buyer's guide - summit home consultants

ELEVATE YOUR EXPERIENCE YOURHOME

BUYINGGUIDE

2111 East Highland, Suite 420 | Phoenix, AZ 85016

[email protected] | P: 602.909.5994 | F: 602.957.6065www.ScottsdaleAndBeyond.com

HertzogBobBroker & Realtor

ELEVATE YOUR EXPERIENCE

HertzogBobBob Hertzog

Designated Broker/Owner

Summit Home Consultants

2111 East Highland # 420

Phoenix, AZ 85016

C:602.909.5994

F: 602.957.6065

E:[email protected]

www.BobHertzog.com


Welcome! You are about to embark on the exciting journey of finding your ideal home. Whether it is your first

home or your tenth home, a retirement home, or an investment property, I will make your home-

buying experience fun and exciting. I can help you find the ideal home with the least amount of

hassle; and I am devoted to using my expertise and the full resources of my Office to achieve these

results!

Purchasing a home is a very important decision and a big undertaking in your life. In fact, most

people only choose a few homes in their lifetime. I am going to make sure that you are well

equipped and armed with up-to date information for your big decision, and will be sure to use

what your specific wants and needs are in your next home, as well as preparing this to guide

you through every phase of the home-buying process. This packet gives you helpful information

during and after your transaction. Use its reference pages, note pages and agency explanations, as

an invaluable guide on your home-buying journey.

Please keep this packet with you during your home-buying process. There are pages that contain

important phone numbers and dates and areas for notes to help you stay organized.

So let’s take an exciting journey together! I look forward to meeting your real estate needs every

step of the way!

HertzogBobOwner & Designated Broker


www.BobHertzog.comLeveraging my experience in the industry, I am known for outstanding client service, high tech

marketing techniques, personal touches and as a skilled negotiator with my client’s best interests

at heart. I believe strongly that it is not only my duty to represent my clients to the best of my

ability, but also to educate them throughout every step of the process armed with top notch

information and marketing insights, so that my clients make the best decisions possible. I am

honest, hardworking, and knowledgeable about the Real Estate industry and work closely with top

agents in the area.

Whether you are buying or selling, I understand the process can often be challenging and

complicated. I focus on taking the pressure off you, so you can make clear and concise decisions

throughout the process. Ultimately, a successful sale is my main goal and we utilize my expertise to

make that happen for you

Our clients receive the utmost care and accurate knowledge that’s above and beyond our

competitors. Only the best Real Estate minds can deliver this consistently.

HertzogBobOwner & Designated Broker


TEAMWORKSummit Home Consultants was created to reward agents for working together. Our belief is that if

we all work together towards a common goal rather than on our own individual interests, we are

all more successful. I’m confident that every Summit Home Consultants professional shares the

common goal of giving you, my client, the best service possible.

KNOWLEDGESummit Home Consultants keeps me ahead of trends in the Real Estate industry through it’s

extensive, industry-leading training and research resources. This allows me to provide you with a

level of service that is unmatched in our industry.

DEPENDABILITYSummit Home Consultants was founded on the principles of honesty, integrity, and trust. We are

taught to “do the right thing”, and always put the needs of our clients first. It reinforces my belief in

our philosophy of “give your clients a level of service that is so great, that they cannot wait to tell

others!”

TRACK RECORDSummit Home Consultants has deep roots in the Metro Phoenix market, having been established

in 2001. Our Owner/Designated Broker is a third-generation real Estate broker, and has a solid

reputation of being a thought-leader in our industry. There are no “part-time” agents on our team.

We sell more homes per agent than any other Brokerage in the Valley, and pride ourselves on our

highly-regarded professionals.

WHY SUMMIT HOME CONSULTANTS?“I believe that in the end, it’s all about the people we surround ourselves with. While our team may seem

small, these are some of the best people in the business you’ll ever meet. They are not only experts at what they do, but are genuinely a great bunch, and I am proud to call them my team members and my

friends. Every client we work with gets the benefit of a collaborative effort by these great people who all bring their unique expertise to the table to help serve every one of our clients better.”

