Homebuyers Guide - Charlotte real estate and homes for sale in

CharlotteHomeZone.com
Stephen Scott
Broker/Realtor®
704-779-6194 cell
704-549-9544 fax
Stephen.Scott@allentate.com
Allen Tate Company
Allen Tate, Jr. started a small real estate and insurance
company in Charlotte, N.C. more than 50 years ago. He
had a vision and goal of exceeding customers’ every
expectation.
Since then, the company has expanded with locations from Raleigh, N.C. to the
Upstate S.C. region. This legendary customer service continues and thrives today.
We offer customers an array of real estate services with the Allen Tate Family of
Companies; the area’s leading real estate website, allentate.com; and of course, my
personal commitment to helping you find the home of your dreams.
04/15/13 – Buyers Kit
Talk to Tate
Since 1957, people have been talking to Tate.
For more than 55 years, Allen Tate
Company has been providing people
across the Carolinas the personal real
estate counseling they need to make
smart homeownership decisions.
Allen Tate Company offers a full
service approach to real estate that
extends beyond the day of closing,
including insurance, mortgage,
relocation and home services. It’s this
service and market knowledge that
has grown the company into one of
the nation’s Top 10 independent real
estate firms.
and sellers throughout the Carolinas
talk to Tate when it comes to their real
estate needs. Let’s talk about just a
few:
We’re in your neighborhood.
We’re in more offices in more
neighborhoods across the Carolinas
to better serve our customers. When
you talk to Tate, you’re talking with an
expert in your local market.
We offer choices.
Many Realtors say
they are full service, but
they don’t always offer
the range of choices
we do. When you talk to
Tate, you’re talking with
an expert in mortgage,
insurance and home
services who will seek
competitive solutions to
your real estate needs.
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04/15/13 – Buyers Kit
We pride ourselves on being
independent. When you talk to Tate,
you’ll experience a whole new level
of service. Our associates are more
empowered because they are backed
by leadership that is local and can
respond with resources that matter
most to homebuyers and sellers.
When you talk to Tate, you are talking
to a team committed to exceeding
your expectations.
We’re committed to
community.
It all started in 1957 when Allen
Tate, Jr. took the advice of his father
and started a small business in the
growing city of Charlotte. Tate’s
vision lead him to helping develop the
surrounding Charlotte area into the
flourishing region it is today.
The Allen
Tate
Company
grew from
an office with eight sales agents in
1975 to more than 35 neighborhood
offices throughout the Carolinas.
There are many reasons why buyers
We’re independent and
locally owned.
The communities we serve are more
than just places of business; they’re
neighborhoods we call home. Allen
Tate Company is committed to giving
back to our local communities through
the Tate Cares program, which
benefits public education, arts and
cultural organizations and United
Way agencies and make a significant
impact on our quality of life.
We know luxury
homes.
We market more
exceptional properties
than any other firm in the
Carolinas. When you talk
to Tate, you’ll discover our
luxury marketing program
includes local, regional,
national and international
exposure.
We know the business.
In an ever-changing market, it is
essential that you are represented
by the most knowledgeable agent
possible. Allen Tate Realtors have
the market data and tools to ensure
that your real estate transaction is as
successful as possible.
We know exposure.
No other real estate company offers
your home the
exposure we
do. When
you talk to
Tate, you are
positioning
your home to
buyers 24/7
on allentate.
com and
hundreds of other broker sites.
We can help you reach customers
locally, regionally, nationally and
internationally by the millions.
We’re global.
Listing your home with Allen Tate
Realtors is listing your home to buyers
from around the world. As a founding
member of Leading Real Estate
Companies of the World®, we’re proud
of the global connection we can offer.
Our network outsells any other real
estate franchise. When you talk to
Tate, you are talking to the world.
Locations
With more locations throughout the Carolinas,
Allen Tate has a vast network of qualified, highly
professional Realtors,® all working to help you find
your perfect home.
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08/16/13 – Buyers Kit
Offices conveniently located throughout North and South Carolina
All Allen Tate Realtors share resources and information about listings on
the market. More than 22 percent of properties listed by an Allen Tate
agent are also sold by an Allen Tate agent!
Family of Companies
Allen Tate Company offers you the convenience of
“One-Stop-Shopping” for all of your real estate needs.
Here are just a few of the services you can take advantage of
through the Allen Tate Family of Companies:
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Complimentary, no-obligation pre-qualification for mortgages
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In-house mortgage and insurance consultants
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Insurance coverage for homes, cars, personal property, life
and business
Free, competitive insurance quotes from a choice of top
insurance carriers
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Handyman services for moving into or out of a home
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And much more
Our service to you continues long after you move in.
