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ALL PRO Our Guide to Buying, Selling, and Investing
ALL PRO www.remaxallprorealty.com 66 Stratford Square Bloomingdale, IL 60108 Call: 630.980.4000 505 W Main Street St. Charles, IL 60174 Call: 630.513.6100 495 IL-47 Unit D Sugar Grove, IL 60554 Call: 630.391.4800
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ABOUT RE/MAX ALL PRO
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SELLING GUIDE
24 GUIDE TO BUYING
44 HOME LOAN LENDING
60 LEGAL ASPECTS
66 HELPFUL TIPS
71 GLOSSARY RE/MAX ALL PRO
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ALL PRO RE/MAX ALL PRO & TOP PERFORMING PROFESSIONALS Whether you are buying, selling or investing or if you are just curious about how to start building your family’s investment real estate, we are your trusted resource. RE/MAX All Pro offices have been assisting consumers in making the best decisions throughout every changing economy since 1989.
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RE/MAX ALL PRO
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ABOUT RE/MAX ALL PRO
SELLING GUIDE WHERE WILL YOU BE MOVING TO? In addressing selling, it sounds strange to ask where you will be going but there’s a good reason. If you need to start the process of seeking a lender or a Realtor out-of-state you’ll not want to be rushed. We have a system to connect you to qualified RE/MAX agents all over the world. Let us assist in finding you a qualified professional when you’re moving out of the area.
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SELLING GUIDE
GETTING YOUR HOME READY Before you invite a real estate agent in for an evaluation of your home, consider preparing it to its best possible condition. You want the agent excited to price and promote your property. Don’t have the strength or time? You may need to hire professionals to get your property “show” ready. When you list with a RE/MAX All Pro Realtor, you will have access to an exclusive list of preferred vendors that include stagers, painters, contractors, organizers, packers, junk haulers, and more. Why worry about getting the property ready for the next owner? If your property is in top condition and clutter free, the professional photos will attract more interest. More people viewing the property could result in higher offers, plus once you’re under contract you can stop taking appointments. The extra effort you put in now can greatly improve your net proceeds and reduce the length of time on the market.
RE/MAX ALL PRO
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ALEX RUMMAN
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SELLING GUIDE CONSIDER WHAT MODEL HOMES LOOK LIKE Every single room is made to look bright, spacious and not personal. Counters, furniture tops, and appliances are free of photos and collectibles. Box your personal items now for the best appearance, plus you will have less to do later when your closing is approaching. When possible, store boxes off-site. ROOM BY ROOM LAYOUTS When reviewing furniture, each room needs the bare minimum. Store away your less-thanbest pieces as they can be a distraction. Revert rooms back to being bedrooms if you have used them for storage, gym equipment or crafts. CLOSETS, DRAWERS, AND APPLIANCES You may use the toaster every morning, but your potential buyers will see this as cramped. Keep everything out of sight, to create a fresh, new home atmosphere. Buyers do look in closets and cabinets to imagine if there is enough space for their things. Try not to stuff items away in these places. Naturally, valuables, medicines, and firearms should be secured.
WINDOWS AND DOORS Clean glass, remove cobwebs and dust, make repairs to seals, trim, and screens. Use a product like WD40 on tracks that do not move smoothly or that creak. When buyers see small items needing repair, they worry about lurking issues that could be neglected. Show them you care for the home and value the need for regular maintenance. PAINTING Painting is one of the least expensive and most effective things you can do to increase the appeal of your home. Fresh paint can help add a new home smell if you have pets or smoke. DEEP CLEANING AND SECURING Home fixtures such as faucets, knobs, toilets and lighting should be cleaned, tightened and be properly functioning. Everything you can touch should be considered for a deep clean. Baseboards, door trim, outlet and switch covers, ceilings, walls, and even the garage floor are often overlooked with daily living. Give it all attention for better offers! KIDS, PETS, AND TOYS Potential buyers come in all ages and life stages. Don’t assume your new buyers will be a family or love your pets. Put away toys so your potential buyers can feel it being their home. When possible, take pets with you during showings. Of course, the kids too.
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CURB APPEAL MATTERS The outside of your home can either increase or reduce the amount of showings you attract. Here are affordable ways to boost your home’s curb appeal, but don’t forget the backyard too. FINE TUNE THE YARD Be diligent with regular mowing, trimming, edging, and weed removal. Add fresh mulch to the landscape beds. Sealcoat the driveway in the summertime. Trim overgrown bushes and trees away from windows. Wintertime requires a clear drive for showings. FRESH COLOR Pick up a few sets of potted flowers and plants and place them next to the front door. If you don’t use your front door often, set a reminder to keep them watered. In the winter you can add color with coordinated branches and boughs in vibrant containers. OUTDOOR LIGHTING Clean exterior fixtures, replace bulbs or update lighting.
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OVERLOOKED DETAILS Many things can go unnoticed in the hurry of life. Now you need to see what a buyer sees. Like split, loose boards on a porch or deck, cracked concrete, leaning or faded mailbox, and missing house numbers. Hide trash bins and add a fresh entry doormat. POWER WASH Rent a power washer for a day and carefully wash your siding, garage floor, concrete drive, and patio. TOUCH UP PAINT Especially your front door, but also pay attention to garage doors and all the exterior trim. TRIM UP SHRUBS Overgrown bushes and trees make a home look older, smaller and uncared for. Now it’s time to meet with a RE/MAX All Pro agent for a consultation.
630-442-4068
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SELLING GUIDE RE/MAX ALL PRO | 13
CHOOSING A MARKETING METHOD Buying and selling real estate should be a simple process, but simple is rarely the case. The choice you make can have profound hidden financial implications and you may not be aware of the losses until it’s too late.
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FOR SALE BY OWNER (FSBO) Selling without a Realtor has an understandable appeal, but the cons outweigh the pros. In fact, National Association of Realtors’ (NAR) surveys show that people who worked with a Realtor had a higher net return on their transaction.
REALTOR REPRESENTATION We suggest you avoid agents from firms that offer discount service. They look to cut their costs at the sacrifice of your net gain. Their service suffers from inadequate security and lack of management. You could suffer from being shuffled through call centers and poor communication. Often they seek to upsell you on their services throughout the transaction.
Consider these factors when selling your property on your own. Do you feel safe letting strangers into your home? Don’t have your time wasted by scams! Are you aware of the value of a Realtor negotiating on your behalf? Did you know that Realtors have many safety systems to protect you from fraud?
You have many options of who you select to represent you. Your best scenario is an agent who has built relationships with past clients, the community, and their office colleagues to make your transaction most successful.
Let your RE/MAX All Pro professional know you’d like to hear more about the absolute value they can bring to you.
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MARKETING YOUR HOME FINDING AND IMPRESSING POTENTIAL BUYERS.
NOBODY IN THE WORLD SELLS 16 |
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SELLING GUIDE
MORE REAL ESTATE THAN *
*As measured by residential transaction sides ALL PRO RE/MAX ALL PRO | 17
PRICING YOUR PROPERTY You probably have an idea of what you think your home is worth. RE/MAX All Pro agents have access to relevant data plus a network of professionals to confer with, to help determine a good list price. Let’s look at some of the questions you may have. WHY IS THE ESTIMATE SO LOW? If the price you had in mind is higher than what data suggests for your property, where did you get your information? Some of our clients are lured into online value estimates that turn out to be a ruse. These providers inflate values to excite sellers into setting an appointment, only to have a representative come out and provide an alternate value.
