Buyers

1. What is the assessed value of the property? Note that the assessed value is generally less than the market value. Ask to see a recent copy of the seller's tax bill to help you determine this information.
2. How often are properties reassessed, and when was the last reassessment done? In general, taxes jump most significantly when a property is reassessed.
3. Will the sale of the property trigger a tax increase? The assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.
4. Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate.
5. Does the current tax bill reflect any special exemptions that I might not qualify for? For example, many tax districts offer reductions to those 65 or over.

If the latest technology or entertainment options are important in your new home, add the following questions to your buyer’s checklist.

1. Are there enough jacks in every room for cable TV and high-speed Internet hookups?
2. Are there ample telephone extensions or jacks?
3. Is the home pre-wired for home theater or multiroom audio and video? Does it have in-wall speakers?
4. Does the home have a local area network (LAN) for linking computers?
5. Does the home already have wiring for DSL or another high-speed Internet connection?
6. Does the home have multizoning heating and cooling controls with programmable thermostats?
7. Does the home have multiroom lighting controls, window-covering controls, or other home automation features?
8. Is the home wired with multipurpose in-wall wiring that allows for reconfigurations to update services as technology changes?

Your neighborhood has a big impact on your lifestyle. Follow these steps to find the perfect community to call home.

• Is it close to your favorite spots? Make a list of the activities — movies, health club, church, etc. — you engage in regularly and stores you visit frequently. See how far you would have to travel from each neighborhood you're considering to engage in your most common activities.
• Check out the school district. This is especially important if you have children, but it also can affect resale value. The Department of Education in your town can probably provide information on test scores, class size, percentage of students who attend college, and special enrichment programs. If you have school-age children, visit schools in the neighborhoods you're considering. Also, check out www.schoolmatters.com.
• Find out if the neighborhood is safe. Ask the police department for neighborhood crime statistics. Consider not only the number of crimes but also the type — such as burglaries or armed robberies — and the trend of increasing or decreasing crime. Also, is crime centered in only one part of the neighborhood, such as near a retail area?
• Determine if the neighborhood is economically stable. Check with your local city economic development office to see if income and property values in the neighborhood are stable or rising. What is the percentage of homes to apartments? Apartments don't necessarily diminish value but do mean a more transient population. Do you see vacant businesses or homes that have been for sale for months?
• See if you'll make money. Ask a local REALTOR^® or call the local REALTOR^® association to get information about price appreciation in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how good of an investment your home will be. A REALTOR^® or the government planning agency also may be able to tell you about planned developments or other changes in the neighborhood — like a new school or highway — that might affect value.
• Make personal observations. Once you've narrowed your focus to two or three neighborhoods, go there and walk around. Are homes tidy and well-maintained? Are streets quiet? How does it feel? Pick a warm day if you can and chat with people working or playing outside.

Home inspections will vary depending on the type of property you are purchasing. A large historic home, for example, will require a more specialized inspection than a small condominium. However, the following are the basic elements that a home inspector will check. You can also use this list to help you evaluate properties you might purchase.

For more information, try the virtual home inspection at www.ASHI.org, the Web site of the American Society of Home Inspectors.

Structure: A home's skeleton impacts how the property stands up to weather, gravity, and the earth. Structural components, including the foundation and the framing, should be inspected.

Exterior: The inspector should look at sidewalks, driveways, steps, windows, and doors. A home's siding, trim, and surface drainage also are part of an exterior inspection.

• Doors and windows
• Siding (brick, stone, stucco, vinyl, wood, etc.)
• Driveways/sidewalks
• Attached porches, decks, and balconies

Roofing: A well-maintained roof protects you from rain, snow, and other forces of nature. Take note of the roof's age, conditions of flashing, roof draining systems (pooling water), buckled shingles, loose gutters and downspouts, skylights, and chimneys.

Plumbing: Thoroughly examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate problems.

Electrical: Safe electrical wiring is essential. Look for the condition of service entrance wires, service panels, breakers, fuses, and disconnects. Also, take note of the number of outlets in each room.

Heating: The home's heating system, vent system, flues, and chimneys should be inspected. Look for the age of the water heater, whether the size is adequate for the house, speed of recovery, and energy rating.

Air Conditioning: Your inspector should describe your home cooling system, and its energy source, and inspect the central and through-wall cooling equipment. Consider the age and energy rating of the system.