Count on our family to be at your side to:
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Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC
05/20/14 – Buyers Kit
Refinance your mortgage
Renew your homeowner’s
Insurance
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Remodel your home
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Repair if things break
Buyer’s Representation
Even though buyer’s representation is now largely available to
home buyers across the country, it wasn’t always so. Real estate
agents once were required to get the highest price and best terms
possible – for the seller.
Now, that has changed, and as your representative, I promise to
protect your interests, from the initial selection of properties, to
the contract negotiations, to the closing table.
I have access to the same facts as a listing
agent, including:
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Marketing history of property in MLS
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Comparable properties
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Actual selling prices
As your buyer’s representative, I will help you access the
information you need to make an informed decision during the
buying process.
04/15/13 – Buyers Kit
Why Buy Now
The
top
3
reasons
to buy a
home now
04/15/13 – Buyers Kit
1.
Interest rates are historically low.
2.
Sellers are motivated.
3.
Financing is available.
Buying Your First Home
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Let me assist you in determining what you want and what you need in your
first home.
Get pre-qualified/pre-approved so you will know the range of homes you
qualify for ahead of time and avoid unnecessary frustration.
Start the home-buying process early and understand the parameters of your
current lease (the amount of notice you must give) and back out lead times to
ensure you allow enough time for the process.
Challenge yourself to keep an open mind about the type of home you may
purchase. Condo vs. single family home – look at the different options available
and don’t discount one over the other (e.g. “I wouldn’t live in an attached home.”).
The reality is the appreciation of the attached home may be greater and may help
you reach your goal of a long term dream home faster.
Make sure the home has a warranty. A first-time homebuyer doesn’t need
surprises. If a warranty is not provided, buy one. Our 2-10 Home Buyers
Warranty® is available to give you peace of mind.
Know the history of the area you are considering. I will do an analysis of
the neighborhood and the appreciation of homes there.
05/30/13 – Buyers Kit
Step by Step Guide to Buying a Home
How I will help you through the home-search
and buying process:
1. Help you understand terms used in buying a home.
2. Get pre-approved for a loan, and arrange for
financing. I can make suggestions and refer
you to an Allen Tate Mortgage Consultant.
3. Help you to determine what you want and
what you can afford.
4. Search extensive Realtor databases for
®
properties to preview and provide expert
information on communities, neighborhoods
and benefits of each previewed home.
5. Count on my expertise to help complete an
offer in writing.
8. Make sure the lender orders the appraisal
and will confirm the property value with the
appraiser once the appraisal is completed.
9. Offer you suggestions or refer you to Allen
Tate Insurance to review homeowner’s
insurance options.
10. Assist you in choosing a real estate attorney to
handle the closing. The attorney will complete
a title search and provide title insurance.
11. Schedule your closing at a convenient time for
all parties.
12. Review your closing statement with you.
6. Present the offer and negotiate on your behalf.
13. Instruct/advise you on the funds needed for
7. Help you through the process of the home
14. Together, we will go to the closing and sign all
inspection, termite inspection and survey.
04/15/13 – Buyers Kit
closing.
required documents.
Your Property Wish List
While your opinions may change during the home-buying process, this easy
checklist will help you prioritize and make the selection process easier.
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How close do you need to be to the following:
Work
Schools
Neighborhood shopping
Public transportation
Family
Other
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What school systems do you want?
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Do you want a one-story or two-story house?
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What age of home would you consider?
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What neighborhoods would you prefer?
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What amenities should the neighborhood offer?
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Do you require a fenced yard or other amenities for your pets?
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Do you have special facilities or needs that your home must meet?
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How much repair or renovation would you be willing to do?
04/15/13 – Buyers Kit
Your Property Wish List
Prioritize each of these options Lot size (at least __________)
Garage (size __________)
Number of Bedrooms
Number of Bathrooms
Family room/den
Formal living room
Formal dining room
Eat-in kitchen
Hardwood floors
Tile/ceramic/granite
Fireplace
Basement
Patio/deck
Pool
View
Light (windows)
Shade
04/15/13 – Buyers Kit
Must Have
Would Prefer
allentate.com
Allentate.com provides:
Search tools that fit your needs.
Allentate.com is known for its
easy-to-use search functions that allows you to search by address,
MLS number, price, neighborhood, map, my personal web page,
First to Know notifications and TateMap.
Up-to-date information from across the Carolinas.
Allentate.com is home to every listing in our footprint (not just Allen Tate
listings), with information that is updated hourly. With allentate.com you
can be sure that you’ve seen all of your options.
More information.
