RE/MAX Associates Plus
Merry Dahms, Judi Chapnick, and Mary Walls
want to assist you with all of your home buying or selling needs!
Please call our office at (314) 727-8008
What if my offer to purchase is accepted??
These events will occur quickly:
Loan Application
Building Inspections
Homeowner’s insurance application
1. LOAN APPLICATION: Unless you are paying all cash and the sale does not involve a mortgage, you will be required to make an official loan application, usually within three working days of the contract acceptance. We strongly suggest that you make loan application before you find your house, and become pre-approved. Pre-approved loans can be a great advantage when negotiating your offer, as the seller will feel very comfortable accepting your offer if he knows that you loan is already approved.
The loan processor will usually require a great deal of personal, financial and employment data. You should be prepared to provide:
If you wish, we will assist you in finding the best rates and terms. You are not obligated to use any suggested mortgage company. However, we will, if you wish, research the market and make recommendations based on the best terms and service. The choice, however, remains yours.
(The last page of the document is a form that will help you to comparison shop.)
In addition to providing your lender with all the information required, you should be prepared, AT THE TIME YOU SUBMIT THE LOAN APPLICATION, to pay for the appraisal fee and credit report. As costs change over time, ask for current fees. This amount varies from lender to lender. Typically, the cost is below $500.
For purchasers who are self-employed, the lender will require that you furnish a great deal of documentation to support your income history. It is recommended that you contact your lender immediately to obtain a list of current requirements. It is certainly wise to do this before you begin your search for a new home.
Depending on the activity in the real estate market, loan approval usually takes between 7 and 45 days. The lender will provide you with an estimate of costs and a loan commitment for up to 60 days. This commitment will lock you into current loan terms. If closing is to occur after 60 days, you will either “float” on your rate and we will provide for that in your contract, or you may want to lock in a rate, by paying an additional fee or point.
In real estate matters, TIME IS TRULY OF THE ESSENCE! In order to ensure a smooth sale, loan application must be completed in a timely manner, and all dates on the purchase agreement STRICTLY adhered to. As the lender verifies the information you have provided, he will sometimes ask you for more information. Please make sure that you provide all additional information promptly. This will help in making the loan process as speedy as possible.
2. BUILDING INSPECTIONS: When purchasing real estate with improvements, it is incumbent upon the purchaser to thoroughly inspect the property. Most Purchase Agreements allow for inspections by the purchaser, and/or his representatives. The cost is normally borne by the purchaser. A basic professional home inspection usually costs in the $250-$600 range depending on the sale price of the property. Termite, soil testing, radon testing, lead paint testing, asbestos testing, pool, plumber, electrician and other specialized tests will cost more. We will be happy to recommend several people to perform these various inspections.
The Agreement, as printed, specifies that inspections be completed within 15 days of contract acceptance, and items of concern to you should be addressed in writing during this time. Inspections may include, but are not limited to, home inspection, roof, plumbing and electrical systems, structural, pool inspection, well and septic system inspections, etc. The Purchase Agreement will also give you the opportunity to have the property inspected for termites. In the event there is a mortgage involved in the sale, the Mortgage Company will REQUIRE a termite inspection. The purchaser and agent prepare a list of unacceptable items from the inspections, to be delivered to the seller’s agent.
The seller and purchaser, through their agents, then have 10 days to resolve any of the concerns. If the concerns cannot be resolved, the contract at the purchaser’s option can be terminated. All earnest money is returned, less any expenses paid out on your behalf.
The purchase agreement specifies that the home is to be in the same condition at closing as on the date that the contract was signed. In that case, it is incumbent upon the purchaser and agent to do a “walk-through” within 4 days prior to closing to ensure everything is as it was when the purchase agreement was signed. The purchaser will be required to sign a statement that everything was checked and was in working order, or the exceptions so noted. At this time it is also a good time to check to see that any required repairs that were made for the building inspection have been completed.
Please note that the agreed price for the property will be based on its existing condition and the seller is not obligated to make any repairs discovered by an inspection, unless so specified in the Purchase Agreement. The inspection should be for the purpose of determining the physical condition of the property so that the buyer can make a knowledgeable decision to purchase, and not for the purpose of establishing a list of cosmetic repairs for the seller to perform. An inspection report should not be considered an opportunity to renegotiate the contract unless a major defect is discovered. You may then have a valid reason to ask for repairs or for release from the contract.
WE STRONGLY RECOMMEND INSPECTIONS
FOR YOUR OWN PROTECTION!
