Back to my pageHOW MUCH HOUSE CAN YOU AFFORDBASIC REAL ESTATE TERMS WHY BUY NOW? A REAL ESTATE AGENT CAN HELP! NEW CONSTRUCTION CONDOMINIUMS REAL ESTATE PROCEDURES IN MA SUMMARY OF INDOOR AIR POLLUTANTS LEAD PAINT AND UFFI MORTGAGE TERMS DOCUMENTATION NEEDED Most people use financing of one type or another to buy a house since they do not have the full cash amount for purchase. What you can afford depends on your cash investment (down payment and closing costs) plus the amount of mortgage you can afford according to your income and debt levels. Completing a worksheet like this one can give you a better idea of how much house you can afford. Mortgage lenders will generally permit a maximum of 28% of combined gross income towards housing cost, namely principal, interest, taxes, and insurance (PITI) and 36% of total combined monthly gross income towards total fixed debt including PITI. (Some lenders/programs will allow higher ratios. However the 28/36 ratios are commonly used by the industry and will serve our example.)
HOUSING EXPENSES:
FRONT RATIO: ____________ BACK RATIO: ____________ CLOSING: The final settlement of a real estate transaction between buyer and seller. DEED: a written instrument which, when properly executed and delivered, conveys title DEPOSIT: an 'earnest money' deposit will be required to show serious intent to purchase a home and will be placed in an escrow account. The deposit will be returned to you if the sale is not finalized through not fault of the buyer. Usually with an offer to purchase a property a deposit of $500.00 us sufficient. At the time you sign the Purchase and Sales Contract, the seller will expect a total of 5% -10% of the purchase price to be placed in escrow (or as agreed upon by buyer and seller). ESCROW: The deposit of instruments and funds with instructions to a third neutral party (Escrow Agent) to carry out the provisions of a contract. EASEMENT: Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which one party has in the land of another. Example: right of way. FINANCING CONTINGENCY: This is very important and should be clearly detailed, including the total loan amount, the date a second or third mortgage is due, and the extent of the financing terms. The seller should allow for a reasonable time limit for the buyer to obtain financing before cancellation of the sales contract. Alternative financing clauses are found in many contracts, allowing buyers to obtain financing other than that mentioned in the sales contract, with the stipulation that such financing does not affect the seller's proceeds. INSPECTION CONTINGENCY: This contingency requires that a satisfactory home inspection report be obtained for the contract executed. The buyer usually pays for this inspection which identifies any structural defects in the property), but considered a worthwhile expense. LIEN: A form of encumbrance which usually makes property security for the payment of a debt or discharge of an obligation such as taxes, mortgages, deeds of trust, etc. REAL PROPERTY: Usually affixed to the real estate (example: built-ins, nails in walls, light fixtures, door knockers and sheds unless specifically excluded a head of time), PEST INSPECTION: This inspection also is paid for by the buyer. Your contract can require the seller to pay for treatment for any infestation discovered (including repair of damages, if necessary). PERSONAL PROPERTY: Any items of personal property that are to be conveyed to the buyer such as light fixtures, washers, dryers, refrigerators, should be specified in writing within the contract. This will prevent any misunderstandings regarding ownership of such items. Any property that is not real property (example: money, savings accounts, appliances, boats, cars etc.) Buying a home is the biggest purchase most people ever make. It's an exciting process. Most buyers wonder just when is the best time to purchase? Here are a few thoughts on the subject. In tough times, owning a house weathers the storm best. Historically, it's where the safe money has been. While price declines have occurred, home values do rebound and when they do recover the often grow faster than the economy. Housing provides a unique blend of being a home to love and an investment to measure. And a homeowner can constantly make improvements with "sweat equity", pay down the mortgage, obtain tax benefits and enjoy the security of a roof overhead!What about interest rates? Today's rates are still the best they've been in decades, staying below 10%. And with an array of mortgage products like 2-step mortgages, ARM's and buydown programs there is most definitely a program available for your unique circumstances. Most mortgage originators can provide you with program and rate information that is up-to-date and individual to your needs. Reap tax benefits! The government encourages saving through home ownership. Mortgage payments, taxes and other deductions are available to you. When should you buy? It depends on your situation, income, tax bracket, savings, and price home that you can afford. Since it's impossible to predict market conditions with certainty, one must consider the factors influencing the market today. Stable rates and healthy gains in property value suggest that buying a home is still a wise move. Most people feel that going through the Real Estate Classified Section and finding an ad that appeals to them or an open house is a good way to find a