Real
Estate Buyer Frequently Asked Questions (FAQ)
Closing: Can I bring a personal check to a
property closing?
No, you will need a cashier's check or certified check for closing.
This is to insure that the funds are equivalent to cash.
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Closing: So what will happen at closing?
At the closing, you will most likely sit at a table with me, the
broker for the seller, probably the seller, and a closing agent. The
closing agent will have a stack of papers for you and the seller to
sign. While he or she will give you a basic explanation of each paper,
you may want to take the time to read each one and/or consult with me to
make sure you know exactly what you are signing. After all, this is a
large amount of money you are committing to pay for a lot of years!
Before you go to closing, your lender is required to give you a booklet
explaining the closing costs, a "good faith estimate" of how much cash
you'll have to supply at closing, and a list of documents you will need
at closing. If you do not get those items, be sure to call your lender
BEFORE you go to closing. Be sure to read the HUD booklet on settlement
costs . It will help you understand your rights in the process. Don't
hesitate to ask questions, I will be happy to answer them to the best of
my ability.
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Closing: What are closing costs?
Closing costs are the costs associated with processing the paperwork
to buy a house. Closing costs which you will pay at settlement average
3-4% of the price of your home. These costs cover various fees your
lender charges and other processing expenses. When you apply for your
loan, your lender will give you an estimate of the closing costs, so you
won't be caught by surprise.
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Closing: What if my offer is rejected?
Your original offer is often rejected for one reason or another. But
do not let that stop you. Now you begin negotiating. I will help you.
You may have to offer more money, but you may ask the seller to cover
some or all of your closing costs or to make repairs that would not
normally be expected. Often, negotiations on a price go back and forth
several times before a deal is made. Just remember, do not get so caught
up in negotiations that you lose sight of what you really want and can
afford! I can help you keep on track.
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Closing: What is an escrow account?
An escrow account is an account that is established by your lender to
pay your real estate taxes, homeowner's insurance and mortgage insurance
on your behalf.
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Closing: What is earnest money?
Earnest money is the deposit you make on the home when you submit
your offer. Earnest money proves to the seller that you are serious
about wanting to buy the house. When you make an offer on a home, your
real estate broker will put your earnest money into an escrow account.
If the offer is accepted, your earnest money will be applied to the down
payment or closing costs. If your offer is not accepted, your money will
be returned to you. The amount of your earnest money varies.
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Closing: What is equity?
Equity is the value of your property that is in excess of claims
against it. When you make loan payments, the principle part of your
payment increases your equity in your home.
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Closing: What law establishes escrow account
guidelines?
Real Estate Settlement Procedures Act (RESPA) is a federal law that,
in general, dictates how lenders establish and maintain an escrow
account for you. A few states also have regulations regarding an escrow
account for a homeowner within their state; if the state does not have a
regulation, the governing of your escrow account falls back to RESPA
regulations. Florida has strict escrow account regulations.
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Closing: When I find the home I want, how much
should I offer?
I can help you in this area by providing answers to these questions:
Is the asking price in line with prices of similar homes in the area? Is
the home in good condition or will you have to spend a substantial
amount of money making it the way you want it? You should get a
professional home inspection before you make your offer. I can help you
arrange one. How long has the home been on the market? If it's been for
sale for a while, the seller may be more eager to accept a lower offer.
How much mortgage will be required? Make sure you really can afford
whatever offer you make. How much do you really want the home? The
closer you are to the asking price, the more likely your offer will be
accepted. In some cases, you may even want to offer more than the asking
price, if you know you are competing with others for the house.
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Closing: Where do you go to close on a
property?
You will go to a local title company or attorney who will perform the
closing. All your mortgage documents will be waiting for you at closing
as well as any other documents requiring your signature.
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Closing: Who chooses the Title Company?
In Broward County it is customary that the seller selects the title
company, however, this can be negotiated.
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Financing: Can you apply for a loan before
you've found a property?
Yes! You have the opportunity to get pre-approved for a mortgage
today. A pre-approval will take into consideration your personal
information such as income, debt and credit history. If you receive a
pre-approval, we will use this information to determine your maximum
loan amount. Once you find a property we can complete the remaining
pieces of the application.
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Financing: Do you know about any first-time
home buyer programs?
Absolutely! For many first time home owners, the down payment is the
biggest obstacle to home ownership. If this is the case for you, there
are programs to assist you. Another option is to select a loan with
"premium pricing." These loans are displayed on the Cendant site with a
negative number of points. If the number of points associated with a
rate is negative, this means that the lender will pay those points to
the borrower at closing instead of the borrower paying points to the
lender. These funds are applied toward closing costs and offered in
exchange for a slightly higher interest rate.