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Your RE/MAX All Pro agent will prepare a Comparable Market Analysis (CMA) to compare the recent sales of similar properties in your neighborhood. The valuation takes into account data that is recorded with the tax assessor such as the size, age and layout of your property. A RE/MAX All Pro agent will use the physical evaluation of the upgrades and features your home has that online data can’t provide. Reasonably pricing your home in what the current market supports is vital.
TIPS FOR A SUCCESSFUL SHOWING: •
Promptly confirm your showings.
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Turn on exterior and interior lights in each room even during the daylight.
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Open all window blinds and curtains. Make the home bright and vibrant.
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Make beds, put away dirty clothing, and free surfaces of clutter.
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Clean sinks and stove, close toilet lids, and empty trash.
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Turn on some low-key music but keep it low.
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If you have a home theater, put a movie on (no sound needed).
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Secure valuables.
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Finally... take the pets and kids, and leave the home, preferably before the buyers arrive.
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SELLING GUIDE
WHY IS THE ESTIMATE SO HIGH? Some agents tell you what they think you want to hear. They inflate the value just to obtain your listing, then tell you to cut the asking price down when it doesn’t sell. This doesn’t mean you shouldn’t go with an agent who comes in with the highest listing price. If the seller’s market is strong, and specifics of your home support a push to a higher list price, you’re fortunate, enjoy being in this position. However, when the market has an abundance of listings we would caution you about being too bold in your asking price. If you are not receiving showings, it could be because the price is too high for the area. A property that sits too long on the market through price reductions can concern buyers that there may be an underlying issue of why the home did not sell. Rely on your real estate agent to provide you with the data, research and advice from their associates on your asking price.
WHAT WILL MY EXPENSES BE? MARKETING SERVICES - FULL SERVICE AGENT Using a full service RE/MAX All Pro agent can attract more buyers and therefore more offers than if you try to go it alone or try a discount broker. Your agent will outline for you their extensive marketing agenda and costs. Some of these steps include the detailed MLS listing, property website, quality brochures, mailers, plus social and internet advertising. CLOSING COSTS AND NET RETURNS Instead of focusing on cost, consider the net return an agent could secure for you. A lesser quality agent that doesn’t value the tools that they are offering, will offer discounts. A discount broker will quickly be willing to reduce your sale price and is not a strong negotiator on your behalf. You need someone motivated and eager to stand strong for your asking price while maintaining a respectful agent-to-agent relationship. RE/MAX All Pro agents can provide a general Seller Net Sheet to outline anticipated selling costs from tax stamps to brokerage, marketing, and attorney’s fees. At first glance it may appear that your real estate agent is taking a big chunk of your sales price. This is actually not the case. First, the commission you pay is split between your real estate agent’s brokerage and the buyer’s real estate agent’s brokerage. Then, the agents are responsible for numerous expenses such as memberships, licensing, technology, various marketing platforms and more. A quality agent is providing high value services and those come at a cost to them. There is a big risk, if your home doesn’t sell, the brokerage isn’t getting paid.
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GOING LIVE ON THE MLS Once you are comfortable with the pricing and marketing strategy, you will sign the final legal documents. Then the excitement begins. Your RE/MAX All Pro Team will jump into action with networking, photography, media advertising, professionally printed materials, secure showing systems and more.
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SELLING SELLING YOUR GUIDE HOME
NEXT STEPS
WORKING WITH OFFERS Vital factors aside from price can affect your final experience and net at closing. For example, there is value in a contract that meets your needs in coordinating moving day. There is value in feeling more confident that your buyer has the means to close on the agreed closing date too. Let your agent help you consider the importance of every detail. CONSIDERATIONS OF A CONTRACT ASIDE FROM PRICE: •
The buyer’s evidence of ability to secure a loan and the quality of the lender.
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Buyer’s commitment by means of earnest money.
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Changes of inclusions.
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Buyer’s request for repairs.
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Closing dates and rent backs.
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Tax prorations.
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The date when all contingencies for loan clearing or sale of properties will be removed.
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Reputation of the buyer’s agent and brokerage.
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Review closing documents provided by the title company.
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Schedule the final read on all municipalities such as water, gas, electric, etc.
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Change of address. Use our checklist.
Movers are done, house is clean and ready for buyer’s final walk through.
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SELLING GUIDE
PREPARING FOR CLOSING DAY
GUIDE TO BUYING In the market for a home but no idea where to start? By asking yourself some questions, you can provide your agent with criteria for an initial search. After looking at a few properties, you’ll find your needs and wants may change. Lean on your agent for suggestions of changes to your search alerts.
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GUIDE TO BUYING RE/MAX ALL PRO | 25
Aside from the basics of how many bedrooms, bathrooms, and parking spaces, what else do you need? What about a home office, playroom or in-law arrangements? Do you want a large yard to care for or would a maintenance free lifestyle work best? Do you drive to work or would you like to have convenient public transportation? Do you have work vehicles or recreational storage needs that some neighborhoods may not allow? Is there a particular school district you desire? Make a list of your top needs and then those that you can be flexible on to assist your real estate agent’s ability to find you the best matches. SINGLE-FAMILY OR ATTACHED HOME? Condos and townhomes come with much less maintenance. You typically won’t be shoveling snow in the winter or replacing the roof, but you’ll likely pay monthly association fees to cover exterior services and repairs. Houses, on the other hand, come with more freedom to customize. They may come with lower association fees for community amenities but those will not cover your home maintenance.
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GUIDE TO BUYING
WHAT ARE YOUR NEEDS?
NOT FINDING WHAT EXCITES YOU? Your RE/MAX All Pro agent has the tools to send hot-activity searches to your email when properties are new on the market or have price changes. Our agents also have their All Pro network and the Private Listing Network (PLN), to see if there is a home that will be available soon but not quite ready for the general public viewing. Occasionally early access is possible. SEARCHING THE INTERNET When you find a home you like online, we suggest caution. Your licensed RE/MAX All Pro agent has the best tools in the industry that show ALL the AVAILABLE homes. Online providers are seeking your contact information to sell off as a “lead”. Your inquiry will likely generate many calls from local real estate agents. Online listing services often promote properties that are not actually for sale or in foreclosure. It is a ruse to make you believe they have additional options. They do not. FOR SALE BY OWNER When you use a licensed Realtor to purchase a home, there is no cost to you. Your agent and brokerage as your advocates have vast knowledge, experience and safety measures in place. A Realtor has a strict code of ethics they are held accountable to. When you venture outside that safety net, you are stepping into the arena of a seller who is not looking out for you. Their focus is on what benefits them, and avoiding the standards of the licensed professionals. If you are interested in a home being sold this way, let your agent contact them and invite them into some legal accountability.
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GUIDE TO BUYING RE/MAX ALL PRO | 29
Insuring Your Future & Your Peace of Mind Providing Insurance Services Since 1979 GENERAL LIABILITY | COMMERCIAL PROPERTY | PROFESSIONAL LIABILITY WORKERS COMPENSATION | CYBER & DATA BREACH | ERRORS & OMISSIONS | BONDS HOME | AUTO | BOAT | RECREATIONAL | LIFE | HEALTH | DISABILITY | LONG & SHORT TERM CARE
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630-712-5500 [email protected] www.thesecuritymakers.com
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The Best Exterior Solutions in the Chicagoland Area
Give Your Home Instant Curb Appeal and Superi Protection With New Siding New home siding looks great and does a fantastic job of protecting your home from the extreme weather we can experience. Whether your siding has become outdated or damaged or it no longer matches your style preferences, it’s time to call in the siding professionals. Advantex Restoration Inc takes your home’s architecture and style into consideration when installing the right siding choice. Our materials are sourced from industry-leading manufacturers, allowing us to offer strong materials in a wide variety of styles and colors. No matter which option is best for your home, we promise your siding will be durable, beautiful, and high-quality materials.
