What Services does Enchantment Realty provide?

You will work with your Broker to complete a purchase contract or formal offer. Your Broker meets with the selling Broker, usually with the sellers present. Your Broker presents the offer. The sellers decide to accept the offer, counter the offer or reject the bid. Sometimes there are contingencies with the offer, the counter offer, or both. A contingency is an offer with a set of specifications or requirements attached. Some of these contingencies include:

• I will purchase your house if and when I sell my current house.
  
• I will purchase your house if you fix the back stairs to the house.
  
• I will purchase your house if my mortgage loan is approved.
  

Sellers can also add contingencies in their counter offers. Also, either party has a time limit set to respond to the offer/counter offer and can withdraw it before that time if there is no response. You will need to present a deposit along with your request. An appropriate deposit will show your good faith to the seller. The seller's agent is bound by law to bring all offers to the seller's attention. After your offer is accepted and all the conditions are met, the offer becomes binding on both sides. If you walk away from the deal at that point, you may lose your deposit. You may also be sued for damages. Make sure you understand and agree with the terms of the offer before signing. 

Things to do when your offer becomes a contract:

1. Arrange for a professional home inspection. The inspection takes about 3 hours. If possible, you should try to be there for at least the last 30 minutes. The inspector will go over his findings with you.
2. You can negotiate any significant repairs or repair allowances during the option period.
3. Start talking to your insurance company about coverage. The Title Company needs your agent's name and phone number as soon as possible. Your coverage should start the day of closing regardless of the day you take possession.
4. Deliver a copy of your contract to your loan officer, and you should immediately contact them to start the loan process.
5. Start contacting the local utility companies, phone companies, etc., to arrange services.
6. About 7 to 10 days before closing, we will call the title company to ensure they have everything they need to proceed with the finish. A follow-up call may be required 2 to 3 days before closing.
7. A day or two before closing, the title company should contact and fax you a copy of the exact closing costs (HUD-1) and let you know how much money to bring to closing.
8. A cashier's check payable to the Title Company will be needed at closing. Bring your checkbook, their estimate may be off, and you may need to write a small check for the difference at closing.
9. Closing will take about 1-2 hours. Please bring your driver's license; they will need to make a copy.
10. The home is yours when the loan is funded and recorded. At that time, you can take possession.
11. It is best not to close at the very end of the month or on a Friday, if possible, and best to close early in the morning to allow time for the loan to be funded and recorded. Also, it is wise not to have your movers delivering the day of closing in case closing or funding is delayed.

Who pays closing costs?
Closing costs vary from transaction to transaction and often total thousands of dollars. You will have to pay plenty of fees during the closing. Depending on prior negotiations, the buyer or the seller could be responsible for these costs, although the buyer typically spends most of them.

All closing costs are spelled out in the lender’s Good Faith Estimate. If you want to make sure you are paying the least amount possible in closing cost fees, you should get at least three Good Faith Estimates from mortgage lenders. This is only an estimate, and the actual charges may differ. RESPA allows the borrower to request the HUD-1 Settlement Statement that shows all actual costs imposed on the borrower in connection with the settlement one day before the settlement. If you see a charge that doesn’t make sense or that no other lender has, it is time to ask questions.

Here is an example of what you can expect to pay (some costs vary widely from state to state, so you should determine precisely what you will have to pay): Discount and Origination Points, Application Fee, Appraisal Fee, Survey Fee, Credit Report Fee, Title search and title insurance, Hazard Insurance, Recording and Transfer Charges, and Interim Interest.

The purpose of your inspection is only to eliminate those properties with too many apparent deficiencies. It is not designed to take the place of a professional home inspection. If a house passes your initial "tests" (location, wants and needs, etc.), you will probably like to schedule a second showing where you can spend an hour or so inspecting the house.

A professional home inspection is when a paid professional inspector -- often a contractor or an engineer -- inspects the home, searching for defects or other problems that might plague the owner later on. They usually represent the buyer and or are paid by the buyer. The inspection usually takes place after a purchase contract between buyer and seller has been signed. 

More and more licensed Brokers and lenders strongly encourage clients to get a professional home inspection. The Department of Housing and Urban Development Form HUD-92564-CN "For Your Protection:  Get a Home Inspection" states:

A home inspection gives the buyer more detailed information about the home's overall condition before purchase. In a home inspection, a qualified inspector takes an in-depth, unbiased look at your potential new home to:

·   evaluate the physical condition: structure, construction, and mechanical systems;

·   identify items that need to be repaired or replaced; and

·   estimate the remaining useful life of the major systems, equipment, structure, and finishes.

Appraisals are Different from Home Inspections

An appraisal is different from a home inspection. Appraisals are for lenders; home inspections are for buyers.   An appraisal is required to:

·  estimate the market value of a house;

·  make sure that the house meets FHA minimum property standards/requirements and that the home is marketable.

It is your responsibility to be an informed buyer. Be sure that what you buy is satisfactory in every respect. You have the right to carefully examine your potential new home with a qualified home inspector. You may arrange to do so before or after signing your contract as long as your agreement states that the home's sale depends on the inspection.

What is the inspector's experience? How many years have they been in the business, and how many inspections do they do a year?

Exclusively inspections? Beware of contractors who do house inspections "on the side"--they may be looking for work!

What type of report? Will it be written or oral, or both? Will the information contain suggestions for remedying deficiencies?

How long will it take? A good house inspection should take between 2 and 4 hours, depending on the size of the house.

What will be included in the inspection? See "What to look for in a professional home inspection" below.

What certifications do they have? Are they ASHI (American Society of Home Inspectors) certified?