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Financing: Do you need help choosing a lender?
Trying to choose a lender can be a difficult task. Start by asking
for referrals from friends, family, neighbors and your real estate
agent. If you are building, ask the builder for a referral, since most
are willing to help you find financing. Find out what kind of rates the
lender offers and the terms of the loan, especially on adjustable rate
mortgages (ARM). Find out what their "junk" fees are.
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Financing: Do you need to sell your existing
home before you apply for a new mortgage loan?
The answer to this question is "No". You can apply for a new mortgage
loan before you sell your current home. However, depending on your
income and debt levels, you may be required to sell your current home
before you can close on your new loan.
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Financing: Have you ever wondered when you
should start the mortgage process and how much of a loan you can afford?
The best time to look for a mortgage is before you look for a house.
This enables you to determine the amount of money you can borrow and how
much house you can afford.
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Financing: How do I know if I can get a loan?
If the amount you can afford is significantly less than the cost of
homes that interest you, then you might want to wait awhile longer and
save up your money. But before you give up, why don't you contact me? I
may be able to help you evaluate your loan potential and find something
that fits your budget. I know about many kinds of mortgages the lenders
are offering and I can help you choose a lender with a program that
might be right for you. Another good idea is to get pre-qualified for a
loan. That means you go to a lender and apply for a mortgage before you
actually start looking for a home. Then you will know exactly how much
you can afford to spend, and it will speed the process once you do find
the home of your dreams.
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Financing: How much money will I have to come
up with to buy a home?
The amount of money required to purchase a home depends on a number
of factors, including the cost of the house and the type of mortgage you
get. In general, you need to come up with enough money to cover three
costs: earnest money, down payment and closing costs. When you make an
offer on a home, your real estate broker will put your earnest money
into an escrow account. If the offer is accepted, your earnest money
will be applied to the down payment or closing costs. If your offer is
not accepted, your money will be returned to you.
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Financing: How much of a down payment will you
need to purchase a home?
The minimum down payment required depends on the loan program you
select. Most lenders offer loans with various down payment options,
including no down payment and low down payment programs.
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Financing: How often do mortgage interest
rates change?
Due to market fluctuations, interest rates are subject to change
daily. Many lenders will allow you to lock and/or float the interest
rate once you have been approved for a loan. Check with your lender
about any interest rate protection they may offer.
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Financing: I am a single parent, how would I
go about buying a home?
Although you do not have the benefit of two incomes on which to
qualify for a loan, there is no reason that you cannot become a
homeowner. Become familiar with the process, pick a good real estate
broker like LivingSpaces Realty Associates, and think about getting
pre-qualified for a loan. You can also contact me at (954) 817-6857 and
I can put into contact with several mortgage brokers that may be able to
assist you.
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Financing: I have poor credit, and I don’t
have much for a down-payment, can I become a homebuyer?
Yes, there are many programs available that may allow you to buy a
home. You may be a good candidate for one of the federal mortgage
programs that are available. A good place for you to start is by
contacting one of the HUD-funded
housing counseling agencies. They can help you sort through your
options. In addition, contact your local government to see if there are
any local homeownership programs that might work for you. You can also
contact me at (954) 817-6857 and I can put into contact with several
mortgage brokers that may be able to assist you.
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Financing: If you finance 100% of the sales
price, why can't you finance the closing costs on a VA loan?
The Veteran's Administration does not permit the loan amount to
exceed the value of the home. Therefore, 100% of the sales price can be
financed, but all other costs must be paid at closing.
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Financing: In addition to the mortgage
payment, what other costs do I need to consider?
You will be responsible for paying your monthly utilities. These may
consist of water, sewer, trash removal, electricity, and gas. If your
utilities have been covered in your rent, this may be new for you. I can
help you get information from the seller on how much utilities normally
cost for the home. In addition, you might have homeowner association
(HOA) or condo association (CA) dues. You will also have property taxes,
consisting of school board, city and county taxes. Taxes normally are
rolled into your mortgage payment. I will be able to help you anticipate
these costs so that you can budget accordingly.
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Financing: So what will my mortgage cover?
Most loans have 4 parts: principal, the repayment of the amount you
actually borrowed; interest, payment to the lender for the money you've
borrowed; homeowners insurance, a monthly amount to insure the property
against loss from fire, smoke, theft, and other hazards required by most
lenders; and property taxes, the annual city/county taxes assessed on
your property, divided by the number of mortgage payments you make in a
year. Most loans are for 30 years, although 15 year loans are available,
too. During the life of the loan, you will pay far more in interest than
you will in principal, sometimes as much as two or three times more!
