Because humans are involved in recording deed transfers and plotting land parcels, a lot can go wrong. You want title insurance because it will protect you against defects and human error.

Property Searches and Public Records

•Property transfers were first recorded alphabetically in separate Grantor and Grantee books.

•The books are heavy to lift and dusty.

•County records are often maintained at local courthouses or the Clerk of Registrars.

•Today, most records are stored on the computer.

Division of Land

•Early deeds involved large chunks of land known as Townships.

•Townships contain 36 sections and are six miles by six miles.

•Sections measure one mile by one mile and contain 640 acres.

•Half of a section is 320 acres.

•1/4 of a section is 160 acres.

•1/4 section of 1/4 section is 40 acres.

•An acre is 43,560 square feet

Title Search Basics

•Title searches start with the most recent deed, searching the grantee’s name (the person now holding title) backwards in time, until the deed when the grantee acquired the property is located.

•That grantor’s name is then searched backwards in time in the grantee’s book to find when the grantor acquired title as a grantee.

•This process continues, and over time, the property description involves larger and larger parcels of land.

•Eventually, the searcher finds the U. S. Patent.

Other Factors Affecting Title

Deeds establish chain-of-title, but sometimes those chains are broken. In addition, title searchers also look for reconveyances (proof that the encumbrances are paid off), and they look for easements, rights-of-way, CC&Rs, other elements affecting title to the property. Here are more records that are searched to piece title together:

•Marriage records

•Death certificates

•Tax sales

Title Insurance Coverage

Depending on the title company, consumers can choose among a variety of options, but the top three choices are Owners, Lender’s and Extended Coverage.

•Basic Owner’s Title Policy Coverage:

1.Clear title to the property

2.Incorrect signatures on documents

3.Forgery, fraud

4.Defective recordation

5.Restrictive covenants

6.Encumbrances or judgments

•Basic Lender’s Title Policy Coverage:

1.Mechanic’s liens and unrecorded liens

2.Unrecorded easements and access rights

3.Defects and other unrecorded documents

•Extended Owner’s Coverage

1.Building permit violations from previous owners

2.Subdivision maps

3.Covenant violations from previous owners

4.Living trusts

5.Structure damage from mineral extractions

6.Variety of encroachments and forgeries after title insurance is issued

Who Pays For Title Policy Insurance?

•This depends on your local custom.

•It can differ from county to county, but it is also negotiable in the purchase offer.

•Sometimes sellers and buyers split the fee for the owner’s policy.

•Typically, the buyer pays for the lender’s coverage.

How Long Are Title Policies Good For?

Forever, theoretically. If you are planning to resell the property within a couple years, ask your title company about “binder” coverage. Most companies will sell you a binder policy for 10% more. A binder is good for two years, often can be extended beyond that time, and the fee charged for the new buyer’s policy will be the difference between what you bought the property for and the price at which it sold. In other words, you will get a credit for the amount of coverage you purchased under your own Owner’s Title policy.

How Often Are Title Policy Insurance Premiums Paid?

Once. The fee is due when you buy. You will never pay it again. Title policy insurance is the best insurance policy you can ever buy.

Closing costs are on top of the purchase price.

How Much Are Closing Costs?

As a rule of thumb, closing costs to buy a home run about 2 to 4 percent of the purchase price. Much depends on the points and origination fees a lender charges to make the loan, which are disclosed on the buyer’s Good Faith Estimate.

The total closing costs to purchase a $300,000 home could cost anywhere from approximately $3,000 to $12,000 or more.

Non-Recurring Closing Costs

Fees that are paid once and never again are called non-recurring. These fees are one-time charges for such items as:

•Title Policies

•Escrow or closing

•Notary

•Wire fees

•Courier / Delivery

•Attorney fees

•Endorsements

•Recording

•State, County or City Transfer Taxes

•Home Protection Plans

•Natural Hazard Disclosures

•Home Inspection

•Lender fees paid in conjunction with the loan on the HUD-1, line 800.