- Bob Hertzog - Founder, Summit Home Consultants

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TABLE OF CONTENTS

About Bob Hertzog 3

Why Summit Home Consultants 4

The Home Buying Process 6

Loan Application Checklist 7

The Mortgage & Loan Process 8

The Ten Commandments 9

Making An Offer 10

“I Have An Accepted Contract, Now What?” 11

Behind The Scenes 13

Closing 101 14

Frequently Asked Questions 15

It’s All About You 16

Your Home Search: What To Expect 17

Why You Need A Realtor 18

Understanding Agency 19

Advantage Of Buyer Agency Agreement 20

Important Dates To Remember 21

Moving Checklist 22

Glossary 25


Select A Real Estate Agent

Obtain Financial Pre-Approval

Select Properties

View Properties

Write An Offer to Purchase

Negotiate Terms

Accept The Contract

Remove Contingencies

Obtain Mortgage Financing

Obtain Funding For Closing

Close On The Property

Take Possession Of Home!

Analyze Your Needs In A Buyer Consultation

Credit | Underwriting | AppraisalSurvey | Insurance | Check

Conduct Inspections

Resolve Any Issues

Conduct Title Search

Remove Any Encumbrances

Obtain Title Insurance

THE HOME BUYING PROCESS

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loan application checklistGeneral Picture ID with Social Security Number

If renting; name, phone number, and complete addresses of all landlords (past 2 years)

Income Employment history; including names, addresses, phone numbers (past 2 years) Copies of last 30 days pay stubs & W-2 forms (past 2 years) Verification of other income (social security, child support, retirement, etc.) If self-employed; copies of signed tax returns including all schedules (past 2 years) and a signed Profit & loss statement of the current year If retired; tax returns (past 2 years)

If you have rental property income; copies of all lease agreements

Assets Copies of all bank statements from checking/savings accounts (past 3 months)

Copies of all investment & retirement account statements, stock/bond certificates (past month)

Creditors Credit Cards (account numbers, current balances, and monthly payments) Installment loans (car, student, etc.) Same details as for credit cards Mortgage loans (property address, lender with address, account numbers, monthly payment & Balance owed on all properties presently owned or sold within the last 2 years) Bring profit of Sale of properties sold.

Childcare expense/support (name, address, phone number - VA LOANS ONLY)

Other Bankruptcy; bring discharge & schedule of creditors Adverse Credit; bring letters of explanation Divorce; bring your Divorce Decrees, property settlements, quitclaim deeds, modifications, etc. VA ONLY; bring Form DD214 & Certificate of Eligibility Retirees; bring retirement and/or Social Security Award Letter

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The mortgage & loan process Funding your home purchase...

Pre-qualifyWe recommend our buyers get pre-qualified before beginning their home search to clarify the

price range of the property.

1. Financial pre-qualification or pre-approvalApplication & Interview

Buyer provides pertinent documentation, including verification of employment

Credit report is requested

Appraisal scheduled for current home owned, if any.

2. UnderwritingLoan package is submitted to underwriter for approval.

3. Loan approvalParties are notified of approval

Loan documents are completed & sent to title.

4. Title companyTitle Exam, insurance & title survey conducted

Borrowers come in for final signatures.

5. FundingLender reviews the loan package

Funds are transferred by wire.

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The ten commandments When applying for a Real estate loan...

1. Thou shalt NOT change jobs, become self-employed or quit your job

2. Thou shalt NOT buy a car, truck, or van (or you may be living in it!)

3. Thou shalt NOT use charge cards excessively or let your accounts fall behind

4. Thou shalt NOT spend money you have set aside for closing

5. Thou shalt NOT omit debts or liabilities from your loan application

6. Thou shalt NOT buy furniture

7. Thou shalt NOT originate any inquiries into your credit

8. Thou shalt NOT make large deposits without first checking with your loan officer

9. Thou shalt NOT change bank accounts

10. Thou shalt NOT co-sign a loan for ANYONE!


Making an offer...Once you have found the property you want, we will write a purchase agreement. While much of

the agreement is standard, there are a few areas that we can negotiate:

The price What you offer on a property depends on a number of factors, including its condition, length

of time on the market, buyer activity, and the urgency of the seller. In today’s market low

ball offers are a waste of time. Rest assured before we write any offers I will prepare a

Comparative Market Analysis. The analysis will provide a fair market comparison.

The move-in date If you can be flexible on the possession date, the seller will be more apt to choose your offer

over others.

Additional property Often, the seller plans on leaving major appliances in the home; however, which items stay or

go is often a matter of negotiation.