You can access property listing details, photos, descriptions,
community profiles, school information and locator maps on allentate.com.
Resources.
Whether you’re looking to get a mortgage, researching insurance options,
buying your first home or relocating, allentate.com is your source for
homeownership information.
allentate.com
All listings with accurate hourly updates.
5/9/14 – Buyers Kit
allentate.com Tools
Allentate.com features tools to help you locate, view
and get to know more than 100,000 properties updated hourly.
Market Report
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Monthly customized email report including complete details and color photos of active
and sold properties on allentate.com, market trends and map search.
Carolinas Market Update
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Short, informative video every other month from Allen Tate President Pat Riley on real
estate activity and trends in the Carolinas.
Market Trends
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Monthly video snapshot of real estate activity for a specific area; features market data
and statistics from local MLS.
1st to Know
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Exclusive email program notifies you when homes meeting your criteria come on the
market.
TateMap
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Community
Profile
tatemobile
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07/17/13 – Buyers Kit
Exclusive online interactive map lets you navigate to any property on allentate.com.
Recent sales (where available) to help you understand market activity and pricing.
Community Profile
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Provides Zip Code area information including cost of living, population, housing inventory
and educational information including test scores.
TateMobile
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Download free apps for iPhone, iPad and Android from Apple App Store and Google Play
Store. Search for Allen Tate. TateMap for iPad available at allentate.com/ipad.
TateMobile
TateMobile is Allen Tate Company’s mobile website and mobile applications to help you
locate and view more than 100,000 property listings on allentate.com.
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Access properties throughout the Carolinas anywhere from your
mobile device – not just Allen Tate listings. Updated daily, directly
from the local MLS.
Search for properties by street name, subdivision, MLS number,
property type, price range, bedrooms, baths and open houses.
Use Keyword Search to search for multiple features such as laundry
room, garage or corner lot – or exclude certain features.
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Use Map Search Option to search geographically.
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Get driving directions.
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Save searches and favorites and share your favorite properties.
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“Claim” me as your Allen Tate agent for easy contact.
Visit the mobile website at m.allentate.com or scan the QR codes below
to download mobile apps.
iPhone/iPadAndroid
07/17/13 – Buyers Kit
What Makes a Good Offer to Purchase?
A good offer :
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Is based on a realistic offering price
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Contains an earnest money deposit
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Has realistic financing terms
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04/15/13 – Buyers Kit
Includes a copy of your
”pre-approval” letter from
a lender
NC Offer to Purchase and Contract
What Buyers Need to Know
(NCAR® Standard Form 2-T)
• The offer to purchase and contract is the rule book. When sellers and buyers sign, they are agreeing to follow the rules.
• The goal of the contract is to share measured risk between the buyer and seller. During different periods of the contract the risk will
shift from one party to the other.
• The due diligence period is an opportunity for the buyer to investigate the property and the transaction contemplated by the contract
and to determine, in buyer’s sole discretion, whether or not to terminate or proceed with the transaction.
• A due diligence fee may be paid to the seller by the buyer as compensation for the buyer’s right to conduct due diligence during the
due diligence period. The fee is paid directly to the seller. The amount of the fee and the length of the period are negotiable.
Before Contract:
Buyer Obligations:
1. Meet with mortgage consultant to get pre-approved
2. Carefully contemplate the amount of time necessary to complete all anticipated due diligence
After Contract:
During due diligence period
Buyer Responsibilities:
1. Conduct due diligence (refer to the ATC “Property Due Diligence Process” document)
2. Hire closing attorney and prepare for settlement
3. Make arrangements for home owner’s insurance
4. Appraisal of property
5. Finalize loan approval
6. Timely notify seller in writing by 5 pm on due diligence date (time is of the essence) if buyer wishes to unilaterally terminate the contract
Between due diligence date and settlement date
Buyer Responsibilities:
1. Make arrangements for transfer of utilities
2. Make arrangements for funds needed for closing
3. Walk through of property prior to closing
Remedies during Due Diligence Period:
Buyer termination
• Buyer can unilaterally terminate for any reason or no reason prior to 5pm on due diligence date. If buyer terminates, due diligence fee
remains with seller and earnest money deposit (EMD) is returned to buyer
Seller breach
• If the seller materially breaches & buyer terminates, buyer is entitled to a refund of the EMD, due diligence fee, and reimbursement of
reasonable costs incurred by buyer’s due diligence
Reasons: Buyers incur costs in anticipation of purchasing the property and should be entitled to recover sums expended in good faith.
Sellers are not likely to incur such preliminary expenses.
