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  Home buyers frequently asked questions
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Answers to home sellers' questions are here.

Q.  What are the steps to buying a home? 

A.  This is the process for buying a home:

1. Check your credit report 3 to 6 months before you plan to buy a home.  Clear up any problems and errors so your credit score will be the best it can be.

2. Call your agent to outline your requirements for your new home.  Before you call, write a list of what neighborhoods you prefer, how many bedrooms, how many bathrooms,  if you need a family room, etc.  

3. If you have not already spoken with a lender, you should do so immediately.  You need to know what price home you qualify for.  Your lender can tell you.  When you apply for a home loan, ask for a document called a "Good Faith Estimate".  This is a government-mandated estimate of your actual loan costs.  This should prevent any last minute surprises when your loan closes.

4. Start your home search.  Your agent can provide you with detailed e-mails of all the listings that match your requirements in your chosen areas.  Then you can then go out and look at any or all the homes you wish to see.

5. Find a home you like!  And decide to make an offer on it.

6.  With the help of your agent, write your offer on the home and negotiate the terms and conditions of the purchase agreement contract.   

7. The seller agrees to accept your offer!

8. Your agent will open escrow at an Escrow Company and deposit your earnest money check.  

9. The Escrow Company handles much of the paperwork involved in completing the sale.  It also keeps all money until the date that both seller and buyer sign the final paperwork to finish the deal.  Toward the end of the escrow period, you give the down payment to the escrow company and your lender submits the loan amount.  After all the terms and conditions are satisfied, and paperwork signed, the escrow company pays the seller.

10. The Grant Deed and other documents are recorded with the County Recorder -- making the sale official.

11.  Congratulations!  You get the keys and the home is yours!!

Q. What is escrow and why does it take so long?

A. When a purchase contract has been agreed to by both buyer and seller, that contract along with the earnest money are given to the escrow company, an impartial third party that can only take action based on instructions from both buyer and seller.

After an escrow account is open, the escrow officer begins to assemble all documents required to complete the terms of the contract.  For example, the officer gets current property tax records to determine how much property tax each party will pay.  The escrow company also need proof of the buyer's homeowners insurance, all the paperwork and money for the buyers' loan.  It sometimes seems as if there are hundreds of pieces of paper and disclosures that need to be signed!  

Finally, after all documents are collected and signed by all parties and the money arrives from the lender, escrow closes.  Both buyers and sellers get a final accounting of all money.  Then the sellers get the money, the buyers get the keys to their new home!

Q.  Who pays for what costs when buying or selling a home?

A.  There are some customary allocations of costs involved with a home purchase in California  For a detailed list of what buyers and sellers generally pay,  go here.

Q. What is a "Good Faith Estimate"?

A. This document, required by the federal government for most loans, forces the lender to disclose all costs for your loan upfront, including fees, closing costs, points, appraisal, etc.  It was developed to eliminate last minute loan surprises.  Be sure to demand it when you apply for the loan.  The actual lender -- not the broker -- must give it to you within 3 days of your application.  You should also ask if your loan will adjust in the future and if the figures the lender gives you includes the cost of home insurance and any homeowners association fees.

Q. What's the difference between a loft and a condo?

A.  Originally -- and I am talking decades ago -- lofts were simply large work or storage spaces in industrial or commercial buildings.  In time, artists and others began to take over the large spaces for work and then began to live there, too.  Lofts these days are usually big, open living spaces in former commercial buildings.  (In some places, however, so-called "lofts" are being built from scratch -- rather than being conversions of old buildings.)  Many lofts are much smaller than they used to be -- but high ceilings are a common characteristic of lofts. 

A condo is usually an apartment style living space that has been finished on the interior by the builder.  All the rooms, interior walls, flooring, closets, and cupboards are in place and painted.  As a condo owner, you own the air space and interior walls within the rooms.  The building's exterior walls, hallway and common areas are owned by the association of homeowners.  

Q. What is a soft loft?

A.  In some newer lofts, the builders add a wall to separate the bedroom area from the rest of the open space in the loft.  These are called soft lofts. 

Q. My lender tells me my FICO score is too low to buy the home I want even though I have good job.  What is a FICO score? 

A.  FICO is an abbreviation for the Fair, Isaac Company which developed a mathematical model to predict credit risk of consumers.  Using the FICO formula, credit bureaus come up with a number that is assigned to you based on your credit history. 

Basically, it works this way: every time you are late with a payment, your FICO score goes down.  When you pay your bills on time, your FICO score goes up.  And the goal should always be to have as high a FICO score as you can because the higher your score the lower your interest rate and fees.  

These days even with a high FICO score , you may not be able to get a loan unless you are willing to pay 20% to 40% down on the property.  Banks have really tightened up lending standards.



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