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Home Buyer Guide


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Home Buyer Guide

  1. 1. · / -- -----_I -1~~CD ~oQV(/~
  2. 2. 04. Quick Reference Page TABLE of contents05. Fast Facts for Buyers06. Life of an Escrow Search Properties Like an Agent FREE! Go to: www.PauIMirador.Listingbook.com07. Benefits from a Professional Realtor Short Sale - Foreclosure - Bank Owned08. Terms You Should Know10. Loans12. Mortgage Payment Charts13. Ways to Hold Title14. Selecting a Home15. Rent vs. Buy16. The Escrow Process -- Explanation of Title Commitment18. Understanding Title Insurance19. Compare Our Eagle Policy20. Who Pays Closing Costs21. The Importance of Title Protection - Why Lenders Require Title Insurance22. Californias Good Funds Law23. Closing Your Escrow - After the Closing - Property Tax Dates24. Planning Your Move25. Your Notes
  3. 3. YOUR ESCROW NUMBER _ YOUR NEW ADDRESS quick reference CITY/STATEIZIP Complete the following information as it becomes available. Utility companie.s may ask for your Escrow number and the name of your Title company. IMPORTANT Do not cancel your home insurance or disconnect utilities prior to the close of escrow. Name _ Phone L---.J Cell L---.J Company _ Pager L---.J Address _ Fax L---.J City/State/Zip _ Email Email _ I Escrow Officer ~ Escrow Assistant _ Email _ Address _ Phone L---.J _ City/State/Zip _ Fax L---.J _ ---------------------- ~-~-------·-----i-- Agent Policy# STOP START DATE DATE~ Phone L---.J· New Agent Policy # Phone L-J ,; New Cable Company __ --""_~_~ ___:__,;,---"------=----r------_ New Electric Company _• Long Distance Carrier~~~-~-------~-_"""--------~~,.,.,..".~------_- Your New Phone~----"~~ __ _"__~ ~ New Fax L---.J _ CeIIPhone ~ __ ~_~ - -------------• Internet Service ~_-;-.,...". __;:_-----------~----~---·I New Water Company _ Lawn Service ~~ ~~-~------------_--- __"__ ,0- ·""·1 z@ FirstAmerican Title
  4. 4. THE ADVANTAGESf OF WORKING WITH ONLY ONE REALTOR® INCLUDE: > FOR BUYERS The Realtor becomes familiar with your familys needs.> REALTOR®. You develop better rapport and communication whenA Realtor® is a licensed real estate agent and a working towards your goal with one Realtor.member of the National Association of Realtors®,a real estate trade association.Realtors also belong to their state .and local Boards The Realtor is more committed to you becauseof Realtors. They have a wealth of resources at theirdisposal, including the Multiple Listing Service and you return that commitment.continuing education. All association members .agree to abide by a 17-article Code of Ethics andstrive for the height of professionalism. You avoid any uncomfortable situation arising> REAL ESTATEAGENT. from agent conflict.A real estate agent is licensed by the state to repre-sent parties in the transfer of property. Every Realtoris a real estate agent, but not every real estate agentis a professional Realtor.> LISTING AGENT.A listing agent forms q legal relationship with thehomeowner to sell the-property and places theproperty in the Multiple Listing Service. "> BUYERS AGEN:r.fA Buyers agent Of Buyers broker is an agent hiredby the Buyer. Generally, the Buyers is paidfrom the commission fee agreed to by the SeUer. Excerpt from the Preamble to the Realtors Code of Ethics:> MULTIPLE LISTING SERVICE (MLS).The MLS is a database of properties listed for sale The term Realtor has come to connoteby Realtors who are members of the local Board of competency fairness, and high integrityRealtors. Information on an MLS property is available resulting from adherenceto thousands of Realtors. to a lofty ideal of moral conduct in business relations.> COMMITMENT. IS A TWO-WAY STREET.Your Realtor will make a commitment to spend valu- • • •able hours finding the rfght home for you: research- No inducement of profit and no instruction from clients evering listings, previewing properties, visiting homes can justify departure from this ideal.with you, and negotiating your contract. Honor thatcommitment by staying with the Realtor youveselected unti] you purchase your home. Be sure your • • • In the interpretation of this obligation,Realtor accompanies you Oil your first visit to all new Realtors can take no safer guidehomes and open houses too. than that which has been handed down through the centuries, embodied in the Golden Rule: "Whatsoever ye would that others should do to you, do ye even so to them. " I First American TItle D
  6. 6. [ COUNT ON ] First American Title Buying a home is a challenging project, and there are many ways a professional can help. [ CO U NT 0 NUS ] for service Here are some of the many ways you may benefit Your Realtor recommends First American with confidence, from working with a Realtor: knowing each of our branches is staffed by professionals dedicated to closing your escrow. Each office can provide comprehensive title and settlement • • ••The Realtor who helps you buy a home is traditionally paid by the Seller. services for any real estate transaction associated with a purchase, construction, refinance or equity loan. Backed by the assurance of First American Title, each transaction will be expertly completed in accordance with the state-specific •• •Your Realtor has thousands of homes to choose from through the underwriting standards and regulatory requirements. Our offices and agents utilize fully-trained staff to provide youMultiple Listing Service (MlS), so youre mora likely to find the home with the most comprehensive insurance coverage andthats just right for you and find it quicker. In fact, a