Remedies after Due Diligence Period:
Buyer breach
• Seller receives earnest money deposit (EMD) and due diligence fee as the only compensation
Seller breach
• If the seller materially breaches & buyer terminates, buyer is entitled to a refund of the EMD, due diligence fee, and reimbursement of
reasonable costs incurred by buyer’s due diligence
Reasons: The courts rarely grant specific performance against buyers because there are too many variables that influence a buyer’s
ability to close that may not be within the buyer’s control (loan, appraisal, etc). The seller only has to sign a general
warranty deed in order to close, and the property is unique and may not be readily replaceable for the buyer.
04/15/13 – Buyers Kit
Financing and Due Diligence
What Buyers Need to Know
In using the NC offer to purchase and contract (NCAR® Standard Form 2-T), you will
be determining a due diligence date. The buyer’s ability to secure financing for the
purchase and the property appraisal are part of the buyer’s due diligence and should
be completed prior to the expiration of the due diligence date when possible.
Buyers and buyer’s agents are encouraged to meet with their mortgage consultant
prior to making an offer. Here is a list of some financial considerations that will affect
the amount of time needed to get loan approval:
Financing Considerations and Due Diligence
1. Is the appraisal completed and reviewed by underwriter? (Note: FHA/VA appraisals are not tied to
the due diligence period. The FHA/VA Financing Addendum (NCAR® Standard Form
2A4-T) contains a federal Amendatory Clause that supersedes the provisions of the NCAR® “due
diligence” contract and would entitle the buyer to a refund of an earnest money deposit under
certain circumstances.)
2. Is it going to be difficult to find comparable properties for the appraisal?
3. Are you applying for a USDA, or State Bond Loan program (NC or SC), which require outside final
review by that agency?
4. Will there be first and second mortgage applications?
5. Is the property being considered a short sale or foreclosure?
6. Are you self-employed or using co-signers which makes for a more complicated financial picture?
7. Are the debt-to-income ratios close to qualification levels?
8. Are there any possible credit issues?
Additionally, the following requirements for lenders could delay the mortgage approval timing:
1. Verifications of employment or rent
2. 4506T (Tax transcripts verified by the IRS)
3. Credit pulled again within 5 days of closing, if new debt or delinquencies occur
4. Re-disclosure requirements which may delay closing by 3 business days
It takes on average 3-5 days for the mortgage consultant in today’s environment to collect the required
documentation to submit a new loan application. The industry average time to close a loan is now at
least 30 days.
Information provided by Allen Tate Mortgage.
Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC
05/20/14 – Buyers Kit
Your Home Mortgage
Before you begin looking for a new home, there are a few things you should know
about mortgage loans and lender requirements. Follow these easy steps and when
you find the right home, Allen Tate Mortgage will have the right mortgage for you.
Check your credit
Understanding your credit history and score is the most important first step in the home buying process. A short
telephone call to one of our trusted mortgage advisors to review your credit will save you valuable time and
money. You will need to know how credit scores affect your ability to borrow money and what rates and terms
are available to you.
Know the differences between Pre-Qualification and Pre-Approval
The terms sound like they mean the same thing … but they do not. A pre-qualification involves sharing
information with your lender regarding your employment, income, assets and credit. Typically a credit report is
pulled as noted in step one. Documentation to support what has been verbally discussed is not provided. This
will give you a general idea of your price range and financing terms.
A pre-approval involves making a full loan application with out a contract on a property. This includes providing
full documentation of income and assets and having it reviewed by an underwriter.
Meet with your Trusted Mortgage Advisor
Prepare ahead for your mortgage appointment and consider your lifestyle and monthly expenses so you can
budget accordingly. Gather the following information and documents together:
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Complete residency history to cover the most recent two years (including landlord contact information).
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Names/addresses/phone numbers for all employers for the most recent two years.
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Copies of your signed federal tax returns for the most recent two years along with W2’s and most recent YTD
pay stub.
Most recent two consecutive month’s of bank statements (all pages) for all bank accounts including IRA, 401-K
retirement accounts
Your Allen Tate Mortgage consultant will review everything and discuss all possible rate and loan term options
available to meet your specific needs.
For more information about Allen Tate Mortgage visit mortgage.allentate.com
Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC
05/20/14 – Buyers Kit
Mortgage Services
Allen Tate Mortgage Services is designed to make your
home financing process as simple as possible.
Professional mortgage consultants have extensive knowledge of mortgage lending and want
to make the process of buying a new home stress free. We work with you to identify your
needs, recognize the actions needed for the process and take responsibility for solving any
problems along the way.
We offer:
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Complimentary, no obligation pre-qualification and pre-approval.
