What to Know | 7 Reasons to Own A Home
Questions to Ask | About the Neighborhood
Questions to Ask | Before Making a Short Sale Offer
WHAT TO KNOW 7 Reasons to Own A Home
WHAT TO KNOW7 Reasons to Work With a REALTOR®
REALTORS® aren’t just agents. They’re professional members of the National Association of REALTORS® and subscribe to its strict code of ethics. This is the REALTOR® difference for home buyers:
An expert guide.
Objective information and opinions.
Expanded search power.
Your rock during emotional moments.
QUESTIONS TO ASK When Choosing a REALTOR®
How long have you been in residential real estate? Is it your full-time job?
Like most professions, experience is no guarantee of skill. But much of real estate is learned on the job.
Do you have any designations or certifications?
Real estate professionals have to take additional specialized training in order to obtain these distinctions. Designations and certifications help define the special skills that an agent can apply to your particular real estate needs. One designation buyers should look for is the ABR®, or Accredited Buyer’s Representative.
What’s your business philosophy?
While there’s no right answer to this question, the response will help you assess what’s important to the agent and determine how closely the agent’s goals and business emphasis mesh with your own.
How many buyers did you and your real estate brokerage represent last year?
This will tell you how much experience they have and how up-to-date they are on the local market.
What’s the average variation between your initial offers and final sales price?
This is one indication of a REALTOR®’s pricing and negotiating skills.
Will you represent me exclusively, or might you choose to represent the seller as well?
While it’s usually legal to represent both parties in a transaction, your REALTOR® should be able to explain his or her philosophy on client obligations and agency relationships.
Can you recommend service providers who can help me obtain a mortgage, make home repairs, and so on?
Practitioners should be able to recommend more than one provider and let you know if they have any special relationship with any of the providers.
How will you keep me informed about the progress of my transaction?
The best answer here is a question. A real estate agent who pays close attention to the way you prefer to communicate and responds accordingly will make for the smoothest transaction.
Could you please give me the contact information of your three most recent clients?
Ask their former customers if they would use the agent again in the future.
VOCABULARY Agency & Agency Relationships
The term “agency” is used in real estate to help determine what legal responsibilities your real estate professional owes to you and other parties in the transaction.
The buyer's representative (also known as a buyer’s agent) is hired by prospective buyers and works in the buyer's best interest throughout the transaction. The buyer can pay the agent directly through a negotiated fee, or the buyer's rep may be paid by the seller or through a commission split with the seller’s agent.
The seller's representative (also known as a listing agent or seller's agent) is hired by and represents the seller. All fiduciary duties are owed to the seller, meaning this person’s job is to get the best price and terms for the seller. The agency relationship usually is created by a signed listing contract.
A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. The subagent works with the buyer to show the property but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer customer can expect to be treated honestly by the subagent.
A disclosed dual agent represents both the buyer and the seller in the same real estate transaction. In such relationships, dual agents owe limited fiduciary duties to both buyer and seller clients. Because of the potential for conflicts of interest in a dual-agency relationship, all parties must give their informed consent. Disclosed dual agency is legal in most states, but often requires written consent from all parties.
Designated agents (also called appointed agents) are chosen by a managing broker to act as an exclusive agent of the seller or buyer. This allows the brokerage to avoid problems arising from dual-agency relationships for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties.
A transaction broker (sometimes referred to as a facilitator) is permitted in states where nonagency relationships are allowed. These relationships vary considerably from state to state. Generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
HOW TO Prepare for House-Hunting
Know that there’s no “right” time to buy.
Don’t ask for too many opinions.
Accept that no house is ever perfect.
Don’t try to be a killer negotiator.
Remember your home doesn’t exist in a vacuum.
Choose a home first because you love it; then think about appreciation.
HOW TO Prepare to Buy a Home
Talk to mortgage brokers.
Be ready to move.
Find a trusted partner.
Make a good offer.
Factor maintenance and repair costs into your buying budget.