Recurring Closings Costs – The Prepaids

Recurring fees are those charges that you will pay again and again. They include such fees as:

•Fire Insurance Premium

•Flood Insurance (if required in your area)

•Property Taxes

•Mutual or Private Mortgage Insurance Premiums

•Prepaid Interest

The time of the year that you close will dictate how many prorata months of premiums the lender will collect to hold against future payments of taxes and insurance. Not every loan has an impound or escrow account, but typically loans totaling more than 80% of your purchase price will require an impound / escrow account.

Can a Seller Credit the Buyer for Closing Costs?

Always check with your lender before you negotiate an offer that involves a seller credit because the lender might not allow it.

•If you are financing 100% of the purchase price, the lender might limit your credit to 3% of the purchase price.

•Depending on your FICO score and the amount of your down payment, the lender might allow a seller to credit you as much as 6% of the purchase price.

•Lenders will not let a borrower receive cash from a seller at closing, regardless of what you may hear at those no-money-down seminars.

Unfortunately, there is no pat answer because the best choice for you depends on your personal situation, the type of property you want to buy and how the lender’s rates compare within the lending community. You can get a loan from a variety of sources such as:

Mortgage Brokers

More than half of all the real estate loans made in the United States originate from mortgage brokers. A mortgage broker is a middle-person who brings together lenders and borrowers. Mortgage brokers each work with different lenders, sometimes 200 or more. It’s important to ask about the variety of products offered as this will vary from broker to broker. Your choices are dependent on the broker’s number of working relationships.

•Fees are paid by the buyer or lender or both.

•Loans at “par” mean the buyer is not paying a fee.

•Yield-spread premiums (YSPs) are typically disclosed at closing and paid by the lender.

•Mortgage brokers can also operate as “up-front” mortgage brokers, meaning they will negotiate a fee directly with the buyer in exchange for shopping for the lowest (wholesale) interest rate & fees.

Mortgage Bankers

Mortgage bankers, as you may have guessed, work for a bank. They may represent more than one bank but the loans they make are bank loans, funded by the bank.

•Fees are generally not negotiable and are set by bank policy.

•Loan products are limited to those the bank offers.

•The banker may not be licensed.

Commercial Banks

Citigroup, Bank of America, and Wells Fargo are good examples of well known commercial banks. Commercial banks offer a wide variety of services. In fact, you probably have a bank like this in your neighborhood.

•Primary source of business is not making mortgage loans.

•Bank rates are competitive.

•Your bank may offer a discount or incentive on your loan if you maintain a checking or savings account at that institution.

Savings & Loan Associations

Savings and loans accept deposits from customers into savings / money market accounts and pay interest on those accounts. To prevent a relapse like the S&L crisis in the 1980s, President Bush in 1989 signed the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Many savings and loans are now regulated by the Department of U. S. Treasury, Office of Thrift Supervision.

•Primary source of business is making real estate loans.

•Savings and loans do not make business or commercial loans but lend for construction, purchase or home improvement purposes.

•The process for obtaining a mortgage is a bit easier than going to a commercial bank.

Credit Unions

These institutions are regularly under attack by lending competitors because credit unions do not pay federal taxes and enjoy certain taxable advantages that other lending institutions do not. They are formed by a group of individuals with a common interest such as state government and community education employees or religious groups.

•Customers must meet qualifications to be eligible for membership.

•Interest rates and terms are typically very attractive and competitive.

•Many credit unions do not sell their mortgage loans on the secondary market.

•Private Individual

Anybody with money in the bank can make a real estate loan to you as long as they comply with federal and state regulations regarding such items as interest rates, fees and charges, and provide legally required disclosures.

•The seller can carry back common financing instruments such as a mortgage, trust deed or land contract.

•No appraisal or title policy may be required, but you should still obtain an appraisal and title protection.