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In-house processing, underwriting and closing
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Conventional and government financing including FHA & VA
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Variety of mortgage products including 15 and 30 year fixed-rate and adjustable-rate alternatives
For more information about Allen Tate Mortgage visit mortgage.allentate.com
Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC
05/20/14 – Buyers Kit
Be a Prepared Buyer
Financing your home in a Seller’s Market
When the inventory of available homes is less than 4 months, as it is today, the real estate market is defined as a Seller’s Market.
This dynamic, where the seller is in a more favorable position, may impact buyers who plan to finance their home purchase.
The most important thing buyers need to know is to be prepared ahead of time. Here’s how:
Get your paperwork together
Lenders today have strict guidelines for financial
documentation. At a minimum, you will need proof of income
(see below); last 2 years of Form W-2; last 2 years of Federal
tax returns; last 2 months of bank statements for all asset
accounts; employment history and residency history. In
addition, you should be prepared with explanations of any new
credit inquiries and any derogatory credit activity, no matter
how long ago it occurred.
Proof of income varies by how you earn your money:
Salaried employee: Last 30 days of your pay stub
and the last 2 years of Form W-2.
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Hourly employee: Documentation of hourly work
history and/or written verification of your
guaranteed work hours from your employer.
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Self-employed: Must be self-employed for at
least 2 years and provide last 2 years of Federal
tax returns (both personal and business)
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Contract employee: If you receive Form 1099
instead of Form W-2, you will need documentation
of two years of history working in the contract
position.
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Commission/Bonus: Must document income
received during the past 2 years by providing
Federal tax returns. Note that your income for this
period will be averaged and any business
expenses will be deducted.
If you have a unique situation that affects your finances,
such as a divorce or relocation, write a letter explaining your
situation before you sit down with your lender.
Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC
05/20/14 – Buyers Kit
Review your credit report
Your lender will obtain your credit score from three reporting
bureaus (Equifax, Experian and TransUnion). The middle score
will be used to determine your eligibility for loan programs and
the interest rate you will qualify for. It is a good practice to
check your credit report for errors by requesting a copy once a
year for no charge from www.annualcreditreport.com.
Understand your bank statements
Be prepared to discuss any non-payroll deposits and provide
documentation of where these funds came from. If you have
received any non-sufficient funds (NSF) notices, these could
negative impact your loan application when the underwriter
reviews it.
Get pre-approved
A loan pre-approval will provide you with financial peace
of mind prior to searching for your home and will allow you
to look more favorable in the eyes of a seller. Unlike a prequalification, a pre-approval requires a full loan application
and documentation, but is reviewed and approved by an
underwriter, not just a loan officer. It may also reduce the time
it takes from contract to closing your loan.
Your Allen Tate Mortgage Consultant can answer your
questions and help you get started.
Insurance Services
Once you’ve found the right home,
Allen Tate Insurance offers comprehensive and affordable
insurance services for your home, your car and your life.
We partner with top national and local insurance providers to offer competitive rates and
outstanding service. Our elite group of carriers includes:
We’re experienced in handling real estate closings and will coordinate your insurance
package to ensure a smooth closing for your new home.
Package discounts for home and auto policies can lower your rates up to 15 percent.
04/15/13 – Buyers Kit
homeservices.allentate.com
After your home search is over and the boxes are unpacked,
we’re at your side to help you keep your home in top condition.
Allen Tate Home Services is a one-stop shop for all of your home maintenance
and repair needs. Our goal is to take the hassle out of homeownership.
Visit our website to be connected to professionals you can count on.
Our service providers are fully insured, licensed and bonded.
Sample of Services We Provide:
Inspection Repairs
Moving & Storage
Heating & Cooling
Locksmith Services
Crawl Space & Moisture Issues
Handyman Services
Blinds & Shutters
Kitchen & Bath Updates
Roof Repair & Replacement
Plumbing
Pest Control
04/15/13 – Buyers Kit
Electrical
All Flooring Sales/Installation
Lawn Care
General Contracting
Power Washing
Gutter Cleaning
Duct Cleaning
Pool Maintenance
Security System Installation
Restoration Services
Why purchase a home warranty?
A home warranty can provide you with peace of mind when you find a home
and are ready to make an offer.
A home warranty:
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Protects you from any unexpected repairs or replacement expenses
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Can eliminate any post-sale issues between a buyer and seller
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Can be negotiated for by the purchaser or offered by the seller
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Can be purchased by the buyer up to 30 days after the home closes
Allen Tate Company proudly partners with 2-10 Home Buyers Warranty®, which
offers the most comprehensive coverage and value available and outstanding
customer service. If you’d like to consider purchasing a home warranty or
negotiating for coverage in an offer to purchase, we can evaluate the appropriate
plan together.
