This presentation on buying a Home is presented to you by DFW Metro Housing Presented by Colin Rosenthal TEL FAX

What does it take to own your own home? 1) Mortgage payment 2) Utilities 3) Buy a lawn mower? 4) How about the leaking Tap or broken stove? Please remember when calculating what you can afford per month that there are many hidden items that will come up when owning a home. These items never came up or were paid by your landlord when you were renting.

Never over extend your self Most of the recent foreclosures happened because people over extended them selves when buying their home. EG You paid $800 a month in rent and now have to pay $1000 a month in your mortgage and have a hot water heater that went out this month and had to finance it at $100 a month for the next year?

Always leave yourself something in reserve for an emergency When planning your budget always think of an emergency and leave about a $100 or more to take care of items like the hot water heater or A/C. I always ask for a home owners warranty when presenting a contract but there is still a $65 deductible to pay Now say Hi to ASHA and her children

Asha and her children

Asha Smith and her 2 children Tyler and Faith Needed a home Once Asha had decided in March of 2008 that she was going to get her own home there was no stopping her. She persevered and overcame every obstacle and on January 8 th this year she moved into her Brand new home with the help of AHAP and TCHP

Only $890 a month for a Brand new home –Asha’s Home was appraised at $ and TCHP and AHAP together gave her $20000 towards the purchase of this new home. The $20000 was used to pay for the Down payment, Closing costs and the balance went to equity in the home. Her mortgage was for $92000 and her payment is $890 a month. All she had to invest was $1000 and be there to answer any questions that came during the processing of her loan and that came from AHAP.

What did it take Team work Every time she was asked for something no matter how small, she was on the ball and got it to them pronto. This is the only way you are going to get into your own home is with TEAM WORK

Each and Everyone Everybody is different so we will have to work with each of you depending on where you want to live and what your individual circumstances are

We have your home Now we have found a few homes that you like and are ready to submit a contract on the one you like the most. The reason I say a few homes is because we will always be asking the seller for concessions and often they will not negotiate or counter so we have to find a few nice home that you will like.

Chapter 4 Contracts The Four Family Contract is an 8 page contract that we will go through page by page. The Third party Financing Addendum is a 2 page form that we will go though If a home is older than 1980, we will also have to include a lead based addendum I always have you sign a get a home inspection form If the home belongs to a home owners association that this form must also be signed Finally there is always a sellers disclosure to be signed unless the home is a foreclosure

Contracts Page 1 At the top under paragraph 1 Parties First the sellers name below that the buyers name Paragraph 2 Next down the legal address of the home and also its physical address Paragraph 3 Next the down payment and the amount to be financed with the total selling price below that Paragraph 4 The financing arrangements Paragraph 5 The earnest money and the title company Paragraph 6A We always ask the seller to pay Title policy

Page 2 and 3 Paragraph 6C Who is supplying the survey Paragraph 6E section 2 Does the home belong to a home owners association Paragraph 7 B Page 3 of contract Sellers disclosure …Always required except when a foreclosure Paragraph 7 E We also always ask for a 7 days inspection contingency. This is the period you have if a problem is found with the home to cancel the contract if the seller will not repair the defect

Contract page 4 Paragraph 9 A The closing date is 10/31/2008 (If by this day the closing does not take place we have to file for an extension and if the seller has decided that he no longer wants to sell we are out of contract and out of luck as well. Paragraph 10 Possession only when funded. When you go to the closing, Only after all parties have signed will your lender fund the property. Only after funding has taken place is the home yours

Page 4 contract conditions –Paragraph 11 –Special Provisions or Condition of contract to purchase –This is where we would ask for the seller to participate in the DPAP, Fee and Buyers closing cost assistance. Anything else such as Fridge stays with house or leave anything in the home that is not considered a fixture. –Please note that when only asking for down payment assistance you insert this on the next page

Page 5, 6 and 7 Paragraph 12 This is when there is no DPAP involved where you would ask the seller to pay all the 6% closing costs of the buyer Paragraph 16: In case of a dispute are you willing to mediate? Page 6 paragraph 21 Full name and address with all your information. Both parties if 2 involved Page 7 Date of execution of contract by agent All the addendum that do with the contract Page 7 Paragraph 24 Buyers Signature

The execution of the contract At the bottom of page 7 under paragraph 24 the REALTOR who last handles the contract will insert a date of execution of both parties have signed. Page 8 of the contract is the realtor commission form and the title company execution of contract after receiving the earnest money from the buyer This contract is now executed and a legal document in any court of law

Signing the Contract Please initial the contract on the left bottom under seller from page 1-6 and sign on top of your name on Page 7 The same thing applies to all the other paperwork. You initial the first pages and sign the last page. Some pages are already signed by the seller. The Sellers Disclosure is always signed by the seller before you get it to initial and sign, This document is 5 pages long

The addenda and amendments Part of the real estate legalities also consists of various addenda and also amendments to the original contract. Items that normally are attached to a contract from day 1 Lead based addendum: If the home was built in 1979 or before it was painted with lead based paint.