Develop your home/neighborhood wish list.
WHAT TO KNOW About Credit Scores
Credit scores range between 200 and 850, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:
Your payment history.
How much you owe and where.
The length of your credit history.
How much new credit you have.
The types of credit you use.
HOW TO Improve Your Credit
Credit scores play a big role in determining whether you’ll qualify for a loan and what your loan terms will be.
Keep your credit score high by doing the following:
Check for errors in your credit report.
Thanks to an act of Congress, you can download one free credit report each year at annualcreditreport.com. If you find any errors, correct them immediately.
Pay down credit card bills.
If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.
Don’t charge your credit cards to the max.
Pay down as much as you can every month.
Wait 12 months after credit difficulties to apply for a mortgage.
You’re penalized less severely for problems after a year.
Don’t order items for your new home on credit.
Wait until after your home loan is approved to charge appliances and furniture, as that will add to your debt.
Don’t open new credit card accounts.
If you’re applying for a mortgage, having too much available credit can lower your score.
Shop for mortgage rates all at once.
Having too many credit applications can lower your score. However, multiple inquiries about your credit score from the same type of lender are counted as one if submitted over a short period of time.
Avoid finance companies.
Even if you pay off their loan on time, the interest is high and it may be considered a sign of poor credit management.
HOW TO Prepare to Finance a Home
Develop a budget:
Use receipts and your banking transaction history to create a budget that reflects your actual habits over the last several months. This approach will better factor in unexpected expenses alongside more predictable costs such as utility bills and groceries. You’ll probably spot ways to save, whether it’s cutting out a Starbucks run or eating dinner at home more often.
Lenders generally look for a debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt—car loans, student loans, and revolving balances on credit cards — down to between 8 and 10 percent of your net monthly income.
Increase your income:
Now’s the time to ask for a raise! If that’s not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.
Save for a down payment:
Designate a certain amount of money to put away in your savings account each month. Although it’s possible to get a mortgage with less than 5 percent down, you can usually get a better rate if you put down more. Aim for 20 percent of the purchase price.
Keep your job:
While you don’t need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.
Establish a good credit history:
Get a credit card and make all your bill payments on time. Pay off entire balances as promptly as possible. Also, obtain a copy of your credit report, which includes a history of your credit, bad debts, and late payments. Ensure that it’s accurate and correct any errors immediately.
Even if you have enough money to qualify for a mortgage and cover your down payment, you will also need to factor in closing costs, which can average between 2 and 7 percent of the home price, and incidentals such as the cost of hiring a home inspector.
Decide what kind of mortgage you can afford:
Generally, you want to look for homes valued between two and three times your gross income, but a financing professional can help determine the size of loan for which you’ll qualify. Find out what kind of mortgage (30-year or 15-year? Fixed or adjustable rate?) is best for you. Also, gather the documentation a lender will need to preapprove you for a loan, such as W-2s, pay stub copies, account numbers, and copies of two to four months of bank or credit union statements. Don’t forget property taxes, insurance, maintenance, utilities, and association fees, if applicable.
Seek down payment help:
Check with your state and local government to find out whether you qualify for special mortgage or down payment assistance programs. If you have an IRA account, you can use the money you’ve saved to buy your first home without paying a penalty for early withdrawal.
VOCABULARY Loans & Lending Terms
Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, shorter terms mean you pay less interest over the life of the loan.
Fixed vs. adjustable interest rates.
A fixed rate allows you to lock in a low interest rate as long as you hold the mortgage and, in general, is a good choice if interest rates are low. An adjustable-rate mortgage (ARM) usually offers a lower rate that will rise as market rates increase. ARMs usually have a limit as to how much and how frequently the interest rate can be increased. These types of mortgages are a good choice when fixed interest rates are high or if you expect your income to grow significantly in the coming years.
Also sometimes called “exotic,” these mortgage types were common in the run-up to the housing crisis, and often featured loans with low initial payments that increase over time.