05/30/13 – Buyers Kit
Short Sale
The Long and Short of a Short Sale
When a homeowner owes a lender more money than the current market value of their home and lacks other liquid
assets to satisfy liens, it is often referred to as being “upside down” in a mortgage. This means the home will not sell
for enough money to pay off their mortgage and other property-related debt in full. In such cases, a “short sale” may
be negotiated with the lender to bridge the gap between the balance due on the mortgage and an offer for the sale of
the home. A short sale is an effort to save the bank the time and costly process of foreclosure.
A short sale may be an excellent opportunity for a buyer who is willing to be patient; has their financing in order; and
has no contingencies, i.e. they need to sell a home first or move in by a certain date.
Before you begin pursuing a Short Sale, here are some things you should know:
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“Short Sale” is a misnomer. Short sales can take a long time – often months or longer. Keep your
options open and continue to look at other properties while you wait.
Price is set by the seller and the buyer, not the bank. But the bank has the final say in approving
the contract.
Multiple liens recorded can be challenging. It is much easier to navigate a short sale when the
seller is obligated to just one lender.
Your offer should be realistic. Lowball offers are generally rejected quickly by the bank, but even
reasonable offers are not guaranteed to receive timely feedback.
Comps on similar properties are required. As your Realtor®, I will present you with comps on
recent home sales in the area so you will be better educated to make an appropriate offer.
Look for “approved” short sale properties. These properties have already had an offer approved
by the bank, but the interested buyer did not purchase. These are the most desirable, as the approval
process is usually shorter.
Banks set the rules. Some are looking for the highest offer; others are looking for the largest down
payment or lean toward a buyer paying cash.
Properties are generally sold “as is.” Repairs are seldom completed on a short sale, but a buyer
may be issued a credit to have some necessary work done.
If you decide a short sale may be right for you, I can provide knowledge, expertise and
resources and help you navigate the process.
04/15/13 – Buyers Kit
Stay informed with Market Report
Prices change, homes sell and new listings come to market every day. And if you’re in the
market to buy a new home, it’s even more important to stay informed about real estate
happenings. Market Report is an email designed to deliver information directly to your inbox, tailored to your home search.
Allow me to set-up this customized email for your area or
neighborhood of interest and you will receive emails containing:
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Homes that just hit the market
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Data on recently sold properties (where available)
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Average days on market
Property details for homes that meet your
search criteria
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Listings and sales by Zip Code
04/15/13 – Buyers Kit
Commonly Used Terms
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Annual Percentage Rate (APR): The total yearly cost of a mortgage as expressed by the actual rate of interest paid. The APR includes the base interest rate, points, and any other add-on loan
fees and costs.The APR is thus invariably higher than the rate of interest that the lender quotes for the mortgage.
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Appraisal: Mortgage lenders require an appraiser to give an opinion of the market value of a house a homeowner wants to sell or refinance. This professional opinion helps to protect
the lender from lending money on a house that is worth less than the amount the buyers have agreed to pay for it or that the seller wishes to obtain when refinancing the existing loan.
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Assessed value: The value of a property for the purpose of determining property taxes. This figure depends on the methodology used by local tax assessor and may differ from appraised or market
value of the property.
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Buydown: The builder or seller agrees to pay part of the home buyer’s mortgage for the first few years. The term also refers to the practice of a seller paying a mortgage lender a
predetermined amount of money to reduce his or her mortgage interest rate, thereby creating more attractive financing for a potential buyer. Veterans with low or modest incomes may
be able to get buydowns through a Veterans Administration loan plan that is available in some new housing developments.
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Cash Reserve: Most mortgage lenders require that homebuyers have sufficient cash left over after closing on their home purchase in order to make the first two mortgage payments or to cover
a financial emergency.
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Closing Costs: These costs generally total from 2 to 5 percent of the home’s purchase price and are in addition to the down payment. Closing costs include such things as points (that is, loan
origination fee to cover lender’s administrative costs), an appraisal fee, a credit report fee, mortgage interest for the period between the closing date and the first mortgage payment, homeowners
insurance premium, title insurance, prorated property taxes, and recording and transferring charges. So when you are finally ready to buy, you need to have enough cash to pay all these costs in order
to buy your dream home.
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Comparable Market Analysis (CMA): In order to determine the price you want to offer, you need to know current sales prices and recent sold prices of houses like the one you are
considering. Identify houses “comparable” to yours that sold within the last six months, are in the immediate vicinity of your house, and are as similar as possible to your house in terms of size,
age, and condition. By analyzing the sale prices of houses comparable to yours that are currently on the market, you can see whether prices are rising, flat, or declining. A written analysis of this
information is called a comparable market analysis (CMA).