•Owner financing works best on properties that are free and clear because an existing loan will most likely contain an alienation clause.

Stock Brokerages & Online Lenders

You might be astonished to learn that the company handling your IRAs or mutual funds or online savings also makes mortgage loans. A few easily recognizable names are HFC Home Loans, INGDirect, Charles Schwab, and Ditech.

•If you need to shake hands with your loan officer in person, an online lender might not be for you.

•Internet lenders seem to work best for sophisticated borrowers with great FICO scores who know exactly what they want.

•Contact only reputable and known companies with secure sites, and stay away from fly-by-night operators.

The answer is it didn’t. First-time home buyers start the search long before most even realize it.

Here’s what you can expect from your home shopping experience.

Benefits for a First-Time Home Buyer

You should buy a home. That’s what you’ve been hearing from friends and family, right? So, by now you have likely already weighed the benefits and decided that home ownership was the best decision for you. That’s a major hurdle now passed. You are focused and certain. Good.

Defining Search Parameters for a First-Time Home Buyer

Almost 80% of all home searches today begin on the Internet. With just a few clicks of the mouse, home buyers can search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and aerial shots of neighborhoods and homes. You’ve probably defined your goals and have a pretty good idea of the type of home and neighborhood you want. By the time you reach your real estate agent’s office, you are halfway to home ownership.

How Long Should It Take to Buy Your First Home?

In seller’s markets, often I show only one home. After all, how many homes does one family need? A few buyers will look for years, but buyers who do that aren’t motivated. A motivated buyer will find a home within two weeks. Most of my buyers find a home within two days.

Good real estate agents will listen to your wants and needs and arrange to show only those homes that fit your particular parameters. Your agent should preview homes before showing them to you as well.

How Many Homes Will a Home Buyer See?

Studies show that your memory dramatically improves after consumption of carbs and slows upon consuming sugar. So, lay off the soft drinks and have a hearty meal of carbs before venturing out to tour homes. The average number of homes that I show to a buyer in one day is seven. Any more than that, and the brain is on overload. Therefore, don’t expect to see 20 or 30 homes; although it’s physically possible to do so, you probably will not remember specific details about any of them.

The “Red Shoes” Experience for a Home Buyer

Women will relate to this. Say, you need a new pair of red shoes. You go to the mall. At the first shoe store, you find a fabulous pair of red shoes. You try them on. They fit perfectly. They are glamorous. Priced right, too. Do you buy them? Of course not! You go to every other store in the mall trying on red shoes until you are ready to drop from exhaustion. Then you return to the first store and buy those red shoes. Do not shop for a home this way. When you find the perfect home, buy it.

How a First-Time Home Buyer Can Rate Inventory

•Bring a digital camera and begin each series of photos with a close-up of the house number to identify where each group of home photos start and end.

•Take copious notes of unusual features, colors and design elements.

•Pay attention to the home’s surroundings. What is next door? Do 2-story homes tower over your single story?

•Do you like the location? Is it near a park or a power plant?

•Immediately after leaving, rate each home on a scale of 1 to 10, with 10 being the highest.

View Top Choices a Second Time Before Buying That First Home

After touring homes for a few days, you will probably instinctively know which one or two homes you would like to buy. Ask to see them again. You will see them with different eyes and notice elements that were overlooked the first go-around.

At this point, your agent should call the listing agents to find out more about the sellers’ motivation and to double-check that an offer hasn’t come in, making sure these homes are still available to purchase.

Making the Selection To Buy a Home

I’ll let you in on a little secret. I generally know which home a buyer is going to choose, and I suspect most other agents operate the same way. It’s an intuition. But I make it a practice not to steer buyers, and I insist that buyers choose the home without interference from me. It’s not my choice to make.

Real estate agents are required, however, to point out defects and should help buyers feel confident that the home selected meets the buyer’s search parameters.

WE HAVE MOVED TO Keller Williams Realty.