Typically, you will not be present at the offer presentation, we will provide it to the listing agent

and/or seller. The seller will then do one of the following:

ACCEPT THE OFFER REJECT THE OFFER COUNTER THE OFFER WITH CHANGES

The most common response is a counteroffer. When a counteroffer is presented, you and I will

work together to review each specific area of it, making sure that we move forward with your goals

in mind and ensuring that we negotiate the best possible price and terms on your behalf.

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I have an accepted contract Now what?...CONGRATULATIONS, YOU HAVE AN ACCEPTED OFFER! Here are the next steps...

InspectionWe have 10 days to call your inspector, get him over to the house, do his inspection, receive his

reports, and respond. You will choose which inspections you want to get, if any, but common

options are.:

1. Building Inspection (usually $300-$600)

2. Termite Inspection (usually $75)

3. Sewer Lateral Line Inspection (usually $125-$300).

During this time, we will also ask the listing agent for the Seller Property Disclosure Statement

(SPDS), which allows the Seller to disclose any known defects/issues with the home. We will

also request an Insurance History Report (CLUE Report), which will show any and all insurance

claims filed against the property during the time that the Seller has owned the home. Once the

inspection is complete, your options include either walking away from the deal and receiving

your earnest money back, asking for money to fix certain issues yourself, asking for the Sellers to

fix items, or inform them that no repairs will be required. Typically, the Sellers will have 5 days to

respond to your inspection resolution requests. During the typical initial 10 day inspection period,

we will call your lender and title company to introduce ourselves as your Realtor® and give them

copies of all paperwork and our contact information. It is our duty to help them make the entire

process as smooth and effortless as possible for you. Once the inspection is done, and you are

satisfied with the resolution negotiations, we can proceed to the next steps.

Earnest MoneyOn your offer we designated how much earnest money you will be putting down. Once we have

an accepted contract we need to get this money to the party we designated within 24-48 hours.

Typically, this will be your title company. You can give this personal check to your Realtor®, or the

title company will send a messenger to your home or office to pick it up. If closing is less than 10

days from now, the check needs to be a cashiers check directly from your bank.

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AppraisalAfter the inspection contingency is resolved, we will call your lender and tell them to now order the appraisal. An appraisal involves the bank sending out their trusted 3rd party to verify the house is worth what they are lending you. We wait until the inspection resolution is completed to avoid spending money on this until we know you’re moving forward with the purchase.

InsuranceOnce we have made it through the inspection period, call your insurance agent to discuss your homeowners insurance needs. Tell them the closing date, so they know when to start coverage. Get a quote you are comfortable with, and give the insurance agents the name and number of your lender. This should all be completed within the first 5 days of the expiration of the inspection period. Getting an insurance quote is free, and the options can be complicated, as there are different levels of coverage, deductibles, etc. ... So make sure you are comfortable with your final decision.

Plan AheadEither call all of the utility companies or use a company like CONNECTED MOVING (see information on page 30) to get everything transferred into your name. This should be done 3-5 days prior to the close of escrow date.

Final Walk-Through1-4 days before closing we can meet at the house and conduct our final walk-through, to make sure the Sellers did not damage the property, and/or that they have fixed everything they agreed to repair. This is also a great opportunity for you to measure rooms and decide how you will set up the furniture. If something we have agreed upon in the inspection resolution has not been completed, we will contact the other agent, and get the issue(s) resolved. If necessary, we can postpone the closing date in order to resolve any remaining issues.

ClosingThe title company will contact you 3-7 days before the closing date to schedule a day/time that is convenient for you to sign the closing documents. At this appointment, please show up with your drivers license(s), and a cashiers check for however much your lender tells you will be required. They likely won’t tell you this amount until a day or two before closing. On closing day, we will meet at the title company, in case any issues come up at the signing.THAT’S IT! Congratulations, you are officially a homeowner!!

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Earnest MoneyAn agreement to convey starts the process once it is received at the Escrow Company. Once you submit the loan application, it is usually subject to a credit check, an appraisal, and sometimes, a survey of the property.

Tax CheckWhat taxes are owed on the property? The Title Company contacts the various assessor collectors.

Title SearchCopies of documents are gathered from various public records: deeds, deeds of trust, various assessments and matters of probate, heir ship, divorce, and bankruptcy are addressed.

Examination Verification of the legal owner and debts owed.

