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Frequently Asked Questions
Here are some common question asked
about Selling or Buying a Home.
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- What Is A Seller's
Disclosure Statement?
- Do I Need An Inspector?
- How Do I Find A Mortgage?
- Are There Different Types Of Mortgages?
- Who Prepares The Agreement Of Sale?
- What Is Settlement Or Closing?
- Who Prepares The Deed?
- What Is The Normal Charge For The Preparation
Of a Deed?
- What Is Title Insurance?
- How Much Does Title Insurance Cost?
- What Will I Need To Bring To Settlement?
WHAT IS NEGOTIABLE?
When it comes to buying your new home, everything
is negotiable. A partial list of what is negotiable when purchasing
your new home may include:
- Price
- Financing
- Closing Costs
- Occupancy
- Painting
- Repairs
- Yard Work
- Fixtures
- Wall Coverings
- Furniture
- Prepaid Taxes and Insurance
- Oil in the Tank
WHAT IS A SELLER’S
DISCLOSURE STATEMENT?
Every residential real estate transaction in Pennsylvania
must be accompanied by a A Seller’s Property Disclosure Statement.
This Disclosure Statement is required by law and Home Sale
Services, Inc. will provide this document and review it
with either the purchaser or the seller.
- HOW MUCH SHOULD I PUT DOWN? (THE BUYER)
- HOW MUCH SHOULD I ASK UP FRONT? (THE SELLER)
The deposit is an important item of every Agreement
of Sale. It assures the seller that the buyer is serious about purchasing
the home. It provides commitment to the transaction. In addition,
an Agreement of Sale must have consideration. No Agreement for Sale
of Real Estate is valid without a deposit. Twenty years ago, it
was commonplace to demand a 20% deposit. Today, 2%-5% of the sale
price is a normal deposit. Since large deposits do impress sellers,
the buyer may find that by making a large deposit he can convince
the seller to accept a lower offer. On many occasions the deposit
is made in two increments: one-half upon the signing of the Agreement
of Sale and the second half at the conclusion of the inspection
period. The inspection period usually lasts 15 days from the date
of the Agreement of Sale.
DO I NEED AN INSPECTOR?
Buyers need inspectors. Inspections may cover the
following areas:
- Structural (roof, foundation, walls, etc.)
- Heating and electrical systems.
- Sewer
- Water
- Radon
- Termite
HOW DO I FIND A MORTGAGE?
Every lender is different and it is important to
choose the one that will work with you and your circumstances. Shop
for the best deal. Check with several mortgage companies. Begin
the search at your own bank or savings and loan or through any of
the following sources:
Independent Mortgage Companies.
These make over half of all home mortgages, including VA guaranteed
and FHA insured loans.
Savings Institutions. Savings and
loan associations and savings banks originate close to a quarter
of home mortgages. Most are conventional loans, not guaranteed
by the VA or FHA.
Commercial Banks. These are active
in residential lending. Banks are a major supplier of loans for
buyers.
Mortgage Brokers. These are intermediaries.
A broker keeps tabs on the mortgage market through its ties to
local, regional and national lenders. Brokers don't lend money
and can't approve loans.
Credit Unions. These organizations
make many first mortgage loans, but you must be a member.
Public Agency. State and local finance
agencies make below market rate financing available to eligible
low and moderate income first time buyers. These loans take time
to negotiate.
ARE THERE DIFFERENT TYPES OF MORTGAGES?
Yes.
Some of them are as follows:
- Fixed Rate Mortgage (FRM). This
is the standard mortgage model. It is the oldest and most easily
understood type of mortgage. Its' primary attraction is that the
interest rate and the amount of payment remain fixed for the life
of the loan, typically either 15 or 30 years.
- Adjustable Rate Mortgage (ARM).
With this kind of mortgage, the interest rate you pay rises and
falls along with other rates charged throughout the economy. The
borrower assumes the risk of rising rates, but stands to benefit
should rates fall. The purchaser should be familiar with how the
rates can be raised before executing any Adjustable Rate Mortgage.
Most have limits known as Acaps.
- Convertible Option. FRM and ARM
represent the primary options available to home buyers today.
A Convertible Mortgage represents something of a compromise between
the two. It is designed for those who like the advantages of the
ARM, but also want to limit the risk of rising rates. Under this
arrangement, the Buyer starts out with ARM, but has the option
of converting to an FRM at specified points during the loan term.