YOUR SIDING MATERIAL OPTIONS • Vinyl Siding
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MAKING AN OFFER As emotions can get involved with sellers, your RE/MAX All Pro Broker will not let this deter them from the job of advocating the best possible terms for you in a respectful manner. WHAT SHOULD YOUR OFFER BE? There is no set formula to use, such as 20% off the asking price. It’s a lot more complicated than that. Every combination of buy and seller needs, wants and limitations is different. RE/MAX All Pro agents network to develop strategies that are helping buyers win offers. Cash is not always king, but some sellers may be looking to avoid mortgage contingencies that could cause delays. In certain markets, cash offers put you at the head of the class and at other times, the sellers just want the highest price. Will your loan support a higher price? Talk strategy with your agent and consider these tips aside from price to make your offer stand out:
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Provide “proof of funds” statements, or a letter from a lender that you’re pre-approved for a maximum amount and how soon you can finalize a closing.
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Offer a higher earnest money amount to show you’re committed.
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Are you willing to forgo items found during your home inspection and take the property as-is? If you do, purchasing a Home Warranty might provide peace of mind for you.
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Lower the tax proration amount.
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Flexible closing dates, or offer to “rent back” to coordinate with the seller’s needs?
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GUIDE TO BUYING RE/MAX ALL PRO | 33
CASTLE
home inspection
Inspections you can trust. Professional inspectors and same-day reports backed by the best warranties. You find your dream home, we’ll make sure it’s not a nightmare.
Choosing the right home is important. We’re here to help. Castle Home Inspection provides expert certified property inspection services in Chicago and the surrounding suburbs. As your personal building consultants, we thoroughly inspect all major components of a property to expose defects and advise on potential maintenance your home may need. We back our home inspection services with the area’s best-backed warranties and guarantees.
Same Day Inspection Reports.
We know how important time is during the home buying process and that is why we are committed to getting your report to you the same day of your inspection.
90 Day Warranty with every inspection. We have your back. Buying a home can be stressful which is why we want to make sure the home inspection process isn’t. When you use Castle Home Inspection you rest easy knowing that you’re backed by the areas best-backed warranties.
B o ok a n i n s p e c t i o n o n l i n e 2 4 / 7 a t : w w w. c a s t l e i n s p e c t o r s . c o m Office: (630) 462-1050
Once you have agreed to the terms in purchasing a specific home, you will have a brief period of time typically referred to as the due diligence period. In this time you can hire a licensed home inspector to allow you to identify any areas of concern that exceed normal wear for the age of the home. During the inspection you and your inspector will work through a checklist visually assessing the condition of the home. This process usually takes a couple of hours, so plan your schedule for that day accordingly. Don’t be afraid to ask questions or for clarification. The inspector’s report will indicate any items that may need to be repaired or replaced in the future. If there are items of concern, you will discuss these with your real estate agent and attorney.
A FEW ITEMS ON AN INSPECTOR’S CHECKLIST: 1. LURKING CHARGES Even though a home’s electrical system may seem to function adequately, inspections can reveal safety issues. This frequently happens with old wiring that’s corroded or outdated, or with new wiring that’s improperly installed. 2. A FAILING GRADE Poor grading, or a slope that drains water toward your house instead of away from it, can cause all kinds of problems such as flooded crawl spaces or basements, rotting walls and framing, mold, and foundation damage.
3. MOLD Mold can sprout anywhere but moisture that collects from leaky pipes, a hole in a roof or a crack in the foundation can cause various issues. If moisture is found, and the inspector can’t find the source of the mold, a specialist may need to be hired. 4. FOUNDATION FLAWS As a home settles over the years, the foundation can shift. Symptoms include cracks in the drywall, uneven floors, and doors and windows that won’t shut. While home inspectors can identify basic foundation issues, if they see something that seems structurally suspicious, they’ll often recommend you call a foundation engineer to assess the situation. 5. NOT GOING WITH THE FLOW Inspectors watch for clogged or bent gutters, or gutters that channel water too close to the house.
How concerned should you be if any of these issues appear on the inspection report? An experienced REALTOR® will be able to translate the inspection and suggest remedies.
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GUIDE TO BUYING
HOME INSPECTION
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GUIDE TO BUYING PREPARING FOR CLOSING DAY For more details, see our checklist countdown on the next page.
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Visit your banker to wire funds to the specific wiring instructions and confirm the validity.
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Review closing documents provided by the title company and attorney.
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WIRE FRAUD ALERT - communicate and verify by confirmed phone numbers, the specific details of your wiring instructions. DO NOT use email communication.
With your agent, do a final walk through of the property to see everything is working as expected and any repairs that were promised are complete.
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Celebrate the purchase of your new home.
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Let us do the heavy lifting - When you choose M.K Movers, we provide a trusted team of professionals and all of the supplies needed to make sure your move is a success.
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FOUR WEEKS TO GO
ONE WEEK TO GO
J Start sorting. Create piles for donation, garage sale, trash, move.
J Confirm times with movers. Close and label boxes.
J Interview moving companies. Rely on referrals!
J Set aside valuables and personal items that will travel with you.
J Buy moving supplies like boxes and tape etc. J Start packing. Mark boxes indicating the rooms to be placed in the new home. J Contact your insurance to see if moving is covered. Inventory the value of your items
J Prep a move-in box of items you’ll need immediately like towels, paper plates, cleaning supplies, and linens. J Don’t miss your final big trash day
J Transfer your insurance to cover your new home.
THE DAY BEFORE YOU MOVE
J Arrange time off at work.
J Clean your home for the next resident.
J Notify your child’s school of your impending moves.
J Set aside your toiletries, medicines, and bath towels.
J Don’t pay to move unwanted items. Eliminate excess trash a little each week. THREE WEEKS TO GO J Notify creditors and subscription services of your new address. J Advertise and host a garage sale.
J Conduct a final walk through on your new home with your real estate agent. J Verify your funding. MOVING DAY
J Make a plan for moving day for kids and pets.
J After the movers are out, tidy and clean a final time.
J Make arrangements with your bank, including moving your safe deposit box.
J Collect all garage door openers and extra keys for the new homeowners to receive at closing.
J Research doctors and dentists in your new location.
J Plan to be at the new home when movers arrive.
J File a change of address form with the post office at usps.com
J Be ready to provide final payment to your movers.
TWO WEEKS TO GO
IMPORTANT CHANGES OF ADDRESS
J Arrange utility services to be turned on/off at your new and old homes.
J Utilities
J Delivery of donations pile. J Discontinue newspaper delivery, trash pick-up, lawn/snow service, etc.
J Inspect delivered furniture for damage.
J Electricity J Gas J Water
J Dispose of hazardous/flammable items like gasoline, bleach, and aerosol cans.
J Cable/Internet/Phone
J Review movers rules. ie: drain fuel from gaspowered equipment like lawn mowers.
J Trash
J Cell Phone(s)
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GUIDE TO BUYING
CHECKLIST
FINANCIAL
MEMBERSHIPS
J Employment (HR/Payroll)
J Professional Associations
J Banks and Credit Cards
J Magazines/Subscriptions
J Loan Agencies (Mortgage, Auto, Student, etc.)
J Gyms
J Insurance (Auto, Medical, Home, Dental, Life, etc.)
J Churches
J Investment Broker
J Community Groups
GOVERNMENT J Social Security J Department of Revenue J DMV (License Registration)
J Alma Maters J Civic Organizations J Licensing Boards J Other Extracurricular Activities
J USPS Mail Forwarding
SERVICES
J Voter Registration
J Home (Lawn, Delivery, Housekeeping, etc.)
