FSBO Central Real Estate Online-(Mortgage walkthrough information)

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Home Ownership -

The Great American Dream

You're buying a New Home. Congratulations!

Now that you've chosen your new home, you may want to "walk through" the paper process step-by-step. We hope this information will help clarify the Escrow, Title Insurance and loan processes and procedures you are about to begin.

How does the escrow proceed?
The authority given to an escrow holder is strictly limited by instructions provided by the buyer and seller. The escrow officer is authorized by instructions to allocate funds for items during the escrow period, such as real estate commissions, title insurance, liens, recording fees, and other closing costs. Instructions also specify the method of collecting funds, proration of insurance and taxes and time limitations on settling the transaction. By holding all money and documents, the escrow process assures buyers and sellers that their mutual instructions will be met.

Confidentiality is another important aspect of escrow. To effectively handle a transaction, your escrow officer must be instructed as to the required terms necessary to close. The officer will discuss escrow matters only with the parties directly involved, specifically the buyer, seller, lender, and real estate agent. No one else has access to this information, except through proper legal procedures. The escrow officer retains impartiality and confidentiality concerning the real estate process.

Closing Escrow
Once all conditions are met, the escrow holder causes the necessary documents to be recorded and disburses funds according to the instructions given to the escrow officer. Escrow fees are included in these costs, and are based on the sales price of the property; the loan amount, and services required. Executed loan documents are forwarded to the lender.

As the Buyer, what do I provide the escrow?

Deposit funds to pay the purchase price, and funds for property and closing costs.
Provide deed of trust or mortgages needed to secure the loan.
Arrange for borrowed funds to be deposited into escrow.
Provide, if required, documents such as inspection reports, insurance policies, and lien information to verify compliance with the instructions.

How does the loan process work?
If you are working with a real estate agent and/or builder's sales consultant, they can provide you with current financing information to help you in selecting a lender. The lender might be a bank, savings and loan or mortgage company. However, the relationship between the lender and realtor are not regulated, so it is a good idea to comparison shop on you own before making any final decisions.

You will be required to complete a loan application which will require personal and financial information. The following information will be necessary at the time of loan application:

Names and Addresses of each employer - past 2 years.
Gross Monthly Salary.
Residential History - past 7 years.
Names, Addresses, Account numbers, Balances of all Checking and Savings Accounts, 2 months worth of bank statements.
Names, Addresses, Account if's, Balances and Monthly Payments for all Open Loans.
2 years tax returns with all schedules.
W2's (2 years) & current check stubs.
Picture ID with proof of Social Security Number.
Addresses of other real estate owned.
Loan information on other real estate owned.
Estimated value of Furniture and Personal Property.
Certificate of Eligibility or DD214's (VA Only).
Money for Credit Report & Appraisal.

After I submit my loan application.. then what?
The lender will begin the qualification process including verification of information submitted on the application and appraisal of the value of the property.

The lender will require that you obtain hazard/fire insurance. However, if you are buying a condominium, there may already be a master hazard policy. You will need to check on this. Also, check with your insurance agent for additional coverage for your personal property. The lender will also require that you obtain title insurance and may have other requirements that will need your attention prior to the close of escrow. You should take care of these requirements well in advance. If buying through a realtor, it is their responsibility to help you with gathering this information.

A.L.T.A. Plain Language Residential Owner's Policy
With this policy a title company insures the purchaser of residential real property, in which he will reside to the same extent as the Standard Coverage Owner's Policy. In addition, this policy affords protection against defects which are insured against in the extended coverage policy if that defect interferes with the use of the property for the residence of the insured. Your title policy provides Coverage for Labor or Mechanics Liens and forced removal of the main structure on the property because it encroaches onto adjoining land or an easement. (Removal of boundary walls or fences is not included in the coverage).

Lenders Title Insurance

A.L.T.A. Standard Coverage Loan Policy
With this policy, the title company insures the lender, based upon a search of the public records only, that:

The borrower owns the estate or interest in the property which is used as collateral for the loan.

There are no defects, liens or encumbrances on the title which the lender was unaware of, or are not shown as an exception from coverage.

There is a right of access to and from the property.

There is marketable title to the property.