This is a form of non-traditional financing where your interest rate will be very low for a short period of time—often three to seven years. Payments usually only cover interest so the principal owed is not reduced. This type of loan may be a good choice if you think you will sell your home at a large profit in a few years.
These loans are sponsored by agencies such as the Federal Housing Administration or the Department of Veterans Affairs. They offer special terms, including reduced interest rates to qualified buyers. VA Loans are open to veterans, reservists, active-duty personnel, and surviving spouses and are one of the only options available for zero down payment loans. FHA loans are open to anyone, and while they do require a down payment, it can be as low as 3.5 percent. Drawbacks include a slower loan process and—for FHA loans—the need to pay mortgage insurance.
As the housing market shifts, so do lending practices. A mortgage broker—an independent professional who acts as an intermediary between you and lending institutions—may be able to help you find a better rate than you can on your own. Also, be sure to shop around; slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.
QUESTIONS TO ASK When Choosing a Lender
Loan terms, rates, and products can vary significantly from one company to the next. When shopping around, these are a few things you should ask about.
What are the most popular mortgages you offer? Why are they so popular?
Are your rates, terms, fees, and closing costs negotiable?
Do you offer discounts for inspections, home ownership classes, or automatic payment set-up?
Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required?
What escrow requirements do you have?
What kind of bill-pay options do you offer?
What would be included in my mortgage payment (homeowners insurance, property taxes, etc.)?
Which type of mortgage plan would you recommend for my situation?
Who will service this loan—your bank or another company?
How long will the rate on this loan be in a lock-in period? Will I be able to obtain a lower rate if the market rate drops during this period?
How long will the loan approval process take?
How long will it take to close the loan?
Are there any charges or penalties for prepaying this loan?
How much will I be paying total over the life of this loan?
HOW TO Finance a Home, Creatively
Investigate local, state, and national down payment assistance programs.
Explore seller financing.
Ask your family for help.
Consider a shared-appreciation or shared-equity arrangement.
Lease with the option to buy.
Consider a short-term second mortgage.
QUESTIONS TO ASK About the Neighborhood
Where you live should reflect your lifestyle. These questions will help you find the best community for you.
Is it close to my favorite spots?
Make a list of activities you engage in and stores you visit frequently. See how far you would have to travel from each neighborhood you’re considering to engage in your most common activities.
Is it safe?
Contact the police department to obtain neighborhood crime statistics. Consider not only the number of crimes but also the type and trend. (Is crime going up or down?). Pay attention to see where in the neighborhood the crime is happening.
Is it economically stable?
Check with your local economic development office to see if household income and property values in the neighborhood are stable or rising. What is the ratio of owner-occupied homes to rentals? Apartments don’t necessarily diminish value, but they indicate a more transient population. Are there vacant businesses or homes that have been on the market for months? Check news sources to find out if new development is planned.
Is it a good investment?
Ask a local REALTOR® about price appreciation in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how a home’s value might grow. A REALTOR ® also may be able to tell you about planned developments or other changes coming to the neighborhood — such as a new school or highway — that might affect its value.
Do I like what I see?
Once you’ve narrowed your focus to two or three neighborhoods, go and get a feel for what it might be like to live there. Take notes: Are homes tidy and well maintained? Are streets bustling or quiet? How does it feel? Pick a pleasant day if you can, and chat with people working or playing outside.
What’s the school district like?
This is especially important if you have children, but it also can affect resale value. The local school district can probably provide information on test scores, class size, the percentage of students who attend college, and special enrichment programs. If you have school-age children, visit schools in neighborhoods you’re considering.
QUESTIONS TO ASK When Considering a Condo or HOA
Condominiums, townhomes, and properties located within a homeowner association offer certain perks, but it’s important to consider them in your decision process.
How much storage is available?
How’s the outdoor space?
Are amenities important?
Who handles maintenance and security?
Are there required reserve funds and association fees? How much are they?
What are the association rules?