Different name same great service !!!!

Making a purchase offer and actually buying a home are generally two different actions, but home buyers sometimes confuse the two. Especially in states such as California where the purchase offer is not the final negotiation due to contingencies in contracts.

In some states on the East Coast, it is common to write a letter of intent to purchase and, in many ways, it seems the more civilized way to buy a home. However, many other states contain provisions in standard purchase contracts that let a buyer cancel the contract and get back their entire earnest money deposit.

Do You Hesitate to Make a Purchase Offer?

If the home you are thinking about buying is likely to quickly sell, and if you have a way to later cancel the contract, you should immediately make a purchase offer. Don’t sleep on it or try to get every single question answered beforehand or you may very well lose the home. Somebody else could beat you to the draw and steal it out from under your nose while you’re busy weighing the pros and cons.

If you like the home, odds are several other active home buyers will, too. You’re not the only smart cookie in the market place who can spot an excellent buy.

And no, losing the home doesn’t mean it was “supposed to be that way.” Consider instead that you were supposed to buy it, and you messed up.

Reality of Purchase Offers

When a home seller accepts a purchase offer, the seller is hoping the buyer will complete the transaction at the price agreed upon and believes there is nothing wrong with the condition of the home. The home buyer, on the other hand, is hoping the transaction will close because the home is in A-1 condition and perfect.

It’s rare that either of those expectations are in line with reality. No home is perfect and many conditions can change once a contract is accepted.

•Buyers often submit repair requests.

•Low appraisals can threaten to blow the deal.

•Mortgages can be denied in underwriting.

Types of Homes That Quickly Sell

In seller’s markets, almost every home sells within 30 days. In buyer’s markets, the DOM will be longer. There are many inherent characteristics and qualities that determine whether homes are likely to sell fast, but these are the top two combinations:

•Turnkey homes in high-demand neighborhoods, excellent condition and priced right.

•Cosmetic fixers in good locations and priced below comparable sales.

If the home you want to buy falls within those two categories, you should quickly make a home offer, providing you retain cancellation rights.

Some real estate agents do not like to waste time writing an offer that a buyer might later cancel and will try to dissuade you from making an offer to purchase. Some might not even disclose to you that you have a certain number of days to change your mind. Don’t hire an agent who doesn’t have your best interest at heart.

Pros to Making Immediate Offers to Purchase

•The obvious reason to make a purchase offer right after finding a home you love is you will prevent anybody else from buying it. When the seller accepts an offer from you, the seller cannot accept another, except a back-up offer, good only if your contract is canceled by you.

•If your offer is first and sole, you can negotiate on price and terms. You can make a lowball offer. Your negotiation power is minimized if there are multiple offers.

•Even if other buyers are interested, they will generally slink away once the seller accepts an offer, opening the door for your renegotiations, if any, after the home inspection.

Cons to Making Immediate Offers to Purchase

•If you’re undecided between two homes and go into contract on property A, property B might not be available if you should change your mind and cancel the first transaction.

•Return of an earnest money deposit is not automatic. Both parties are required to sign cancellation instructions. In California, for example, a seller can delay signing for 30 days, without penalty, an authorization to return the good faith deposit.

•Buyers can incur appraisal, credit report and home inspection fees that are non-refundable. Generally, title policy / escrow and other closing costs are waived upon cancellation.

Given the alternative of losing the home you want, however, it is advantageous to learn from the mistakes of others who have lost opportunities — because they were hesitant to act with urgency — instead of learning this painful lesson yourself.

Bad Credit Report

Does your credit report tank? If your FICO score is below 620, you’re not going to receive a good interest rate for a loan and, in fact, that kind of score could dump you into the hands of a predatory lender. Not a good sign.

•If you want to buy with bad credit, you should work on fixing it before applying for a loan.

•Four late payments is enough to disqualify you from obtaining a loan.

•You can order your credit report free online.

