WHAT YOU NEED TO KNOW WHEN BUYING A HOME! Welcome! It is my pleasure to assist you with your move and introduce you to your new area of residence. The material on this page will provide you with information on the home buying process in Georgia. With the knowledge you will gain from this page and and my years of real estate experience I know we can find the home that meets your needs and wants! Please remember whether you are just starting the home buying process or if you are ready to purchase a home today I am never to busy to answer any of your questions. Sincerely, John W. Patrick 770.862.9427 cell How I Work With You On January 1, 1994 the Brokerage Relationships in Real Estate Transactions Act (BRRETA) became law in the state of Georgia. This act clarifies relationships between brokers, buyers and sellers. It provides full disclosure of the working relationship and legal obligations between Agents and their Clients and Customers. For your review, a pamphlet explaining brokerage relationships in Georgia is included in this booklet. It is my practice to establish an exclusive relationship and represent all purchasers with whom I do business. I have found this to be the most productive method of working through the home buying process. Your objectives can best be met by making me a member of your team! Please review the information enclosed and let me know if you have questions. After finding your new home, I will draft the “Purchase and Sale Agreement” offer per your instructions and provide advice through the negotiation. When we have a firm contract, I can assist you in obtaining financing and property insurance, negotiating the home inspection and drafting amendments as necessary, assist in locating the services that you may require, recommend repairmen as needed, and be available to assist in all phases including reviewing the settlement statement and attending the closing. Further, I can provide school reports, commuting alternatives and maps, locations and contact phone numbers for utility companies, drivers licenses, auto registration, instructions on filing for tax exemptions on your new real estate purchase and any other resource recommendations you may need. I am available to you by phone and email. If I am out at the time of your call, the office voice mail system alerts me by pager and I will return your calls promptly. In short, your understanding of the home buying process and satisfaction with your real estate purchase is my priority from searching for the property through closing. I look forward to assisting you with your move. What To Expect From The Real Estate Professional Who Assists In The Home Buying Process Fair and honest treatment Showing homes in the price range requested without moving into higher price range unless requested Willingness to work within the guide lines of the employer’s relocation policies Special attention to children’s needs, if applicable Knowledge of the market Explanation of the purchase and sale agreement Writing and presenting the purchase and sale agreement Maintaining contact with the lender until the sale is closed Willingness to provide information of special interest Disclosure of the agency relationship As your Real Estate Professional, I promise you the utmost in professional service, and I amCommitted to Raising the Value My Clients Receive! Checklist For Moving Post Office - Provide forwarding address. Creditors - credit card companies, local charge accounts. Magazine Publication Houses - address change for subscriptions requires several weeks Friends and relatives. Utility Companies - Get refund of deposits. Route Men - Paperboy, milk and laundry men. Stop services on given date. Schools - ask for transfer off children’s records. Doctor, dentist - ask for referrals; transfer x-rays, prescriptions for medication, vision correction. Bank - transfer funds; arrange for check cashing and credit approval in new city. Auto Registration Department - arrange for transfer, if necessary, of car title, driver’s license, inspection stickers. Also transfer motor club membership. Insurance Companies - life, health, fire, auto. Supply with new address information to assure uninterrupted coverage. Church, clubs, civic organizations - transfer memberships, get letter of introduction. Veterinarian - ask about regulations; licenses, vaccinations, tags, etc. Consult with your moving counselor to check insurance coverage, vacancy clause, packing and unpacking assistance, arrival day, necessary shipping papers, and payment arrangements. Empty freezer; plan use of foods. Defrost refrigerator. Have appliances serviced for moving. Arrange to clean clothing & rugs. Have them wrapped for moving. Plan special care needs for infants. Plan for transporting your pets. Carry cash, jewelry, and documents yourself, or use registered mail. Carry traveler’s checks for quick available funds. Notify friends or relatives of the route you’re taking and your travel schedule, including over night stops. Double check closets, drawers, and shelves to be sure they’re empty. Leave any information pertinent to the sale of your home with new owner or REALTOR®. If you have not established a relationship with a lender, you may want to contact one of the following. I have worked with each of and found them to be competitive in the marketplace, reliable and professional. I recommend that you establish your lender relationship prior to writing an offer so that we may provide a letter of pre-qualification with the purchase offer on your new home. 1. Your annual gross salary. List overtime and bonus separately. 2. If in sales or marketing, or any commission income, or claiming any interest or bonus income, please provide two years tax returns. 3. If you receive social security disability or pension income, bring a copy of a check or award certificate from that agency. 