What’s the average vacancy rate?
How many units are owned by investors?
Can I meet other residents before making an offer?
QUESTIONS TO ASK The Condo Board
Before you purchase a condo, you should have an attorney review property documents for you. However, you should contact the board yourself ahead of time. You’ll learn how responsive and organized its membersare and be alerted to potential problems.
How many units are owner-occupied?
What covenants, bylaws, and restrictions govern the property?
How much does the association keep in reserve?
Are association assessments keeping pace with the annual rate of inflation?
What does the assessment cover?
What special assessments have been mandated in the past five years, and how much of that was the responsibility of individual owners?
What’s the turnover rate?
Is the condo building in litigation?
What other projects has the developer built?
Are multiple associations involved in the property?
QUESTIONS TO ASK When Choosing a Home Inspector
Do you belong to a professional association?
There are many associations for home inspectors, but some groups confer questionable credentials or certifications in return for nothing more than a fee. Make sure the association your home inspector names is a reputable, nonprofit trade organization.
Will your report meet all state requirements?
Also, make sure the organization complies with a well-recognized standard of practice and code of ethics, such as those adopted by the American Society of Home Inspectors or the National Association of Home Inspectors.
How experienced are you?
Ask inspectors how long they’ve been working in the field and how many inspections they’ve completed. Also ask for customer referrals. New inspectors may be highly qualified, but they should describe their training and indicate whether they work with a more experienced partner.
How do you keep your expertise up to date?
Inspectors’ commitment to continuing training is a good measure of their professionalism and service. Advanced knowledge is especially important with older homes or those with unique elements requiring additional or updated training.
Do you focus on residential inspection?
Home inspection is very different from inspecting commercial buildings or a construction site. Ask whether the inspector has experience with your type of property or feature. The inspector should be able to provide sample inspection reports for a similar property. If they recommend further evaluation from outside contractors on multiple issues, it may indicate they’re not comfortable with their own knowledge level.
Do you offer to do repairs or improvements?
Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest.
How long will the inspection take?
On average, an inspector working alone inspects a typical single-family house in two to three hours; anything less may not be thorough.
Costs range from $300 to $500 but can vary dramatically depending on your region, the size and age of the house, and the scope of services. Be wary of deals that seem too good to be true.
Will I be able to attend the inspection?
The answer should be yes. A home inspection is a valuable educational opportunity for the buyer and a refusal should raise a red flag.
WHAT TO KNOW About the Home Inspection
Some items should always be examined.
The home’s “skeleton” should be able to stand up to weather, gravity, and the earth that surrounds it. Structural components include items such as the foundation and the framing.
The inspector should look at sidewalks, driveways, steps, windows, doors, siding, trim, and surface drainage. They should also examine any attached porches, decks, and balconies.
A good inspector will provide very important information about your roof, including its age, roof draining systems, buckled shingles, and loose gutters and downspouts. They should also inform you of the condition of any skylights and chimneys as well as the potential for pooling water.
They should thoroughly examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate larger problems.
You should be informed of the condition of service entrance wires, service panels, breakers and fuses, and disconnects. Also take note of the number of outlets in each room.
Heating and Air Conditioning
The home’s vents, flues, and chimneys should be inspected. The inspector should be able to tell you the water heater’s age, its energy rating, and whether the size is adequate for the house. They should also describe and inspect all the central air and through-wall cooling equipment.
Your inspector should take a close look at walls, ceilings and floors; steps, stairways, and railings; countertops and cabinets; and garage systems. These areas can reveal leaks, insect damage, rot, construction defects, and more.
Inspectors should check for adequate insulation and ventilation in the attic and in unfinished areas such as crawl spaces. Insulation should be appropriate for the climate. Without proper ventilation, excess moisture can lead to mold and water damage.
They’re charming, but fireplaces can be dangerous if they’re not properly installed. Inspectors should examine the vent and flue, and describe solid fuel-burning appliances.