High Debt Ratios

Lenders consider two ratios: front-end and back-end. The front-end is your mortgage payment, plus taxes and insurance divided by your monthly salary. The back-end adds your monthly debt payments to your PITI payment before dividing that total figure by your salary. A 50% debt ratio is a high ratio. A high debt ratio means you may not qualify for the loan. If you should find an unscrupulous lender that is willing to fund such a loan, you may not be able to afford to feed yourself, even if you eat dirt.

Job Instability or Relocation

How secure is your job? A high-rolling Sacramento buyer purchased a home in Midtown. His mortgage payments were $3,500 a month, which was a lot for a 25-year-old. However, that payment was affordable while this guy was earning an annual $120,000 salary. But when he lost his job, he also lost his home to foreclosure.

•Is Your Job in Jeopardy?

Is your company laying off? Could you be fired and, if so, how hard would it be to get another job right away? Unemployment compensation is rarely enough to cover mortgage payments.

•Relocation.

Are you likely to be transferred to another city within the next two to three years? If you had to sell due to a job transfer, your property would need to appreciate at least 10% to cover the cost of selling; otherwise, you would lose money on the sale. When you buy a home, you should plan to stay put for a while.

Maintenance Issues

All homes require upkeep and maintenance. Not everybody has the where-with-all, much less the desire, to tackle home repair projects. In addition, many first-time home buyers can not afford to hire a professional to fix things that break. Experts suggest you set aside 5% of the purchase price to cover maintenance and repairs when you buy a home.

When Renting Costs Considerably Less

If your mortgage payment would be triple the amount (or more) you would pay for rent, it might not make financial sense for you to buy. For example, if it would cost you $2,000 a month to rent what would cost you $6,000 per month to own, does it make sense to pay $48,000 a year more to own a home?

If you are in a 30% tax bracket, you might not come close to recouping the difference you paid. Say your deductible expenses are $5,000 a month; 30% of that is only $1,500, which would be your true tax savings per month. Would you spend $6,000 to save $1,500? For more information, please consult a tax accountant or CPA.

Back in the old days, like the 1970s, MLS information was available in print format. Books were published monthly; updates weekly. It was quite heavy and cumbersome to haul around! Fortunately, today it’s online.

What is MLS?

MLS is a sharing of comprehensive home information among real estate professionals. Listings brokers enter the data about a home for sale and offer to share the commission with a broker who brings a buyer. It’s an online software that contains all the specifics about a home, from the address, age, square footage, number of bedrooms, baths, upgrades and schools districts to types of financing the seller will consider, and more. There is generally at least one to a dozen photographs of the home, plus a link to a virtual tour, if one exists.

Home buyers make the mistake of believing they can access this information through online feeds to other services, but the data the public can receive is:

•Limited in scope

•Can be outdated

•Often inaccurate

For Sale By Owners in MLS

While there is no separate category for a For Sale by Owner (or FSBO) listing, the MLS can contain listings from sellers who are unrepresented.

•The way FSBOs circumvent some MLS restrictions is to pay a flat fee to a discount real estate broker to enter the information, but the seller is not really represented.

•Instructions to present all offers directly to the seller is often frowned upon or prohibited by MLS authorities.

•Sometimes the selling commission is less than the fee agents are offered by traditional brokers — which does not motivate agents to show these listings, even though they cannot legally refuse to do so.

Who Owns the MLS?

The trend is leaning toward local MLS companies joining or merging with other local MLS companies to create regional MLS services. MLS can be privately owned and operated or it can be an affiliate of a local board of Realtors, among other forms of ownership, but most are subject to regulations set forth by the National Association of Realtors.

Back in the ’80s, many MLS were owned by boards of Realtors, but conflict of interests and lawsuits caused many association groups to form a separate entity for MLS. In my area of Sacramento, for example, members of MLS are not required to be a member of the Sacramento Board of Realtors, nor the California Association of Realtors, nor the National Association of Realtors.

