As good agents we try to anticipate and help our buyers gain a clearer understanding of every detail involved in a home transaction.

• Closing: Can I bring a personal check to a property closing? No, you will need a cashier's check or certified check for closing. This is to insure that the funds are equivalent to cash.
• Closing: What are closing costs? Closing costs are the costs associated with processing the paperwork to buy a house. Closing costs which you will pay at settlement average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won't be caught by surprise.
• Closing: What is earnest money? Earnest money is the deposit you make on the home when you submit your offer. Earnest money proves to the seller that you are serious about wanting to buy the house. When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies.
• Closing: What is equity? Equity is the value of your property that is in excess of claims against it. When you make loan payments, the principle part of your payment increases your equity in your home.
• Financing: Can you apply for a loan before you've found a property? Yes! You have the opportunity to get pre-approved for a mortgage today. A pre-approval will take into consideration your personal information such as income, debt and credit history. If you receive a pre-approval, we will use this information to determine your maximum loan amount. Once you find a property we can complete the remaining pieces of the application.
• Financing: Do you need help choosing a lender? Trying to choose a lender can be a difficult task. Start by asking for referrals from friends, family, neighbors and your real estate agent. If you are building, ask the builder for a referral, since most are willing to help you find financing. Find out what kind of rates the lender offers and the terms of the loan, especially on adjustable rate mortgages (ARM). Find out what their "junk" fees are.
• Financing: How much money will I have to have at the time I buy a home? The amount of money required to purchase a home depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money, down payment and closing costs. When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you.
• Financing: So what will my mortgage cover? Most loans have 4 parts: principal, the repayment of the amount you actually borrowed; interest, payment to the lender for the money you've borrowed; homeowners insurance, a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes, the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you will pay far more in interest than you will in principal, sometimes as much as two or three times more! Because of the way loans are structured, in the first years you will be paying mostly interest in your monthly payments. The interest payment is deductable on your federal income taxes. In the final years, you will be paying mostly principal.
• Financing: What are ARM Loans? With Adjustable Rate Mortgages (ARM), the interest rate can change, so your monthly payment may increase or decrease. Most ARMs have rate caps to regulate the amount the interest rate for a loan can increase or decrease over the lifetime of the loan. The interest rates are usually lower for ARMs than for fixed rate loans during the first few years, so ARMS allow buyers to purchase more expensive homes than they could with a fixed rate loan.
• Financing: What are fixed rate loans? With a conventional fixed rate loan, the interest rate charged remains fixed throughout the life of the loan and the monthly payments do not change. While a fixed rate loan offers the borrower security that their payment will not increase, they also do not allow the borrower to take advantage of dropping interest rates. The borrower will need to refinance with a new loan to reduce the interest rate. Fixed rate mortgages are usually 15 or 30 years, but loans of up to 40 years can be found with some lenders. The longer the term of the mortgage is, the lower the monthly payment.
• Financing: What are points? One point is one percent of the loan amount (for example, on a $100,000 loan, 1 point equals $1,000). Lenders usually will give a lower interest rate depending on the number of points a borrower is willing to pay.
• Financing: What does it mean to have a floating rate and what does it mean to lock-in a rate? These terms are used to describe interest rate protection plans for borrowers who have not yet closed on a property. Many lenders offer this type of rate protection for borrowers. Due to market fluctuations, interest rates are subject to change daily. In order to obtain a specific rate/point combination you must "lock in" your rate with your lender. You are locked into that rate as long as your loan closes by the predetermined expiration date. Your monthly mortgage payments will be calculated based on your locked in interest rate. If the lender offers a floating rate and interest rates decrease, the lender may allow you to "float" your interest rate down to the new lower level.

Here are some questions asked by people selling their homes:

• Financing: What is the rule of thumb for Closing costs? 1 to 2% is usually the normal figure to give you an estimate of the costs at closing a sale of a property.
• Financing: Do you need to sell your existing home before you apply for a new mortgage loan? The answer to this question is "No". You can apply for a new mortgage loan before you sell your current home. However, depending on your income and debt levels, you may be required to sell your current home before you can close on your new loan.
• Financing: Have you ever wondered when you should start the mortgage process and how much of a loan you can afford? The best time to look for a mortgage is before you look for a house. This enables you to determine the amount of money you can borrow and how much house you can afford.
• Inspections: Is a termite inspection required? For conventional loans, the investor or lender will require a termite inspection if there are visual signs of infestation. All government loans require a pest inspection on any structure that is ground level or of total wood construction (including condos). There are termites in San Diego County and even though many homes are concrete block construction (CBS), it is wise and highly recommended to have any home inspected for termites regularly.
• Inspections: What are the facts on mold? Here are some things to consider on this topic of growing importance. There is no such thing as a mold-free home; and doorways, windows, and heating, ventilation, and air conditioning systems serve as the main points of entrance. Though mold is not hazardous to healthy people, it can make asthma, hay fever, and allergies worse or cause infections in people with compromised immune systems. Mold thrives in moist areas and can ruin paint, wallpaper, drywall, and wood surfaces. To keep the substance in check, the American Society of Home Inspectors urges homeowners to quickly fix plumbing or roof leaks; immediately wash and completely dry mold-infested areas; replace ceiling tiles, carpeting, and other absorbent materials that have been contaminated; clean and dry air conditioner, refrigerator, and dehumidifier drip pans often; and use exhaust fans or open windows when showering and cooking. They also are advised to keep indoor humidity levels at 30 percent to 50 percent relative humidity; use bathroom cleaning products that kill mold; add mold inhibitors to paint; and avoid carpeting bathrooms.
• Inspections: What does the term "as-is" mean? The term "as is" means the seller is not going to make any repairs to the property. This, however, does NOT mean that the seller is exempt from disclosing known problems with the property. The seller must disclose all known defects to the buyer. Not disclosing known defects is fraud, a very serious crime. Homes sold "as is" often bring a lower sales price, as the buyer will make price adjustments for known, necessary repairs. It is wise, and recommended, that the buyer have a professional home inspection done on the property. We also recommend that the buyer have a roof inspection done by a qualified roofing company, as well as have the pool and air conditioning system inspected by a service company.
• Insurance: How much title insurance do you need? The amount of title insurance needed is based on the value of your home and the amount of your mortgage. Title insurance guarantees the lender and/or the owner against the possibility that there may be an unknown lien or discrepancies in ownership on the property they are purchasing. Lenders need to be covered for the full value of the mortgage; this policy is required and will vary from state to state. There is a one-time fee for the policy that is paid at closing. You can obtain a separate home owner's insurance policy to cover the full value of your home. However, this additional policy is not required. It is customary for the seller to provide the buyer with a new title insurance policy in San Diego County, however, this can be negotiable.

Shawn Hethcock
Shawn Rodger
1424 Camino Del Mar
Del Mar, CA 92014
858-755-6761
Fax 858-755-4709