J Business License Office (If you operate a business from home)
J Childcare (School, Daycare, Babysitter, etc.) J Doctors J Lawyers J Accountants J Vet/Groomer OTHER J Business Cards J Friends/Family
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START SAVING BY SWITCHING TO AFFORDABLE AND RELIABLE SOLAR Invest in solar to lower your energy costs. Take advantage of rebates to save even more. A sustainable and smart choice for your home.
CONTACT US TODAY TO GET STARTED. RESIDENTIAL SOLAR COMMERCIAL SOLAR SUSTAINABILITY ENERGY EFFICIENCY SOLAR REBATES COMMUNITY PARTNERSHIPS FINANCING OPTIONS
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INVESTING Investing in property is widely held to be a great idea, but only if you buy the RIGHT property. Here’s what to consider for a good return on investment when buying a home. DOES THIS PROPERTY HAVE POTENTIAL AS A RENTAL? Not all communities allow rentals and investors. Many towns require certification in the Crime Free Landlord classes plus rental licensing fees and inspections. Some community associations charge annual fees and may require your tenant get approved first by the Homeowner’s Association Board. Investigate these additional rules and regulations before you make an offer on a property.
FACTOR IN ALL COSTS AND YOUR RATE OF RETURN The purchase price of a property is not the only thing you need to think about when weighing up return on investment. Your financial advisor can assist but here are some things to consider: •
Fees associated specifically to being a landlord.
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Will your insurance company cover a rental property?
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If acquiring a loan, what is your rate on a non-owner occupied property?
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Speak with your tax advisor on the costs involved with the calculating taxes on your assets.
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How long before you will need to make major improvements to the home such as siding, roofing, driveway, HVAC systems?
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Intending to “flip” the property? Again, talk to your tax advisor in advance to be aware of Gains Taxes.
BECOMING A LANDLORD If you’re thinking about leasing out your current home, there are several important factors to consider before putting it up for rent.
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GUIDE TO BUYING PREPARE YOUR PROPERTY Make sure there are no issues that you may have overlooked that you would be “cited” for if your local government conducts rental property inspections. If you have this type of ordinance to abide by you will be able to obtain a pre-inspection outline from their office. SELF MANAGE OR PROPERTY MANAGER There are a couple of ways of getting a blank lease. Ask your real estate agent or attorney for assistance, otherwise a property manager will have access to all the necessary forms. BACKGROUND CHECKS AND CREDIT CHECKS County and state rules can affect how you need to proceed. With a proper manager you can avoid the concern of missteps in conforming.
EXPECTATIONS OF TENANTS Make clear upfront the expectations for utilities, general maintenance, visitors, association rules, inspections, replacement keys, garage door openers, security deposits, damage and repairs, and renter’s insurance. DO A WALK THROUGH Use a walk through checklist prior to the tenants moving in, to indicate the state the property should be returned to when their lease is complete. KNOW YOUR RESPONSIBILITIES Regulations change often which means that not checking the rules can result in a landlord unwittingly breaking the law. For some reason, many investors choose not to educate themselves on fair housing laws which bring serious implications if you violate them. Rules may vary widely from county to county or even town to town. RE/MAX ALL PRO | 43
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HOME LOAN LENDING RE/MAX ALL PRO | 45
TYPES OF HOME LOAN PROVIDERS INTERNET LENDERS Many quote fantastic rates but oftentimes cannot deliver. If issues come up during the transaction, these out-of-area companies lack the relationship and sensitivity of local Loan Officers (LOs). There is nothing worse than having gone through the whole process only to find an issue in the 11th hour. We suggest you use lenders with a local presence. LOCAL BANK LENDING There is value in the comfort within your established banking relationship. However they are limited in the products and programs their bank offers. But they are worth consideration. INDEPENDENT MORTGAGE BANKER An Independent Mortgage Banker can have a relatively local representative but their funds come from one large banking institution. They can have great, timely results but may offer a narrow range of products that can be limiting in fitting into your circumstances. LOCAL MORTGAGE BROKER Unlike banks and independent lenders, Mortgage Brokers can shop and compare a wide variety of options from many different sources. They are not committed to one provider. This access to wholesale bank lending creates an exciting, competitive market where loan providers compete to give you better terms. Your Loan Officer will act as your personal shopper and mortgage counsel as the options can be overwhelming to compare.
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HOME LOAN LENDING CASH OR A LOAN? Paying cash? What are your spending limits? Consider that you will have monthly costs after the purchase of taxes, insurance, maintenance and possibly association fees. If you are willing to remodel, how much are you willing to invest in improvements after closing? Let your real estate agent know these details up front. Getting a loan? Going through the mortgage pre-approval process is the best first step. You don’t want to get excited about a home that you likely would not get an accepted offer without a firm pre-approval. A great lender can point out areas in your financials that you can address to help save you money. The key is to get this process started immediately. Important Note: At this time do not make any major changes in job, purchases, investments. This can drastically affect your loan purchasing power. RE/MAX ALL PRO | 47
Tia Duderstadt 13 Month Home Warranty Coverage of more than 120 items Repairs and replacement coverage No age restrictions on appliances and systems Protection against unknown pre-existing conditions Monthly Payment Options Available Free Listing coverage up to $1500 Access to over 10,000 contracted, licensed and background checked service providers Includes up to $5,000 of coverage for HVAC System No cap on Freon
Coverage that gives you real-life assurance WHY CHOOSE HWA?
For over two decades, Home Warranty of America has helped homeowners like you stay safe and feel comfortable when buying, selling or just living in their homes. •
13 months of initial coverage
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A fully customizable plan that meets your needs
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Easy-access customer service via phone, email, chat or web
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Coverage of more than 120 items
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Protection against unknown pre-existing conditions
“We’ve got you covered!”
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FREE Seller’s Coverage on active listings for up to 180 days ($1,500 limit)
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No age restrictions on your home
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Multi-year plans
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Newly enhanced claims process
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Coverage for townhomes, condos and investment properties and new construction plans
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Dependable service from a national network of independent qualified service technicians
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Access to over 10,000 contracted, licensed and background checked service providers
(847) 271-7968 Email: [email protected] Web: www.hwahomewarranty.com
ASAP START THE PRE-APPROVAL Why does it matter? It gives you the advantage of being the closest thing to a cash buyer as possible. When you submit this with your offer you are giving the seller an assurance that if they accept your contract and they take their home off the market, the probability is very high that a closing will occur. The time it takes to get this completed can vary depending on your situation. Best to get started right away so you are not disappointed with wanting to make an offer on a house without this strength.
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HOME LOAN LENDING WHAT IS A GOOD INTEREST RATE ON A HOME LOAN? Not every rate is available to you. You may pursue a rate only to find out it doesn’t fit in your situation. Should you get a fixed-rate or adjustable rate mortgage? A conventional loan or a government loan? Deciding which mortgage product is best for you will depend largely on your unique circumstances. PAYING DISCOUNT POINTS In some cases, it may benefit you to “buy down the interest rate” by paying extra money up front in the form of discount points. Your mortgage professional can assist you with the calculations to make an informed decision. WHAT IS AN ANNUAL PERCENTAGE RATE (APR) The APR allows homebuyers to compare different types of mortgages based on the total cost for each loan. It’s the interest rate reflecting the cost of a mortgage as an annualized rate. This rate is likely to be higher than the stated “note” (written loan agreement) rate on the mortgage, because it takes into account points and other credit costs. This is one measurement that could be used to compare interest rates offered by different lenders.