Interiors: An inspection of the inside of the home can reveal plumbing leaks, insect damage, rot, construction defects, and other issues. An inspector should take a close look at:

• Walls, ceilings and floors
• Steps, stairways, and railings
• Countertops and cabinets
• Garage doors and garage door systems

Ventilation/insulation: To prevent energy loss, check for adequate insulation and ventilation in the attic and in unfinished areas such as crawlspaces. Also look for proper, secured insulation in walls. Insulation should be appropriate for the climate. Excess moisture in the home can lead to mold and water damage.

Fireplaces: They're charming, but they could be dangerous if not properly installed. Inspectors should examine the system, including the vent and flue, and describe solid fuel-burning appliances.

What does your future home look like? Where is it located? As you hunt down your dream home, consult this list to evaluate properties and keep your priorities top of mind.

• Neighborhoods
  What neighborhoods do you prefer?
• Schools
  What school systems do you want to be near?
• Transportation
  How close must the home be to these amenities:
  • Public transportation
  • Airport
  • Expressway
  • Neighborhood shopping
  • Schools
  • Other
• Home Style
  
  • What architectural style(s) of homes do you prefer?
  • Do you want to buy a home, condominium, or townhome?
  • Would you like a one-story or two-story home?
  • How many bedrooms must your new home have?
  • How many bathrooms must your new home have?
• Home Condition
  
  • Do you prefer a new home or an existing home?
  • If you're looking for an existing home, how old of a home would you consider?
  • How much repair or renovation would you be willing to do?
  • Do you have special needs that your home must meet?

1. They don't ask enough questions of their lender and end up missing out on the best deal.
2. They don't act quickly enough to make a decision and someone else buys the house.
3. They don't find the right agent who's willing to help them through the homebuying process.
4. They don't do enough to make their offer look appealing to a seller.
5. They don't think about resale before they buy. The average first-time buyer only stays in a home for four years.

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.
2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS^®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.
3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.
4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
5. Predictability. Unlike rent, your fixed-mortgage payments don't rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.
6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.
7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Buying a home should be fun, not stressful. As you look for your dream home, keep in mind these tips for making the process as peaceful as possible.

1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It's critical that the REALTOR^® you chose is both highly skilled and a good fit with your personality.
2. Remember, there's no "right" time to buy, just as there's no perfect time to sell. If you find a home now, don't try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn't change fast enough to make that much difference in price, and a good home won't stay on the market long.
3. Don't ask for too many opinions. It's natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.
4. Accept that no house is ever perfect. If it's in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.
5. Don't try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to "win"e; by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.
6. Remember your home doesn't exist in a vacuum. Don't get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.
7. Plan ahead. Don't wait until you've found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don't leave yourself short and let your home deteriorate.
9. Accept that a little buyer's remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don't lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home's most important role is to serve as a comfortable, safe place to live.

Not all real estate practitioners are REALTORS^®. The term REALTOR^® is a registered trademark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS^® and subscribes to its strict Code of Ethics. Here are five reasons why it pays to work with a REALTOR^®.

1. You'll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.
2. Get objective information and opinions. REALTORS^® can provide local community information on utilities, zoning, schools, and more. They'll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have a resale value when I am ready to sell?
3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR^® to find all available properties.
4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
5. Property marketing power. Real estate doesn't sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner's contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR^®, you do not have to allow strangers into your home. Your REALTOR^® will generally prescreen and accompany qualified prospects through your property.
6. Real estate has its own language. If you don't know a CMA from a PUD, you can understand why it's important to work with a professional who is immersed in the industry and knows the real estate language.
7. REALTORS^® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you've done it before, laws and regulations change. REALTORS^®, on the other hand, handles hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.
8. Buying and selling is emotional. A home often symbolizes family, rest, and security — it's not just four walls and a roof. Because of this, home buying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they'll ever make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.
9. Ethical treatment. Every member of the NATIONAL ASSOCIATION of REALTORS^® makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a REALTOR^®, you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for REALTORS^® to take the Code of Ethics orientation and they are also required to complete a refresher course every four years.

Moving to a new home can be stressful, to say the least. Make it easy on yourself by planning far in advance and making sure you've covered all the bases.

1. Plan ahead by organizing and budgeting. Develop a master "to do" list so you won't forget something critical on moving day, and create an estimate of moving costs. (A moving calculator is available at REALTOR.com)
2. Sort and get rid of things you no longer want or need. Have a garage sale, donate to a charity, or recycle.
3. But don't throw out everything. If your inclination is to just toss it, you're probably right. However, it's possible to go overboard in the heat of the moment. Ask yourself how frequently you use an item and how you'd feel if you no longer had it. That will eliminate regrets after the move.
4. Pack similar items together. Put toys with toys, kitchen utensils with kitchen utensils. It will make your life easier when it's time to unpack.