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Contingency: Conditions contained in almost all home purchase offers. The seller or buyer must meet or waive all contingencies before the deal can be closed. These conditions relate to
such factors as the buyer’s review and approval of property inspections or the buyer’s ability to get the mortgage financing that is specified in the contract. Sellers may include contingencies as
well, such as making the sale of their house contingent upon their successful purchase of another home. If a contingency cannot be met, the party for whom it was established may legitimately
withdraw from a contract.
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Corporate Home: A home previously owned by an employee whose corporation transferred him. In the process, he was unable to sell his home and the corporation purchased the house from
him in order to allow him to move to his new location.
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Co-signer: Past credit issues may require you to have help securing a mortgage, even though you are financially stable. A friend or relative can come to your rescue by cosigning (which literally means
being indebted for) a mortgage. A cosigner cannot improve your credit report, but can improve your chances of getting a mortgage. Cosigners should be aware, however, that cosigning for your loan will
adversely affect their future creditworthiness since your loan becomes what is known as a contingent liability against their borrowing power.
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Credit Report: A report lenders use to determine an applicant’s credit worthiness. Applicants must pay for a lender to obtain this report, which the lender uses to determine the applicant’s ability to handle all
forms of credit and to pay off loans in a timely fashion.
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Debt-to-Income Ratio: Before you begin looking for a new home, you should determine what your price range is. Lenders generally figure that you shouldn’t spend more than about 33 to 45
percent of your monthly income for your housing costs. The debt-to-income ratio measures your future monthly housing expenses, which include your proposed mortgage payment (debt), property tax,
and insurance, in relation to your monthly income.
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Delinquency: Delinquency occurs when a monthly mortgage payment is not received by the due date. The first time, missed payment is delinquent, the next time, missed payment
puts you in default.
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Down Payment: The part of the purchase price that the buyer pays in cash, upfront, and does not finance with a mortgage. Generally, the larger the down payment, the better terms you
can get on a mortgage.
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Earnest Money: A home buyer’s “good faith” deposit that accompanies a written purchase offer.
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Fixed-Rate Mortgage: Loan terms that include a stable, unchanging interest rate (for example, 8.5 percent) for the life (term) of your 15- or 30-year mortgage. Your mortgage payment
will be the same amount each and every month. Compare fixed-rate mortgages with adjustable-rate mortgages.
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Foreclosure: A legal process whereby property pledged as security for a debt is sold to satisfy a debt in the event of a default in payments or terms.
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FSBO: A property that is For Sale By Owner and is not listed through a real estate broker.
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Home Warranty Plan: A type of insurance that covers repairs to specific parts of the home for a predetermined time period.
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Homeowners Insurance: This is required and necessary. You must have “dwelling coverage” that can cover the cost to rebuild your house. The liability insurance portion of this
policy protects you against accidents that occur on your property. Another essential piece is the personal property coverage that pays to replace your lost worldly possessions and
usually totals 50 to 75 percent of the dwelling coverage. Finally, get flood or earthquake insurance if you’re in an area susceptible to these natural disasters. As with other types of
insurance, get the highest deductibles with which you are comfortable.
04/15/13 – Buyers Kit
Commonly Used Terms
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House Inspection: Like homeowners insurance, we think that a house inspection is a necessity. The following should be inspected: overall condition of the property, inside and out;
electrical, heating, and plumbing systems; foundation; roof; pest control and dry rot. A good house inspection can save you money by locating problems. With the inspection report in
hand, your Realtor can ask the seller to either do repairs or reduce the purchase price.
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Interest: Lenders usually require borrowers to pay the interest that accrues from the date of settlement to the first monthly payment.
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Interest Rate: Interest is what lenders charge you to use their money. Lenders generally charge higher rates of interest on higher-risk loans. For fixed-rate mortgages, remember that
the interest rate has a seesaw relationship with the points. A high number of points is usually associated with a lower interest rate, and vice versa. For an adjustable-rate mortgage,
make sure that you understand the formula (the index plus the margin) that determines how the interest rate is calculated after the teaser rate expires.
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Legal Fees/Attorney Fees: Costs relating to having an attorney or law firm review and prepare the needed documents for your closing. These costs may include, deed preparation (this cost is
paid for by the seller), title search, and closing packet preparation.
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Lock-In: A lock-in is a mortgage lender’s commitment and written agreement to guarantee a specified interest rate to the homebuyer, provided that the loan is closed within a set period of time.