Because of the way loans are structured, in the first years you will be
paying mostly interest in your monthly payments. The interest payment is
deductible on your federal income taxes. In the final years, you will be
paying mostly principal.
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Financing: What are ARM Loans?
With Adjustable Rate Mortgages (ARM), the interest rate can change,
so your monthly payment may increase or decrease. Most ARMs have rate
caps to regulate the amount the interest rate for a loan can increase or
decrease over the lifetime of the loan. The interest rates are usually
lower for ARMs than for fixed rate loans during the first few years, so
ARMS allow buyers to purchase more expensive homes than they could with
a fixed rate loan.
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Financing: What are FHA Loans?
The Federal Housing Administration (FHA) insures some mortgage loans
so that more lenders are willing to make loans to borrowers who might
not be able to qualify for other loan types. This is true for borrowers
with sketchy credit histories or because of high debt-to income ratios.
With a FHA insured loan, a homebuyer can make a down payment of as
little as 3 percent. The FHA charges the borrower an upfront mortgage
insurance premium fee, plus a monthly charge on all loans.
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Financing: What are VA Loans?
The Veterans Administration (VA) created a loan program to help
military veterans purchase homes. VA loans require no down payment.
Veterans, current military personnel and spouses of veterans who died of
service-related injuries may apply for VA loans. Certification of
eligibility is required. If you choose to apply for a VA loan, please
make sure that the person with VA eligibility is listed as the primary
borrower.
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Financing: What are fixed rate loans?
With a conventional fixed rate loan, the interest rate charged
remains fixed throughout the life of the loan and the monthly payments
do not change. While a fixed rate loan offers the borrower security that
their payment will not increase, they also do not allow the borrower to
take advantage of dropping interest rates. The borrower will need to
refinance with a new loan to reduce the interest rate. Fixed rate
mortgages are usually 15 or 30 years, but loans of up to 40 years can be
found with some lenders. The longer the term of the mortgage is, the
lower the monthly payment.
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Financing: What are lease-options and
lease-purchase options?
Buyers who lack funds to make a down payment might want to consider
using a lease-option or a lease-purchase agreement. With a lease-option
agreement, the buyer leases the home for a specified amount of time,
usually 12 to 24 months, after which he/she has the option to buy the
home at a price agreed upon during the lease term. With a lease-purchase
option, the buyer leases the property for an agreed upon amount of time
and is obligated to purchase the property when the lease expires.
Lease-option and lease-purchase tenants may have to pay an above market
rent and in return they receive rent credits toward the down payment on
the property.
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Financing: What are points?
One point is one percent of the loan amount (for example, on a
$100,000 loan, 1 point equals $1,000). Lenders usually will give a lower
interest rate depending on the number of points a borrower is willing to
pay.
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Financing: What are the different type of
loans available?
Loans can be categorized as either conventional or government backed.
Some of the differences between these types of loans are: conventional
loans will require the borrower to pay for private mortgage insurance
(PMI) if the loan is for more than 80 percent of the purchase price. The
government backed loans are known as the Federal Housing Administration
(FHA) insurance and the Veterans Affairs (VA) guarantee. The government
has "backed" these loans with either insurance or a guarantee.
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Financing: What documents do you need to
complete a loan application?
Depending on the loan program you are applying for you may be asked
to provide a variety of documents. Documents may include but are not
limited to: a fully executed agreement of sale for the property being
purchased, two months bank statements for all accounts, a HUD1
settlement statement on the property you are selling, copy of your
recent pay stub, previous W2s, divorce decree, copy of a rental lease,
homeowner's insurance policy, flood insurance policy, and any other
documents that may be required to approve your loan.
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Financing: What does "Pre-Qualification" mean?
In a pre-qualification, you will be asked basic information about
yourself and the type of home you are interested in buying. You will
have the opportunity to view various mortgage programs and their rates.
This will help you narrow down which mortgage programs best fit your
needs before you apply. If you'd like to determine the maximum loan
amount you may qualify for, you can visit the calculator section of the
Cendant site. You can save this information for a future visit by
registering on the site.
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Financing: What does a mortgage lender
consider when reviewing a loan application?
There are three categories of information most lenders look at when
reviewing a loan application. The applicant's personal information, the
subject property information and the mortgage program information.
Personal Information includes your income, assets, debts and credit
history. This information is used to help determine your ability to
repay the loan. Property Information includes using an appraiser to
prepare an appraisal report on the property. The appraiser compares your
home to other similar homes in your area to determine that the loan
amount being requested is acceptable to the lenders investors. The
mortgage program information includes such factors as down payment
required, repayment terms and length, points, and interest rates.