Decide what, if anything, you plan to move on your own. Precious items such as family photos, valuable breakables, or must-haves during the move should probably stay with you. Don't forget to keep a "necessities" bag with tissues, snacks, and other items you'll need that day.

1. Remember, most movers won't take plants. If you don't want to leave them behind, you should plan on moving them yourself.
2. Use the right box for the item. Loose items are prone to breakage.
3. Put heavy items in small boxes so they're easier to lift. Keep the weight of each box under 50 pounds, if possible.
4. Don't over-pack boxes. It increases the likelihood that items inside the box will break.
5. Wrap every fragile item separately and pad bottom and sides of boxes. If necessary, purchase bubble-wrap or other packing materials from moving stores.
6. Label every box on all sides. You never know how they'll be stacked and you don't want to have to move other boxes aside to find out what's there.
7. Use color-coded labels to indicate which room each item should go in. Color-code a floor plan for your new house to help movers.
8. Keep your moving documents together in a file. Include important phone numbers, driver's name, and moving van number. Also keep your address book handy.
9. Print out a map and directions for movers. Make several copies, and highlight the route. Include your cell phone number on the map. You don't want movers to get lost! Also make copies for friends or family who are lending a hand on moving day.
10. Back up your computer files before moving your computer. Keep the backup in a safe place, preferably at an off-site location.
11. Inspect each box and all furniture for damage as soon as it arrives.
12. Make arrangements for small children and pets. Moving can be stressful and emotional. Kids can help organize their things and pack boxes ahead of time, but, if possible, it might be best to spare them from the moving-day madness.

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.
2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it's a good thing if you have a good proportion of balances to total credit limits.
3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.
4. How much new credit do you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.
5. The types of credit you use. Generally, it's desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of their required down payment. National programs include the Nehemiah program and the American Dream Down Payment Fund from the Department of Housing and Urban Development.
2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.
3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors' names are usually on the mortgage. Companies are available that can help you find such an investor if your family can't participate.
4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.
5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.
6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you're in good financial standing, with a strong income and little other debt.

Thinking about the mortgage process can be scary. It seems so complicated, with so many offers to choose from. So where do you start? With your REALTOR®!

Your REALTOR® is a professional who has established strong relationships with reputable mortgage companies as a result of years in the business. Your REALTOR® is a knowledgeable resource working on your side. You can trust your REALTOR® to recommend a good mortgage company because you share the same goal - a smooth and successful closing! Your REALTOR® has guided many past clients through financial transactions. Why not let your REALTOR® help you by providing the name of a mortgage company that has your best interests in mind?

There's no reason to waste your time calling toll-free numbers or surfing the Internet to wade through the ever-changing "teaser" interest rates when your REALTOR® knows a solid, competitive company. It saves time and gives you peace of mind.

1. Develop a household budget. Instead of creating a budget of what you'd like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills, and groceries.
2. Reduce your debt. Lenders generally look for a total debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt — car loans, student loans, and revolving balances on credit cards — down to between 8 and 10 percent of your net monthly income.
3. Look for ways to save. You probably know how much you spend on rent and utilities, but little expenses add up, too. Try writing down everything you spend for one month. You'll probably spot some great ways to save, whether it's cutting out that morning trip to Starbucks or eating dinner at home more often.
4. Increase your income. Now's the time to ask for a raise! If that's not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.
5. Save for a down payment. Designate a certain amount of money each month to put away in your savings account. Although it's possible to get a mortgage with only 5 percent down, or even less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment.
6. Keep your job. While you don't need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.
7. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.

Not only does owning a home give you a haven for yourself and your family, but it also makes great financial sense because of the tax benefits — which you can't take advantage of when paying rent.

• W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.
• Copies of at least one pay stub for each person signing the loan.
• Account numbers of all your credit cards and the amounts for any outstanding balances.
• Copies of two to four months of bank or credit union statements for both checking and savings accounts.
• Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
• Addresses where you've lived for the last five to seven years, with names of landlords if appropriate.
• Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
• Copies of your most recent 401(k) or other retirement account statement.
• Documentation to verify additional income, such as child support or a pension.
• Copies of personal tax forms for the last two to three years.

Brush up on these mortgage basics to help you determine the loan that will best suit your needs.