Finding MLS Listings

Many services offer to provide home buyers with a list of available homes on the market, but few provide comprehensive data. To get that information, you need to ask your real estate agent to set you up on a home search. Typically, there are many types of reports a buyer can receive, so ask your agent for the most comprehensive report, the name of which varies by locale. What you don’t want is a customer copy. It’s not enough information.

An agent can enter your name, e-mail and home search preferences into a search engine on MLS that will send you automatic e-mails of new listings. This way you will receive up-to-the-minute information that you can’t really get anywhere else.

MLS Searches

If you’re beginning a home search, lucky you! You can ask your agent to customize a search for you that will automatically send you updated listings. Not all agents will set up a search for you based on anything other active listings, so if you want to receive price reductions, pending or sold sales data, ask for it.

Here are a few ways (among many) that you can request to have your report customized:

•ZIP Code

•Radius Search, within a specified distance from a target address

•Street or Subdivision

Within those parameters, you can further define your search to:

•Price range from low to high

•Number of bedrooms and baths

•Garages

•Pools and spas

•Square footage

Your requirements can be even more clearly defined, depending on your priorities. But be aware that as the number of exceptions climb, you might be missing out on opportunities. It’s wise to keep the list somewhat limited, especially for those cases where a data field might not contain data due to human error.

If you are shopping for a new home in a seller’s market, your best bet for finding sellers who might be receptive to a lowball offer is to check out those sellers of overpriced homes lingering with excessive DOM. But whether the market is hot, cold or neutral, lowball offers can result in big savings to a buyer if they are presented and negotiated properly.

To get started, let’s look at what NOT do when making a lowball offer:

Common Mistakes Made by Lowball Buyers

•Can’t Afford or Unqualified to Pay More. Don’t tell the seller your price is fair because that’s how much the lender has qualified you to buy. Sellers don’t care what you can or cannot afford to buy. If you can’t afford to buy the house, that’s not the seller’s problem; it’s yours.

•Paying Cash. It’s all cash to the seller in the end. Most buyers don’t realize that. If a property will appraise at selling price and the buyer’s credit is acceptable, a conventional loan transaction will close just the same as a cash deal.

The main advantage to paying cash for a home is it removes the loan contingency, the right for a buyer to walk away if a loan isn’t possible. But most loan contingencies follow the same number of days as other contingencies, so who cares? It’s not a big selling point.

•Walking Away. Some buyers get their knickers in a twist and walk away when the seller counters the offer at more than the buyer was prepared to pay. Maybe the counter was list. Maybe less. Doesn’t matter. The point is the doors have been opened for negotiations. Only the inexperienced or truly stupid walk away.

Strategies for Winning the Lowball Offer

•Find out the Seller’s Motivation. If you don’t know why the seller is selling, you can’t meet the seller’s needs. Maybe the pressing issue is financial. Maybe the seller needs to quickly move. If you know the reason behind the sale, you can structure your offer to fulfill those needs.

•Write a Clean Offer. Dot I’s and cross T’s. Don’t ask for items that oppose local custom. Shorten inspection periods, reduce or waive some contingencies and submit a lender preapproval letter. Don’t give the listing agent a reason to doubt your ability to perform. Appear strong, qualified and ready to close.

•Always Counter the Counter Offer. It goes without saying that the first counter is only an invitation for the buyer to offer a second counter offer. But sometimes buyers get discouraged. It’s a dance to see who will win. Until they turn off the lights and close up the bar, keep dancing.

•Move Attention Away From Price. There are many other considerations than price. It’s smart to change tactics and ask for other concessions such as closing cost credits, repair credits, longer escrow periods or focus on tangible goods such as furniture or appliances.

•Give a Logical Reason Why Your Lowball Offer is Fair. Don’t insult the agent by handing over a list of comparable sales. Show you have done your homework. Make notations on each sale that compares it to the subject property. Maybe the higher priced homes had remodeled kitchens. If the home you want to buy is not updated, then knock off a believable figure reflecting the remodeling work from the seller’s list price.