house. However there is a better way. That way is sitting down with me and discussing your desires, type of area, style of home, amenities... everything you really want and need in your next home. As a Coldwell Banker Realtor, I have access to the entire Multiple Listing System (MLS) which covers the properties listed for sale within a specific area. Together, we can leisurely select the homes that you would like to see. By setting up appointments, you can see these homes in a short period of time and have a clearer idea of what is right for your needs Jot down notes as you go from one house to the next and discuss with me your likes and dislikes of each home. Ask me questions and bring up concerns regarding taxes, shopping, and transportation around the area. I can provide you with community profiles of any or all towns in this area. I can make your house hunting easier and accelerate the whole process to it's conclusion... the purchase of your next home. I can help you obtain the information you need to make an informed decision about your next home. And if you're considering many different locations, our relocation connections will work for you too. You will be in good hands anywhere you choose to move with Coldwell Banker there to help! Buying a new home can be one of the most exciting adventures ever. From visualizing the way the lot will appear, plotting house design and picking out cabinets & lighting, the details are many. Buying new construction requires a flexible attitude and is clearly helped by a knowledgeable Realtor. How do you start? The process of buying a newly built house is actually similar to the process of buying a resale. Your individual price range, locational preference, home style and timing need should be determined and shared with a knowledgeable Realtor. You should view homes and developments that meet your needs. Gather feature sheets, brochures and other relevant materials you need when you're viewing homes. Since many homes are under construction and in various stages wear appropriate clothing. You may be walking land in muddy conditions as well as seeing model homes. Many builders work with local Realtors who are their marketing know you are qualified to buy. The most variable factor is timing in anew home and how long you can obtain a rate lock. Delays are part of he process of new construction and preparations should be made for them. The overall mortgage process is the same as for a resale. What about financing? Builders like all sellers will want to know you are qualified to buy. The most variable factor is timing in a new home and how long you can obtain a rate lock. Delays are part of the process of new construction and preparations should be made for them. The overall mortgage process is the same as for a resale. What about making changes? Before a house is started you may be able to make design changes. Once a home is up (fully constructed) your options are limited. Some changes may involve increased cost so you should be prepared with an overage budget. In buying a new home it is the details that matter. So give your preferences some thought and do not forget to become knowledgeable about the builder too! Coldwell Banker is ready to assist you in the purchase of your new home!
Whatever your reason for deciding to purchase a condominium, once the decision has been made it is important to know what it is you are buying. You are buying an undivided interest in common with other buyers in a portion of real property, as well as a separate interest in space in a residential building. The only part that you own individually is your unit. The rest of the buildings and any recreational facilities are owned in common with the other buyers. Your purchase and sales agreement will define your ownership interest in the common areas, and subsequently establishes your voting power. It also determines the amount you will be assessed for maintenance and operation of the common areas and in some states the real estate tax assessed against your unit. Owning real estate in common with others requires certain legal documents to govern your interests and the interests of the other owners. The three major documents are the master deed, the bylaws, and the budget. Master Deed: the master deed describes the entire condo entity including each unit and all common areas. It specifies elements of ownership that govern how the condo ill be operated. This document should be reviewed by an attorney to assure compliance with state regulations. The master deed should include provisions for professional management if possible. By Laws: The bylaws, which govern the day to day rules of the condominium, will usually dictate how and when the developer will turn over control if that hasn't occurred already. The bylaws will list responsibilities of the board officers, terms and method of election, use of common areas, how fees and assessments will be collected and establishing and operating budget. Budget: this document determines the monthly association fees. It should list all the necessary expenses to maintain all common areas for one year. Banks will require proof of a master insurance policy and you should want to review this as well as finding out about reserves in place for replacement of the major components of the condominium such as roof, heating and parking. All the above documents should be reviewed by you prior to signing a purchase and sales agreement.
