1) Choose the Right Realtor!
We will be your biggest ally and should be someone that has a number of years experience, is professional & knowledgable and works for a well respected Brokerage like Compass. Testimonials will tell you a lot about a Realtor and should be easily found. You will be working very closely so be sure to let them know your communication preferences.
2) Get Pre-Qualified
When you are ready to make your purchase, it is imperative that you get pre-qualified. Particularly in a high demand market like Los Angeles. Sellers will not consider offers without accompanying documentation. (If it is all cash. they will require proof of funds). The lender will help you navigate the complex world of financing to help you find the best rate and terms for your type of purchase. They will be able to advise you on how much the bank will lend you based on your income and credit history, as well as what price range to look in. Your Realtor can help find you a great mortgage broker.
3) Start Viewing Homes
Your Realtor will begin introducing homes to you. The better you can articulate your dreams, wishes, wants, and needs the more on-target your Realtor can be. But don’t worry. it won’t matter where you are in the process, a great Agent will be willing to invest the time it takes to help you get there. It’s also helpful to write down your “Top Ten” wants and then decide which of those are deal-breakers. During Covid, there aren’t any open houses, only private viewings by appointment, but photography. 3D Virtual Tours and Videos will be your new Open House. Try to be realistic, if possible. It’S rare that a home “ticks” all the boxes. But if one ticks 6 or 7, it’s probably a winner. It will just depend on what your priorities are.
4) Writing the Offer
In order to position you with the greatest chance of success with your offer, you’ll want to have a few things ready. A recent pre-approval letter from your lender and a bank or financial statement showing that you have your down payment. plus closing costs. If there are multiple offers, you might want want to be prepared to write what we call a “Love Letter” to the Sellers as well. Now it’s time for your Realtor to do their job. This is an exciting time!
5) The Escrow Process
Your offer was accepted now what? Fasten your seatbelt and enjoy the ride. All time frames begin the day after Acceptance of your offer. The 3% Good Faith Deposit is due in escrow in 3 business days. Your lender will order an appraisal and let you know what they need from you in order to start processing your application. Contact your Insurance Broker so that your new home will been insured on closing day. Investigations Period – Inspections will be scheduled and depending on the type. age and condition of the property they may include a general inspection, a chimney inspection, a sewer line inspection, and possibly others. You will also be receiving the Seller’s Disclosures during this period and reviewing them along with the results of your inspections. You will receive documents from escrow including the Preliminary Title Report and City Report along with other reports.
The Escrow Process continued
The Seller will be responsible for the minimum mandatory retrofitting but any other repairs or requests will be negotiated between the Buyer and Seller, by your Realtor. You’ll want to consider how you will be taking title to your property. Once the Buyer Seller comes to terms on the repairs or credits. if any, and after all reports have been reviewed and approved. the Investigations contingency is removed. Once the lender gives you word that you have received Loan Approval. the Loan Contingency will be removed. The Home now time to order your new sofa or patio furniture and schedule your move. About 1 week prior to the scheduled Close of Escrow, we will review your Estimated Closing Statement so you can wire in the balance of your Down Payment and Closing Costs. You will sign your Loan Documents and we will have our Final Walk Through. On Closing Day you get your keys! Congratulations!
Key Terms
Adjustable-Rate Mortgage (ARM)
A loan on which the monthly payments will increase or decrease over time, based on changes in the ARM’s interest rate index. ARM payments typically are adjusted every six months or once a year.
Appraisal
Assessment of the properties Market Value, for the purpose of obtaining a mortgage and performed by a licensed appraiser.
Appraisal Contingency
A purchase that is “subject to” a property appraising at the full value of the transaction.
CC&R’s
Covenants, Conditions, and Restrictions. Limitations placed on the use and enjoyment of land. May include penalties for failure to comply. These are found most often on condominiums and planned unit developments.
Closing Costs
Expenses in addition to the price of the home incurred by buyers and sellers when a home is sold. Common closing costs include escrow fees, title insurance fees, document recording fees, inspection fees, transfer taxes, and commissions.
Closing Disclosure
The five-page Closing Disclosure also referred to as CD, must be provided to the consumer three business days before they close on the loan. The Closing Disclosure details all of the costs associated with the mortgage transaction.
Closing Statement
The statement that lists the financial settlement between Buyer and Seller, and the costs that each must pay.
Contingency
Certain criteria that have to be met in order to finalize the sole which a purchase or sale are “subject to” or contingent upon.
Earnest Money
Deposit Also known as a Good Faith Deposit. The deposit given by a buyer to a seller to show that the buyer is serious about purchasing the home. Typically in California, it is 3% of the purchase price. Earnest money usually is refundable to homebuyers in the event a contingency of the sales contract cannot be met.
Easement
An interest in land owned by another that entitles its holder to a specific limited use, such as laying a sewer, putting up electric power lines or crossing the property. Also, see “Right of Way.”
Escrow
A procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer and delivers them upon performance by the parties.
Fee Simple Estate The greatest possible estate in land where the title is held completely and without any limitations or conditions. Sometimes designated simply as “Fee”.
Fixed Rate Mortgage
A loan where the monthly payments do not change. the interest rate is fixed for the term of the loan.
Hazard Insurance
Insurance protecting a property owner against loss, such as: fire, windstorm, lightning, smoke, property damage, flood or mudslide. It is usually purchased as part of the Homeowner’s Insurance Policy.
Homeowners Insurance
Insurance protection paying benefits for damage to improved real property or possessions in the home. Also provides liability coverage against accidents in the home or on the property.
Home Warranty
A policy that covers certain repairs (e.g. plumbing or heating) of a newly purchased.
Investigation Contingency
A purchase that is “subject to” a Buyers right to investigate and acceptance of any matter of feting the property.
Loan Contingency
A purchase that is “subject to” a Buyer being approved for financing at the terms requested.
Mortgage Insurance
Money is paid to insure the mortgage when the down payment is less than 20 percent.
Mortgage Banker
A company that originates mortgages for sale into the secondary mortgage market (e.g., Fannie Mae and Freddie Mac).
Mortgage Broker
An individual or company that arranges mortgage.
Preliminary Title Insurance
A report showing the condition of title before a sale or loan transaction. When the transaction is completed, a new title insurance policy will be issued and mailed to the buyer.
Title Insurance
Insurance to protect the buyer and lender against losses arising from disputes over the ownership of a property.
Underwriting
The process of evaluating a loan application to determine if it meets the lender’s standards.
Variable Rate Mortgage
A loan in which the interest rate fluctuates with the cost of funds or some other index.
Walk Through, Final
The purpose of this type of inspection is to make certain the property is in the agreed-upon condition, repairs (if any) from the home inspection are complete, and to confirm that the property is in the same basic condition as when contracted for sole.