- Growing-Equity Mortgage (GEM).
This option is designed for borrowers who want to pay off their
mortgage as soon as possible. Therefore, the interest rate remains
fixed, but the amount of the monthly payment increases according
to a pre-arranged schedule. This mortgage can be appealing to
someone who is expecting regular income growth and wants to build
equity quickly.
- Fifteen Year Mortgage. Like the
GEM, the Fifteen Year Mortgage enables borrowers to repay their
loan more quickly, which means they build equity faster and pay
less interest over the life of the mortgage.
- Bi-Weekly Mortgage. Another option
for people who want to repay their loan sooner is the Bi-Weekly
Mortgage. Instead of making a single mortgage payment each month,
borrowers who choose this option make two equal payments monthly.
- FHA Loan. In 1937, under an Act
of Congress, the Federal Housing Administration was established
to provide American families with an opportunity to become homeowners.
Formerly, a homeowner's options were limited only to short term
loans ranging from one to five years in term. FHA revolutionized
the mortgage industry at the time by offering 30 year mortgages
and made the possibility of home ownership available to Americans
nationwide. There are now several FHA Homeland programs available.
- Veterans Administration Guaranteed Loans
(VA). VA loans have most of the advantages of FHA loans
and then some, but they also have eligibility restrictions. They
are available only to Veterans of the Armed Services, those currently
in the service and their spouses. VA loans are typically half
a percent or more below the market rates and they can be obtained
with no money down.
WHO PREPARES THE AGREEMENT OF SALE?
Either the buyer or the seller prepare the Agreement
of Sale. It is this document that Home Sale Services, Inc.
provides. Each settlement is unique and every Agreement of Sale
is different.
WHAT IS SETTLEMENT OR CLOSING?
When you purchase or sell a property you must sign
an Agreement of Sale. In Pennsylvania the contract for the sale
or purchase of property MUST be in writing. All
other contracts in Pennsylvania can be made with the wave of a hand
or a wink of an eye, but the sale of property must be in writing.
When the writings are complete and the inspections are over and
the appraisals and documentation have been concluded, you are ready
to go to settlement (closing). Settlement is the time when the buyers
and the sellers sit down, exchange a deed for money and transfer
the property. It is the time when the sellers hand the buyers the
keys.
A settlement should be handled by an experienced
real estate attorney and an experienced title company. What happens
at settlement is all governed by what is in the Agreement of Sale.
At settlement, the money changes hands, the taxes are apportioned,
the judgments, liens and encumbrances on the property are paid off,
the new mortgage is executed and filed at the courthouse in the
county in which the home is located.
Generally, no terms or conditions survive settlement.
Following the settlement, the seller is free to take his money,
unencumbered by any conditions and the buyer has accepted the house
in its present condition.
WHO PREPARES THE DEED?
In Pennsylvania, the Buyer traditionally pays for
Deed preparation. The real estate attorney generally prepares the
Deed for the Buyer. On many occasions, the title company will see
the preparation of the Deed.
WHAT IS THE NORMAL CHARGE FOR THE PREPARATION
OF A DEED?
A normal charge in the suburban Philadelphia area
for the preparation of a Deed is $100.00.
WHAT IS TITLE INSURANCE?
Title insurance insures that the real estate that
you are buying is free from any claims effecting your ownership.
It insures that there are no mortgages, liens, judgments or encumbrances
against your property. That the prior owners owned it and that no
one's divorce or estate can ever claim a part of it. Mortgage companies
and banks will not loan you money without title insurance.
Title insurance may also provide protection against
mechanic's liens, documents misplaced in courthouses, boundary line
disputes, unpaid taxes and concealed problems like forgery or other
frauds. The title insurance company does an exhaustive search of
the title to insure your peaceful enjoyment of your property.
HOW MUCH DOES TITLE INSURANCE COST?
The rates for title insurance in Pennsylvania are
established and set by law. To obtain a price quote for title insurance,
contact Freeland Abstract,
Ltd., 610-489-3656, or CKrell@Freeland-Abstract.com.
WHAT WILL I NEED TO BRING TO SETTLEMENT?
- The Seller should bring paid and unpaid tax bills and copies
of mortgage documents. In addition, two forms of identification.
- The Buyer should bring two forms of identification, and sufficient
funds to complete the transaction.
- Both parties should bring their copies of the Agreement of Sale
and the Disclosure Statement to settlement.
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