majority of the professional service available in the industry for sale are listed by Realtors and arent available to YOt.! ..unless you are working with a Realtor. [COUNT ON US] forstability : First American Title is the principal subsidiary ofUnfortunately, its true. Some transactions fall apart before dosing. The First American Corporation in Santa Ana, California,An experienced Realtor may be able to resolve problems and see your the largest supplier of real estate related services in the nation.transaction through <0 a successful closing. Were backed by assets totaling over $3 billion and reserves of more than $300 million. First American is-the leading title insurer in the state, with roots dating back to 1892.New home subdivisions will welcome you and your Realtor. If youre Weve served California families for generations.interested in buying a new home, take your a@entwith you on your firstvisit to each subdivision. Your professional Realtor is an importantsource of information who can supply background on the builder, nearbysubdivisions, and the local community. [ COU NT ON US] for convenience First American has a direct office or an agent office located near you. We offer more convenient locations-over 150 offices throughoutYou use a professional for your legal, financial and health needs. Why California. First American has an extensive network of officesgamble on what may be your biggest investment without a professional and agents throughout the United States, the Bahama Islands,at your side? Canada, Mexico, Puerto Rico, the U.S. Virgin Islands Bermuda, Guam, and the United Kingdom. Our headquarters is located at 2 First American Way, Santa Ana, CA 92707.If you consider a "For gale By Owner," take your Realtor along to helpnegGtiate the contract, The owner may not only agree to your terms, butalso agree to Ray the agents commission. [COUNT ON US] for all of your needsYou will have more protection from legal and financial liability, especially First American offers more than title insurance and escrow services:as real estate transactions become more complicated. Property research· Account servicing Foreclosures • 1031 tax-deferred exchanges Hazard Insurance • Home WarrantyYour experienced Realtor will negotiate and prepare the purchase Homeowners Insurance • Trust and Investmentcontract for you and assist you throughout the escrow process. Credit Services • AppraisalsNaluations Analytics & Modeling • Technology Solutions I First American Title D
  7. 7. AMORTIZED LOAN. A loan that is paid off-both interest and principal-by regular payments that are equal or nearly equal. AMENDMENTS. A change-either to alter, add to, or correct-part of an agreement without changing the principal idea or essence. APPRAISAL. An estimate of value of property resulting from analysis of facts about the property; an opinion of value. ASSUMPTION. Taking over another persons financial obligation; taking title to a property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the property. BENEFICIARY. The recipient of benefits, often from a deed of trust; usually the lender. CLOSE OF ESCROW. The date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective. CLOUD ON TITLE. A claim, encumbrance, or condition that impairs the title to real property until disproved or eliminated through such means as a quitclaim deed or a quiet title legal action. COMPARABLE SALES. Salesthat have similar characteristics as the subject property, used for analysis in the appraisal. Commonly called "cornps." CONVEYANCE. An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.a I First American Title
  8. 8. TERMS YOU SHOULD KNOWDEED OF TRUST. An instrument used in many states in place of a mortgage.DEED RESTRICTIONS. Limitations in the deed to a property that dictate certain uses that mayor may not be made ofthe property.EARNEST MONEY DEPOSIT. Down payment made by a purchaser of real estate as evidence of good faith; a deposit orpartial payment.EASEM ENT. A right, privilege or interest limited to a specific purpose that one party has in the land of another.HAZARD INSURANCE. Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending uponthe policy. Buyer often adds liability insurance and extended-coverage for personal property.HOMESTEAD EXEMPTION. Automatic in California, it allows any resident of California, 18 years of age or older, to exempt fromattachment, execution or forced sale $100,000 of equity in a single dwelling unit. Exceptions include (1) process and sale of aconsensual lien, i.e. where a deed of trust or equity loan is foreclosed; (2) a forced sale resulting from a mechanics lien, and (3)any equity beyond the $100,000. (You should consult an attorney to determine if this exemption offers you protection in the eventof an attachment, execution or forced sale.)IMPOUNDS. A trust type of account established by lenders for the accumulation of borrowers funds to meet periodic paymentsof taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.LEGAL DESCRIPTION. A description of land recognized by law, based on government surveys, spelling out the exact boundariesof the entire piece of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.LIEN. A form of encumbrance that usually makes a specific property the security for the payment of a debt or discharge of anobligation. For example, judgments, taxes, mortgages, deeds of trust.MORTGAGE. The instrument by which real property is pledged as security for repayment of a loan.PIT!. A payment that combines Principal, Interest, Taxes and Insurance.POWER OF ATTORNEY. A written instrument whereby a principal gives authority to an agent. The agent acting under such agrant is sometimes called an "Attorney-in-Fact."PURCHASE AGREEMENT. The purchase contract between the Buyer and Seller. It is usually completed by the real estateagent and signed by the Buyer and Seller.QUITCLAIM DEED. A deed operating as a release, intending to pass any title, interest, or claim which the grantor may havein the property, but not containing any warranty of a valid interest or title by the grantor.RECORDING. Filing documents affecting real property with the County Recorder as a matter of public record.WARRANTY DEED. A real estate oriented document used to convey fee title to real property from the grantor (usually the Seller)to the grantee (usually the Buyer). ~ I First American Title D