REAL ESTATE PROCEDURES IN MASSACHUSETTS OFFERS: All offers to purchase real estate must be in writing. The offer to purchase is a form which describes the basic terms and price to be considered by both buyer a seller. This offer includes reference to a final Purchaseand Sale Agreement to be executed by the parties. An initial deposit of $500-$1000 is usually required to be presented by the buyer to the seller when a written offer to purchase property is made. Commonly used addenda to the offer afford buyers the opportunity to have the property inspected at their own expense, commonly within 3-5 business days, by a qualified home inspector and to agree that the inspection is satisfactory. The State also requires a mandatory inspection for lead paint on any property built prior to 1968. Buyers are also given an agreed upon time during which to apply for an receive financing from the lending institution of their choice (commonly within 28 working days from offer.) PURCHASE AND SALE AGREEMENT: A. The Purchase and Sale Agreement defines in detail all rights and responsibilities of both buyer and seller. It states the intended date of conveyance and the terms of the sale. B. The Purchase and Sale Agreement is usually signed within 7-10 days by both buyer and seller after a mutually agreed upon offer to purchase has been signed. C. The Purchase and Sale Agreement is accompanied by a deposit usually equal to approximately 5%-10% of the total agreed upon purchase price. D. These contingency clauses included in the Purchase and Sale Agreement provide opportunity for the buyer to withdraw from the transaction if (s)he is unable to meet the contingencies within the specified times and conditions. The documents involved in the purchase and transfer of Real Estate are legal and binding contracts. It is recommended that buyers obtain legal representations. In the State of Massachusetts it is common practice for the attorney who represents the buyer's lending institution to conduct the title search and to certify title to the lender and the buyer. This practice may vary in the city of Worcester and adjacent communities where the seller will often provide a Certificate of Title from a local title company. The lender's attorney represents the lender. However, the legal fees are paid by the buyer as part of the total closing costs. The financing procedure can take from 21-40 days depending on the lender and the market conditions. The actual conveyance may take place at the Registry of Deeds, at the offices of the attorney representing the lender, or as may otherwise agreed upon by the parties. Buyers should plan to be present at the conveyance.
WHAT IS RADON? Radon is a naturally occurring radioactive gas. It is a decay product of the uranium that is distributed deep beneath the surface of the ground all over the Earth. Radon gas is not the end result of any form of human activity. The gas enters houses through he foundation walls and basement floors, especially through holes and cracks. WHAT ARE THE TESTS FOR RADON? Charcoal canisters are used for radon screening. The canisters, which absorb the radon gas, must be left open in a house for at least 48 hours. They are then sealed and mailed off for lab analysis. Canisters can be obtained in some hardware stores, or directly from testing laboratories for about $30 per test (of two). If someone other than a homeowner places the canisters, cost should be about $100. Generally, results are available within two days of receipt of the canister. Alpha track detectors are small jars containing a plastic that is microscopically "scratched" by the radioactive emissions from radon. These tests must be left in place for one or more months, after which they are sent off for analysis. Reports take up to three weeks. "Track Etch" detectors are available from: Terradex Corp., 1-800-528-8327 in Glenwood, IL. Rapid (under 3 hours) radon gas measurement is also available, through the use of electronic counting devices. This type of testing is more costly (under $300) but is not yet widely available due to; the high cost of the measuring equipment. Long term measurements are more accurate since the concentration of radon gas depends on weather and other highly variable factors that alter indoor air pressure. WHAT HAS TO BE DONE? If tests indicate that the radon "concentration" is less than 4 picocuries per liter of air, no steps are recommended. At levels greater than 4, additional testing should be done. Basement ventilation may reduce radon levels. Other mitigation measures include: caulking cracks, providing outside air for heating equipment and dryers, HRV (heat recovery ventilation), and installation