The insured deed of trust is valid and enforceable (usury or truth in lending laws excluded).

What do I need to do before my appointment to sign the escrow papers?

Cashier's Check. Obtain a cashier's or certified check made payable to the title company in the amount indicated to you by your escrow officer or you may choose to wire funds. Contact your escrow officer to obtain wire instructions. A personal check may delay the closing since a title company is required to have "good funds" (check has cleared) before disbursing funds from escrow. Similarly, an out of state check could cause a delay in closing due to delays in clearing the check.

Lenders Requirements. Make sure you are aware of your lender's requirements and that you have satisfied those requirements before you come to the title company to sign your papers. Your loan officer can assist you.

Hazard/Fire Insurance. Be sure to order your hazard/fire insurance once your loan has been approved. Then call your escrow officer with the insurance agent's name and phone number so that he or she can make sure the policy complies with your lender's requirements. You must have your insurance in place before the lender will send money to the title company.

Identification. Please bring a valid driver's license, passport of picture I.D. with you to the title company. This is needed so that your identity can be verified by a notary public. It's routine, but a necessary step for your protection.

After signing the closing documents

When does the transaction actually "close"?
After you have signed all the necessary instructions and documents, the escrow officer will return them to the lender for a final review. This review usually occurs within a few days and upon completion, the lender is ready to fund your loan and advises the escrow officer.

Usually the Deed and the Deed of trust are recorded within one working day of the escrow's receipt of loan funds. This completes the transaction and signifies the "close of escrow."

Make sure you are aware of your lender's requirements and that you have satisfied those requirements before you come to the title company to sign your papers.

Be sure to order your hazard/fire insurance once your loan has been approved. Then call your escrow officer with the insurance agent's name and phone number. You must have your insurance in place before your lender will send the closing funds to the title company.

You'll need to bring a cashier's check to the title company for the remainder of the purchase price. Get the exact amount of the balance due from your escrow officer by telephone before your appointment for signing the papers. The check should be made payable to the name of the title company.

In the event that you wish to transfer funds from another escrow or wire transfer funds, arrangements must be made in advance with the escrow officer.

Please bring either your valid drivers license, passport, or picture I.D. with you to the title company. This is needed so that your identity can be verified by the notary public. It's routine, but a necessary step for your protection.

Decide how you wish to hold title to you new home. You need to make this decision prior to your escrow appointment. We suggest you consult a lawyer, tax consultant or other qualified professional before you decide.

Ask your builder when your keys for your new home will be released.

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP: Community property with right of survivorship is a method of ownership by husband and wife that vests title in the surviving spouse upon the death one of the spouses.

COMMUNITY PROPERTY: Arizona is a community property state. There is a statuary presumption that all property acquired by husband and wife is community property. Community property is a method of co-ownership for married persons only. Upon death of one of the spouses, the deceased spouse's interest will pass by either a will or interstate succession.

SOLE AND SEPARATE: Real Property owned by a spouse before marriage or any acquired after marriage by gift, devise, descent or specific intent. If a married person acquires title as sole and separate property the spouse must execute either a disclaimer deed or a quit claim deed.

JOINT TENANCY WITH RIGHT OF SURVIVORSHIP: An undivided interest in property taken by two or more joint tenants. The interest must be equal; occurring under the same conveyance, and beginning at the same time. Upon death of a joint tenant, the interest passes to the surviving joint tenant or tenants, rather than to the heirs of the deceased. If a married couple acquires title as joint tenants with right of survivorship, they must specifically accept the joint tenancy to avoid the presumption of community property

TENANCY IN COMMON: A method of co-ownership where parties do not have survivorship rights and each owns a specific undivided interest in the entire title.

CORPORATION: Any group of people "incorporating" by following certain statutory procedures may take title to real property in the name of the corporation.

GENERAL PARTNERSHIP: Title may be taken in the name of a general partnership duly formed under the laws of the state of the formation of the partnership. A partnership is defined as a voluntary association of two or more persons as co-owners in a business for profit.

LIMITED PARTNERSHIP: A partnership formed by two or more persons under the laws of Arizona or another state and having one or more general partners and one or more limited partners. A certificate of limited partnership must be filed in the Office of the Secretary of State, a certified copy of which must be recorded.

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