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Financing: What does it mean to have a
floating rate and what does it mean to lock-in a rate?
These terms are used to describe interest rate protection plans for
borrowers who have not yet closed on a property. Many lenders offer this
type of rate protection for borrowers. Due to market fluctuations,
interest rates are subject to change daily. In order to obtain a
specific rate/point combination you must "lock in" your rate with your
lender. You are locked into that rate as long as your loan closes by the
predetermined expiration date. Your monthly mortgage payments will be
calculated based on your locked in interest rate. If the lender offers a
floating rate and interest rates decrease, the lender may allow you to
"float" your interest rate down to the new lower level.
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Financing: What is a 4506 form?
A 4506 form is an IRS form that authorizes the mortgage lender to
obtain copies of tax returns directly from the IRS on the borrower. Some
lenders may require this form to be completed before approving a loan.
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Financing: What is a Truth in Lending
statement?
The Truth in Lending statement provides detailed information about
the interest charges and finance charges that you will incur. It defines
the cost of your loan expressed as the APR, the amount of interest
you'll pay in dollars, and the total of your payments if you make the
minimum payment required over the life of the loan.
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Financing: What is a balloon mortgage?
A balloon mortgage is a mortgage that is amortized over the full term
of the loan repayment period but at the end of a specified period the
balance of the mortgage comes due. Thus, a balloon payment needs to be
made. For example, with a 7-year balloon you would make monthly payments
for seven years that have been calculated based on a 30-year mortgage
payment. At the end of the 7 years, the remaining principal balance
would be due and payable in full.
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Financing: What is a down payment?
The down payment is a percentage of the cost of the home that you
must pay when you go to settlement. The more money you can put into your
down payment, the lower your mortgage payments will be. Some types of
loans require 10-20% of the purchase price. That's why many first-time
homebuyers turn to HUD's FHA for help. FHA loans require only 3% down -
and sometimes less.
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Financing: What is rate protection and how
does it work?
Some lenders offer interest rate protection plans. When you select a
rate protection program, the lender sets an interest rate and guarantee
this rate will not rise above that capped rate. If the rates go down,
your interest rate "floats down" with them. If rates increase, you will
close at the capped rate therefore you are protected from the increase.
The length of protection offered varies from program to program.
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Financing: What is seller financing?
Sometimes the seller is willing to finance the purchase of their
property. The buyer negotiates a note with the seller and then makes a
monthly payment to the seller, the seller then passes that payment on to
the mortgage company. If the seller is no longer making a mortgage
payment on the property, he/she simply accepts the down payment and
monthly payments from the buyer. The seller becomes the lender.
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Financing: What is the Mortgage Good Faith
Estimate?
The Good Faith Estimate (GFE) discloses estimated costs associated
with your mortgage transaction. The GFE, by Federal law, estimates the
lender's charges along with the local closing agent's charges and fees.
The GFE also includes estimated amounts for real estate and property
taxes and homeowner's insurance.
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Financing: What paperwork will be necessary
during the mortgage process?
Once you have submitted your application form, the lender will send
you a complete loan package including documents for your review and
signature. All you need to do is review the application for accuracy,
sign where indicated and return the package, along with any requested
documentation. Paperwork will vary by lender as well as the speed the
documents are processed. Starting early on this process is beneficial to
your home buying process.
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Financing: What's the difference between
installment and revolving debt?
Installment debt refers to a loan in which you repay a set amount on
a regular basis that will pay off the entire loan in a specified amount
of time. This may be a car loan, student loan etc. Revolving debt has no
set term or payment, i.e. credit cards.
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Financing: Where can you go to get a loan?
Mortgage Bankers offer a variety of mortgages and some offer
computerized loan origination networks, which list all mortgage
programs, rates and fees offered by a variety of lenders. Mortgage
Brokers will work with almost any borrower, even those with sketchy
credit. Mortgage brokers work with almost any lender to find an
"appropriate" mortgage for the homebuyer and they do all the paperwork.
Banks, Thrifts, or Savings and Loan give loans to buyers with "B" and
below credit ratings.
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Financing: Why is the Annual Percentage Rate
(APR) different from the interest rate?
The APR is a rate that reflects the total cost of your mortgage loan
expressed in terms of an annual interest rate. The APR reflects factors
including the interest rate on your mortgage loan, the term of the loan,
and the other applicable costs of financing such as points, fees and
certain closing costs. Your monthly payment is calculated based on the
mortgage note rate, not the APR. The APR will be higher than your
interest rate, especially if you are paying any points.