Does the inspector have Errors and Omissions Insurance? This gives you some protection should there be an "error or omission" in the inspection--meaning the inspector missed something.

Foundation: How is the structural integrity of the foundation? Is there any evidence of cracks, shifting, or moisture problems?
General Construction: How is the quality of the general construction?
Exterior: Is the house in need of exterior repairs or maintenance?
Plumbing: How is the condition of the overall plumbing system? Any evidence of leaks or water pressure problems?
Electrical: Do any dangerous electrical situations exist? Are there apparent code violations in the electrical system?
Heating and Cooling Systems: What are the ages of the systems? Are the systems adequate for the size of the house? Have they been maintained properly?
Interior: Do doors and windows open and close properly? Are floors firm and level?
Kitchen: Are appliances functioning correctly? Is the plumbing, including the dishwasher connection, in good repair?
Baths: Is the floor solid? Is there any evidence of previous or current water leaks? Is the plumbing in good repair?
Attached structures: What is the condition of any attached form (sheds, decks, garages, etc.)
Roof: What is the approximate age of the roof? What is the estimated remaining life of the roof? What is the condition of the roofing structure as well as the shingles?
One can usually find an inspector by looking in the phone book or by inquiring at a real estate office.

Mortgage lenders require their customers to get title insurance. A title is the legal document of ownership of property. The companies also need you to pay for a title search, which is an extensive search through legal documents to prove the person selling your property has a legal claim to do it. So why have title insurance when you have had a title search done? The search may have made an error or come across forged documents that would pass the title search. Around six percent of all policies have a claim, so it is not as uncommon as some may think to have a claim.

You will have to have title insurance even if you refinance your mortgage. The mortgage lender is insuring against a lien on the property. A lien is a legal claim against a property, usually because of debt. If you don’t pay your taxes or borrow against your home, you will have a lien on your property.

The title insurance will pay the mortgage company the balance of the principle owed them over the life of a mortgage. For example, if you purchase a home valued at $100,000 and put down ten percent, then your title insurance will protect the amount owed to the bank of $90,000. As you pay off the equity, the bank is insured against only the remaining amount you owe. This means the insurance covers a depreciating amount over time. Many policies also protect the home owner’s equity investment. So of that $100,000 home, you put down $10,000 in equity as a down payment, and you are covered for that amount which increases year after year until the principal is paid off to the bank. You must check individual policies to see if they cover the bank and yourself! Protecting yourself is often optional but costs only a few dollars more.

To help save money, check to see if you qualify for a discount. Each state has different laws covering title insurance, and discounts are frequently offered for various reasons. For example, if you are going to own a home only for a few years, see if you can get a binder policy for a small premium, say 15%, and use the same title insurer with your new house. You will often get back the money you paid prior, minus the premium.

A bank typically requires mortgage insurance to get loan approval if you put down less than 20% of the purchase price for a home. If you are purchasing a house through a HUD program, you will have to get it. The insurance typically can be dropped after a certain amount of principle has been paid on the loan or if you refinance a loan. The insurance is a benefit for the bank. If, for some reason, you could not pay your mortgage and the bank had to foreclose, it will guarantee an amount back to the bank. Many people don’t understand why you need mortgage insurance when the home is collateral. Banks don’t like having to sell properties they foreclose. Selling property is not their business. Typically banks will have a company buy the home as soon as possible and take a loss. The mortgage insurance helps defy this potential loss.

Home warranties are handy items whether you are purchasing a home or selling. A home warranty policy will pay for the cost of fixing and, if necessary, replacing heating, cooling systems, and built-in appliances. Policy coverage varies, but central heating/cooling systems, electrical systems, interior plumbing, water heaters, ovens, refrigerators, etc., are usually covered against average damage for a set period, usually one year. In addition, ceiling fans, outdoor in-ground pools, and even roofs can be warrantied in some areas.

Typically a home warranty will cost between $350 to $600 depending on terms, conditions, and contract period. When you make a claim, there is a small deductible. Home warranties don’t cover damaged items (pre-existing conditions) and don’t cover cosmetic repairs (rust, paint, etc.). Usually, home warranties don’t cover structural items such as window frames, doors, etc.

Even if a seller does not pay for a home warranty, a buyer may want to purchase one. A repair on a major appliance on the house can easily exceed the cost of a home warranty. Home warranties also give peace of mind in the period after purchase. Typically a household’s cash reserves are depleted after purchasing a home, and any major repair can be a tremendous financial burden to the family. For example, a typical repair to a furnace will cost $1,250 to $3,500, well above the cost of a home warranty. Typically an agent or real estate agent can provide you with a home warranty. As with any contract, read the terms and conditions closely. In most states, real estate agencies get a monetary incentive for selling a home warranty. Try shopping around for promises to make sure the real estate company is trying to bring you the best deal. Home warranties are very common. It is estimated that nearly one million policies were sold last year.

With these comprehensive questions, ensure you find a loan that fits your needs.

1. What are the most popular mortgage loans you make? Why?
   
2. Which type of mortgage plan do you think would be best for us? Why?
   
3. Are your rates, terms, fees, and closing costs negotiable?
   
4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? NOTE: Private mortgage insurance is usually required if you make less than a 20-percent downpayment. However, most lenders will let you discontinue the policy when you have acquired a certain amount of equity by paying down the loan.
   
5. Who will service the loan? Your bank or another company?
   
6. What escrow requirements do you have?
   
7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
   
8. How long will the loan approval process take?
   
9. How long will it take to close the loan?
   
10. Are there any charges or penalties for prepaying the loan?