4. If you are self employed, bring copies of your personal and business tax returns for two years, business profit/loss and balance sheet for the current year. 5. List all stocks, bonds and or certificates of deposit, including their cash value in today’s market. 6. Face amount and cash value of all life insurance. 7. If you presently own real estate, please supply the following: name, address of lender, account number, original loan amount and balance. Provide same information for real estate previously owned and paid if applicable. 8. Name and address of all employers for the last two years; 2 most recent check stubs and last 2 years W-2. 9. Address of all residences for the last two years. 10. Bank names and addresses for each savings and checking account, including account numbers and balance in each account. 11. Complete list of creditors with addresses, account numbers, monthly payments and current balances. 12. If divorced, provide a copy of your final divorce decree and separation agreement. 13. Complete original executed Sales Contract. 14. Information to order appraisal, i.e., legal description, lot size, person to call for appraiser to gain access to house. 15. Checks for credit report and appraisal. How To Qualify For A Example: Hourly wage ($15.00) multiplied by the hours worked each week (40) equals $600.00. $600.00 times 52 equals $31,200.00. $31,200.00 divided by 12 equals $2,600.00. (Gross monthly income) NOTE: If you are paid twice a month, then the two weeks gross times 24 divided by 12 gives you your gross monthly income. If you are paid every two weeks, then the two weeks gross income times 26 divided by 12 gives you your gross monthly income. NOTE: Commissioned sales people will be averaged over the last 2 or 3 years. Example: $2,600.00 gross monthly income times .28 = $728.00 A. The $728.00 is the most you will be able to afford on a mortgage payment. 1) This $728.00 would represent total monthly payment including principal and interest, taxes, homeowners insurance and private insurance (if applicable). Example: $2,600.00 gross monthly income times .36 = $936.00 A. Your total mortgage payment plus monthly installment debts and monthly revolving charge payments should not exceed $936.00 in this example. NOTE: On your debts: 1. On revolving or installment take 5% of each debt. 2. Use the minimum required on charge accounts. 3. If you are paying child support/alimony; count it as a monthly installment debt. 4. Besides mathematically analyzing your income, a mortgage lender considers the following, and each are just as important as your income. (FHA qualifying ratios are .29 and .41) A. Job Stability B. Cash Resources and Source of Cash (Savings, Gifts, Etc.) C. Previous Credit history including Previous Verification of Mortgage D. Location and Condition of Home There are numerous loans available for today’s homebuyer. Selecting the appropriate loan is a personal decision, impacted by anticipated time of ownership, personal tax situation and need for mortgage interest deductions. Following is a partial list of available loan types, the advantages and disadvantages. Advantages Fixed Payments, No Adjustments Greater Interest Deduction Qualifying For Lower Payments Disadvantages Pay More Interest Than 15 Year Length Of Time For Repayment Advantages Payoff Loan In Shorter Period Of Time Less Total Interest Paid Compared To 30 Year Probable Lower Interest Rate Disadvantages Higher Monthly Payments Have To Qualify For Higher Payments Adjustable Rate Mortgage Advantages Attractive To Short-Term Ownership Qualify At Lower Rate Under Certain Circumstances Payment May Decrease May or May Not Be Assumable Disadvantages Possible Future Payment Increase May Have To Qualify At Higher Rate Under Certain Circumstances Possible Negative Amortization On Some Loans Questions to Ask when Purchasing New Construction 1. Ask the Builder/Developer or the onsite agent if they are aware of any future businesses, schools, churches or commercial property being built near the subdivision? You can go to Zoning and Development and see what permits have been applied for. 2. Request information on the Builder and ask to preview other homes that he or she has built in the subdivision. If possible interview the Builder and ask for references. In what other subdivision has he built homes? Talk to other Homeowners and the Better Business Bureau, they will tell you a lot! 3. What warranties will the Builder provide on the property: mechanical, plumbing, electrical system, structural, appliances and material/workmanship? 4. What will happen if the property is not delivered on time? How will the Builder deal with a delay? 5. Who holds the Earnest Money and is it non-refundable? Will the Earnest Money be deposited into a general account or an escrow account? 6. What are the Builder's allowances? Where, what and how much? 7. What type of heating and cooling systems? (example: gas or electric) 8. What size is the hot water heater and where will it be located? 9. What type of insulation will be installed? 10. Was fill dirt brought in and has the soil been tested already, if not, when will it be tested? 11. When will the walk through and punch out list be completed? 12. Request a specification sheet and copy of the plans. 13. What is the call back procedure? Who is the contact person and what are the contact numbers? 14. What is included in the price of the home? Landscaping, appliances (what type and or model), paint colors (How many coats of paint and what type of paint including trim/doors), wood flooring (How many coats of stain and what color stain), wallpaper, screens, fireplace mantel, kitchen back splash, counter tops, decking, hardware (chrome or brass) intercom system, roof ventilation & attic fan, mail box, garage door opener, fans, steps, carpet and pad, hardwood floors, cabinets, fixtures (Chrome or brass), mirrors, sinks/sprayers, alarm system, irrigation system, down spouts, kick out flashing, pedestal sinks, crown molding, windows, door knobs (chrome or brass), walk ways and clean up? 15. Review Covenant/Restrictions for set back lines, lot lines, restrictions on fences, close lines, pools, outbuildings, etc. How are they enforced? 