  9. 9. OBTAINING A NEW LOAN WHEN AND WHERE TO APPLY FOR A LOAN There are many sources for home loans including banks, credit unions, mortgage companies, and mortgage brokers. Your Realtor® may give you several names of lenders who have proven reliable in their previous ~ transactions. Apply for your loan as soon as possible. In fact, its probably a good idea to know what you can afford before you begin looking for I your new home. It can give you more bargaining power when negotiating with a Seller, especially in todays market. A lender can prequalify you for a certain price range and help you avoid disappointment later. VERIFICATION REQUESTS Your lender will mail out verification requests and order an appraisal on the property you are buying. If your lender asks for additional items, please com- ply promptly with those requests to avoid delaying loan approval. WHAT IS HAZARD (OR FIRE) INSURANCE? Hazard insurance covers the dwelling itself and is required by the lender to protect their "risk" in your home. Your Lender or Realtor will explain the necessary hazard insurance coverage to you. If you are buying a condominium, a master policy already exists which includes your unit-but it does not cover your personal belongings. CONTACT YOUR INSURANCE AGENT EARLY IN THE PROCESS Hazard Insurance coverage must be provided so the lender can release loan funds to First American. Hazard Insurance is one of the items frequently postponed until the last minute, and this can result in delaying the closing for a day or more. Order your insurance as soon as your loan is approved; then furnish your escrow officer with the agents name and phone number. When you talk with your insurance agent, be sure to ask about additional coverage in a homeowners policy to insure your personal belongings and to protect against liability for such events as injuries to visitors. WHAT HAPPENS AFTER LOAN APPROVAL? After loan approval and just prior to your planned Closing date, the lender will send loan documents to First American Title, and your escrow officer will prepare an estimated settlement statement. This statement indicates what funds go where, and at this time your escrow officer can tell you how much money you need to bring to the closing appointment. Be aware that this amount may be higher or lower than previously estimated :! due to changes in such items as prepaid interest, prorated fees, courier fees, and impound accounts.- L I First American TItle
  10. 10. DO NOT CHA GE JOBS. Ajob change may result in your WHAT TO AV01D DURING THE LOAN PROCESS loan being denied, particularly if you are taking a lower paying position or moving into a different field. Dont think DONT PAY OFF EXISTING ACCOUNTS " UNLESS THE LENDER REQUESTS IT. youre safe because youve received approval earlier in the If your Loan Officer advises you to payoff certain bills in order to quality for the process, as the lender may call your employer to re-verify loan, follow that advice. Otherwise, leave your accounts as they are until your your employment just prior to funding the loan. 0 escrow closes. 0AVOID SWITCHING BANKS OR MOVING YOUR MONEY TO ANOTHER INSTITUTION. DONT MAKE ANY LARGE PU~CHASES. A majorAfter the lender has verified your funds at one or more institutions, the money should purchase that requires a withdrawal from your verifiedremain there until needed for the purchase. 0 funds or increases your debt can result in your not qualifying for the loan. A lender may check your credit or re-verify funds at the last minute, so avoid purchases that could impact your loan approval. 0 types of loans ADJUSTABLE RATE LOAN. Adjustable or variable rate refers to the fluctuating interest rate youll pay over the life of the loan. The rate is adjusted periodically to coincide with changes in the index on which the rate is based. The minimum and maximum amounts of adjustment, as well as the frequency of adjustment are specified in the loan terms. An adjustable rate mortgage may allow you to qualify for a higher loan amount but maximums, caps and time frames should be considered before deciding on this type of loan. ASSUMABLE LOAN. A true assumable loan is rare todayl This loan is used to enable a buyer to pay the seller for the equity in the home and take over the payments without meeting any requirements. Assumables these days generally require standard income, credit and funds verification by the lender before the loan can be transferred to the buyer. BALLOON PAYMENT LOAN. A balloon loan is amortized over a long period but the balance is due and payable much sooner, such as amortized over 30 years but due in five years. The loan also may be extendable or it may roll into a different type. This could be an option if you expect to refinance before the loan is due or you plan to sell before that date. Discuss