of sub-slab suction systems. Sub slab suction is only undertaken for serious problems, and costs around $2,000 - $5,000 . WHERE IS THERE MORE INFORMATION? The Massachusetts Office of Radiation Control at 617-727-6214 can provide the names of the testing services and mitigation contractors. The EPA at 617-223-4845 will also provide help. WHAT IS ASBESTOS? Asbestos is a naturally occurring fibrous mineral. It was used for many years primarily as an insulating material and a mineral filler. Floor tiles, asbestos cement shingles and pipe, roof paper and shingles, and patching compound are other construction products that contained asbestos. New installations of most asbestos containing materials has been banned by the Federal government. WHAT IS THE TEST FOR ASBESTOS? Asbestos fibers in a material must be identified visually by microscopy. Solid sampling involves removal of a piece of the suspect material and examining it for asbestos and other fibers. The test itself cost about $50, but if a technician has to remove and deliver the sample, an additional cost of about $60 per hour is charged. Air sampling entails drawing air through a special filter, requires about 3 hours of a technician; time and costs about $250. Test should be arranged in advance and results are usually available the same day. WHAT HAS TO BE DONE? Homeowners are not required to remove asbestos; however, asbestos containing materials should have "intact" surfaces. Asbestos abatement contractors can encapsulate asbestos pipe insulation (under $2 per food). Removal is costly-anywhere from one thousand to three thousand dollars for a basements and is recommended only as a last resort. (Removal from pipes: ;under $15 per foot; depends on ceiling height.) WHERE IS THERE MORE INFORMATION? Tufts Asbestos Information Center, Tufts University: 617-381-3531 Consumer Product Safety Commission: 1-800-638-CPSC Yellow Pages Under: "Asbestos Removal Service." WHAT IS LEAD PAINT? Lead white and other lead pigments were used in both exterior and interior paints, until 1978, when their use was banned. At one time it was believed that lead poisoning in children was the result of eating paint chips, but it is now known that lead from fine dust in houses and soil are important contributors. WHAT ARE THE TESTS FOR LEAD PAINT? A non-quantitative test for lead in paint consists of adding a drop of sodium sulfide solution to exposed paint layers. If there is lead present, the paint rapidly darkens and turns gray or black. X-ray fluorescence is a quantitative method for determining the presence of lead. This method requires the use of an expensive electronic device containing a source of radioactive rays. The readings are instantaneous. Both tests cost under $100 for a house, and results are available immediately. As soon as regulations are in place, led paint inspectors will be trained and licensed by the state. HOW IS THE NEW PAINT LAW DIFFERENT? Some changes from the old law: deleading will be carried out to a height of five rather than four feet; all the moving parts of accessible windows will have to be lead free inside and out; prior to as purchase and sale agreement, buyers will be notified about possible lead paint condition and dangers of lead paint, and allowed up to ten days to have a lead paint test if desired. Sellers and real estate agents will have to disclose. Inspectors and deleading contractors will soon have to be trained and licensed by the state. Cost for deleading should be about $30 - $40 per "unit" area deleaded (Some examples of a "unit" one side of a door, one side of a door casing and jam; a window casing and apron, etc.) There are other significant legal changes and the law should be consulted directly. WHERE IS THERE MORE INFORMATION? Mass Dept. Public Health Lead Program: 1-800-532-9571 and Yellow Pages under: "Paint Removing" and "Lead Paint Detection Services. * WHAT IS UFFI? UFFI stands for Urea Formaldehyde Foam Insulation. The toxicity of UFFI is due to the formaldehyde that is released into a home. UFFI was pumped into the exterior walls from 1970-1979. WHAT IS THE TEST FOR UFFI? The presence of UFFI itself can sometimes be determined fro visual examination of exterior wall cavities by removal of an outlet plate. Chemical testing to identify solid insulation may be necessary. Testing for formaldehyde gas requires chemical monitoring. The state provides free screening monitors to homeowners with UFFI. The monitors are left hanging for a week and then sent back for reading. About a month is required overall. "Air Scan", manufactured by Crystal Diagnostics in Woburn, is a monitor costing under $100 that will give the homeowner test results in 24 