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Loan Origination: This fee is sometimes called a “point” or “points.” It covers the lender’s administrative costs in processing the loan. Often expressed as a percentage of the loan, the fee will
vary among lenders. Generally, the buyer pays the fee, unless otherwise negotiated.
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Multiple Listing Service: (MLS) is a real estate agents’ cooperative service that contains descriptions of most of the houses that are for sale. Real estate agents use this computerbased service to keep up with properties listed for sale by members of the Multiple Listing Service in their area.
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Notary Fee: This fee is charged for the cost of having a person who is licensed as a notary public swear to the fact that the persons named in the documents did, in fact, sign them.
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Points: Also known as a loan’s origination fee, points are interest charges paid up-front when you close on your loan. Points are actually a percentage of your total loan amount (one
point is equal to 1 percent of the loan amount). For a $100,000 loan, one point costs you $1,000.
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Pre-paids/Escrow Account Deposits: These cost are for the payment of taxes and/or insurance and other items that must be made at settlement to set up an escrow account. The
lender is not allowed to collect more that a certain amount.
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Principal: The principal is the amount that you borrow for a loan. If you borrow $100,000, your principal is $100,000. Each monthly mortgage payment consists of a portion of principal
that must be repaid plus the interest that the lender is charging you for the use of the money. During the early years of your mortgage, your loan payment is primarily interest.
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Private Mortgage Insurance (PMI:) If the down payment is less than 20 percent of a home’s purchase price, the borrower will probably need to purchase private mortgage insurance
(also known as “mortgage default insurance”). Lenders feel that homeowners who can only come up with small down payments are more likely to default on their loans. Therefore, lenders
make these homeowners buy PMI, which reimburses them the loan amount in case the borrower does default. Private mortgage insurance can add hundreds of dollars per year to loan costs.
After the equity in the property increases to 20 percent, borrowers no longer need the insurance. Do not confuse this insurance with mortgage life insurance.
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Property Disclosure Statement: Some states require that sellers give prospective buyers a written disclosure regarding all known property defects and all known material facts that
may affect the property’s value or desirability.
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Prorations: Certain items such as property taxes and homeowners association dues are continuing expenses that must be prorated (distributed) between the buyers and sellers at
closing. If the buyers, for example, owe the sellers money for property taxes that the sellers paid in advance, the prorated amount of money due the sellers at closing is shown as a
debit (charge) to the buyers and a credit to the sellers.
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Recording Fee: The cost for having the new deed recorded. This will put your name in the public records as the owner of the home. Usually around $35.
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REO: An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. I.e. property owned by a bank, such as foreclosures,
deed in lieu, etc…
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Settlement or Closing Fee: This fee is paid to the settlement agent or escrow holder. The cost of the fee needs to be negotiated between the buyer and the seller.
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Short Sale: This occurs when the proceeds of a real estate sale fall short of the balance owed on the property. The bank forgives the short fall.
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Survey: The lender may require that a surveyor conduct a property survey. This is a protection to the buyer as well. Usually the buyer pays for the surveyor’s fee, but sometimes this may
be paid by the seller.
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Tax Deductible: Refers to payments that you may deduct against your federal and state taxable income. The interest portion of your mortgage payments, loan points, and property
taxes are tax deductible.
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Title Insurance: Covers the legal fees and expenses necessary to defend your title against claims that may be made against your ownership of the property. The extent of your
coverage depends upon whether you have an owner’s standard coverage or extended coverage title insurance policy. To get a mortgage, you also have to buy a lender’s title insurance
policy to protect your lender against title risks.
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Zoning: Certain city and county government bodies have the power to regulate the use of land and buildings. For example, the neighborhood where your house is located is probably
zoned for residential use. It most likely also has zoning codes or ordinances to regulate building heights, yard sizes, and the percentage of lot coverage by buildings.
04/15/13 – Buyers Kit
Notes
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04/15/13 – Buyers Kit
Why hire an award-winning
Allen Tate Realtor®?
Each year, Allen Tate recognizes its top performing agents based on
closed sales volume. For 2013, I’m proud to have earned the Winners
Circle designation. This is one of the highest awards given to Allen
Tate agents.
Allen Tate Company is extremely proud of its top performing agents and teams. But what
makes us most proud is this; the talent and dedication of our Allen Tate Realtors helped more
than 20,000 buyers and sellers achieve their goal of homeownership. The quality reputation
of the Allen Tate brand and strong marketing and technology helped our clients achieve their
real estate goals.
Awards don’t make great Realtors. They simply provide us with a way to recognize the
outstanding work of exceptional Realtors who do their very best job possible for our clients.
My real reward is your business and your referrals.
02/07/14 – Buyers Kit