Lead Paint Addendum The Federal government requires that you as the buyer are informed and also sign a Lead based Paint addendum telling you that there is a possibility that there could after all these years be lead paint on the home and that you have the right to have this inspected at your own expense

Get a Home Inspection As a realtor I always give my clients this form because having been burnt myself many years ago and buying a home with a major foundation issue I realize the importance of having a registered Texas Home Inspector, Inspect the home within 7 days of contract under Section 7 F on page 3. This of course in voluntary on your part and is completely up to you.

Home Owners Association Again if the home you are buying is part of a Home-owners association you are required to sign the necessary documents and the Home Owners association Mandatory membership Addendum form. Most of the time you are also required to pay about $100 registration as well

Third party Financing Addendum Another form used as part of the purchase is the Third Party Financing Addendum. This form is requesting a period of time to apply and be financed without loosing your earnest money. The normal term is for 30 days Max but sometimes sellers will only allow 15 days

Third Party Financing Cont If you have not cancelled the contract and made a request for return of earnest money by the time that 30 or 15 days days is up you will loose your earnest money. THUS THE IMPORTANCE OF THE TEAM and immediate communication and return of documents when requested by either Chris or ME

Third Party Financing Form Under term we try for 30 days The loan we use is always a fixed rate and at normally no more than 7% and the length of the loan is either 15 or 30 years at the same interest rate The amount of money you are requesting for the loan and the Max amount % of setup fee is normally no more than 3% The home must appraise at the selling price and please sign on page two and initial page one

Sign the Third party Financing addendum This addendum is signed on page two at the bottom

The Sellers Disclosure Federal law requires all sellers (Except Foreclosures) to supply the buyer with a Sellers Disclosure. In this disclosure they have to disclose anything they know about the property. Including plumbing, have there been any water dame claim, foundation issues etc. Everything they have done and experienced with the home while they owned it and anything they know about the home before they bought it.

Seller Disclosure This form the seller will sign and you as the buyer will receive it sometimes with the contract and sometimes after contract to sign. The contract will state that the seller has to supply it to you within 10 days of contract. You will in turn initial and sign it to be returned to the listing agent and the title company

The Cancellation of a Contract Once a contract has been cancelled forms are needed to legally cancel the contract Forms used to cancel: Termination of Contract Request for return of Earnest Money

Cancellation of Contract The cancellation of contract has to be done in a timely fashion or you will loose your earnest money. If you cancel because of a Home inspection the termination has to be signed and submitted before midnight on the 7 days after execution of contract. If cancellation is for refusal of financing you must cancel before midnight on either the 15 th or 30th day depending on the third party financing addendum

Request for return of earnest money The earnest money which sits in Escrow at the title company will only be returned if both the buyer and seller agree and sign the release of earnest money form. If you cancelled the contract on the 31 st days the seller has the right to retain the earnest,money but will not get it unless you sign the form allowing him to get it. On the other hand you will also not get it until the matter is decided in a court of law. Most Sellers and their agents on the other hand are easy to deal with and I seldom have a problem with the return of earnest money id the form have been filed on time

Finally I hope this presentation has given you more of an idea of what is involved in buying a home and Please feel free to call me 7 days a week at to answer any questions you may have. You may also visit my web-site at: or me at Thanks very much for your time, Colin Rosenthal

Closing costs Those horrible words In any real Estate transaction these are words you will always hear….Closing Costs Let us for simple calculating reasons let us say that we have found you a lovely home priced at $ You would like to submit a contract but need to know what you expenses are going to be and what you can afford. There are from both sides (Buyer and Seller) expenses which are called closing cost associated with this contract that are going to cost both the buyer and seller lots of money.

Sellers Closing Costs The Home is priced at $ The seller will have to pay the following: Listing agent and buyers agent commissions normally about 6% or $6000 Title policy and property taxes year to date, plus title and legal fee normally these costs amount to about 3% or $3000 This mean that the sellers closing costs are about $9000.

The Actual Buyers closing costs The Actual buyers closing costs are as follows: Loan setup fees, prepaid Insurance and Taxes on the home. Pre-paid FHA insurance as well as other hidden title items. These expenses normally add up to about 6% or in this case $6000 on our $ home we are purchasing.

Buyers closing cont. Down payment of Between 3.5 and 5% of the price of the home with an FHA Loan. In this case 3.5% or $3500. Therefore you the buyer will need to have a total of $9500 ($6000 plus $3500) in the bank to be able to purchase THIS HOME FOR $ $$$$$$$$$$$$$$$$$$$$$$$$$$

Buyer Closing Costs page 4 Now we have a total of about $9500 we will need to buy the home including the down payment The best type of mortgage loan to get today in this current market is an FHA 201B FHA loan which depending on you earning capacity and credit score requires a minimum of 3.5% down payment

The Problem Very few people have $9500 ready and waiting to buy a home and this is where our knowledge and experience help you get a home of your own: There are various different methods of overcoming this problem but this is where our team work begins.

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