Document PreparationAppropriate forms are prepared for conveyance and settlement

SettlementAn Escrow Officer oversees the closing of the transaction: seller signs the deed, you sign a new mortgage, the old loan is paid off and the new loan is established. Seller, Realtors®, attorneys, surveyors, Title Company, and other service providers for the parties are paid. Title insurance policies will then be issued to you and your lender.

Behind The ScenesNow that you have decided to buy your home, what happens between now and the time you

legally own the home? A Title Company may handle the following items:

Title InsuranceThere are two types of Insurance• Coverage that protects the lender for the amount

of the mortgage• Coverage that protects your equity in the propertyBoth you and your lender will want the security offered by title insurance, Why?

Title agents search public records to determine who has owned any piece of property, but these records may not reflect irregularities that are almost impossible to find. Here are some examples: An unauthorized seller forges the deed to the property; An unknown, but rightful heir to the property shows up after the sale to claim ownership; Conflicts arise

over a will from a deceased owners; Or a land survey

showing the boundaries of your property is incorrect.

For a one-time charge at closing, title insurance will

safeguard you against problems including those even

an extensive search will not reveal.

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Closing 101

Prepare For ItClosing day marks the end of your home-buying process and the beginning of your new life! To

make sure your closing goes smoothly, you should bring and prepare the following:

Make sure to have available funds in your bank account to cover for the closing cost and

Down payment

An insurance binder and paid receipt

Photo ID’s

Social Security Numbers

Addresses for the past 10 years.

Own ItTransfer of title moves ownership of the property from the Seller to you. The two events that make

this happen are:

DELIVERY OF THE BUYERS FUNDS

This is the check or wire funds provided by your lender in the amount of the loan.

DELIVERY OF THE DEED

A deed is the document that transfers ownership of Real Estate. The deed names the Seller

And Buyer, gives a legal description of the property, and contains the notarized

signatures of the seller and witnesses.

At the end of closing, the deed will be taken and recorded at the County clerk’s office. It will be

sent to you after processing.


Frequently Asked Questions

How will you tell me about the newest homes available?The Multiple Listing Service Website provides up-to-date information for every home on the market. I constantly check the New on Market list so I can be on the lookout for my clients. I will get you this information right away, the way that is most convenient for you; by phone and/or email.

Will you inform me of homes from all real estate companies or only summit home consultants?I will keep you informed of ALL homes. I want to help you find your dream home, which means I need to stay on top of every home that is available on the market.

Can you help me find new construction homes?Yes, I can work with all builders and get you the information you need to make a decision. On your first visit with the builder, I will accompany you. By using my services with a new construction home purchase, you will receive the services I offer, as well as those provided by the builder, at no additional cost.

How does a For sale by owner (fsbo) work?Homeowners trying to sell their home without agent representation are usually doing so in the hopes of saving the commission. If you see a FSBO and want the advantages of my services, let me contact the owner for you and make an appointment. Most times the homeowner will work with an agent, even though their home is not listed, since the agent is introducing a potential buyer to their property.

Can we go back through our property again once an offer is made, but before possession?Usually, we can notify the seller and schedule a convenient time to visit the property again. Immediately before the closing, we will schedule a final walk-through and inspection of your new home.

Once my offer is accepted, what should i do?Celebrate and focus on moving into your new home! You will want to schedule your move, pack items, and notify businesses of your address change. I will provide you with a moving checklist to help you remember all the details. I will also give you a good faith estimate and HUD statement, which will indicate the amount you will need to bring to closing.

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It’s all about you!My Real Estate business has been built around one guiding principle:

IT’S ALL ABOUT YOU!

YOUR NEEDS

YOUR DREAMS

YOUR CONCERNS

YOUR QUESTIONS

YOUR FINANCES

YOUR TIME

YOUR LIFE

My focus is on your complete satisfaction. In fact, I work to get the job done so well, you will want

to tell your friends and associates about it. Maybe that’s why more than 90% of my business comes

from repeat customers and referrals.

Good service speaks for itself. I’m looking forward to the opportunity to earn your referrals too!

“Bob was great from day one!

He was very knowledgable patient and did

not use pressure tactics. Bob is very honest

and professional and always available to

handle questions and concerns. The best real

estate sale experience I have ever had!”

- Kevin D.