this option carefully with your Loan Officer before accepting this type of loan. BUY-DOWN LOAN. If you have cash to spare, you can pay a portion of the interest up-front to reduce your monthly payments. COMMUNITY HOMEBUYERS PROGRAM. This program is designed to assist first-time buyers by offering a fixed rate and a low down payment, such as 3 to 5% down. The program doesnt require cash reserves, and qualifying ratios are more lenient; however, the buyers income must fall within a certain range and a training course may be necessary if required by the program. Ask your Loan Officer if this program is available in your community and whether or not you might qualify. CONVENTIONAL LOAN. This simply describes a loan that is not obtained under any government-insured program, secured by investors. It could be any type: fixed rate, adjustable, balloon, etc. FHA LOAN. This program is beneficial for buyers who dont have large down payments. The loan is insured by the Federal Housing Administration under and Housing Urban Development (HUD) and offers easier qualifying with less cash needed up-front but the condition of the property is strictly regulated. The Seller will pay a portion of the closing costs that would typically be paid by the buyer in a conventional loan program. FIXED RATE LOAN. This loan has one interest rate that is constant throughout the loan. GRADUATED PAYMENTS. This is a mortgage that has lower payments in the beginning that increase a pre-determined amount (not based on current rate fluctuations as with an adjustable) usually on an annual schedule for a specific number of years. NO-QUALIFYING. A no-qualifying loan may be an option for those who can afford a larger down payment, generally 25% to 30% or more. Since the risk for the lender is virtually eliminated, the borrower doesnt have to meet normal lender requirements such as proof of income. VA LOAN. People who have served in the US armed forces can apply for a VA loan which covers up to 100% of the purchase price and requires little or no down payment. The seller pays much of the closing costs but those fees are added to the sales price of the home. I First American Title _
  11. 11. MORTGAGE PAYMENT PRINCIPAL & INTEREST 30- YEAR LOAN INTEREST RATE Loan Amount 5.00% 5.5% 1--6.00% ~ f- 6.5% ., ~ 7.00%~ ~ 7.5% J }- ~ 8.00% ~ 8.5% J ~.OO% ~ $300,000 $1,610.46 $1,703.37 $1,79865 $1,896.20 $1,995.91 $2,097.64 $2,201.29 $2,306.74 $2,413.87 $350,000 $1,878.88 $1,987.26 $2,098.431 $2,212.24 I $2,328.56 r $2,447.25 1$2,568.18 $2,691.20 $2,816.18 c $400,000 $2,147.29 $2,271.16 $2,398.20 $2,528.37 $2,661.21 $2,79686 $2,93506 $3,075.65 $3,218.49 $450,000 $2,415.70 1 $2,555.05 I1 $2,697.981 I $2,844.31 I 1$2,993.8611 $3,146.47 [ [$3,301941 1$3,460.11 1$3,620.80 j $500,000 $2,684.11 $2,838.95 $2,997.75 $3,160.34 $3,326.51 $3,496.07 $3,668.82 $3,844.57 $4,023.11 $550,000 $2,952.52 $3,122.84 1$3,29753 1I $3,476.37 I $3,659.16 $3,845.68 $4,035.71 1$4,229.02 r $4,425.42 1 $600,000 $3,220.93 $3,406.73 $3,597.30 $3,792.41 $3,991.81 $4,195.29 $4,402.59 $4,613.48 $4,827.74 $650,000 $3,489.34 !1 $3,690.63 I 1$3,897.08 I1 $4,108.44 ] I $4,324.47 I 1$4,544.89 1 1$4,769.47 1$4,99794 1$5,230051 $700,000 $3,757.75 $3,974.52 $4,196.85 $4,424.48 $4,657.12 $4,894.50 $5,136.35 $5,382.39 $5,632.36 $750,000 $4,026.161 I$4,258.42 1 !$4,496.63 $4,740.51 1 $4,989.77 r $5,244.11 1$5,503.23 1 1$5,766.85 1$6,034.671 $800,000 $4,294.57 $4,542.31 $4,796.40 $5,056.54 $5,322.42 $5,593.72 $5,870.12 $6,151.31 $6,436.98 $850,000 $4,562.98 I [ $4,826.21 $5,096.18 $5,372.58 1$5,655.07 1$5,943.32 1$6,23700 1$6,535.76 1$6,839.29 $900,000 $4,831.39 $5,110.10 $5,395.95 $5,688.61 $5,987.72 $6,292.93 $6,603.88 $6,920.22 $7,241.60 $950,000 $5,099.81 11$5,394.00 [ 1$5,695.73] I I $6,004.65 1 $6,320.37 I 1 1$6,642.54 i $6,97076 1$7,304.68 1$7,643911 $1,000,000 $5,368.22 $5,677.89 $5,995.51 $6,320.68 $6,653.02 $6,992.15 $7,337.65 $7,689.13 $8,046.23 THIS FORMULA IS ONLY A GUIDE AND NOT TO BE CONSTRUED AS ACTUAL LENDING CALCULATIONS. Contact your loan officer to determine more accurately what price range you should consider. Lenders abide by certain ratios when calculating the loan amount their customers can qualify for and the ratios vary by lender and loan program. Many use 28% of your gross monthly income as the maximum allowed for your mortgage payment (principal/interest/taxes/insurance or PITI); for your total monthly debt, the ratio is 36%. Total monthly expenses means PITI plus long-term debt (such as auto loans) and revolvingl credit-card debt. Do not include other expenses such as groceries, utilities, clothing, tuition, etc., to calculate this ratio. I MONTHLY PAYMENTS I ON ACCOUNTS, AUTO, I MONTHLY ALLOWABLE TOTAL DEBIT (C) _ CREDIT CARDS, LOANS I MINUS MONTHLY DEBIT - (A) _ I + I I =MONTHLY ALLOWABLE PITI (D) _ I + I I (LESS 20% FOR TAXES & INSURANCE) x.80 + I I ALLOWABLE PRINCIPAUINTEREST ONLY (E) _ + I L _ I + I GROSS MONTHLY INCOME (B) _ I =TOTAL MONTHLY I I x.28 DEBT (A) I =MONTHLY ALLOWABLE PITI (F) _ I I I (LESS 20% FOR TAXES &INSURANCE) x.80 ----------------------------------, I =ALLOWABLE PRINCIPAUINTEREST ONLY (G) _ I I GROSS MONTHLY I PAYMENT: ENTER LESSER OF (E) OR (G) (-.!.H)-- _ I INCOME BEFORE r---------------------------------------------------- I TAXES (B) _ I LOAN AMOUNT _ I USING CHART ABOVE, I x.36 I FIND CURRENT INTEREST RATE. FOR 20% DOWN x"".8""0 I = ALLOWABLE _ I LOCATE PAYMENT AMOUNT IN = HOME PRICE _ I THAT COLUMN CLOSE TO YOUR I TOTAL MONTHLY I PRINCIPAL AND INTEREST (H). LOAN AMOUNT x=.9=.0 I DEBT (C) I FIND THE LOAN AMOUNT TO THE I LOAN 10% DOWN _ I LEFT AND ENTER HERE. I = HOME PRICE _•• ~~W ~~L# I First American Title
