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Q. |
What are closing costs? |
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A. |
Closing costs are the fees for services, taxes
or special interest charges that surround the
purchase of a home. They include upfront loan
points, title insurance, escrow or closing day
charges, document fees, prepaid interest and
property taxes. Unless, these charges are rolled
into the loan, they must be paid when the home is
closed. |
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Q. |
Who pays the closing costs? |
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A. |
Closing costs are either paid by the home seller
or home buyer. It often depends on local custom and
what the buyer or seller negotiates. |
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Q. |
Why do I need a title report? |
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A. |
As much as you as a buyer may want to believe
that the home you have found is perfect, a clear
title report ensures there are no liens placed
against the prior owners or any documents that will
restrict your use of the property. A preliminary
title report provides you with an opportunity to
review any impediment that would prevent clear title
from passing to you. When reading a preliminary
report, it is important to check the extent of your
ownership rights or interest. The most common form
of interest is "fee simple" or "fee," which is the
highest type of interest an owner can have in land.
Liens, restrictions and interests of others excluded
from title coverage will be listed numerically as
exceptions in the report. You also may have to
consider interests of any third parties, such as
easements granted by prior owners that limit use of
the property. Some buyers attempt to clear these
unwanted items prior to purchase. A list of standard
exceptions and exclusions not covered by the title
insurance policy may be attached. This section
includes items the buyer may want to investigate
further, such as any laws governing building and
zoning. |
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Q. |
What is the best time to buy? |
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A. |
Because many buyers prefer to move in the spring
or summer, the market starts to heat up as early as
February. Families with children are anxious to buy
so they can move during summer vacation, before the
new school year begins. The market slows down in
late summer before picking up again briefly in the
fall. November and December have traditionally been
slow months, although some astute buyers look for
bargains during this period. |
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Q. |
Where do I get a copy of my credit report? |
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A. |
For a copy of your own credit report, call one
of the three main national credit reporting
agencies:
- Equifax, (800) 685-1111;
- Experian, (800) 392-1122
- Trans Union, (312) 408-1050.
The bureaus also should provide instructions on
how to read their report and dispute any
inaccuracies it contains. |
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Q. |
What is the first step when looking for a
home loan? |
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A. |
Most experts recommend that you should get
pre-qualified for a loan first. By being
pre-qualified, you will know exactly how much house
you can afford. Almost all mortgage lenders now
pre-qualify people, and many of them can even do it
on the Internet. You also can do your own
affordability calculations; most recent consumer
books on home buying include steps to doing so, as
do various real estate Internet sites. |
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Q. |
How do you qualify as a first-time buyer? |
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A. |
In general, lenders define a first-time home
buyer as someone who has not owned any real estate
-- whether a personal residence, vacation home or
investment property -- during the past three years.
Lenders verify an applicant's status by examining
their income tax returns, checking to see that the
individual did not take any deductions for mortgage
interest or property taxes. |
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Q. |
What is an impound account? |
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A. |
An impound account is a trust account
established by the lender to hold money to pay for
real estate taxes, and mortgage and homeowners
insurance premiums as they are received each month. |
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Q. |
What's a home inspection? |
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A. |
A home inspection is when a paid professional
inspector -- often a contractor or an engineer --
inspects the home, searching for defects or other
problems that might plague the owner later on. They
usually represent the buyer and or paid by the
buyer. The inspection usually takes place after a
purchase contract between buyer and seller has been
signed. |
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Q. |
Do I need a home inspection? |
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A. |
Yes. Buying a home "as is" is a risky
proposition. Major repairs on homes can amount to
thousands of dollars. Plumbing, electrical and roof
problems represent significant and complex systems
that are expensive to fix. |
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