WHAT TO KNOW About Home Hazards
A colorless, odorless gas that can seep into your home from the ground, radon is often referred to as the second most common cause of lung cancer behind smoking.
What to look for: Basements or any area with protrusions into the ground offer entry points for radon. The Environmental Protection Agency publishes a map of high-prevalence areas. A radon test can determine if high levels are present.
A fibrous material once popular as fire-resistant insulation, asbestos was banned in 1985. However, it’s often found in the building materials, floor tiles, roof coverings, and siding of older. If disturbed or damaged, it can enter the air and cause severe illness.
This toxic metal used in home products for decades can contribute to several health problems, especially among children. Exposure can occur from deteriorating lead-based paint, pipes, or lead-contaminated dust or soil.
Other hazardous products
Stockpiles of hazardous household items — such as paint solvents, pesticides, fertilizers, or motor oils — can create a dangerous situation if not properly stored. They can easily spark fires and can cause illness or even death if ingested, even in small amounts.
When hazardous chemicals are disposed of improperly, they can seep through the soil and enter water supplies. A leaking underground oil tank or septic system can contribute to this.
VOCABULARY Green Home Terms
Whether you’re building the home of your dreams or looking for an existing unit, there’s a lot of data involved in finding the right environmentally friendly dwelling. Here’s a breakdown of the different certification systems for energy-efficient homes.
The Residential Energy Services Network is a not-for-profit corporation that develops industry-wide standards and rules for energy efficiency ratings and certification systems for buildings. In addition to overseeing the HERS index (see below), RESNET certifies contractors of all types, including builders, roofing and siding professionals, and remodeling contractors.
The Home Energy Rating System is an index measuring a home’s energy efficiency. An average home built to current industry standards for energy efficiency will have an index of 100. A lower score indicates higher levels of efficiency (for example, a home with a score of 70 is using 30 percent less energy than the average home). The opposite is true with homes that score higher than 100. This index is overseen by RESNET.
The United States Green Building Council is the agency that bestows Leadership in Energy and Environmental Design certifications on environmentally friendly buildings and projects. The highest certification a building can earn is “LEED platinum.” Projects earn points based on numerous categories such as indoor air quality and water efficiency. More points add up to a higher certification level.
The Energy Star program is overseen by the U.S. Environmental Protection Agency. Products such as refrigerators, light bulbs, and furnaces can earn Energy Star certifications. Separately, homes can be Energy Star–certified through an independent inspection.
This program is also administered by the EPA. Homes that go above and beyond the Energy Star requirements by incorporating additional features to combat moisture, mold, pests, and pollutants can earn this label.
National Green Building Certification
Overseen by the National Association of Home Builders, this program helps residential building professionals develop and build sustainable projects. Buildings can earn bronze, silver, gold, or emerald certifications. At the Emerald level — which is the highest certification a project can earn — a building “must incorporate energy savings of 60 percent or more.”
WHAT TO KNOW About the Appraisal Process
Once you are under contract, your lender will send out an appraiser to make sure the purchase price is in line with the property’s value.
Appraisals help guide mortgage terms.
Appraised value is not a concrete number.
Appraised value doesn’t represent the whole picture of home prices.
Appraisers use data from the recent past.
There are uses for appraised value outside of the purchase process.
QUESTIONS TO ASK About Property Tax
It’s natural for the sale price of a home to loom large in your mind. But don’t forget to look at what your property tax bill might be.
What is the assessed value of the property?
Assessed value is generally less than market value. A recent copy of the seller’s tax bill will help you determine this information.
How often are properties reassessed in this area?
In general, this will happen annually, but properties in areas of slower growth may be reassessed less often.
When was the last reassessment done on this property?
Most significant tax increases on an individual property can be linked to when that property was last reassessed.
Will the sale of the property trigger a tax increase?
Depending upon where you live, the assessed value of a property may increase based on the amount you pay for it. And in some areas, such as California, taxes aren’t allowed to increase until the property in question is resold.