  12. 12. WAYS TO HOLD TITLE IN CALIFORNIA COMMUNITY PROPERTY TENANCY IN COMMUNITY JOINT TENANCY WITH RIGHT COMMON PROPERTY OF SURVIVORSHIP Two or more persons Two or more persons Husband and wife or Husband and wife or (may be spouses or domestic (may be spouses or domestic partners. domestic partners. partners-). domestic partners/). Ownership can be divided into Ownership interests Ownership interests Ownership interests any number of interests, equal must be equal. must be equal. must be equal. or unequal. -- Single conveyance and One or more conveyances Single conveyance (creating Single conveyance or spouses or domestic partners (Law presumes interests are identical interests). Vesting presumption from marriage must indicate consent which equal if not otherwise specified.) must specify joint tenancy. or domestic partnership. can be on deed. Equal. Equal. Equal. Equal. Each co-owner may transfer Each co-owner may transfer or Both spouses of domestic Both spouses of domestic his/her interest separately mortgage their interest partners must consent to partners must consent to but tenancy in common separately.3 transfer or mortgage. transfer or mortgage. results.s & 4 Co-owners interest not Unless married or domestic Entire property subject to Entire property subject to subject to liens of other partners, co-owners interest not forced sale to satisfy debt of forced sale to satisfy debt of debtor/owner but forced sa Ie subject to liens of other debtor/ either spouse or domestic either spouse or domestic can occur if prior to owner but forced sale can occur- partner. partner. co-owners/debtors death. Decedents Y2 interest Decedents interest Deceaseds Y2 interest passes automatically passes to Decedents interest passes to automatically passes to to surviving spouse or surviving spouse or domestic his/her heirs by will or intestacy. surviving joint tenant domestic partner unless partner due to right of ("Right of Survivorship"). otherwise devised by will. survivorship. Qualified survivorship rights. Right of Survivorship. Mutual Right of Survivorship Mutual consent required for consent required for transfer. Co-owner interests may be (avoids probate). May transfer. Surviving spouse or Surviving spouse or domestic separately transferable." have tax disadvantages for domestic partner- may have partner? may have tax spouses. tax advantage. advantage.1. "Persons" includes a natural person as well as a validly formed corporation, limited partnership, limited liability company or general partnership. Trust property is vested in the trustee (usually a natural person or corporation).2. For domestic partners meeting California statutory requirements, benefits are same as community property except certain tax benefits may not be available. Note: Two unrelated persons who are either (a) same sex, or (b) opposite sex if they meet age or disability requirements, may be domestic partners provided that they are not then married or in a domestic partnership and comply with other statutory requirements.3. Transfers by married persons or domestic partners may require a quitclaim deed from spouse/partner for title insurance purposes.4. If co-owners are married or domestic partners, property may be subject to legal presumption of "community property" requiring consent of both spouses/partners to conveyor encumber title notwithstanding vesting as "joint tenancy." I First American TItle II)
  13. 13. SEl.:.ECTING The following home comparison chart is designed to help you remember the homes you visit and what you liked best and least about each one. Rate features or make notes that will help you determine what pleased or displeased you. Remembering each home would appear easy, but it can quickly become confusing. Which home was near the school? Which one had the great pool? Did it have a family room? And how many bathrooms? In the "something memorable" category, note something you think is unusual and memorable about each home, such as a stained glass window, fruit trees, a childs playhouse. This will make it easier for you to recall the property later and refer to a specific address. And, last but not least, maybe the most important question, does this house feel like home? Good luck with your search, and enjoy your house hunting adventure! HOME 1 HOME2 HOME3 HOME4 HOMES ADDRESS ASKING PRICE NO. BEDROOMS/BATHS SQUARE FOOTAGE FIRST IMPRESSION LOCATION NEIGHBORHOOD APPEALING -~- LIVING ROOM DINING ROOM GREAT ROOM KITCHEN FAMILY ROOM BATHROOM MASTER BATHROOM MASTER BATH BEDROOMS =s ~ FLOOR PLAN PATIO POOL LANDSCAPING GARAGE OR CARPORT SOMETHING MEMORABLE LDOES THIS FEEL LIKE HOME?II "°"1 Lt% First American TItle
  14. 14. rentEver thought how much you pay in rent over an extended period of time? Probably a lot more than you realize. The amount you spend for renteach month could be applied to a mortgage, not only building equity in your own property, but-in most cases-substantially reducing theFederal and state income taxes you pay each year. And what happens to your rent money? Its gone! Theres no interest, no equity, no return.Interest rates are still low, and you may be surprised at what you can afford. To determine your home-buying ability, call your real estate agentor lender. The consultation is free-no strings attached-so make the call today! [RENT • • YOUR INVESTMENT AND RETURN ] MONTHLY YOUR PAYMENT after 1 year after 3 years after 5 years after 10 years after 15 years RETURN + t t t $ 400 $ 500 4,800 6,000 I I I I I 14,400 18,000 24,000 30,000 1 48,000 60,000 172,000 90,000 $0 $0 $ 600 7,200 21,600 36,000 72,000 1108,000 $0 $ 700 8,400 25,200 42,000 84,000 1126,000 $0 $ 800 9,600 28,800 48,000 96,000 1144,000 $0 $ 900 10,800 32,400 54,000 108,000 162,000 $0 $ 1,000 12,000 36,000 60,000 120,000 180,000 $0 $ 1,100 13,200 39,600 • 66,000 132,000 198,000 $0 $ 1,200 14,400 43,200 72,000 144,000 216,000 $0 $ 1,300 15,600 46,800 78,000 156,000 i 234,000 $0 $ 1,400 50,400 1252,000 16,800 84,000 168,000 $0 $ 1,500 18,000 54,000 90,000 180,000 270,000 $0 $ 1,750 . 21,000 I 63,000 105,000 1 210 315,000 $0 $ 2,000 $ 2,500 1 1 24 ,000 30,000 72,000 90,000 120,000 150,000 000 240,000 300,000 360,000 450,000 $0 $0 t ~ ~---v-.: tt.$ I First American TItle It