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POPULAR LOAN PROGRAMS Whether you are buying a home or refinancing, there are two basic types of home loans. Each has different reasons you’d choose them. Fixed Rate and Adjustable Rate. FIXED RATE MORTGAGE Fixed-rate mortgages usually have terms lasting 15 to 30 years. Throughout those years, the interest rate and monthly payments remain the same. Situations where people tend to favor loans like this include: •
Borrower plans to live in the home more than 7 years.
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Borrower likes the stability of a fixed principal/interest payment.
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Borrower doesn’t want to run the risk of future monthly payment increases.
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Borrower thinks income and spending will stay the same.
ADJUSTABLE-RATE MORTGAGE Adjustable-rate mortgages (often called ARMs) typically last for 15 to 30 years, just like fixed-rate mortgages. But during those years, the interest rate on the loan may go up or down. Monthly payments increase or decrease. Situations where people tend to favor loans like this include:
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Borrower plans to stay in the home less than 5 years.
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Borrower doesn’t mind having the monthly payment periodically change (up or down).
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Borrower is comfortable with the risk of possible payment increases in future.
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Borrower thinks income will probably increase in the future.
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VA LOANS VA loans are mortgages guaranteed by the Department of Veteran Affairs. These loans offer military veterans exceptional benefits, including low interest rates and no down payment requirement. This program was designed to help military veterans realize the American dream of home ownership.
BALLOON MORTGAGES Balloon mortgages include a note rate that remains fixed initially, and the principal balance becomes due at the end of the mortgage term. REVERSE MORTGAGES Reverse Mortgages allow senior homeowners to convert a portion of their home equity into cash while still living in the home. These loans will let a senior homeowner stay in their home longer than they might be able to otherwise by freeing them from the mortgage payment.
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HOME LOAN LENDING
FHA LOANS FHA home loans are mortgages which are insured by the Federal Housing Administration (FHA), allowing borrowers to get low mortgage rates with a minimal down payment. This program is also recommended for borrowers who have less than perfect credit, higher debt ratios, or are in need of more underwriting flexibility.
HOW MUCH CAN YOU BORROW? FIRST STEP In determining how much home you can afford these factors are considered: •
FICO Credit Score.
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Self Employed Borrower.
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Source of Down Payment.
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LTV and Debt-to-Income Ratios.
LTV LTV or Loan-to-Value ratio is the maximum amount of exposure a lender is willing to accept in financing your purchase. Lenders are usually prepared to lend a higher percentage of the value to borrowers with better credit.
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HOME LOAN LENDING DEBT TO INCOME RATIO Another consideration in a lender approving a loan for a particular borrower is the ratio of monthly debt payments (such as auto and personal loans) to income. Rule of thumb states that your monthly mortgage payments should not exceed 1/3 of your gross monthly income. CREDIT SCORE Credit Scores are widely used by almost all types of lenders in their credit decisions. It is a quantified measure of creditworthiness of an individual, which is derived from mathematical models developed by Fair Isaac and Company (FICO). A FICO score is supposed to reflect the credit risk of the individual in comparison with that of the general population. It is based on a number of factors including past payment history, total amount of borrowing, length of credit history, search for new credit, and type of credit established.
SELF-EMPLOYED BORROWERS Self-employed individuals often find there are greater hurdles to borrowing for them than an employed person. For many conventional lenders, the problem with lending to the self-employed person is documenting an applicant’s income. Applicants with jobs can provide lenders with pay stubs, and lenders can verify the information through their employer. In the absence of such verifiable employment records, lenders rely on income tax returns, which they typically require for two years. SOURCE OF DOWN PAYMENT Lenders expect borrowers to come up with sufficient cash for the down payment and other fees payable by the borrower at the time of funding the loan. Generally, down payment requirements are made with funds the borrowers have saved. If a borrower does not have the required down payment, they may receive “gift funds’’ from an acceptable donor with a signed letter stating that the gifted funds do not have to be paid back. In some communities, down payment assistance may be available.
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BEGIN THE LOAN PROCESSING Once you’ve agreed to purchase a specific home, it’s time to take the next big step. You may be required to provide extensive documentation. Be prompt so as to not affect your contingency timelines in your purchase contract.
YOUR LOAN ORIGINATOR WILL GO INTO DETAIL OF WHAT IS NEEDED BUT HERE IS WHAT YOU MIGHT NEED TO PROVIDE: •
Copy of signed sales contract including all riders.
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Verification of the deposit you placed on the home.
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Names, addresses and telephone numbers of all real estate agents, builders, insurance agents and attorneys involved.
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Copies of your pay stubs for the most recent 30-day period and year-to-date total.
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Copies of your W-2 forms for the past two years.
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Names and addresses of all employers for the last two years.
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Letter explaining any gaps in employment in the past two years.
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Work visa or green card (copy front and back).
IF SELF-EMPLOYED OR RECEIVE COMMISSION OR BONUS, INTEREST/DIVIDENDS, OR RENTAL INCOME: •
Full tax returns for the last two years PLUS year-to-date Profit and Loss statement (complete tax return including schedules and statements. If you have filed an extension, please supply a copy of the extension.)
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Schedule K-1 tax forms for all partnerships and S corporations for the last two years.
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If your ownership position is 25% or greater. Federal Partnership (1065) and/or Corporate Income Tax Returns (1120) for the last two years.
IF YOU WILL USE ALIMONY OR CHILD SUPPORT TO QUALIFY: •
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Provide divorce decree/court order stating amount, as well as proof of receipt of funds for the last year.
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Prepare a list of all names, addresses, account numbers, balances and monthly payments for all current debts with copies of the last three monthly statements.
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Include all names, addresses, account numbers, balances and monthly payments for mortgage holders, and contact information for landlords, for the last two years.
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If you are paying alimony or child support, include marital settlement/court order stating the terms of the obligation.
Provide an award letter from that agency or organization and/or 3 months of recent bank statements to show receipt of the funds.
SOURCE OF FUNDS AND DOWN PAYMENT •
DEBT OR OBLIGATIONS
Sale of your existing home - Copy of the signed sales contract on your current residence and a copy of the settlement statement showing the proceeds from the sale of your home will be required as proof of funds.
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Savings, checking or money market funds Provide copies of bank statements for the last two months.
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Stocks and bonds - Provide copies of your statement from your broker or copies of certificates.
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Gifts - If part of your cash to close, provide Gift Affidavit and proof of receipt of funds.
MOTTO MORTGAGE NOW 505 West Main St., Ste B, St Charles, IL 60174 NMLS #2114465
630-365-1600
SCAN HERE AND GO TO OUR RESOURCES TAB FOR MORTGAGE CALCULATORS AND MORE INFO.
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HOME LOAN LENDING
IF YOU RECEIVE SOCIAL SECURITY INCOME, DISABILITY OR VA BENEFITS:
.
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LEGAL ASPECTS Using a specific real estate attorney can save you from delays and financial loss. Many attorneys can process your real estate transaction but if it is not their main expertise the management of the various parties involved can be affected.
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LEGAL ASPECTS RE/MAX ALL PRO | 61
HOW AN ATTORNEY CAN HELP For a nominal fee, your attorney will make sure that the contract is what you were anticipating and that you have a clear understanding of it. In Illinois, the attorney will have 5 days to review a real estate contract and address any changes or requests they may need to negotiate upon your instruction with the attorney of the opposite side of the transaction. The attorney’s office will: •
Coordinate closing dates, “rent-backs”, credits, tax prorations, closing figures, contingencies and much more.
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Confirm the names on the contract are consistent with the legal names, trusts, or corporations that are recorded.
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Work with the title insurance company to uncover if there could be any potential ownership discrepancies.
