Real Estate Frequently Asked Questions

1.   What are the general steps in buying a first home? 2.   How do I determine the amount of my initial offer? 3.   Where can I get information about local schools in Hampton Roads? 4.   What does AICUZ mean?  5.   How can I prepare myself against emergency repair bills for my new home?  6.   Are there mortgages designed for first time home buyers? 7.   What are points? And what does is mean to buy down a rate? 8.   What are closing costs? 9.   What does my monthly mortgage include? 10. What is title insurance and what is the difference between Lender´s        title insurance and Owner´s title insurance? **Please note, if you have a specific question that you would like answered that you do not see in this list, feel free to email me!

Real Estate Frequently Asked Questions  What are the general steps in buying a first home? 1.    Speak with a lender and get pre-approved for financing--your REALTOR® can also help       you with this should you need a referral. 2.    Set up a buyer counselling session with your real estate agent to discuss your unique situation your   housing needs,time frame and anything else that is important to you in finding a home. 3.    Begin receiving real estate listings of homes that match your criteria.  Review listings sent to you for potential homes of interest and set up appointments with your agent to view homes. 4.   Begin yourn housing tour-bring a digital camera with you and take notes to help you remember  homes you liked. When you find a home you would consider living in, talk to your agent about making an offer. 5.    Select a home you want to make an offer on and dicuss the details with your agent as well as the terms of your offer. Provide earnest money and submit with your contract. 6.    Your offer will either be accepted, rejected or negotiated. Negotiation is usually the most likely outcome and once the terms have been agreed upon by both parties, your offer is ratified. 7.    Once your offer is ratified, this is the time when inspections, title work and appraisal are done.  You should be working with your lender and settlement agent to provide them with any other additional information needed. 8.    Provided there are no problems with any of the above, the walk-through is set up.  The walk-thorugh is your last opportunity to go through the house before closing.  All appliances and systems must convey in working order unless stated differently in the contract.  Discrepancies are then negotiated prior to closing. 9.   Provided all is well with the walk-through, you proceed to closing.  Closing is where loan documents are signed, a HUD document is prepared (showing details of all the monies in a transaction), title is signed over to the buyer and keys are exchanged.   How do I determine the amount of my initial offer? Though there are no hard and set rules for making an initial offer, your real estate agent can do a comparative market analysis for the home you are considering buying so you can see if the home is priced in line with the area and also what other comparable homes have recently sold for in the neighborhood.  It is also important to keep in mind these other factors in determining your initial offer:  the home's condition, how long it's been on the market, financing terms, and the seller's situation (i.e.: How motivated is the seller?). By the time you're ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.   Where can I get information about local schools in Hampton Roads? A good resource to use is Great Schools.net ; here you search by a particular city and also further define your search by elementary, middle and high schools. You will see information on academics, SOL scores, student/teacher ratios, demographics and more.  There are also links to the individual school´s website with even more information such as classes, extracurricular activities, and bus routes.  Another good idea would be visit a school of interest and meet with the principal.  Many public schools encourage an open door policy and welcome visitors.   What does AICUZ mean? AICUZ (Air Installations Compatible Use Zone) is a program that regulates land development in the area surround military air installations. All of Hampton Roads is subject to some form of jet noise and some areas are affected by accident potential zones.  Mandatory disclosure is made in all AICUZ affected areas for the sale or lease of property.   How can I prepare myself against emergency repair bills for my new home?  A home warranty may be a good investment in that it covers problems not covered by one´s homeowner´s insurance policy. A home warranty is a service contract usually covering 1 year (some companies may allow renewals) that protects homeowners from inexpected repairs due to normal wear and tear.  Though each company´s warranty differs, typical covered items  include appliances, hot water heaters, air-conditioning and heating.  The costs for a home warranty is between $300-$500 and is an item that may be negotiated for in a contract.   Are there mortgages designed for first time home buyers? Yes, VA loans and FHA loans (mortgages insured by the Federal Housing Administration) have no or low downpayment requirements which is helpful to many first time home buyers. A VA loan is 0% down and an FHA loan is 3.5% down, however, this downpayment can come in the form of a gift. Additionally Virginia has a home buyer´s program known as VHDA (Virginia Housing Development Authority) geared to helping credit worthy first time homebuyers or those who have not owned a home for the last 3 years.   The rates are posted on their website and for buyers who qualify there are 100% financing options.  If you are not currently working with a local lender and would like a personal recommendation, please contact me at Liz@HamptonRoadsRealEstate.us.   What are points? And what does is mean to buy down a rate? A point is 1% of the entire loan amount and "buying down the rate" essentially means paying points in return for a lower interest rate and hence,a lower monthly payment.  Since you are essentially paying more upfront for a reduced monthly mortgage payment, it usually only makes sense if you are planning on living in the home for a longer period of time (5+years).   What are closing costs? Closing costs are expenses incurred by both the buyer and seller in transferring property.  Here are some kinds of the fees involved in a standard closing: Inspections - you may have already paid these costs. If not, they are collected at closing.      Title Insurance - pays to research who legally owns the property and protects you and the lender against loss or damage if someone should challenge your right to ownership.             Loan Origination Fee - This is the fee paid to the company originating your loan to cover  their costs associated with creating, processing, and closing your mortgage. Homeowners Insurance - Your lender will require proof that you have adequate homeowners insurance.  You may be required to pay the first year's premium. PMI - Private Mortgage Insurance is required by your lender if you put less than a 20% downpayment on your home.   Property taxes - These are based upon the purchase price of your home In a typical home purchase, closing costs equal about 3% to 5% of the purchase price of the home.   What does my monthly mortgage include? Your monthly mortgage payment includes PITI (Principal, Interest, Taxes and Insurance).  The bulk of your monthly payments will go toward paying off principal and interest and in the first few years of your loan, it will be primarily interest payments.  Most lenders will also collect payment for real estate taxes (See Hampton Roads real estate tax rates) and home owner´s insurance aka hazard insurance.  These payments will be escrowed on your behalf and the lender will pay your tax and insurance bills as they come due.   What is title insurance and what is the difference between Lender´s title insurance and Owner´s title insurance? Title insurance is an insurance policy that protects against losses due to a title that is not free and clear of defects (i.e. liens, encumbrances).  There are 2 types of title insurance, Lender´s and Owner´s. Lender´s title insurance is also known as a Loan Policy and protects the lender´s interests in the property up the the loan amount.  Owner´s title insurance, aka Owner´s Policy, protects the owner´s interests in the property.  An owner pays a one time fee for this protection and it lasts as long as he or she owns the property or should he or she die, this coverage extends to their heirs.  Owner´s title protects the buyer from problems that were not uncovered during the title search and pays for legal fees involved in defending a claim to title.  Owners should make sure that the policy covers the full value of the house.

Liz Schuyler, 4000 Virginia Beach Blvd. Ste 164 Virginia Beach, VA  23452

Direct: (757) 235-0274 Fax:    (757) 213-4064 Skype: Liz.Schuyler Email: Liz@HamptonRoadsRealEstate.us Web: http://www.HamptonRoadsRealEstate.us Blog: HamptonRoadsRealEstateRamblings