  15. 15. THE ESCROW PROCESS AT FIRST AMERICAN TITLE WHAT IS AN ESCROW? An escrow is a process wherein the buyer and seller deposit written instructions, documents, and funds with a neutral third party until certain conditions are fulfilled. In a real estate transaction, the AS PART OF OUR SERVICE, buyer does not pay the seller directly for the property. The buyer gives the FIRST AMERICAN WILL: funds to an escrow company who, acting as an intermediary, verifies that title to the property is clear and all written instructions in the contract have been met. Then the company transfers the ownership of the property to OPEN escrow and deposit your "good faith" the buyer through recordation and pays the seller. This process protects funds in a separate escrow account. all parties involved. The state of California licenses and regulates all escrow companies. The Insurance Commissioner and the state banking department can inspect a l----,..... .~ CONDUCT a title search to determine ownership , and status of the subject property. companys records at any time, providing further oversight of the companys management and position as an impartial third party to the transaction. ISSUE a title commitment In California, escrow services are generally provided by a title insurance and begin the process to delete or record items company instead of an attorney. The stability, reliability and performance to provide clear title to the property. of your title and escrow company are vital to protect the interests of all parties to the transaction. Per contract, CONFIRM that the lender has determined you, the buyer, are qualified for a new loan. ASK you to complete a beneficiarys statement if you are assuming the sellers loan. HOW IS AN ESCROW OPENED? Once you have completed the contract (or Purchase Agreement) and the seller has accepted the offer, your realtor MEET all deadlines as specified in the contract. will open the escrow. The earnest money deposit and the contract are placed in escrow. As a neutral party to the transaction, First American can REQUEST payoff information for the sellers loans, respond only to those written instructions agreed to mutually by all other liens, homeowners association fees, etc. "interested" parties (seller and buyer); First American cannot otherwise alter the contract or create instructions, and that protects all interested parties. PRORATE fees, such as property taxes, per the contract, and prepare the settlement statement. SET separate appointments: Seller will sign documents; you will sign documents and deposit funds.HOW TO HOLD TITLE. You should inform your escrow officer and lender assoon as possible of how you wish to hold title to your home and exactly how yourname(s) will appear on all documents. This allows your lender and title company REVIEW documents ensuring all conditionsto prepare all documents correctly. (Changes later, such as adding or deleting and legal requirements are fulfilled;an initial in your name, can delay your closing.) You may wish to consult an request funds from, accountant or other professional before deciding how to hold title. When all funds are deposited, RECORD documents at the County recorder to transfer the subject property to you. After recordation is confirmed, CLOSE escrow and disburse funds, including sellers proceeds, loan payoffs, realtors commissions, WHAT HAPPENS AT FIRST AMERICAN? During the escrow period, our related fees for recording, etc. title department begins researching and examining all historical records pertaining to the subject property. Barring any unusual circumstances, a commitment for title insurance is issued, indicating a clear title or listing PREPARE and send final documents any items which must be cleared prior to closing. The commitment is sent to parties involved. to you for review. (See" Explanation of Title Commitment" on the next page.) Your escrow officer follows instructions on your contract, coordinates deadlines, and gathers all necessary paperwork. For example, written requests for payoff information (called" demands") are sent to the sellers mortgage company and any other lien holders. I First American Title