Location & Neighborhood

•Suburbs or Country.

Pros: Generally less expensive. Often newer. Tract homes are conforming. More home for the money.

Cons: More time in traffic if driving to town for work. Further away from entertainment options cities offer.

•Urban.

Pros: Closer to many employers. Walking distance to theaters, restaurants, schools. Many period homes offer more distinctiveness in styles.

Cons: Often noisier. Higher crime rates. More expensive.

•Busy Streets.

Pros: Often homes on streets with more traffic are thousands of dollars cheaper. If noise doesn’t bother you, don’t pass up homes on busy streets. Drive by at different times of the day / week to ascertain noise levels.

Cons: These types of homes will always sell for less than others in the same area. If bedrooms are located near the front of the home, sleep may be disturbed.

•Cul de sac.

Pros: Number one choice of buyers with children.

Cons: Less privacy, neighbors know more about you.

•Corner lots.

Pros: Often larger lots. Fewer neighbors. More visibility.

Cons: More traffic noise. More vulnerable to vehicles jumping the curb. Kids might trespass at the corner. More sidewalk to shovel in winter.

Type of Home

•Single Family.

Pros: Good appreciation. Opportunity for gardens. More privacy. Quieter.

Cons: More expensive than our next category. More maintenance.

•Condos, Townhomes, Cooperatives.

Pros: Less expensive than comparable single-family homes. Generally newer so fewer repairs. Lock-n-go lifestyle. No yard or exterior maintenance.

Cons: Less privacy. Noisier. Common walls and/or floors and ceilings. Sometimes no private yard or balcony.

Number of Stories

•Single Story.

Pros: Easy wheelchair access. Some medical conditions such as bad knees make it hard for certain individuals to climb stairs. Easier to clean.

Cons: Can be noisier if stereos or televisions are located on the same floor as bedrooms. Some people feel safety is compromised if bedrooms are located at ground level. More of the lot is absorbed by living quarters.

•More than One Story.

Pros: More living space on same foundation than a ranch home. Less noise if entertaining on lower level while other family members sleep upstairs.

Cons: More trips up and down the stairs to carry stuff to bedrooms. If laundry rooms are on the second floor, washer leaks are major. Might need dual vacuum cleaners. It is difficult to maintain consistent temperatures on each level without dual heating and cooling units.

•Split Levels.

Pros: Often less expensive if purchased with lower level unfinished. Higher ceilings are appealing. Downstairs family room separates noise levels from upstairs. More square footage on same size lots as ranch homes.

Cons: Less storage space. Hassle to take trash downstairs and carry groceries upstairs or vice versa. Kitchens tend to be smaller.

Interior Specifications

•Number of Bedrooms.

Pros: Common minimum requested configurations are 3 bedrooms. Newer parents prefer bedrooms located on one level.

Cons: 2 bedrooms appeal primarily to first-time home buyers, singles or seniors. However, don’t discount a two bedroom if an extra den will satisfy your space requirements.

•Number of Bathrooms.

Pros: More than one bath is preferred by most people. One bath homes are often less expensive.

Cons: Don’t pass up a one bath home is there is room to add a second bath. Sometimes it costs less to put in an extra bath than it does to buy a two-bath home.

•Square Footage.

Pros: larger spaces offer more room and cost less per square foot than smaller spaces.

Cons: Don’t be misled as lay-out is more important than actual square footage. Sometimes well designed smaller spaces appear larger.

•Bonus Rooms.

Pros: Extra space for media rooms, art studios, children’s playrooms, gyms, den/study.

Cons: More expensive.

Garages

•Attached.

Pros: Cheaper to build. Convenient if raining or snowing.

Cons: Higher noise levels inside the home from cars. Some people feel they are an eye sore. If the garage door to the house self locks, you could get locked out at an inopportune time.