16. What is the monthly association fee and is there an initiation fee up front and will you have to put money in a reserve fund at closing? What does the association fee include? To whom is it payable and what day of the month is it due? 17. Who is the Management Company for the Homeowners Association and when will it be turned over to the Homeowners? 18. Get a list of the sub-contractors name and numbers. 19. Walk the property lines, check for easements and the possibility of a floodplain. 20. Verify if the property is on sewer or septic. 21. What are the estimated taxes? 22. What is the estimated completion date for the subdivision? Note: All agreements between Buyer, Builder, On Site Agents and or workers are to be IN WRITING AND SIGNED BY ALL PARTIES. Also, have the home inspected by an inspector of your choice! 1. Drainage Concerns: Land sloping toward foundation, downspouts functioning normally (not extended away from foundation or stopped up), water in the basement. 2. Exterior Concerns: peeling paint; wood rot at doors, windows, decks, eave lines; damaged siding, loose handrails, rusty medal posts, overly dirty siding, decks, or driveways, open gaps in between siding and window/door assemblies. 3. Roof Concerns: Curling or deteriorating asphalt shingles, wood rot and staining seen from inside attic space, toe boards, nail holes, vent stack collars cracked, flue stack penetrations leaking, clean gutters and check alignment, replace rusted out sections of gutters. 4. Structural Concerns: Wood rot or insect damage in framing - including flooring, attic, and decks, Evidence of repairs, severe floor sags, foundation deterioration or movement, overly damp crawlspace. 5. Interior Concerns: Water stains in ceilings, settlement in door and window frames inadequate attic ventilation. 6. Plumbing Concerns: Leaky shower pans, stains under fixtures, galvanized plumbing/reduced water pressure, polbutylene. 7. Electrical Concerns: Locate main shutoff to determine amp rating, locate electrical controls, test all electrical appliances, lights, attic fans and ceiling fans for proper operation. 8. Heating and Cooling Concerns (HVAC): Older equipment, maintenance records, gas leaks, heat exchanger excessive rust or cracks, chimney flue cleaning needed if excessive soot exists. Looking for some of these basic problems can give you advanced Knowledge of what the Home Inspector may find. Having this advanced knowledge can aid you in preparing an accurate disclosure list and the ability of consulting with a qualified contractor to estimate the costs of doing necessary repairs before the contracts start coming through the door. While most lenders have an approved list of closing attorneys, you may request the attorney of your choice. If that attorney is on the lender’s approved list, they will make every effort to use him or her. I have worked with the following and found them to be very thorough and professional. Ken Raymer Unlike other types of insurance, which protect a policyholder against loss from some future occurrence, such as a fire or auto accident, title insurance in effect protects a policyholder against loss from some occurrence that has already happened such as a forged deed somewhere in the chain of title. Needless to say, a title company will not insure a bad title any more that a fire insurance company would insure a burning building. However, if upon investigation of the public records and all other material facts, the Title Company feels that it has an insurable title, it will issue a policy. Generally, a title insurance policy will protect the insured against losses arising from such title defects (“hidden risks”) as the following: 1. Forged deeds, mortgages, satisfactions or releases. 2. Deed by person who is insane or mentally incompetent. 3. Deed by minor (may be disavowed). 4. Deed from corporation, unauthorized under corporate bylaws or given under falsified corporate resolution. 5. Deed from partnership. 6. Deed from purported trustee, unauthorized under trust agreement. 7. Deed to or from a “corporation” before incorporation, or after loss of corporate charter. 8. Deed from a legal nonentity (styled, for example, as a church, charity or club). 9. Deed by person in a foreign country, vulnerable to challenge as incompetent, unauthorized or defective under foreign laws. 10. Claims resulting from use of “alias” or fictitious name style by a predecessor in title. 11. Deed challenged as being given under fraud, undue influence or duress. 12. Deed following nonjudicial foreclosure, where required procedure was not followed. 13. Deed affecting land in judicial proceedings (bankruptcy, receivership, probate, conservatorship, and dissolution of marriage) unauthorized by court. 14. Deed following judicial proceedings, subject to appeal or further court order. 15. Deed following judicial proceedings, where all necessary parties were not joined. 16. Lack of jurisdiction over persons or property in judicial proceedings. 17. Deed signed by mistake (grantor did not know what was signed). 18. Deed executed under expired power of attorney (death, disability or insanity of principal). 19. Deed apparently valid, but actually delivered after death of grantor, or without consent of grantor. 1. The agreement to insure the title and indemnity against loss. 2. A description of the estate and property being insured. 3. A list of conditions of and exclusions to coverage. 