• Mortgage terms. Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.
• Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that your loan's interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. These types of mortgages are a good choice when fixed interest rates are high or when you expect your income to grow significantly in the coming years.
• Balloon mortgages. These mortgages offer very low interest rates for a short period of time
  - often three to seven years. Payments usually cover only the interest so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
• Government-backed loans. These loans are sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers.

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.

In high-priced housing markets, it can be difficult to afford a home. That's why a growing number of home buyers are forgoing traditional fixed-rate mortgages and standard adjustable-rate mortgages and instead opting for a specialty mortgage that lets them "stretch" their income so they can qualify for a larger loan.

But before you choose one of these mortgages, make sure you understand the risks and how they work.

Specialty mortgages often begin with a low introductory interest rate or payment plan — a "teaser"— but the monthly mortgage payments are likely to increase a lot in the future. Some are "low documentation" mortgages that come with easier standards for qualifying, but also higher interest rates or higher fees. Some lenders will loan you 100 percent or more of the home's value, but these mortgages can present a big financial risk if the value of the house drops.

Specialty Mortgages Can:

• Pose a greater risk that you won't be able to afford the mortgage payment in the future, compared to fixed rate mortgages and traditional adjustable rate mortgages.
• Have monthly payments that increase by as much as 50 percent or more when the introductory period ends.
• Cause your loan balance (the amount you still owe) to get larger each month instead of smaller.

Common Types of Specialty Mortgages:

• Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years of the loan, and you pay nothing to reduce the total amount you borrowed (this is called the "principal"). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.
• Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan's principal amount, causing the total amount you owe to increase each month instead of getting smaller.
• Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you may make a minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan; an interest-only payment, or payments calculated to pay off the loan over either 30 years or 15 years.
• 40-Year Mortgages: You pay off your loan over 40 years, instead of the usual 30 years. While this reduces your monthly payment and helps you qualify to buy a home, you pay off the balance of your loan much more slowly and end up paying much more interest.

Questions to Consider Before Choosing a Specialty Mortgage:

• How much can my monthly payments increase and how soon can these increases happen?
• Do I expect my income to increase or do I expect to move before my payments go up?
• Will I be able to afford the mortgage when the payments increase?
• Am I paying down my loan balance each month, or is it staying the same or even increasing?
• Will I have to pay a penalty if I refinance my mortgage or sell my house?
• What is my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?

Be sure you work with a REALTOR® and lender who can discuss different options and address your questions and concerns!

Step 1
Set up a meeting with your loan officer to fill out the loan application. After you provide the required documents, a credit report will be ordered by the loan officer.

Step 2
Your application is processed. The title work (assuring that your new home has a legal title) and appraisal (determining property value) for your new home are ordered.

Step 3
Once the title work and appraisal of your new property are completed, these documents are added to your application file. All of your information is then sent to underwriting. This is where your application is approved, denied, or additional information is requested.

Step 4
Once approved for your loan, your information is forwarded to the closing department. Documents and instructions for closing the sale of your new property are prepared and sent to the title company handling your closing.

Step 5
The closing. Final documents are signed, funds are disbursed and payments (as they are spelled out in the terms of your mortgage loan) begin.

Types of Mortgages:

Adjustable Rate Mortgage (ARM)- A home loan in which the interest rate is changed periodically based on a standard financial index. Most ARMs have a Cap (limit) on how much the interest rate may increase. The caps protect you from drastic market changes, but ARMs don't offer the stability of a fixed-rate loan. ARMs could be a good choice for someone who knows his or her income will rise and at least keep pace with the loan rate's periodic adjustment cap. If you plan to move in a few years and are not concerned about the possibility of a higher rate, an ARM also could be a good choice.

An ARM's rate is based on a money market index. The one-year U.S. Treasury bill is commonly used. To come up with the ARM rate, the lender will add a "margin", usually two to four percentage points, to the index.

Balloon mortgage: A home loan which is payable in full after a period that is shorter than the term of the loan, with typical terms being 5, 7, or 10 years. On a 7 year balloon for example, the payment is calculated over a 30-year period but the balance due on the loan after 7 years, must be either paid off or refinanced.

Balloon mortgages are similar to ARMs in that the interest rate is not fixed. Borrowers run the risk of higher interest rates at the end of the balloon period.

Biweekly mortgage- A mortgage on which the borrower makes half of the monthly loan payment twice in a month. This works out to 26 payments in a year, rather that the typical 24 and the loan is paid off more quickly.

Conventional Mortgage: With a conventional mortgage, the lender obtains a lien on the property in return for the payment of the amount the loan. A home loan that is not guaranteed by the VA (Veterans Administration) of insured by the FHA (Federal Housing Administration).