•Detached.

Pros: Can be tucked away from site lines. Quieter.

Cons: More expensive to build. Farther to walk in bad weather.

Additional Considerations

•School districts.

•Special amenities such as fireplaces, pools or spas.

•Condition of plumbing, electrical, heating & cooling units.

•Available utilities such as cable or DSL, satellite.

•Sewer, cesspool or septic connections.

•Fixers. If you’re handy with tools, you might save a lot of money if you consider homes that need minor improvements, fresh paint or new carpeting.

Popular Types of Mortgage Loan Programs

•Fixed-Rate Mortgage Types

This is the granddaddy of them all. Now you can choose from 10-year, 15-year, 20-year-, 30-year, 40-year and even 50-year fixed-rate mortgages, all of which are completely amortized.

•FHA Loans

FHA mortgage loan types are insured by the government through mortgage insurance that is funded into the loan. First-time home buyers are ideal candidates for an FHA loan because the down payment requirements are minimal and FICO scores do not matter.

•VA Loans

This type of government loan is available to veterans who have served in the U.S. Armed Services and, in certain cases, to spouses of deceased veterans. The requirements vary depending on the year of service and whether the discharge was honorable or dishonorable. The main benefit to a VA loan is the borrower does not need a down payment. The loan is guaranteed by the Department of Veteran Affairs, but funded by a conventional lender.

•Interest-Only Mortgage Types

Calling a mortgage loan type an “interest-only mortgage” is a bit misleading because these loans are not really interest only, meaning the borrower pays only interest on the loan. Interest-only loans contain an option to make an interest-only payment. The option is available only for a certain period of time. However, some junior mortgages are indeed interest only and require a balloon payment, consisting of the original loan balance at maturity.

Hybrid Types of Mortgage Loans

•Option ARM Mortgage Types

Option ARM loans are complicated. They are adjustable-rate mortgages, meaning the interest rate fluctuates periodically. Like the name implies, borrowers can choose from a variety of payment options and index rates. But beware of the minimum payment option, which can result in negative amortization.

•Combo / Piggyback Mortgage Loan Types

This type of mortgage financing consists of two loans: a first mortgage and a second mortgage. The mortgages can be adjustable-rate mortgages or fixed-rate or a combination of the two. Borrowers take out two loans when the down payment is less than 20% to avoid paying private mortgage insurance.

•Adjustable-Rate Mortgage Types

Adjustable-rate mortgages (ARMs) come in many flavors, colors and sizes. The interest rate fluctuates. It can move up or down monthly, semi-annually, annually or remain fixed for a period of time before it adjusts.

•Mortgage Buydowns

Borrowers who want to pay a lower interest rate initially often opt for mortgage buydowns. The interest rate is reduced because fees are paid to lower the rate, which is why it’s called a buydown. Buyers, sellers or lenders can buy down the interest rate for the borrower.

Specialty Mortgage Loan Types

•Streamlined-K Mortgage Loans

Like the 203K loan program, FHA has another program that provides funds to a borrower to fix-up a home by rolling the funds into one loan. The dollar limits for repair work are lower on a Streamlined-K loan, but it requires less paperwork and is easier to obtain than a 203K.

•Bridge / Swing Loans

These types of mortgage loans are used when a seller has put a home on the market — but it has not yet sold — and the seller wants to borrow equity to buy another home. The seller’s existing home is used as security for a bridge (also called swing) loan.

•Equity Mortgage Loan Types

Equity loans are second in position and junior to the existing first mortgage. Borrowers take out equity loans to receive cash. The loans can be adjustable, fixed or a line of credit from which the borrower can draw funds as needed.

•Reverse Mortgages

Reverse mortgage are available to any person over the age of 62 who has enough equity. Instead of making monthly payments to the lender, the lender makes monthly payments to the borrower for as long as the borrower resides in the home. The interest rate can be fixed or adjustable.