  16. 16. WHAT HAPPENS NEXT FOR THE BUYER?IDENTITY STATEMENT. You will be asked to fill out an IdentityStatement that enables our title department to distinguish you This explanation may help you understand the contents of thefrom others with identical names during our search of County Title Commitment you receive from First American Titlerecords. It also provides basic information that will be usefulfor your escrow officer. SCHEDULE AHOME LOAN. Unless you are paying cash, assuming a loan,or the seller is financing, you will need to apply for a home loan This is the information submitted to our Title departmentif you have not already done so. Your realtor should be able by the escrow officer. It contains the basic information givento recommend several reliable sources for your loan. Apply assoon as possible to comply with the purchase contract and to to us by the buyer or realtor, such as the legal descriptionavoid delaying the closing. of the property, sale price, loan amount, lender, nameRESPONSE TO SELLERS NOTICES. If directed by the contract, and marital status of buyer and will receive the following items which require a responsefrom you. Your realtor can help you with your responses. SCHEDULE B a. Sellers property disclosure statement listing any existing problems known to the seller. The schedule B "exceptions" are items which are tied to the subject property. These include Covenants, Conditions b. Information pertaining to the home owners Association (HOA) or planned unit development and Restrictions (CC&Rs), easements, homeowners (PUD), such as Covenants, Conditions and association by-laws, leases and other items which will remain restrictions (CC&Rs), if applicable. of record and transfer with the property. They are referred c. Flood hazard disclosure if the property is in a food area. to as "exceptions" because the buyer will receive a clear title "except" the buyers rights will be subject to conditions in the d. Independent inspections, such as termite and septic, and any repairs as required. CC&Rs, recorded easements, etc. The buyer is asked to sign a receipt for the schedule B documents which states theTITLE COMMITMENT. You will receive a copy of the titlecommitment when we complete the title search. See across buyer has read and accepts the contents.for an explanation of the title package you will receive fromFirst American. If you have questions about the title commit-ment, contact your realtor or your escrow officer. REQUIREMENTS These are items that First American needs to delete and/or record in order to provide a clear title to the property. Items that need to be addressed include: - Current property-tax status, - Any assessments that are owed such as those for a homeowners association,CONSIDER THIS. One escrow transaction could involveover twenty individuals including realtors, buyers, sellers, - Any encumbrances (or liens) on the property.attorneys, escrow officer, escrow technician, title officer, Sometimes items show up against a property because anotherloan officer, loan processor, loan underwriter, home inspector,termite inspector, insurance agent, home warranty represent person has a name similar to an involved party. This is onetative, contractor, roofer, plumber, pool service, and so on. reason we ask for an Identity Statement, to determine if itemsAnd often one transaction depends on another. are inaccurate and can be deleted.When you consider the number of people involved, youcan imagine the opportunities for delays and mishaps. So,much like an airline pilot cant prevent turbulence during a NOTEfight, your experienced realtor and escrow team cant This information is provided by the County Recorders Office and isprevent unforeseen problems from arising. However, theycan help smooth out the bumps and, whenever possible, not intended as legal advice. It specifies the proper size, marginsget you safely through to a successful closing. and print type to beused on documents to be recorded. If you have any questions, please do not hesitate to call your escrow officer for information and help. I First American TItle ID
  17. 17. un d e rsta n din 9 TITLE INSURANCE THE TITLE INDUSTRY IN BRIEF. Prior to the development of the title industry in the late 1800s, a homebuyer received a grantors warranty, attorneys title opinion, or abstractors certificate as assurance of home ownership. The buyer relied on the financial integrity of the grantor, attorney, or abstractor for protection. Today, title insurance companies are regulated by state statute. They are required to post financial guarantees to ensure that any claims will be paid in a timely fashion. They also must maintain their own "title plants" which house duplicates of recorded deeds, mortgages, plats, and other pertinent county property records. wh at IS TITLE INSURANCE? Title insurance provides coverage for certain losses due to defects in the title that occurred prior to your ownership. The seller can give only those rights that previously have been received with" good title." Title insurance protects against defects such as prior fraud or forgery that might go undetected until after closing and possibly jeopardize your ownership and investment. why TITLE INSURANCE IS NEEDED? Title insurance assures the new buyers that they are acquiring marketable title from the seller. It is designed to eliminate risk or loss caused by defects in title from the past. Title insurance protects the interest of the mortgage lender as well as the equity of the buyer for as long as they or their heirs have any interest in the property. wh e n IS THE PREMIUM DUE? It is a one-time premium which is paid at the close of escrow. It is customary for the seller to pay for the Owners Policy. If there is a new loan, the buyer pays for the Lenders policy. The policy has a perpetual term and provides coverage for as long as you are in a position to suffer a loss. do ALL TITLE COMPANIES OFFER THE SAME PROTECTION? First American Title provides comprehensive title and settlement services for any real estate transaction associated with a purchase, construction, refinance or equity loan. First American offers exceptional service in every aspect of your transaction and has a strong reputation that stretches back over a century. First American provides the technology, expertise and comprehensive selection of title and settlement services to meet your needs. Drawing on more than a century of experience and innovation, First American is your single source for accurate, efficient and cost-effective title and settlement solutions. Any standard American Land Title Association (ALTA) policy covers the same basic items. However, First American Titles Eagle Policy (our ALTA homeowners policy of Title Insurance*) combines the easy-to-understand Plain Language policy with additional coverages, including coverage for events happening after the policy date.