Is the tax bill comparable to other properties in the area?
If not, it might be possible to appeal the assessment and lower the rate.
Does the current tax bill reflect any special exemptions for which I might not qualify?
For example, many tax districts offer reductions to those individuals 65 and older.
CHECKLIST Your Mortgage Application
Every lender requires documents as part of the process of approving a mortgage loan. Here are documents you’re generally required to provide.
QUESTIONS TO ASK Before Making a Short Sale Offer
If a home is being sold for less than what the current owner owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale.A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Home owners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Answering these questions will help you determine if a short sale is a good fit for you.
Are you very patient?
Is your financing in order?
Do you have any contingencies?
Can you take rejection?
HOW TO Buy in a Tight Market
Increase your chances of getting your dream house in a competitive housing market.
Get prequalified for a mortgage.
Stay in close contact with your real estate agent.
Scout out new listings yourself.
Be ready to make a decision.
Keep contingencies to a minimum.
But don’t get caught in a buying frenzy.
WHAT TO KNOW About Homeowners Insurance
A homeowners insurance policy will protect you against certain losses and damage to your new home and is generally required by lenders prior to closing. Some lenders will collect the money you owe for homeowners insurance as part of your monthly mortgage payment and place it in an escrow account, paying the insurer on your behalf when the bill is due.
Most insurance policies do not cover flood or earthquake damage as a standard item. You may need to buy these types of coverage separately.
Dollar limitations on claims:
Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
If your home is destroyed, you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll still receive only $150,000.
Actual cash value:
If you choose not to replace your home when it’s destroyed, you’ll receive replacement cost minus the depreciation. This is what’s referred to as actual cash value.
Generally, your homeowner’s insurance covers your liability for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that amount is sufficient, especially if you have significant assets.
HOW TO Lower Homeowners Insurance Costs
The first step is to shop around; quotes on the same home can vary significantly from company to company.
Review the Comprehensive Loss Underwriting Exchange report.
Seek insurance coverage as soon as your offer is approved.
Maintain good credit.
Buy your homeowner’s and auto policies from the same company.
Raise your deductible.
Ask about other discounts.
Seek group discounts.
Conduct an annual review.
Investigate a government-backed insurance plan.
Insure your house for the correct amount.
WHAT TO KNOW About Title Insurance
Title insurance protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as misspellings of a person’s name or an inaccurate description of the property. In some states it is customary for the seller to purchase the policy on your behalf.
Your mortgage lender will require it.
Title insurance protects the lender (and the secondary markets to which they sell loans) from defects in the title to your home—which could include mistakes made in the local property office, forged documents, and claims from unknown parties. It ensures the validity and enforceability of the mortgage document. The amount of the policy is equal to the amount of your mortgage at its inception. The fee is typically a one-time payment rolled into closing costs.
There are two different policies to consider purchasing.
The first policy, the one your lender will require, protects the lenders investment. You may also purchase an owner’s policy that provides coverage up to the purchase price of the home you are buying.
You have the right to choose your provider.
You can shop around for a lower insurance premium rate at a wide variety of sites online. You should first request quotes from a few companies and then reach out and speak to them. Ask about hidden fees and charges that could make one quote seem more attractive than another. Also, find out if you’re eligible for any discounts. Discounts are sometimes available if the home has been bought within only a few years since the last purchase as not as much work is required to check the title. You can also ask your lender or real estate professional for advice or help with getting quotes. Make sure the title insurance company you choose has a favorable Financial Stability Rating with Demotech Inc.
Even new construction needs coverage.
Even if your home is brand-new, the land isn’t. There may be claims to the land or liens that were placed during construction that could negatively impact your title.
VOCABULARY Transaction Documents
When you walk away from the closing table with a big stack of papers, know what to file away for future reference.
