Southern CA home purchase procedure

For more information, contact me:
Joan Trossen, Realtor® / Broker
(909) 653 . 4341
joni@AskJoni.com

Synopsis
of a Purchase
or

REAL ESTATE BUYING PROCEDURE

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F.Y.I.

A credit report must be run (it's secured).: We/you can then deal with any errors, judgments, collections, etc.
This is the first step towards home ownership and in most cases the most important.

Lenders are owners of many properties today -
called REOs (Real Estate Owned).
They prefer you submit a pre-approval from a Direct Lender.
Apply for your lender's pre-approval letter to determine your purchase price range.: You submit most recent paystubs, W-2s, 1099s and income tax returns for the last two years, (self-employed, recent P&L.) and all additional documentation to substantiate loan application information, verification of money sufficient to satisfy costs and down payment. Truthfulness at the outset is absolutely mandatory. Initially, only one "preliminary-type" credit check is procured. However, a required in-depth, all-three-agency credit report will be run as loan process progresses.
Omission by you of a single item can eliminate your likelihood of a purchase. Your loan officer works with/for you to obtain all requested documentation; the need for it is not exaggerated.
Your lender will submit to you a rundown of your approximate costs based on sales price and your loan program.
If not forthcoming, I advise strongly you demand one.
This form is called:
"Buyer's Preliminary Cost Estimate" (PCE) or
"Good Faith Estimate" (GFE).
You are ready to investigate homes you can qualify to buy.
We'll perform extensive property searches within your price range in your preferred areas meeting your requirements.: After viewing properties inside and out, you find a home upon which you desire to make an offer.
Lender issues a pre-approval letter for your offered sales price.: The letter states you are eligible to purchase at the given price. This letter is very impressive proving to the seller and his agent that you are qualified to purchase the home.
You issue a good faith deposit check.: The deposit is held uncashed by me, your representative. Upon opening a file in your name (within days of acceptance of offer) escrow will request a cashier's check which will be credited to your down-payment and closing costs at the end of escrow. Your initial Earnest Money Deposit (EMD) will be destroyed or returned to you.
(This is clearly stated in the Offer to Purchase and the escrow instructions.)
We prepare an "Offer to Purchase" (RPA).: All real estate negotiations, terms and agreements must be in writing to be legally recognized.
If offer is not accepted by seller, a counter offer may be written by seller.: You and seller may counter and re-counter. This process may be repeated several times until all parties agree to terms.; The property remains on the market until both you and seller agrees to terms.
If and when all parties are in accord, the property is taken off the market, escrow is opened, your money is deposited in escrow's trust account and escrow instructions are drawn (prepared).: Within 3 days, yours and sellers' signed offer and all signed counter offers are delivered to escrow and to all other parties involved.
The escrow company is a licensed and regulated third party which determines the closing date from the Offer to Purchase and/or counter offers setting forth all other terms therein. The instructions are sent or delivered to you directly, allowing you to read them over carefully, privately and slowly.
Those items which are unclear will be clarified by either escrow, your lender or me. Do not enter any changes thereon.; I strongly recommend a Home Inspection -
it is not mandatory.; With you in attendance, at least a 12-page report is generated during a thorough property examination inside, including attic and crawl-space, outside, roof, grounds and utilities - conducted by a licensed inspector. I recommend a general contractor. It usually takes 2 to 3 hours - depending upon the size of the home. The price can be negotiated.. +/-$250. At this time you will be able to determine what work must be done to accommodate your lender's requirements prior to closing - the recordation of the deed in your name.
Some lenders require a termite inspection to be performed and a clearance notice generated, especially when asked for in the RPA.: A clearance is issued when no infestation exists - after any necessary work is performed. Copies of the report are usually sent to the agents and lender. The requirements to close are clearly spelled out.
Seller delivers a mandatory Property Disclosure Package to you within 7 days or sooner.: Seller sets out all features and known defects in the property. You acknowledge receipt of the package, receiving a copy (as well as all the other documents signed previously). A non-owner occupant, such as an REO/lender owned property are exempt from disclosing that which they have no knowledge.
You may request some or all the repair items listed within the reports to be repaired by the seller.: The seller has the option to comply or not - lender/owners (REOs) and short-sales often opt not to repair anything, unless it is an FHA requirement. Buyers are advised that the "property is being sold in "as-is" "where-is" condition in the property listing.
Note:You choose to perform a Home Inspection, as well as the free termite inspection, to familiarze yourself with the condition of your home, and to learn of health and safety issues. In most cases, the home will not be new, hence, you have to take into consideration "normal wear and tear."
Another major thing to remember is: many properties are vacant. Vacant properties have few "surprises." What you see, is what you get. There is little or no furniture, pictures on the walls, clothing, storage or other items to "hide" many secrets of the house's condition.
Your lender ordered an appraisal upon opening escrow.: The property value must be proven to the lender prior to committing to the desired loan amount. This proof is called an appraisal. Home values can be appraised three ways; however, the most common is the use of Comparables (properties of similar type, size, age, etc. sold within a reasonable radius of the property in question and recorded within the last three to six months).
You order hazard/homeowner's insurance.: If your car insurance company writes fire/homeowner's policies, seek them out for a quote; they commonly offer discounts in such cases. You can choose anyone you want. Experienced insurance agents are familiar with billing escrow companies - so you don't have to pay "upfront." They handle the necessary paperwork to satisfy the lender. You need to give him/her the age, square footage, type of roof, fireplace and garage to procure a quote.
Your lender requires insurance coverage to protect their investment and is one of the mandatory items for the escrow to close. I recommend you to investigate early what insurance is available and the costs involved. The old adage: "you can't have too much insurance" is true in fire and earthquake prone areas.
The lender continues preparing your Loan Package (file).: Your file can grow very thick with verifications of past years' employment and residences, copies of all the personally submitted items: bank statements, tax returns, divorce papers, letters explaining certain credit items, bankruptcy papers, social security information, pension/child support income, the appraisal, termite report/clearance, preliminary title report and more.; Note: a word to the wise - submit all items immediately, to the lender when requested. If you are unable to deliver or otherwise supply them, call me and we will get it done. Late closing escrows are generally due to buyers not responding in a timely fashion (immediately) or omitting a minor, to you, but actually, some important credit item during the initial lender interview as well as future requests
Also, under no circumstances alter your credit status by purchasing or paying off creditors or changing jobs without first discussing it with your lender.