Your home search: what to expectI love helping buyers find their dream home. That’s why I work with each client individually, taking

the time to understand their unique lifestyles, needs and wishes. This is about more than a certain

number of bedrooms or a particular zip code. This is about your life. And it’s important to me.

When you work with me you get:

A knowledgeable & professional Realtor®A committed ally to negotiate on your behalfThe backing of a trusted company, summit home consultantsI have the systems in place to streamline the home-buying process for you. As part of my service, I will commit to helping you with your home search by:

Personally touring homes & neighborhoods with youKeeping you informed of new homes on the marketHelping you preview homes on the webAdvising you of other homes that have sold and for how muchWorking with you until we find the home of your dreams


Why you need a Realtor®As a licensed Real Estate professional, I provide much more than the service of helping you find your ideal home. Realtors® are expert negotiators with other agents, and superb navigators around the local neighborhood. They are members of the National Association of Realtors (NAR) and must abide by a Code of Ethics and Standard of Practice enforced by the NAR. A professional Realtor® is your best resource when buying your home.

Let me be your guide• As a knowledgeable Realtor® I can save you endless amounts of time, money, and frustration.• As a knowledgeable Realtor® I know the housing market inside and out and can help you avoid

the “wild goose chase”.• As a knowledgeable Realtor® I can help you with any home, even if it is listed elsewhere or if it

is being sold directly by the owner.• As a knowledgeable Realtor® I know the best lenders in the area and can help you understand

the importance of being per-qualified for a mortgage. I can also discuss down payments, closing costs, and monthly payment options that suit you.

• As a knowledgeable Realtor® I am an excellent source for both general and specific information about the community such as schools, churches, shopping, and transportation; plus tips on home inspections and pricing.

• As a knowledgeable Realtor® I am experienced at presenting your offer to the homeowner and can help you through the process of negotiating the best price. We bring objectivity to the buying transaction, and we can point out the advantages and the disadvantages of a particular property.

And the best thing about me as your Realtor® is that all this help won’t cost you a dime!The seller pays the commission to the Realtor®.


Understanding agency Who works for whom?

Seller agency (single agency)• Agent will represent the best interest of the seller• Agent will owe the seller fiduciary duties• Agent must give the buyer all material facts so that the buyer can make an educated decision

Buyer agency (single agency)• Agent will represent the best interests of the buyer• Agent will owe the buyer fiduciary duties• Agent must give the seller all material facts so that the seller can make an educated decision

Transaction Broker (Dual Agency)• Agent represents both the buyer and the seller equally.• Agent’s objective is to get a mutually satisfactory agreement among all parties.• Agent gives all options to the buyer and the seller.• Depending on the local market, all parties may be present at contract presentation to negotiate on

their own behalf.• All parties have confidentiality. Agent may do nothing to the detriment of either the buyer or the seller.• Both the buyer and the seller have a right to counsel. Before making any decisions, both parties have

the right to seek family, religious, legal, or financial counsel.

In all relationships, as your Agent I have a duty to act honestly with both the buyer and the seller


The advantages of a buyer agency agreement

Your interests are professionally representedEnlisting the services of a professional Buyer’s Agent is similar to using an accountant to help you with your taxes, a doctor to help you with your health care, or a mechanic to help you with your car. If you had the time to devote to learning everything about accounting, medicine, and automotive mechanics, you could do these services yourself. But who has the time? This is why you allow other professionals to help you in their specific areas of expertise.

We will take care of the hassles of everyday real estate transactions for you. We let you concentrate on your full-time job, while we do our job. We will guide you through the home-buying process and exclusively represent your interests as we help you find a home, present your contract offer, negotiate, and close on your home!

You get a personal specialist who knows your needsJust as your accountant, doctor, and mechanic understand your specific needs, your Buyer’s Agent gets to know your real estate needs and concerns. This type of relationship is built through open communication at all times. Your Buyer’s Agent will save you a lot of time by providing you all the details about any home before you see it. In addition, you Buyer’s Agent will listen to your feedback and concerns about each home.

You will quickly and conveniently get a great homeThe advantage to signing a Buyer’s Agency Agreement with me is that you will have a professional agent working to find and secure the ideal home for you. It is nearly impossible to find a home that meets your needs, get a contract negotiated, and close the transaction without an experienced agent. You won’t need to spend endless evenings and weekends driving around looking for homes or trying to search computer networks by yourself. When you tour homes with your professional Buyer’s Agent, you will already know that the homes meet your criteria and are within your price range.