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File the real estate deed and title policy for final transfer of ownership with government offices. Failing to file the appropriate documents at the state or the county level may result in dire consequences.
TITLE INSURANCE The title company will search then insure on their results clearing that the property is free of any encroachments or encumbrances such as liens or judgments. They’ll confirm that the seller has the legal right to sell the property and what parcels are included in the ownership transfer. If the title company uncovers something problematic, your attorney can counsel you on how to proceed.
The information provided does not, and is not intended to, constitute legal advice; instead, all information and content are for general informational purposes only. Information contained in this book may not constitute the most up-to-date legal or other information. Readers should contact their attorney to obtain advice with respect to any particular legal matter. No reader should act or refrain from acting on the basis of information without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein - and your interpretation of it - is applicable or appropriate to your particular situation.
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TRUSTED ADVISOR AND COUNSELOR Matthew Karras is an experienced, local attorney handling real estate and estate planning matters. He prides himself on providing quality, personal service to each of his clients in a boutique firm setting. Having practiced law for ten years, he has the experience to handle your matter with utmost professionalism while also translating all the legalese into plain English. By only handling real estate and estate planning, Mr. Karras’ time is not spent in a court-room. Rather, he is available to speak with you, the client, to handle issues as they arise so that you do not have to wait for a resolution. Whether it is buying or selling a home or a commercial property, or helping you craft a personalized estate plan for when the worst happens, Mr. Karras is dedicated to your satisfaction. “Matthew was absolutely a pleasure to do business with! He was very helpful and responsive and helped me understand the legal part of my first home buying experience. I recommend his services. You will be very satisfied! Thank you Matt for all you do!”
Joseph D.
“Matt was very easy to work with. He responded to emails immediately and was extremely thorough in every aspect during the purchase of my new home.”
Patrick H.
630.480.6997
www.karraslawpc.com Matthew J. Karras, Esq.
522 W. Main St., Suite 2E Saint Charles, IL 60174
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Your Home is a Very Special Investment Here at Country Financial Insurance we believe in educating our clients, to help you pick the coverage that you need. We work closely with your Realtor’s and mortgage brokers as Trusted Advisors and plan to earn your trust as well. Now more than ever, while we all battle inflation in our economy it is important for your insurance and your financials to work with a Trusted Advisor versus getting lost in the shuffle of a 1-800 # program. We have a TEAM of experts here working for you that will look at not only the best Home Policy but have all these checklist items in mind while finding ways to save you hundreds/thousands on your insurances as a package deal.
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HOME INSURANCE CHECKLIST
> Does your home insurance have a built-in inflation guard? > Do you get accident forgiveness from an act of God claim (Wind/Hail)? > If someone gets hurt on your property are their medical bills covered on your policy? > Is your fence, patio, detached garages, and sheds actually covered? > Is everything replaced at full value or get a depreciated payout? > Do you need sump pump coverage? • Commercial Specialists available • Spanish Speaking Agents/Assistants Available • 2020 #1 Home Insurance Co. by JD Power
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HELPFUL TIPS 66 |
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Here are a few factors in favor of buying vs renting: •
Homeowners can take advantage of federal income tax deductions on property taxes and mortgage interest.
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Rent typically increases each year, a fixed-rate mortgage doesn’t.
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Rent prices have been outpacing home price growth. Nationally, rent prices have grown as much as 7.1 percent in 2022, putting rent costs ahead of home price growth, according to the realtor.com forecast.
•
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Homeowners get to make the decisions on decorating and improvements. Studies have shown that homeowners may have greater benefit of stability as they are more likely to establish roots in their neighborhood from participation in the local scene through volunteerism, political activities and community organizations.
POSITIVE RENT PAYMENT HISTORIES COULD BE A STEP TO HOMEOWNERSHIP Consumers with a history of on-time rent payments could find it easier to build their credit and qualify for home loans. New underwriting guidelines from Fannie Mae and Freddie Mac allow lenders to consider positive rent payment histories when determining someone’s creditworthiness and that, in turn, could make it easier for more renters to get mortgages and become homeowners.
SHOULD I BUY OR RENT? YES
Are you planning to stay for more than 5 years?
Are you in a financially stable position?
NO
Can your budget handle mortgage taxes, maintenance and other costs?
YES
RENT
NO
BUY
YES
NO
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HELPFUL TIPS
TIPS TO CONSIDER RENT VS OWN
MOVING EXPENSE TIP Save all moving receipts for three reasons: First, by donating your things to Goodwill or Habitat for Humanity, you may be able to deduct a portion of the value of these donations against your income tax. Second, if you’re relocating for work, you may be able to deduct moving expenses from your taxes come tax season. And third, if your company plans to reimburse you for the move, you’ll need to show HR all the receipts in order to get your money back.
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DID YOU KNOW?
Credit card interest and fees can add about 20% more to the cost of an item unless you pay off the balance in full each month.
Step 1: Look at last month’s credit card bill and bank debit statement to become more aware of your spending. Circle all the times you swiped for less than $20. Add up your circles. Are you surprised by the number of times you made a purchase under $20? It’s often shocking to see how a soft drink and chips or a cup of coffee and a simple pack of gum can add a quick $10 or more to your daily spending. Step 2: Set goals and create a budget. Determine your savings goals and what you need to save each month to achieve that goal. Determine what you can allow yourself for impulse and entertainment spending. (Scan the QR code for a budget worksheet.) Step 3: Create rules to live by to curb spending and meet goals. Decide to pay cash more often from an allowance you’ve given yourself through your budget. When the cash is gone, resist the urge to use credit and debit cards. Rules to Live By Examples: •
“I will pay cash for quick-stop snacks and drinks”
•
“I will pay cash for Uber, taxi, transit, or gas”
•
“I will pay cash for weekend activities”
Step 4: Make a promise to yourself - and take action on your rules.
Scan the QR code to access free government calculating worksheets from the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC):
Scan here
•
Budgeting your Finances
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My New Money Goal Worksheet
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Identifying Spending Challenges
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Five Steps for Making Financial Decisions
www.consumer.gov
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HELPFUL TIPS
HELPFUL TIPS FOR SAVING GOALS
TIPS FOR WHY YOU NEED A RE/MAX ALL PRO AGENT 1. THEIR PROFESSIONAL LICENSE HAS BEEN EARNED Licensed real estate professionals have been tested by the state and they adhere to a continuing education schedule for changes in rules and regulations. Real estate has its own language, coordination of timelines, disclosures, transaction management and more. Your RE/MAX All Pro Realtor has specialized current market training and a network of colleagues that are always learning. 2. THEY HAVE THE ULTIMATE SEARCH TOOLS You can find almost anything online, but how accurate is the data? No online data source can compare to the savvy insider MLS and tax tools of your local RE/MAX All Pro broker. They have member only methods to find details on properties that are available or likely to become available, opportunities you won’t find on the internet alone. 3. THEY HAVE NEGOTIATION TRAINING You can expect variety in the structure of your offers. Comparing and recommending your best next move needs the emotion taken out of the moment to help you look at terms in a different light. A third party gives you a stronger stance and helps you determine all the variables, as price is never the only factor in working with your contracts. 4. THEY’RE CONNECTED TO EVERYONE Through professional and community networks, plus the support of their RE/MAX All Pro network, your agent might not know everything, but they make it their mission to know just about everyone who can possibly help in the process. Whether you’re buying or selling a home they have preferred vendor lists to assist you along the way. Movers and packers, engineers, attorneys, lenders, inspectors, contractors and designers - the list goes on and on, they have access to what you’ll need.