3. HOMEOWNER’S INSURANCE: Prior to closing, you MUST be able to show proof to your lender that you have obtained adequate insurance on a property with improvements. There are so many different types of insurance policies available that it would be impossible to cover them all in any detail. It does pay, however, to shop around to obtain the best possible price and terms. You may wish to investigate the difference between simple coverage and actual replacement cost coverage. Replacement cost coverage costs a little more, but the coverage escalates with the value of the home. This could be a significant advantage in the future. Homeowner’s policies do not usually cover damage caused by rising water, and your lender may also require that you carry flood insurance on the property if your home is located in a flood plain. Do NOT wait until the last minute to begin researching your home insurance options. We will be happy to recommend several insurance agents.
Before the final purchase, you may also need:
A survey of the property
An appraisal
Title Insurance
Home Warranty
4. SURVEY: When a mortgage loan is involved in a purchase, your lender will usually require a survey of the property. A survey is simply a one-dimensional drawing as if you were looking down onto the property from above. A survey provides:
Lot dimensions
Easements
The position of the home on the property, where applicable
Location of out buildings fences pools, etc.
Any encroachments
Flood Zone
It is strongly recommended that a survey be obtained on all purchase of real estate, whether or not the lender requires one. A survey can help eliminate many boundary disputes and ensures that you are purchasing the correct property. We also recommend that you have a stake survey that marks the borders, fences, exactly, for your protection. It is essential if you are going to add fencing or add an addition.
Even in cash sales, purchasers are encouraged to obtain a current survey, simply to protect themselves. Costs vary according to the property, but a typical residential survey is in the $125-$750 range, depending whether it is a spot survey (lower cost) or a stake survey. The stake survey gives you better coverage on your title policy. It insures that the boundaries are actually where they are drawn.
5. APPRAISAL: An appraisal is ordered on almost all real estate sales covered by a mortgage. The Mortgage Company orders an appraisal upon initial loan application.
The cost of an appraisal in normally borne by the purchaser and is customarily paid for at the time you make loan application. The cost is usually around $400.
Appraisals normally take one to two weeks to complete. During very active market periods, the time it takes for an appraisal can vary significantly. If an appraisal is not required, should you get one anyway? An appraisal is one person’s opinion of the value of a particular property on a specific date. An appraisal gives some assurance to the purchaser that the price they are paying represents a fair market value and appraisals are always recommended.
6. TITLE INSURANCE: At the closing table you will notice that if there is a mortgage involved in the sale of the property, you will probably have to pay for “lenders Title Insurance”. This is a cost that is normally borne by the purchaser and covers ONLY the lender in the event there is a title problem in the future. Lender’s title insurance has a low cost. Often the Title Company quotes only a combined price. At the closing the closer will explain the purchaser’s title policy. Title insurance is a one-time charge and remains in force “forever”.
Should you purchase owner’s title insurance? This is entirely your choice, of course. It is an additional precaution and could avoid financial loss in the future, in the event there is a problem discovered with the title AFTER the sale. This is a ONE-TIME fee that protects your title from anything that might be questioned related to the property prior to the sale. (I.e., if a former “unknown” heir appears, or if a mechanics lien is placed on the property, related to the seller, after closing) The Lender’s mortgage insurance only covers the lender, NOT you.
You are strongly encouraged to discuss owner’s title insurance with us, or the closing company, in order to insure that you have a complete understanding of the risks involved should you elect not to purchase this insurance.
7. HOME WARRANTY: When investing in a home, be it new or previously owned, it is always a good idea to have some type of warranty placed on it. There are several Homeowners Warranty Plans available. They are similar, in that they all cover mechanical items only and not structural items. Typically, plans cover air conditioning units, heating units, electrical and plumbing systems, built-in appliances, etc. Some restrictions apply to each plan and each plan has some form of deductible.
Sometimes, sellers offer a Home Warranty Plan with the home, in which case the seller pays for it. However, in the event a seller does not provide a home warranty, the purchaser can buy one. The warranty plan normally runs for one year from the date of purchase. Some plans are renewable. Costs vary, but typically are in the $350-$450 range. You may purchase additional coverage for such things as swimming pools and spas.
Please understand, machines being what they are, an appliance an air conditioning unit may work perfectly one day and fail the next. There is usually no warning when a machine is about to fail, and it would be most difficult to prove that a seller had prior knowledge that something was defective. The warranty plans have saved homeowners millions of dollars. Imagine, should an air-conditioning compressor fail, the repair could cost hundreds of dollars to repair or replace. For the simple payment of a small deductible, the compressor may be repaired or replaced.
HOME WARRANY PLANS ARE
WORTH THEIR WEIGHT IN GOLD!