What is the buyer’s agency agreementEntering into a Buyer’s Agency Agreement has countless advantages. When you sign the agreement, you are simply agreeing to “hire” a personal representative who, by law, must represent your best interests to the best of his/her ability. All of this personal service is available at absolutely NO COST TO YOU! The Seller’s Agent is responsible for paying your Buyer’s Agent fee. With me, you get a professional agent devoted to protecting your needs and to helping you make one of the most important investment decisions of your life - and you don’t even have to pay the fee!

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Important dates to remember

Effective Date Loan Application Deadline

Inspection Deadline Loan Commitment Due

Inspection Response Additional Escrow Due

Termite Inspection Closing Date

Reaching a successful closing requires paying attention to an incredible number of details. Our closing department will work closely with you now to make sure all details are handled.

As always, my goal is to have a smooth closing process and relieve any unnecessary stress. Please feel free to contact me with any questions.


Moving checklistWhat to do before you move!

Two months before moving Sort through your belongings to reduce the number of things to move Have a garage sale or donate items you no longer need Decide whether to move yourself or hire professionals. Make reservations with a moving company or truck rental company. TIP: Call 3 companies for estimates to compare Gather packing supplies; boxes, packing material, tape, felt markets, & scissors If you’re moving a long distance, make travel arrangements with the airline, hotel, and rental car agency. If you’re driving to your new home, get maps and plan your travel route. Save all moving receipts. Some moving expenses are tax deductible. Check the current tax code for requirements. Place your legal, medical, financial, and insurance records in a safe and accessible place. Purchase insurance coverage for valuables to be moved.

One month before moving Start packing items that aren’t regularly used such as off-season clothes and decorations, and items in storage areas (garage, attic, closets, etc.)

Make travel arrangements for your pets If you’re driving, get your car tuned up Get medical records from your doctors, dentist, optometrist, and veterinarian Send items (rugs, drapes, clothing, quilts, bedding, etc.) to the cleaners Back up important computer files.

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Two weeks before moving Contact your utility companies & notify them of your move Sign up for services at your new address Contact your long distance phone company and notify them of your move Call friends & family and recruit help for the moving day Confirm your travel reservations Arrange to close or transfer your bank account, if appropriate. Pick up items from your safety deposit box ______________________________________________________________________________

______________________________________________________________________________

One week before moving Pick up items from the cleaners, repair shops, or friends Pack a survival kit of clothes, medicines, special foods, etc. to carry you through the day while you unpack Finish packing all boxes minus what you’ll need in the final week. Inform the post office of your upcoming move Send change-of-address cards with your new address and phone number to: Friends & Family, workplace, schools, and alma mater’s Banks, insurance companies, credit card companies, and other financial institutions Magazines & Newspapers Doctors, lawyers, accountants, Realtors, and other service providers State and federal tax authorities and any other government agencies as needed

The day before... Set aside moving materials, such as tape measure, pocketknife, and rope Pad corners and stairways of house Lay down old sheets in the entry & hallways to protect floor coverings Remove hanging fixtures If you are moving yourself, pick up the rental truck and a dolly to move heavy boxes If you are driving, check oil, tire pressure, and gas up the car

If you are flying, make sure you have tickets, charge cards, and other essentials

Moving checklist

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Moving checklistMOVING DAY Carry with you: The keys to your new home A map of your new town & directions to your home The telephone number of the moving company Cash or Traveler’s Checks Documentation related to the sale of your home Your insurance policies & agent’s phone number Your current address book or personal planner Prescription & Non-Prescription medicines Enough clothing to get by if the movers are late Any items of great personal value to you that are virtually irreplaceable Back-up copies of important computer files Sheets, towels, and personal hygiene items for the first night in your new home _______________________________________________________________________________

_______________________________________________________________________________

ARRIVAL DAY Show movers where to place furniture & boxes Check inventory to ensure that everything was delivered before signing delivery papers Note any damages on the inventory sheet Unpack any valuable items, such as silver, art, and jewelry, upon arrival. Inform the post office of your upcoming move _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________

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AcceptanceThe date when both parties, seller and buyer, have agreed to & completed signing/initialing the contract.

Adjustable rate mortgageA mortgage that permits the lender to adjust the mortgage’s interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change.