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5. THEY HAVE LOCAL OFFICE SUPPORT RE/MAX All Pro works as a team. On site staff and managers, plus a network of experienced agents all working collectively to help you achieve your real estate goals. 6. THEY ADHERE TO A STRICT CODE OF ETHICS Not every real estate agent is a Realtor, who is a licensed real estate salesperson that belongs to the National Association of Realtors®. What difference does it make? Realtors are held to a higher ethical standard than licensed agents and are accountable to a Code of Ethics. 7. THEY’RE YOUR MUSE/SECURITY/ THERAPIST Your RE/MAX All Pro agent will be working for you at nearly all hours of the day and night. Whether you need more data on a home, want to quickly view a new home on the market, allow others in to see your home safely, or if you just need someone to talk to about the stresses of moving. Your agent has security, sensitivity, and solutions.
•
Closing is when the home sale is considered final, which typically includes all parties’ signatures on all required documents, all monies conveyed, and when a lender is involved, with full lender’s approval. For some markets across the nation, recording the deed with the county clerk’s office is the ultimate and final step of closing. Once all these items are completed, then a buyer’s access to the property is then provided, and the buyer is considered the new homeowner.
All you’re looking for are some straightforward answers with no jargon. That’s why we’ve created this simple list of terms. •
Adjustable-rate mortgage (ARM) There are two types of conventional loans: the fixed-rate and the adjustable-rate mortgage. An adjustable-rate mortgage, or ARM, is a home loan with an interest rate that can change periodically. This means that the monthly payments can go up or down. Generally, the initial interest rate is lower than that of a comparable fixed-rate mortgage. After that period ends the interest rate, and your monthly payment, can go lower or higher.
•
•
•
•
•
A related metric is the average DOM for homes sold in a market during a specified period. A low average DOM indicates a strong market that favors sellers. A high average DOM signals a weak market that favors buyers. Seasonality can also be a factor.
Appraisal
•
•
Earnest Money The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earnest money is applied against the downpayment. If the sale does not go through, the earnest money may be forfeited or lost unless the offer to purchase expressly provides that it is refundable.
Buyer’s agent/listing agent A buyer’s agent, also known as a selling agent, is a licensed real estate professional whose job is to locate a buyer’s next property, represent their interests by negotiating on behalf of that buyer to obtain the best price and terms for that buyer as possible. This agent is a fiduciary for the buyer. The listing agent, also known as the seller’s agent, is a licensed real estate professional whose job is to market the seller’s property, and to represent the seller’s best interest by negotiating on behalf of the seller to secure the best price and terms possible.
Dual Agent A disclosed dual agent represents both the buyer and the seller in the same real estate transaction. In such relationships, dual agents owe limited fiduciary duties to both buyer and seller clients. Because of the potential for conflicts of interest in a dual-agency relationship, all parties must give their informed consent. Disclosed dual agency is legal in most states, but often requires written consent from all parties.
As-is A property marketed in “as is” condition usually indicates that the seller is unwilling to perform most if not all repairs. It could also mean that it is priced “as is”, which is typically lower than market pricing in the area. This does not waive your right to do a professional home inspection.
Days on market (DOM) DOM is defined as the number of days from the date on which the property is listed for sale on the local real estate brokers’ multiple listing service (MLS) to the date when the seller has signed a contract for the sale of the property with the buyer.
Affidavits
An appraisal is required to gather the estimated value of a piece of real estate. During the home sale, the mortgage lender sends out an appraiser to get a professional opinion of the value of the property. This helps the lender decide if the property is worth the amount of the purchase price that the potential buyer is seeking a loan for.
Conventional Mortgage A mortgage loan not insured by HUD or guaranteed by the Veterans’ Administration. It is subject to conditions established by the lending institution and State statutes. The mortgage rates may vary with different institutions and between States.
These are binding statements by either party. For example, you may end up signing an affidavit stating that you haven’t incurred any liens on your home.
•
Closing
•
Easement Rights A right- of- way granted to a person or company authorizing access to or over the owner’s land. An electric company obtaining a right- of- way across private property is a common example.
This agent is a fiduciary for the seller.
•
Encroachment An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line.
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GLOSSARY
GLOSSARY OF TERMS
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Encumbrance
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A legal right or interest in land that affects a good or clear title, and diminishes the land’s value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance does not legally prevent transfer of the property to another. A title search is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether they want to purchase with the encumbrance, or what can be done to remove it.
Home sale contingency A home sale contingency is for a buyer to indicate to a seller that part of their condition to purchase the seller’s property relies on the buyer’s ability to finalize a close on their current property. This is often negotiated with a clause in a contract or with an addendum to a contract. An example of how such a contingency can be used would be if a buyer needs to sell their property in order to have the down payment required on the purchase of the new property or would rather use their sale proceeds instead of their savings to make the down payment. Depending on the market, it could hamper negotiations with a seller when a contingency is part of the picture.
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Equity Equity is ownership. In homeownership, equity refers to how much of your home you actually own—meaning how much of the principal you’ve paid off. The more equity you have, the more financial flexibility you have, as you can refinance against whatever equity you’ve built. Put another way, equity is the difference between the fair market value of the home and the unpaid balance of the mortgage. If you have a $200,000 home, and you still owe $150,000 on it, you have $50,000 in equity.
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A homeowner’s association is a private association that manages a planned community or condominium. When you purchase a property that is managed by an HOA, you agree to abide by the HOA’s rules and pay its monthly or annually HOA dues. If you fail to pay and/or comply, they often have the ability to file a lien against the property and/ or foreclose on the property.
Lead based paint Lead-based paints were banned for residential use in 1978. Homes built in the U.S. before 1978 are likely to have some lead-based paint. When the paint peels and cracks, it makes lead paint chips and dust. Any surface covered with lead-based paint where the paint may wear by rubbing or friction is likely to cause lead dust including windows, doors, floors, porches, stairways, and cabinets. Sellers are required to provide a lead based paint disclosure on all homes built prior to 1978.
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Mortgage broker The broker is an individual or company that is responsible for taking care of all aspects of the deal between borrowers and lenders, whether that be originating the loan or placing it with a funding source such as a bank. Mortgage brokers will often have more programs available and competitive interest rates to offer as they have several lender options to offer the borrower.
Fixed rate mortgage
Homeowner’s association (HOA)
Interest This is the cost of borrowing money for a home. Interest is combined with principal to determine monthly mortgage payments. The longer a mortgage is, the more you will pay in interest when you have finally paid off the loan.
With fixed rate mortgages, your interest rate stays the same for the duration of the loan. They are often available as 10, 15, 20 & 30-year loans with the most popular being 15- and 30-year.
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Inspection An inspection happens when buyers pay a licensed professional inspector to visit the home and prepare a report on its condition and any needed repairs. The inspection most often happens within 5 business days after the contract is fully executed. This allows the buyers to fully assess if they want to buy a particular home as is or ask the seller to either complete or issue a monetary credit for certain repairs.
Escrow Escrow for buying a home is an account (escrow account) where money from the potential home buyer (earnest money) is deposited. This is held by a third party such as listing brokerage, attorney, or title company. The money is required to ensure the buyer is serious about purchasing the home. An escrow account is also used by mortgage lenders to collect money from the borrower (through their monthly mortgage payment) to pay the property taxes and homeowners insurance when they are due. An escrow account may also be used in other situations such as to guarantee the condition of the property if the seller rents it back after closing or to guarantee repairs that are to be completed on a property after closing.
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Mortgage Lender A mortgage lender is a financial institution or mortgage bank that offers and underwrites home loans. Lenders have specific borrowing guidelines to verify your creditworthiness and ability to repay a loan. They set the terms, interest rate, repayment schedule and other key aspects of your mortgage.
