YOUR PLAN OF ATTACK
STRENGTHEN YOUR CREDIT
DO YOUR “HOME’WORK
TYPES OF HOMES
THE HOME INSPECTION
THE CLOSING
CLOSING COSTS
NON-RECURRING CLOSING COSTS


THE VALUE OF A HUDSON COUNTY MLS REAL ESTATE AGENT

Saving You Time, Money and Adversity... Hudson County MLS Agents Add Value to a Real Estate Transaction Working with a Hudson County MLS Agent can save you time, money and adversity.

YOUR PLAN OF ATTACK

A home may represent the largest single investment you will make in your lifetime. It is one of life’s most exciting experiences and one of the most challenging. As a result, there are many things you need to know before signing on the dotted line. Whether you're already a homeowner or a first-time buyer, preparation is the key. A detailed plan will help ensure you complete all the necessary steps in the complex process of buying a home. Plus, the more prepared you are at the outset, less time will be spent on stress, panic and uncertainty, and more on securing your piece of the American Dream of Homeownership. This is your "wish list."

Once your wish list is complete, you and your Hudson County MLS Agent should begin prioritizing the items. Which are most important and which are less necessary, features are absolutely essential to you, which are nice "extras" and which are completely undesirable? Some items most buyers consider when making up your wish list:

  • Convenience for all family members
  • Quality of schools
  • Crime rate of neighborhood.
  • Types of homes in neighborhood and property values.
  • Familial needs like large floor plans, play room for children, bedrooms on same floor, etc.
  • Future construction.
  • Proximity to schools, employment, hospitals, shops, public transportation, cultural activities, highways, airports, the shore, parks, stadiums, attractions, etc.

With this information readily available, your Hudson County MLS Agent will recommend properties and neighborhoods that meet your wish list criteria.

STRENGTHEN YOUR CREDIT

Checking your credit rating early on in your ‘plan of attack’ is a prudent step, even if you think you have excellent credit. You may not be aware of errors or disputed items that could be on your report and it’s best that you correct these items before applying for a home mortgage. If there are inaccuracies in your report, you will need to write a letter to the appropriate credit bureau explaining away the errors or disputes. Credit bureaus typically help you straighten things out in under 30 days.

A few tips about credit reports:

  • After seven years (10 for bankruptcy) adverse credit information should be removed from your credit report.
  • Inactive credit cards with higher credit limits may be looked upon as potential debt.
  • Officially cancel all used credit cards prior to your mortgage application process (Speaking of credit cards... refrain from making any big-ticket purchases during your home search and application for a mortgage loan).

After cleaning up your credit report, the next step is to determine the amount of home you can afford. is important so you know your buying power. Your buying power will provide you with a reasonable and realistic expectation when it comes time to look for a home. There are two terms you will hear in the mortgage application process that sound alike but whose meanings are quite different: Pre-qualification and Pre-approval. First, you and your Hudson County MLS Agent should conduct the pre-qualification process before you start house-hunting. The "pre-qualifying" process examines your income, assets and present debt to provide you with an estimate as to what you may be able to afford on a house purchase. The key words are "may be able to afford." Be honest with your Hudson County MLS Agent and prepared to provide a monthly accounting of all sources of income and expenses. The mortgage "pre-approval" is similar to having money in the bank. It's strength for you as a home buyer. Pre-approval is a written commitment from your lender as to the amount of money that institution will lend you to buy the home of your dreams. You can present this commitment to the seller. The pre-approval spells out for the seller exactly what you qualify for and at what rate, bring that seller a peace of mind and giving you a leg-up on other potential buyers. For you, as the buyer, the pre-approval is important for multiple reasons:

  1. it indicates the amount of your monthly mortgage payments
  2. outlines the amount you'll need for a down payment, and
  3. eliminates the frustration of finding homes that you think are perfect but are not in your price range. A cautionary note: Be certain you want to buy a new home because a pre-approval does cost money; money you could lose if you decide not to buy or choose to work with another mortgage representative.

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DO YOUR “HOME’WORK

Once you are pre-approved by a lender, it’s time to get ‘back to school’ and conduct some home-work before you make the decision to buy. Surf the Internet. Drive around neighborhoods that interest you. Look at lawn signs. Go to "Open House" postings. Find homes that interest you and choose from the ones your Hudson County MLS Agent provides. First and foremost, try your best to keep your emotions in check and remain objective. Refer to your “necessities” list and check it against the home you are interested in. Overall, will this house meet your needs as outlined on your list? You don’t have to worry about the details right now; that’s what a professional home inspector will do for you once the home is under contract.

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TYPES OF HOMES

A snapshot of available homes include:

  • Single-family: One home per lot—you own and are responsible for everything on the lot.
  • Multi-Family Homes: Buildings with up to four units, with the buyer intending to occupy one of them and renting the other available units.
  • Condominiums: Similar to a single-family home, with condos you own the edifice itself, the inside of the property and some of the common elements like staircases, sidewalks and your roof. You’ll pay a homeowners association to administer and take care of the exterior of the development.
  • Co-ops: Here, you purchase shares in a corporation that owns a building, and you receive a lease to your own apartment. A board of directors supervises management. Monthly charges include your share of an overall mortgage on the building.