Amortized LoanA loan, which is paid in equal installments during its term.

A.P.R. (Annual Percentage Rate)A term used in the Truth in Lending Act. It represents the relationship of the total finance charge (interest, discount points, origination fees, loan broker, commission, etc.) to the amount of the loan.

AppraisalAn estimate of real estate value, usually issued to standards of FHA, VA, and FHMA. Recent comparable sales in the neighborhood is the most important factor in determining value. This should be contrasted against the home inspection.

AppreciationAn increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

glossary

Assumable MortgagePurchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage.

Bill of SaleDocument used to transfer title (ownership) of PERSONAL PROPERTY.

Closing Statement (HUD1)A financial statement rendered to the buyer and seller at the time of transfer of ownership, giving an account of all funds received or expended.

Cloud on TitleAny condition that affects the clear title to real property.

Comparable SalesSales that have similar characteristics as the subject property and are used for analysis in the appraisal process.

ContractAn agreement to do or not to do a certain thing.

ConsiderationAnything of value to induce another to enter into a contract, i.e.; money, services, a promise.

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DeedWritten instrument, which when properly executed and delivered, conveys title to real property.

Discount PointsA loan fee charged by a lender of FHA, VA, or conventional loans to increase the yield on the investment. One point = 1% of the loan amount.

EasementThe right to use the land of another.

EncumbranceAnything that burdens (limits) the fee title to property, such as a lien, easement, or restriction of any kind.

EquityThe value of real estate over and above the liens against it. It is obtained by subtracting the total liens from the value.

Escrow PaymentThe portion of a mortgagor’s monthly payment held in trust by the lender to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.

Fannie MaeNickname for Federal National Mortgage Corporation (FNMA), a tax-paying corporation created by congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages.

glossaryFederal Housing Administration (FHA)An agency of the U.S. Department of Housing & Urban Development (HUD), Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

FHA Insured MortgageA mortgage under which the Federal Housing Administration insures loans made, according to its regulations.

Fixed Rate MortgageA loan that fixes the interest rate at a prescribed rate for the duration of the loan.

ForeclosureProcedure whereby property pledges as security for a debt is sold to pay the debt in the event of a default.

Freddie MacNickname for Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages.

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Graduated Payment MortgageAny loan where the borrower pays a portion of the interest due each month during the first few years of the loan. The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its life.

InvestorThe holder of a mortgage or the permanent lender for whom the mortgage banker services the loan. Any person or institution that invests in mortgages.

Lease Purchase AgreementBuyer makes a deposit for future purchases of a property with the right to lease the property for the interim.

Loan to Value Ration (LTV)The ratio of the mortgage loan principal (amount borrowed) to the property’s appraised value (selling price). Example - on a $100,000 home, with a mortgage loan principal of $80,000 the loan to value ratio is 80%.

MortgageA legal document that pledges a property to the lender as security for payment of a debt.

Mortgage insurance Premium (MIP)The amount paid by a mortgagor for mortgage insurance. This insurance protects the investor from possible loss in the event of a borrower’s default on a loan.

glossaryMortgagorThe borrower of money or the giver of the mortgage document.

NoteA written promise to pay a certain amount of money.

Origination FeeA fee paid to the mortgagee for paying the mortgage before it becomes due. Also known as prepayment fee or reinvestment fee.

Private Mortgage Insurance (PMI)See Mortgage Insurance Premiums.

Promissory NoteA written contract containing a promise to pay a definite amount of money at a definite future time.

RealtorA member of local and state real estate boards, which are affiliated with the National Association of Realtors (NAR).

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glossaryRent with optionA contract, which gives one the right to lease property at a certain sum with the option to purchase at a future date.

Second mortgage/ second deed of trust/ junior mortgage or junior lienAn additional loan imposed on a property with a first mortgage. Generally, a higher interest rate and shorter term than a ‘first’ mortgage.

SEVERALTY OWNERSHIPOwnership by one person only. Sole ownership.

SURVEYThe process by which a parcel of land is measured and its area ascertained.

Tenancy in CommonOwnership by two or more persons who hold an undivided interest without right of survivorship. (In event of the death of one owner, his/her share will pass to his/her heirs.)

Title InsuranceAn insurance policy which protects the insured (purchaser or lender against loss arising from defects in the title).

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