate of all settlement charges nor to settlement. Check with your REALTY WORLD® agent for more information. First, you'll work out any lingering problems that may have resulted from your walkthrough, if such a procedure is customary in your area. Such problems will be nothing new to either of the agents involved or the settlement representative, so they will all know ways to handle the situation. The settlement representative will explain to you (the buyer) the deed of trust (or mortgage) and deed of trust note. He or she will review any lender forms or VA or FHA documents. You'll sign all of these and hand over the certified check for the balance of the down payment and closing costs. That's it. You just bought a new home! And if you've done business with a REALTY WORLD® Trinity River Realty agent, you know how the REALTY WORLD® System, the experience and skill of our agents and exclusive REALTY WORLD® programs can reduce the stress associated with buying a new home. "If You're Thinking of Moving, Now or in the Future, Let's Sit Down and Talk. I Can Help You Sell a House or Find a Home That's Perfect for You." -- Your REALTY WORLD® Trinity River Realty Sales Agent
Agent: A person who acts for or in place of another with authority (either written or implied) to do so from that other person. Also known as a sales associate. Agreement of Sale: A legally enforceable agreement to do (or not do) a particular thing. Same thing as the contract, sales agreement, purchase agreement or binder. Appraisal: An expert judgement or estimate of the quality or value of real estate as of a given date. Usually used for qualification for the loan amount. Assessed Value: The value placed on property for tax purposes. Does not usually reflect fair market value. Assumable Mortgage: A mortgage that may be taken over or assumed by the buyer of a property if they qualify. Brokerage Fee (Commission): Fee paid to a real estate broker for transacting the purchase or sale of a piece of property Certificate of Title: A document signed by a title examiner or attorney, stating that the seller has clear and insurable title to the property. Closing (Settlement): Conclusion of a real estate sale, at which time title transfers and necessary funds change hands. Commission: Same definition as brokerage fee (above). Competitive market analysis: A method of valuing property using a study of recently sold, similar properties, property that failed to sell and other property currently on the market. Contract. A legally enforceable agreement to do (or not to do) a particular thing. Convey: To deed or transfer title of property from one person to another. Deed: A written instrument that when executed, delivered and recorded, authorizes the conveyance of title of real property (as opposed to personal property) from one person to another. Personal property is transferred with a bill of sale. Earnest Money: The money placed in escrow for the seller, by the potential buyer, upon the signing of the agreement of sale to show that the buyer is serious about buying the house. Also known as a deposit. Equity: The increased value the owner builds as the market value of the property increases and the mortgage balance decreases. Escrow: Funds left in trust to a third party to be released upon fulfillment of preset condition. Fair Market Value: The price a ready, willing and able buyer will pay for a home that a seller will accept. FHA: FHA stands for Federal Housing Administration, a federal agency set up to insure mortgages made to first time home buyers by a lending institution in order to protect the lender from default. Hazard Insurance: Pays for damages from fire, storms, etc. Also know as 'Homeowner's Insurance.' Home Protection Plan: A limited home warranty program available through REALTY WORLD® offices for home buyers and sellers. It protects against major repair bills on major appliances and select mechanical elements and systems. Lien: A security interest in real or personal property to satisfy a debt. Market Price: The actual amount for which property is sold. Also called sales price or purchase price. Market Value: The highest price which a buyer would pay and the lowest price a seller would accept. Mortgage (Deed of Trust): Puts up the title to real property as security for a mortgage loan and therefore protects the lender in case of default. Mortgagee: A person or company who loans money for the purchase of real property. Mortgagor: A person who borrows money in order to purchase real property. Multiple Listing Service (MLS): A system by which brokers of real property can share information on properties that are for sale. P.I.T.I.: Stands for principal, interest, taxes and insurance. Most mortgage payments include these four elements. PMI (Private Mortgage Insurance): Insurance written by a private company protecting the mortgage lender against loss occasioned by a mortgage default. Point: One percent of the loan amount paid to the lender. Also referred to as 'discount points.' Prepayment Penalty: A charge levied by the lender to the borrower for paying off a mortgage before its maturity date. Prorate: To allocate between the seller and the buyer their proportionate share of obligation paid or due. Examples include property taxes, fire insurance or a condominium fee. RealAction® Marketing Plan: An exclusive REAL'TY WORLD® program that keeps home sellers informed in writing about the progress being made on the sale of their house. ReaIFax® Home Buyer Plan: A program used by REALTY WORLD® agents to assist buyers throughout the entire home purchase process. REALTOR®: The registered trade name for a sales associate or broker who is a member of the National Association of REALTORS®. Real Scope® Photo Display Board: A REALTY WORLD® home selling program that allows buyers and other agents to preview the home, both inside and out, in the comfort of a REALTY WORLD® office. It includes a photo display of the home featuring interior and exterior shots in full color. Survey: Done by a licensed surveyor, it's a map of a plot of land showing it's size, boundaries, improvements and how it relates to adjacent properties. Title: The document that indicates rights of ownership, control and possession of property. Title Abstract: A summary of the public records relating to a title on a piece of land. Title Insurance: Insurance to protect the lender and/or the homeowner from loss resulting from defects in the title of the property unknown at the time of purchase. Title Search: An actual check of the title records in the local jurisdiction to ensure that the title can be legally conveyed. Transfer Tax: State tax, local tax (where applicable) and tax stamps (where applicable) required by law when title passes from one owner to another. www.realtyworld.com. The exclusive web address for REALTY WORLD®, featuring properties and community data from all over the USA, as well as company and agent profiles. |