Your lender is required to provide you with this three-page document within three business days of receiving your loan application. It will show estimates for your interest rate, monthly payment, closing costs, taxes, and insurance. You'll also learn how your interest rate and payments could change in the future, and whether you'll incur penalties for paying off the loan early (called "prepayment penalty") or increases to the mortgage loan balance even if payments are made on time (known as "negative amortization").
Your lender is required to send this five-page form—which includes final loan terms, projected monthly payments, and closing costs—three business days before your closing. This window gives you time to compare the final terms to those in the Loan Estimate (see above), and to ask the lender any questions before the transaction is finalized.
Mortgage and Note
These spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
This document officially transfers ownership of the property. In a cash deal, it goes to you, but otherwise you won’t get the deed until you pay off the mortgage.
These are binding statements by either party. For example, the sellers will often sign an affidavit stating that they haven’t incurred any liens on the property.
This word describes any amendments to the sales contract that affect your rights. For example, the sellers may arrange to retain occupancy for a specified period after closing but agree to pay rent to the buyers during that period.
These documents provide a record and proof of your coverage, be they insuring the title or the property itself. Homeowners insurance documents will generally be your responsibility, while proof of title insurance will be given to you at the closing table.
CHECKLIST Your Final Walk-Through
Closing time is hectic, but you should always make time for a final walk-through to make surethat your home is in the same condition you expected it would be. Here’s a detailed list ofwhat to check for on your final walk-through.
Basement, attic, and every room, closet, and crawl space have been checked.
Requested repairs have been made.
Copies of paid bills and warranties are in hand.
No major, unexpected changes have been made to the property since last viewed.
All items included in the sale price—draperies, lighting fixtures, etc.—are still on site.
Screens and storm windows are in place or stored onsite.
All appliances are operating (dishwasher, washer/dryer, oven, etc.).
Intercom, doorbell, and alarm are operational.
Hot water heater is working.
Heating and air conditioning systems are working.
No plants or shrubs have been removed from the yard.
Garage door opener and other remotes are available.
Instruction books and warranties on appliances and fixtures are available.
All debris and personal items of the sellers have been removed.
CHECKLIST Prepare for Your Move
Update your mailing address at usps.com or fill out a change-of-address form at your local post office.
Change your address with important service providers, such as your bank(s), credit companies, magazine subscriptions, and others.
Create a list of people who will need your new address.
Whether you plan on sending formal change-of-address notices in the mail or just e-mailing the family members, friends, and colleagues who should be informed, a list will ensure no one gets left out.
Contact utility companies.
Make sure they’re aware of your move date, and arrange for service at your new home if the service provider will remain the same.
Check insurance coverage.
The insurance your moving company provides will generally only cover the items they transport for you. Ensure you have coverage for any items you’ll be moving yourself.
Unplug, disassemble, and clean out appliances.
This will make them easier to pack, move, and plug in at your new place.
Check with the condo board or HOA about any restrictions on using the elevator or particular exits or entrances for moving, if applicable
Pack an “Open First” box.
Include items you’ll need most, such as toilet paper, soap, trash bags, chargers, box cutters, scissors, hammer, screwdriver, pens and paper, cups and plates, water, snacks, towels, and basic toiletries.
If you’re moving a long distance:
Obtain copies of important records from your doctor, dentist, pharmacy, veterinarian, and children’s schools.
E-mail a copy of your driving route to a family member or friend.
Empty your safe deposit box.
HOW TO Pack Like a Pro
Plan ahead. Develop a master to-do list so you won’t forget something critical heading into moving day. This will also help you create an estimate of moving time and costs.
Discard items you no longer want or need. Ask yourself how frequently you use an item and how you’d feel if you no longer had it. Sort unwanted items into “garage sale,” “donate,” and “recycle” piles.Pack similar items together. It will make your life easier when it's time to unpack.
Decide what you want to move on your own. Precious items such as family photos, valuable breakables, or must-haves during the move should probably stay with you. Pack a moving day bag with a small first-aid kit, snacks, and other items you may need before unpacking your “Open First” box.