hours. The state will also perform, if necessary, the more accurate "choromotropic acid test". This test requires about 1.5 hours of continuous air sampling. Since release of formaldehyde is highly dependent on a warmth and humidity, air tests must be conducted with temperatures of 70F or above. The State only furnishes free testing during warmer months. WHAT HAS TO BE DONE? UFFI does not have to be removed; however, if the formaldehyde level in a home is .1 pprn or higher, or the homeowner can document ill health effects, he can apply for funds to have UFFI removed. Removal is called "repurchasing," and involves removal of exterior siding, sheathing and insulation; followed by reinsulation and replacement of sheathing and siding. The cost is about $10 per square foot. Sellers and real estate agents must notify buyers of UFFI presence. WHERE IS THERE MORE IN FORMATION? Mass. Dept. of Public Health UFFI Program 617-727-2660 or Yellow Pages under "Laboratories, Testing" for air testing. This information provided by J. May Home Inspections is not intended to be complete. Anyone with concerns regarding unsafe material should contact State or Federal agencies for additional guidance. All price estimates are very rough estimates and may; differ significantly from actual quotes.
Now you can really show off! Adjustable Rate Mortgage (ARM): A mortgage for which the interest rate and the payments change during the life of the loan. Amortization: A plan for gradually repaying, in periodic payments, money borrowed. Commercial Bank: A financial institution authorized to provide a variety of financial services, including business and consumer loans. Checking services, credit cards and savings account. Conventional Loan: A loan not guaranteed by the VA or insured by the FHA. Debt-To-Income Ratio: A percentage arrived at by dividing the borrower's fixed monthly obligations by the borrower's monthly income. Index: A reference used to measure fluctuations in particular factors of economic activity. For an ARM loan, an index of interest rates is used to calculate periodic adjustments in the rate and payment on the loan. Installment Debts: A buyer's long-term debts; they usually extend for periods longer than 10 months Intermediate Term Loans: A home loan of less than 30 years. Life-of the Loan Cap: A consumer protection on some adjustable loans. It limits the total upward (and downward) adjustment that may occur during the life of the loan. Also know as the overall cap. Lock-In Rate: A rate commitment made by lender when making a mortgage loan to commit. Lock-In periods vary depending on your lender. Rate Cap: Interest rate cap on an ARM loan; it restricts the upward movement of the loan's interest rate at the time of adjustment. Discount Points & Origination Fees: Fees charged by the lender. Points are measured as a percent of the loan with each point equal to 1% of the loan. Origination fees vary. DOCUMENTATION NEEDED (Well, it's not quite that bad!) Many new home buyers are unaware of the documentation required to obtain a home mortgage. Due to the secondary mortgage market, the information required to obtain a mortgage has been standardized. Although there are some differences between guidelines, the following is a suggestion of what a buyer should bring to a mortgage application; 1. A copy of the fully executed Purchase and Sale Agreement 2. The name and telephone number of the person to contact for access to the property for appraisal purposes. 3. Address of residence for last two years. 4. Names and addresses of employers for the past two years. 5. A copy of most recent pay stub. 6. If self-employed, commissioned, or earning substantial dividend or interest income, include the past two years of federal tax returns signed on the second page. Include all schedules (Partnership, Corporate, of K-1's if applicable). Also include a year to date profit an loss statement signed and dated. 7. Three most recent bank statements and/or names, addresses, account numbers, and balances for all accounts with financial institutions (checking, savings, money market, stocks, bonds, savings, etc.). 8. Names, addresses, account numbers balances and monthly payments, tax bills and condo fee checks. 9. For other real estate owned, include lease, tenant at will agreements, tax bills and condo fee checks. 10. Written explanations for all 30, 60 and 90 day late payments if applicable. 11. Copy of deed - for refinances. The lender may require additional information depending on the particular situation.
The more infomation submitted at the time of application, the quicker the the loan will be approved.
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