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Downpayment A down payment is a sum of money that the buyer pays upfront in a real estate transaction at closing. The amount paid is usually a percentage of the purchase price and can range from as little as 3% to as much as 20% or more for a property being used as a primary residence
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Mortgage pre-approval letter or pre-qualification Getting a mortgage pre-approval letter is important because it gives home buyers an idea of what they can afford. A mortgage pre-approval letter is issued by the lender and identifies the terms, loan type and loan amount the buyer qualifies for after checking the buyer’s debt-to-income ratios along with cash on hand and credit history. Most sellers or their agents require a mortgage letter with any home offer that isn’t all-cash since it acts as proof the buyer has been qualified to get financing.
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records at the county recorder’s office.
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will take more time than a conventional sale.
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has the funds needed available.
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When a home is “under contract” it usually signifies that the Buyer and Seller have formalized their commitment to sell and purchase the property.
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Refinancing The process of a borrower paying off one loan with the proceeds from another loan generally under a different terms and interest rate.
counteroffer.
Points
Purchase and sale agreement (PSA) A purchase and sale agreement is commonly referred to a written contract between the buyer and seller, which outlines the terms of the parties to sell and purchase real property.
Buyers make a formal offer on the home they want to purchase. The offer can be the full list price, or what you and your agent deem a fair market value.
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Proof of funds When you make an offer, sellers may require you to submit proof of funds. If you’re buying a house with a mortgage, it shows them that you have the cash available for your down payment and closing costs. If you’re paying all cash, your proof of funds shows you have the money. A proof of funds can be a bank statement or a statement from another financial institution that shows the buyer
Offer/counteroffer
The buyer’s agent puts the offer in writing, asks you to sign it, and then submits it to the seller’s agent. The seller might immediately accept it, in which case it becomes the parties’ purchase contract, or may make what’s known as a
Probate sale A probate sale happens when a homeowner dies without writing a will or leaving a property to someone. In such situations, the probate court would authorize an estate attorney, or other representative, to hire a real estate agent to sell the home. The total process will usually be a bit more complicated and therefore
Mortgage Insurance Premium Mortgage insurance premium (MIP) is paid by homeowners who take out loans backed by the Federal Housing Administration (FHA). FHA-backed lenders use MIPs to protect themselves against higher-risk borrowers who are more likely to default on loans. FHA mortgages require every borrower to have mortgage insurance.
Preliminary title report A preliminary title report reveals any issues with a title that need to be dealt with by the seller in order to deliver a clear title. It gives details such as ownership history, liens, and easements. The title company gathers this report by searching existing property
Multiple listing service (or MLS) An MLS is a database that allows real estate agent and broker members to access and add information about properties for sale in an area. When a home is listed for sale, it gets logged into the local MLS by a listing agent. Buyer’s agents often check the MLS to see what’s on the market and what similar homes have sold for.
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Special Assessments A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers,
Sometimes called “discount points.” A point is one percent of the amount of the mortgage loan. For example, if a loan is for $250,000, one point is $2,500. Points are charged by a lender to raise the yield on the loan at a time when money is tight, interest rates are high, or when there is a legal limit to the interest rate that can be charged on a mortgage. Points can be paid by a buyer, seller, or split between them
street lights, etc. A special assessment can also be from a Home Owners Association that determines additional funds are needed to do repairs/replacements that were not budgeted for in the regular association fee. These can be items such as new roof or exterior
depending on what was negotiated in the purchase contract.
siding
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Pre- and post-occupancy agreements Pre-occupancy is where the buyer takes possession before the closing date. This is very uncommon as the risk to a seller is extremely high if the buyer does not close. Postoccupancy is where the seller remains in the property for an agreed amount of time after the closing. In both situations a separate agreement is highly recommended.
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Survey A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure them that a building is actually sited on the land according to its legal description.
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GLOSSARY
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Quitclaim Deed
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A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor’s interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has.
A seller’s disclosure is a disclosure by the seller of information about the property, or which could affect a buyer’s decision to purchase the property, all of which are to the best of the seller’s knowledge. Items such as mechanical issues, plumbing problems, roof leaks, and other material defects known by the seller must be disclosed by them to the potential buyer.
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Radon Radon is a colorless, tasteless and odorless gas that causes lung cancer. Radon can reside at dangerous levels inside buildings. Sellers are required to provide a radon disclosure to the buyers. Buyers can, and are recommended to, conduct a radon test during the home inspection period.
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A REALTOR® promises to uphold the Code of Ethics of the association and to hold each other accountable for when serving the public, customers, clients, and each other, with a high standard of practice and care.
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Riders Amendments or additions to the sales contract.
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Title search A title Search is an examination of municipal records to determine the legal ownership along with if there are any liens or encumbrances that are recorded against the property.
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Title As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.
REALTOR® An actively licensed real estate broker and REALTOR® are often used interchangeably, although not every real estate agent is a REALTOR®. A REALTOR® is a member of the National Association of REALTORS® (NAR).
Tax Stamps A tax, in the form of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies by state, county and municipality.
Real estate broker A real estate broker is a person who has passed a state broker’s exam and met a minimum number of continuing education to maintain their license. Real estate brokers are highly trained to guide buyers and sellers successfully through transactions.
Seller disclosure Property Disclosure
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Title Insurance It provides coverage and protects lenders or homeowners against claims or future losses due to title defects which are created by some past event prior to the acquisition of the property.
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Trust sale A trust sale means that the home is being sold by a trustee of a living trust – and not a private party. Often this is because the original homeowner has passed away or has placed their assets in a living trust.
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Lawyer Karras Law, P.C. Matthew J. Karras, Esq. 522 W. Main Street, Suite 2E St. Charles, IL 60174 Phone: 630 480 6997 Website: www.karraslawpc.com
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THE DATA MAKES US DIFFERENT 11,165
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110+
RE/MAX Commercial brokers in all market segments (AKA agents with COMM or COMRES as primary specialty)
Commercial transactions closed*
Counties and territories with RE/MAX representation (regardless of commercial status)**
$19.3B+
641
89
Commercial sales and lease volume***
RE/MAX Commercial offices and
RE/MAX Commercial offices and divisions (offices with COMM or RESCOM specialty)****
divisions and (offices with COMM The Miracle Home Program gives RE/MAX agents offices the RESCOM ability to make a donation to CMN Hospitalsorafter eachspecialty) closed transaction.
*Reported commercial transaction volume for 2021. **Network-wide, including residential. ***Commercial sales and lease volume in 2021.
Participations in thereporting program not onlytransaction does good for the ****Number of countries 1+ commercial for YE2021. community, but it also helps listings stand out with Miracle Home sign riders branding.
THE MIRACLE HOME Together we support kids at:
PROGRAM
Every minute, 62 children enter one of omingdale | Sugar Grove | St. Charles
our memberEvery hospitals for62treatment. minute, children enter one of our member Every 30 seconds, RE/MAX agent hospitalsa for treatment. helps someone find their perfect place.
Every 30 seconds, a RE/MAX agent helps someone find fund their perfect place. Donations help pediatric medical
equipment and treatments, healthcare Donations help fund pediatric medical equipment and services and research. treatments, healthcare services and research. Every dollar raised helps kids like Every Vinny get the caredollar they raised need. helps kids like Vinny get the care they need.
With a passion for the communities in With a passion for the communities in which its agents which its agents livework, and work, live and RE/MAX has raised millions for sick and RE/MAX hasinjured raisedkids millions forNorth sick America. and across injured kids across North America.
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