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THE HOME INSPECTION

Even if you are an inspector yourself, you should hire a professional home inspector to look at the house you’d like to buy. Plan on being with the inspector during the inspection process. That way, you can ask questions and get immediate answers. Plus, you can review the inspector’s report and ask the inspector in person any additional questions you may have. Once you found a home to purchase, let your Hudson County MLS Agent know you want to make an offer. Your Hudson County MLS Agent will contact the seller’s listing agent and relate back to you items such as terms regarding the sale, multiple offers, date for possession, etc. From there, you and your Hudson County MLS Agent, based on the asking price and surrounding market, determine a price you want to consider for the home. Your offer will be presented in writing and will be accompanied by a check for earnest money to show "good faith." Your Hudson County MLS Agent will walk through every detail of the contract with you and explain each of the terms and conditions. The offer will include items such as the amount you would like to pay; the inspection; the appraisal deadline; the loan approval date; the closing and occupancy dates, and any contingencies, such as the sale of your current residence.

 

The seller may not accept your first proposal. Don’t worry. Negotiations between the professionals will continue if you still desire the home and the seller still wants to sell. Negotiations should result in both parties agreeing on the terms of the transaction. Once you and seller have agreed on the terms, the mortgage process gets underway. Title insurance is ordered, inspections completed and the sales contract finalized. The contract is then reviewed by you and the seller, and signed by both parties. Just before closing (either the day of or before), you and your Hudson County MLS Agent (who will have already confirmed an appointment with the seller) will take a final “walk-through” or inspection of the home. This is your time to make sure agreed upon features, amenities and other extras are there, and that repairs, if any, were made. That is, ensure that contingencies, if any, were upheld.

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THE CLOSING

Congratulations! The day has come. It’s closing time. The closing or settlement is last step in the home buying process. The purpose of the closing is to make sure the property is ready to be transferred to you from the seller. At closing you will sign and sign and sign—all sorts of papers and checks. Be sure to read each one carefully, and ask questions. Your Hudson County MLS Agent, who should accompany you to the closing, will be able to quickly and easily explain any items that you are having difficulty understanding. Closings will continue to conclusion unless something goes awry. At that point, the problem is addressed and the closing continues. When all the papers are signed, the seller hands over the keys and you now know the house is yours.

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CLOSING COSTS

At closing, there are two categories of costs:

  1. Non-recurring closing costs—items that are paid once and you never pay again.
  2. Recurring closing costs—items you pay time and again over the course of home ownership, such as property taxes and homeowner's insurance.

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NON-RECURRING CLOSING COSTS

Points - Points, or your Loan Origination Fee, is equal to one percent of the mortgage loan.
Discount Points - Any points in addition to the loan origination fee are called "discount points." On a conventional loan, discount points are usually lumped in with the loan origination fee.

Appraisal Fee - Your property is your collateral for the mortgage, so lenders want to be reasonably certain of the value and require an appraisal. Appraisal fees vary.
Credit Report - Required by your mortgage lender. Fees vary.
Lender's Inspection Fee - Required by your mortgage lender if you’re buying a new home. Fees vary.
Mortgage Broker Fee - Applies only if you work with a mortgage broker. Fees vary.
Tax Service Fee - Required by your mortgage lender. Fees vary.
Flood Certification Fee - Required by your mortgage lender. Fees vary. Flood Monitoring - Required by your mortgage lender. Fees vary.
Other Lender Fees - Required by your mortgage lender. Fees generate income for the lenders and are used to offset the fixed costs of loan origination. Costs vary.
Document Preparation - Required by your mortgage lender. Fees vary.
Underwriting Fee - Required by your mortgage lender. Fees vary.
Administration Fee - Required by your mortgage lender. Fees vary.
Appraisal Review Fee - Sometimes required by your mortgage lender. Fees vary.
Warehousing Fee - Rarely required by your mortgage lender. Fees vary.
Items Required To Be Paid In Advance Pre-paid Interest - Since mortgage loans are usually due on the first of each month, this fee is based on the number of days the closing takes place prior to the first of the following month.
Homeowner's Insurance - Typically, you will pay the first year in advance. fees vary.
VA Funding Fee - The Veterans Administration sometimes charges a fee for guaranteeing your loan. Fees are normally added to the balance of the loan.
Up Front Mortgage Insurance Premium (UFMIP) - This is charged on FHA purchases of single family residences (SFR's) or Planned Unit Developments (PUDs) and is 2.25% of the loan balance. Like the VA Funding Fee it is normally added to the balance of the loan.
Mortgage Insurance or PMI - Most mortgage insurance (if required) is paid monthly with your mortgage payment. PMI covers the lender and a portion of the losses in cases where borrowers default on their loans.
Reserves Deposited with Lender - The lender's goal is to always have sufficient funds to pay your bills as they come due. Here, if you make a minimum down payment, you may be required to deposit funds into an impound account to make the payments on your homeowner's insurance, property taxes, and mortgage insurance. Impound accounts are sometimes referred to as escrow accounts.
Homeowners Insurance Impounds - Since a lender is allowed to keep two months of reserves in your account, you will have to deposit two months into the impound account to start it up.
Property Tax Impounds - Here, the amount varies depending on when your closing takes place. Fees vary.
Mortgage Insurance Impounds - Most lenders ask that you may put at least one, possibly, two months worth of mortgage insurance as an initial deposit into your impound account. Non-Recurring Closing Costs Not Associated With The Lender Closing/Escrow/Settlement Fee - Methods and fees vary.
Title Insurance - Title Insurance costs vary depending on whether you are purchasing a home or refinancing a home. The title insurance exists to protect you from any claims that could be brought against the property you’re buying. The title insurance gives you a guarantee, that once you have bought your home you own it, or else, the title company must compensate you for damages.
Notary Fees - Loan documents have two or three forms that must be notarized. Fees vary.
Recording Fees - Certain documents get recorded with your local county recorder. Fees vary.
Pest Inspection or Termite Inspection - Typically paid by the seller of the home. Home Inspection - Optional item.
Home Warranty - Optional item.

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