FHA Mortgage- An FHA mortgage is a mortgage which is insured (against loss) in whole or in part by the Federal Housing Authority. The borrower pays the mortgage insurance premium. Typically the down payment for an FHA mortgage is low but the amount that can be borrowed is also low.

Home Equity Loan- A mortgage on the borrower's principal residence, usually for the purpose of making home improvements or debt consolidation.

Home Equity Line of Credit (HELOC)- A mortgage set up as a line of credit, from which a borrower can draw, up to a maximum amount. Money can be drawn from the line by writing a check, using a credit card or other forms of withdrawing money.

Interest Only Mortgage- The scheduled monthly mortgage payment consists of interest only and no part of the payment goes toward principal, so the loan balance will remain unchanged. The option to pay interest only only lasts for a specified time period, usually 5 to 10 years. This type of loan is flexible in that, borrowers have the option of paying more than just the interest only payment (paying toward principal).

LIBOR Mortgage- A LIBOR mortgage is an adjustable rate mortgage on which the interest rate is tied to the London InterBank Offered Rate. This s the interest rate offered for U.S. dollar deposits by a group of London banks. There are different types of LIBORS depending on the length of maturity of the deposit made to the London banks.

VA mortgage- (Veterans Administrations mortgage)- A mortgage available to both active and former servicemen and women. No down payment is required and the lender is insured against loss by the Veterans Administration.

Purchase money mortgage- A purchase money mortgage is one that is given to secure the loan which is used to buy the property. A first (senior) mortgage on the property has priority over any second (junior) mortgages.

Reverse Mortgages:
A loan to an home owner, usually 55 or older, on which the balance rises over time and which is not repaid until the owner dies or sells the home.

Please contact me with any questions you have about the loan process

Credit scores, along with your overall income and debt, are big factors in determining whether you'll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:

1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.
2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.
3. Don't charge your credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to apply for a mortgage. You're penalized less for problems after a year.
5. Don't order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your debt.
6. Don't open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.
7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

Moving to a new home can be stressful, to say the least. Make it easy on yourself by planning far in advance and making sure you've covered all the bases.

1. Plan ahead by organizing and budgeting. Develop a master "to do" list so you won't forget something critical on moving day, and create an estimate of moving costs. (A moving calculator is available at REALTOR.com)
2. Sort and get rid of things you no longer want or need. Have a garage sale, donate to a charity, or recycle.
3. But don't throw out everything. If your inclination is to just toss it, you're probably right. However, it's possible to go overboard in the heat of the moment. Ask yourself how frequently you use an item and how you'd feel if you no longer had it. That will eliminate regrets after the move.
4. Pack similar items together. Put toys with toys, kitchen utensils with kitchen utensils. It will make your life easier when it's time to unpack.

Decide what, if anything, you plan to move on your own. Precious items such as family photos, valuable breakables, or must-haves during the move should probably stay with you. Don't forget to keep a "necessities" bag with tissues, snacks, and other items you'll need that day.

1. Remember, most movers won't take plants. If you don't want to leave them behind, you should plan on moving them yourself.
2. Use the right box for the item. Loose items are prone to breakage.
3. Put heavy items in small boxes so they're easier to lift. Keep the weight of each box under 50 pounds, if possible.
4. Don't over-pack boxes. It increases the likelihood that items inside the box will break.
5. Wrap every fragile item separately and pad bottom and sides of boxes. If necessary, purchase bubble-wrap or other packing materials from moving stores.
6. Label every box on all sides. You never know how they'll be stacked and you don't want to have to move other boxes aside to find out what's there.
7. Use color-coded labels to indicate which room each item should go in. Color-code a floor plan for your new house to help movers.
8. Keep your moving documents together in a file. Include important phone numbers, driver's name, and moving van number. Also keep your address book handy.
9. Print out a map and directions for movers. Make several copies, and highlight the route. Include your cell phone number on the map. You don't want movers to get lost! Also make copies for friends or family who are lending a hand on moving day.
10. Back up your computer files before moving your computer. Keep the backup in a safe place, preferably at an off-site location.
11. Inspect each box and all furniture for damage as soon as it arrives.
12. Make arrangements for small children and pets. Moving can be stressful and emotional. Kids can help organize their things and pack boxes ahead of time, but, if possible, it might be best to spare them from the moving-day madness.