Know what your movers will take. Many movers won’t take plants or liquids. Check with them about other items so you can plan to pack them yourself.
Put heavy items in small boxes. Try to keep the weight of each box under 50 pounds.
Don’t overpack boxes. It increases the likelihood that items inside the box will break.
Wrap fragile items separately. Pad bottoms and sides of boxes and, if necessary, purchase bubble-wrap or other packing materials from moving stores. Secure plants in boxes with air holes.
Label every box on all sides. You never know how they’ll be stacked. Also, use color-coded labels to indicate which room each box should go in, coordinating with a color-coded floor plan for the movers.
Keep moving documents together in a file, either in your moving day bag or online. Include vital contact information, the driver’s name, the van’s license plate, and the company’s number.
Print out a map and directions for movers and helpers. Make several copies, and highlight the route. Include your cell phone number on the map.
Back up computer files on the cloud. Alternatively, you can keep a physical backup on an external hard drive offsite.
Inspect each box and piece of furniture as soon as it arrives. Ahead of time, ensure your moving company has a relatively painless process for reporting damages.
HOW TO Move With Pets
Update your pet’s tag with your new address.
Make sure your pet’s collar is sturdy and correctly sized. The tag should also include your mobile number and e-mail address so that you can be reached during the move.
Request veterinary records.
Ask your current vet to send your pet’s medical history directly to the new vet. Have their contact information handy in case of emergency or if the new vet has questions.
Keep a week’s worth of food and medication with you.
You may want to ask for an extra prescription refill before you move. Take the same precaution with special therapeutic foods.
Seclude them from chaos.
Keep your pet in a safe, quiet room on moving day with a clear sign posted on the door. There are many light, collapsible travel crates available, but ensure it is well ventilated and sturdy enough for stress-chewers. Also, introduce your pet to the crate before the trip.
Prepare a pet first aid kit.
Include your vet's phone number, gauze to wrap wounds or to muzzle your pet, adhesive tape for use on bandages, nonstick bandages, towels, cotton swabs, antibiotic ointment (without pain relief medication), and 3% hydrogen peroxide.
Play it safe in the car.
Use a crate or carrier in the car, securing it with a seat belt. Never leave your pet in the bed of a truck, the storage area of a moving van, or alone in a parked vehicle. If you’re staying overnight, find pet-friendly lodging beforehand and have kitty litter or plastic bags on hand. Get ready for takeoff.
When traveling by air, check with the airline about pet requirements or restrictions and whether you must purchase a special airline crate that fits under the seat in front of you.
Prep your new home.
Set up one room with everything your pet will need: food, water, medications, bed, litter box, scratch post, and toys. Keep windows and doors closed when your pet is unsupervised, and beware of small spaces where nervous pets may hide. If your old home is nearby, give the new home owners or neighbors your phone number and a photo of your pet, in case your pet tries to return.
Learn about local health concerns and laws in your new area.
If you’re moving to a new country, contact the Agriculture Department or embassy of the country to obtain specific information on special documents, quarantine, or costs related to bringing your pet into the country.
CHECKLIST For the New Owners
Before the property changes hands, consult this list to make sure these items are transferred with the house.
Owner’s manuals and warranties for any appliances left in the house.
Garage door opener(s).
Extra set of house keys.
Other keys. Think beyond the front doors; do you have any cabinets or lockers built into the home that require keys?
A list of local service providers, such as the best dry cleaner, yard service, plumber, and so on. You’re not just helping the new owners, but also the local businesses you’re leaving behind.
Code to the security alarm and phone number of the monitoring service if not discontinued.
Smart home device access. Any devices listed as fixtures need to be reset for the new homeowner. Make sure your account information and usage data are wiped from the device so that they may use it. Check with your device’s manufacture to find out how to do this.
Numbers to the local utility companies. This can be especially helpful to owners who may not yet have easy access to the Internet in the new home.
Contact info for the condo board or home ownership association, if applicable.