1. Rights of parties in possession, not shown in the public records including unrecorded easements. 2. Any facts that an accurate survey would reveal (e.g. encroachments). 3. Taxes and assessments not yet due or payable. 4. Zoning and governmental restrictions. What The Buyer Brings To Closing Please bring the following documents to closing: 1. Picture Identification and one additional piece of ID 2. Receipt for prepayment of one year homeowner’s insurance 3. Your checkbook, for payment of incidentals Decisions you will make prior to closing: 1. Do you want a home warranty? 2. Do you want a termite bond? 3. Selection of your homeowner’s insurance company 4. Do you want the land surveyed? 5. Do you want owner’s title insurance? What To Expect at Closing Residential real estate closings are handled in several different ways among the various states. In some states title companies handle the process, escrow companies predominate in other states, in Georgia, most closings occur with the assistance of an attorney who specializes in real estate transactions. 1. Representation If a lender is financing the acquisition, the lender will usually have a designated list of attorneys from which the borrower is allowed to select from. Some lenders have only one designated attorney to handle their closings. Regardless of whether a choice is permitted, the attorney represents only the lender. Because of ethical considerations due to a possible conflict of interest among the various parties to a closing, an attorney representing the lender should not represent any other party to the closing. Therefore, if representation is desired by the borrower with respect to the closing or contract of sale, independent counsel should be obtained. Of course, if a lender is not involved in financing the transaction, the purchaser will select an attorney to represent his or her interest. 2. Functions An attorney selected after the signing of the contract of sale to handle the closing will customarily examine the title to the property, prepare the sale and loan closing documents, conduct the closing, arrange for the recording of the closing documents, issue the lender’s and if desired, owner’s title insurance, and disburse the lender’s and or purchaser’s funds. As opposed to some states in which an escrow company conducts a closing from which proceeds are not disbursed until after the closing documents are recorded, disbursement of funds at most Georgia closings occurs immediately after all closing documents are signed and other lender and or contract conditions are satisfied. Therefore, most closing attorneys require a cashier’s check or similar instrument for the purchaser’s net purchase proceeds. As of July 1, 1990, settlement agents may not accept from a purchaser personal checks in excess of $5,000 for deposit into an escrow account. 3. Closing Costs Initially, payment of and limitations on the amount of closing costs are determined by the contract of sale. If a lender finances the trans- action, the purchaser will be responsible for negotiating the precise amount of the closing costs. Nearly all lenders will be subject to certain federal regulations governing disclosure of a “good faith estimate” of settlement charges to be given to the borrower within three business days following loan application. In order to prevent unpleasant surprises at closing, the purchaser should become familiar with and understand the limitations of such an estimate. If more certainty than an estimate is required by a purchaser, it should be requested at the time of loan application since the good faith estimate is the limit of federal requirements. Closing costs are collected at the time of time of closing, usually by payment off a net purchase figure which includes the purchaser’s equity, the closing costs, prorations and other adjustments. Payment of discount points by separate check for tax purposes must usually be approve in advance by the lender. Closing costs and their individual components will vary among lenders and closing attorneys. For example, certain items included in a lump-sum quote by one lender may not be included in another’s quote. Thus, a purchaser should at least inquired whether the initial quote includes all of those costs which can reasonably be expected to be paid at closing. Closing costs do not include escrow’s for property taxes and insurance. Furthermore, closing costs quoted by a lender usually do not include the cost of an owner’s title insurance policy. 4. Owner’s Title Insurance Owner’s title insurance is designed to insure the owner against loss suffered because of claims made against the title to the property. The policy typically insures against those matters which were not or could not have been discovered by a proper title examination of the property, subject exceptions to coverage detailed in the policy. As with all types of insurance, deciding to purchase is only part of the job: determining, for example, whether certain exceptions to coverage are acceptable or in accordance with the contract of sale, takes additional consideration, and an attorney’s advice may be helpful in such a decision. In some states owner’s title insurance is required to be purchased by the seller on behalf of the purchaser: in others, its purchase is customary. In Georgia, however, owner’s title insurance is purchased at the option of the purchaser at his or her expense unless otherwise agreed in the contract of sale. 5. Property Taxes Some things never change. Although you are relocating to Georgia, property taxes here are a pleasant reminder of your previous state of residence. Property taxes are based upon forty percent of the county’s assessment of the fair market value of your property as of January 1 of each year multiplied by a rate per thousand established by the county each year. |