A Loan Package is not complete until ALL documents necessary for an underwriter's loan approval are received from you.
There are no insignificant items in an escrow.
Copies of appraisal distributed.: An appraisal can be issued "on the money," high or low. If it is higher than the selling price, the buyer is very happy, the seller grits his teeth and accepts the truth. But if the appraisal is lower than expected, it is a big Oops. Seller would necessarily have to agree to come down in his expectations and meet the figure. Or you have the option to increase the down payment to the adjusted loan amount - paying cash down to the appraisal price or cancel the escrow.
Caveat: The Offer to Purchase includes a clause requiring the property - as well as the the buyer - qualify for the loan at the given amount, which is in direct relationship to the selling price.
When complete, the package is submitted to the Loan Underwriter for Final Approval.: The loan is generally Approved with Conditions. Commonly, the Conditions require you to submit up-to-date paystubs and documentation to improve the package and oftentimes duplication of items submitted previously.
Note: avoid taking a vacation prior to the close of escrow. You must be available for escrow's last minute needs.
Also: Retain copies of all documents received and those submitted in a convenient, safe place large enough to grow. You will have many reasons to consult this file - especially by your tax man. Incidentally, it is most advantageous to consider a tax consultant, especially the first year you file after taking title to your home. Also, if, and when, you purchase additional properties, it is advisable to keep each property's file separate.
Loan conditions must be met and loan approved within 17 days from acceptance as stated in the Offer to Purchase. Time is of the essence.
LOAN IS APPROVED
Lender generated Loan Documents are prepared for your signature.
We perform a Walk-Through inspection of the property.: Within 5 days of closing, you and I inspect the home to ascertain if the home meets the terms set forth in the escrow instructions and Offer to Purchase.
All additional home repairs performed.: In the event any approved corrective work has not been performed prior to the Walk-Through Inspection, the repairs must be accomplished prior to the close of escrow.
The escrow officer scrutinizes your file and loan documents.: Escrow's file includes, amongst others, all clearances, supporting documents and signed loan papers. When all documents are deemed received, escrow calculates the amount of money necessary to close, including prorations of taxes and interest. The amount due from you must be in the form of a cashier's check, made payable to the escrow company's trust account or more normally today, wired directly into the escrow's bank account.. In addition to the money actually needed - a pad of about $200-300 - is usually added - in case of exigencies. Escrow cannot close "short" of money. Hence, a refund check is issued to you at the close representing that which is not spent to cover specified items. All the money received from those involved in the transaction must be accounted for by law. You will receive a closing statement (HUD-1) clearly stating where the funds were disbursed.
The loan "Funds.": Money is wired (transferred) from lender to escrow's bank. Usually, the deed is recorded with the County at 8:00 a.m. the following morning. It sometimes takes until the end of the day to get verification of a successful recording.

"Yes, it recorded - the house is yours"
CONGRATULATIONS

Escrow's last remaining duty is to write the checks.

Disbursements may include checks to seller, termite company, your insurance carrier, city departments, county departments, agents and you, etc.

Why ain't my escrow clos'n?

Joan (joni) Trossen, [E-MAIL]
Not Your Ordinary So. CA - Riverside / San Bernardino County - Broker / Agent
40 years of service
I want to be your Southern California Realtor®
909 . 653 . 4341

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