** Some examples: - Post-policy encroachment. The owner has been in his home for several years when a neighbor builds a patio cover on the property. Well provide legal defense.** - Post-policy Forgery. someone forges the homeowners name on a mortgage. Well provide legal defense.** - Building permit violation. A room added prior to the closing date did not receive a city permit, and the new homeowner is being forced to remove the structure. Well pay for the removal, per policy limits.** - Automatic Inflation Coverage of 150%, a 10% increase in the policy amount for each of the first five years. Note: if you decide to sell your home in the future, new title insurance will be needed to protect your Buyer for the time prior to and during your ownership for any defects that may have occurred. See below for First American Titles short-term, reduced-rate certificate. * An ALTA homeowners Title Insurance policy is requested in Line 117 of the revised AAR Residential Resale Real Estate Purchase Contract, 5/00. ** Deductibles, maximums, and conditions may apply."." .. ~ I First American TItle ~- ~
  18. 18. ~A_SK_FO_R_O_U_R_Ef4teP~_O_N_Y_O_U_R_N_EX_T_P_U_RC_H_A_S---,E ALTA , ALTA PLAN OUR STANDARD LANGUAGE EAGLE >-- -; ~ t-- -; 1. Someone else owns an interest in your title 2. A document is not properly signed ----------------------------------~------~----- ---------- 3. Forgery, fraud, duress, incompetency, incapacity or impersonation affects your title 4. Defective recording of any document affects your title 5. You have no legal access to and from your land Restrictive covenants limit your use of the land -----------------~--------~------~------" A lien on your title because there is: (a) a deed of trust, (b) a judgment, tax, or special assessment, and/or (c) a charge by the homeowners association Purchase, lease or loan refused because title is unmarketable Unrecorded mechanics liens on your title for labor and materials 10. Others have rights under unrecorded leases, contracts or options 11. Someone else has an unrecorded easement on your land -------------------- Forced removal of structure because it: (a) extends onto other land or onto an easement, 12. (b) violates a restriction on schedule b, and/or (c) violates an existing zoning law 13. Cannot use land for single family dwelling or residence because use violates Other defects, liens, or encumbrances ---------------------r----n------ 14. Plain language Forgery occurs after policy date Cloud on title occurs after policy date J------ Adverse ~--------~------------------~------~~----~------~ possession occurs after policy date ~ _b ~~ ~~ 19. Prescriptive easement occurs after policy date 20. --------------------------------------------~----~~----~~--- No legal vehicular and/or pedestrian accessto your land Forced correction due to violation of covenant, condition or restriction Someone takes your title due to restriction violation that occurred before policy date --------------~------~------~-- Violation of land regulation or subdivision law causes: (a) refusal of building permit, (b) refusal of purchase, lease or loan, and/or (c)forced correction or removal of violation ~--~ removal/correction Forced of structure due to violation of building permit --~--~--~~~----~------ 25. Forced .correction due to violation of zoning law or regulation --------",~-~----~~-----~~-----~~----~ 26. Forced removal of structure-includes ------------------------~----~~--~~---- __________________ your boundary wailifence-due to encroachment ~ ~~ -u__, ~ ----~--------~~--~------~----~~----~ Permit, purchase, lease or loan refused due to neighbors encroaching structure Forced removal of structure due to building setbacks or easement ~-- 29. Structure damaged through use or maintenance of easement 30. Improvements damaged from extraction of minerals, water or other substance after policy date 31. 32. ------~--------------_r---~~--_.._--~ Neighbor builds encroaching structure (excludes wall/fence) after policy date Residence with address shown not located on land at policy date 33. Map not consistent with legal description 34. Title can be transferred to Living Trust after policy date; extends to heirs, trust beneficiaries 35. Automatic increase in coverage to 150% (10% annually for 5 years) Note: For residential property, 1 to 4 units. Coverage shown are subject to exclusions, Conditions and Schedule B items set forth in the policy. Because of the nature or location of certain properties, an inspection of the property may be necessary to determine if additional exceptions from coverage need to be shown in Schedule B of the residential policy which will be noted in the preliminary report. The foregoing table is intended to highlight only some important aspects of coverage and is not to be construed as expanding or limiting the coverage as set forth in the mentioned title policies. Copies of these policies are available upon request. Any decision on coverage should be made only after review of the policies themselves. I First American Title ID