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately.
2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
3. Know the replacement cost. If your home is destroyed you'll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you'll only receive $150,000.
4. Know the actual cash value. If you chose not to replace your home when it's destroyed, you'll receive replacement cost, less depreciation. This is called actual cash value.
5. Know the liability. Generally your homeowner's insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it's sufficient if you have significant assets.

On closing day, expect to sign a lot of documents and walk away with a big stack of papers. Here's a list of the most important documents you should file away for future reference.

• HUD-1 settlement statement. Itemizes all the costs — commissions, loan fees, points, and hazard insurance —associated with the closing. You'll need it for income tax purposes if you paid points.
• Truth in Lending statement. Summarizes the terms of your mortgage loan, including the annual percentage rate and recision period.
• Mortgage and note. Spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
• Deed. Transfers ownership to you.
• Affidavits. Binding statements by either party. For example, the sellers will often sign an affidavit stating that they haven't incurred any liens.
• Riders. Amendments to the sales contract that affect your rights. Example: The sellers won't move out until two weeks after closing but will pay rent to the buyers during that period.
• Insurance policies. Provide a record and proof of your coverage.

Sources: Credit Union National Association; Mortgage Bankers Association; Home-Buyer's Guide (Real Estate Center at Texas A&M, 2000)

You'll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:

• Down payment
• Loan origination
• Points, or loan discount fees, which you pay to receive a lower interest rate
• Home inspection
• Appraisal
• Credit report
• Private mortgage insurance premium
• Insurance escrow for homeowner's insurance, if being paid as part of the mortgage
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
• Deed recording
• Title insurance policy premiums
• Land survey
• Notary fees
• Prorations for your share of costs, such as utility bills and property taxes

A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

1. Review the Comprehensive Loss Underwriting Exchange (CLUE) report on the property you're interested in buying. CLUE reports detail the property's claims history for the most recent five years, which insurers may use to deny coverage. Make the sale contingent on a home inspection to ensure that problems identified in the CLUE report have been repaired.
2. Seek insurance coverage as soon as your offer is approved. You must obtain insurance to buy. And you don't want to be told at closing that the insurer has denied your coverage.
3. Maintain good credit. Insurers often use credit-based insurance scores to determine premiums.
4. Buy your home owners and auto policies from the same company and you'll usually qualify for savings. But make sure the discount really yields the lowest price.
5. Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower. Avoid making claims under $1,000.
6. Ask about other discounts. For example, retirees who tend to be home more than full-time workers may qualify for a discount on theft insurance. You also may be able to obtain discounts for having smoke detectors, a burglar alarm, or dead-bolt locks.
7. Seek group discounts. If you belong to any groups, such as associations or alumni organizations, they may have deals on insurance coverage.
8. Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
9. Investigate a government-backed insurance plan. In some high-risk areas, federal or state governments may back plans to lower rates. Ask your agent.
10. Be sure you insure your house for the correct amount. Remember, you're covering replacement cost, not market value.

It's guaranteed to be hectic right before closing, but you should always make time for a final walk-through. Your goal is to make sure that your home is in the same condition you expected it would be. Ideally, the sellers already have moved out. This is your last chance to check that appliances are in working condition and that agreed-upon repairs have been made. Here's a detailed list of what not to overlook for on your final walk-through.

Make sure that:

• Repairs you've requested have been made. Obtain copies of paid bills and warranties.
• There are no major changes to the property since you last viewed it.
• All items that were included in the sale price — draperies, lighting fixtures, etc. — are still there.
• Screens and storm windows are in place or stored.
• All appliances are operating, such as the dishwasher, washer and dryer, oven, etc.
• Intercom, doorbell, and alarm are operational.
• Hot water heater is working.
• No plants or shrubs have been removed from the yard.
• Heating and air conditioning system is working
• Garage door opener and other remotes are available.
• Instruction books and warranties on appliances and fixtures are available.
• All personal items of the sellers and all debris have been removed. Check the basement, attic, and every room, closet, and crawlspace.

A home warranty is a service contract, normally for one year, which helps protect homeowners against the cost of unexpected covered repairs or replacements on their major systems and appliances that break down due to normal wear and tear. Coverage is for systems and appliances in good working order at the start of the contract.

Check your home warranty policy to see which of the following items are covered. Also, find out if the policy covers the full replacement cost of an item.

• Plumbing
• Electrical systems
• Furnace
• Water heater
• Heating ducts
• Water pump
• Dishwasher
• Garbage disposal
• Stove/cooktop/ovens
• Microwave
• Refrigerator
• Washer/Dryer
• Swimming pool (may be optional)