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Financing: Why is the number of points
associated with a rate sometimes a negative number?
If the number of points associated with a rate is negative, this
means that the lender will pay those points to the borrower at closing
instead of the borrower paying points to the lender. These funds are
then applied toward closing costs. Funds for closing are offered in
exchange for a slightly higher interest rate.
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Financing: You found a great house but you
don't have much money for a down payment. What are your options?
There are a variety of programs that require a minimal down payment
and some lenders offer programs that require no money down. You may also
want to look at an FHA loan. These loans typically require a lower down
payment than conventional loans.
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Inspections: Is a termite inspection required?
For conventional loans, the investor or lender will require a termite
inspection if there are visual signs of infestation. All government
loans require a pest inspection on any structure that is ground level or
of total wood construction (including condos). There are termites in
Southwest Florida and even though many homes are concrete block
construction (CBS), it is wise and highly recommended to have any home
inspected for termites regularly.
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Inspections: What are Betterment Fees?
A betterment fee is a tax that can be assessed by the city for
properties that have been "bettered" by the construction of a public
water or sewer line. Therefore a property may have some assessments paid
but still have a water or sewer betterment fee. This fee is about $1,000
for water and about $2,000 for sewer. Most of the betterment fees are
for vacant lots in the older sections of the city. The fee is paid when
the building permit is purchased.
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Inspections: What are the facts on mold?
Here are some things to consider on this topic of growing importance.
There is no such thing as a mold-free home; and doorways, windows, and
heating, ventilation, and air conditioning systems serve as the main
points of entrance. Though mold is not hazardous to healthy people, it
can make asthma, hay fever, and allergies worse or cause infections in
people with compromised immune systems.
Mold thrives in moist areas and can ruin paint, wallpaper, drywall, and
wood surfaces. To keep the substance in check, the American Society of
Home Inspectors urges homeowners to quickly fix plumbing or roof leaks;
immediately wash and completely dry mold-infested areas; replace ceiling
tiles, carpeting, and other absorbent materials that have been
contaminated; clean and dry air conditioner, refrigerator, and
dehumidifier drip pans often; and use exhaust fans or open windows when
showering and cooking. They also are advised to keep indoor humidity
levels at 30 percent to 50 percent relative humidity; use bathroom
cleaning products that kill mold; add mold inhibitors to paint; and
avoid carpeting bathrooms.
Source: Copley News Service (12/23/02); Gary, Gene
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Inspections: What does the term "as-is" mean?
The term "as is" means the seller is not going to make any repairs to
the property. This, however, does NOT mean that the seller is exempt
from disclosing known problems with the property. The seller must
disclose all known defects to the buyer. Not disclosing known defects is
fraud, a very serious crime. Homes sold "as is" often bring a lower
sales price, as the buyer will make price adjustments for known,
necessary repairs. It is wise, and recommended, that the buyer have a
professional home inspection done on the property. I also recommend that
the buyer have a roof inspection done by a qualified roofing company, as
well as have the pool and air conditioning system inspected by a service
company.
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Inspections: Why is a home appraisal necessary
for getting financing? Can't you just use the tax value of the home?
Appraisals compare your home to other homes in your area that have
recently sold. Tax values obtained from your taxing authority can
sometimes be higher or lower and may not reflect the actual appraised
value of the home. An appraisal is necessary for the lender to justify
the loan amount being requested, as required by secondary investors. You
should not rely on the appraisal for assurance about the condition of
your home.
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Insurance: How do I know if I need flood
insurance?
Most standard homeowner's insurance policies do not cover loss due to
flood. The law requires that if your home is located in a Flood Hazard
Area you must purchase flood insurance. If you choose, you can obtain
flood insurance coverage even if you are not required to do so by the
lender. The law requires lenders to do a flood hazard determination on
all properties securing a mortgage. Be sure to verify your property's
elevation above sea level as this can effect your insurance rates.
Please visit FEMA for
more information.
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Insurance: How much title insurance do you
need?
The amount of title insurance needed is based on the value of your
home and the amount of your mortgage. Title insurance guarantees the
lender and/or the owner against the possibility that there may be an
unknown lien or discrepancies in ownership on the property they are
purchasing. Lenders need to be covered for the full value of the
mortgage; this policy is required and will vary from state to state.
There is a one-time fee for the policy that is paid at closing. You can
obtain a separate home owner's insurance policy to cover the full value
of your home. However, this additional policy is not required. It is
customary for the seller to provide the buyer with a new title insurance
policy in Broward County, however, this can be negotiable.
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Insurance: What amount of homeowner's
insurance is required?
Your homeowner's insurance policy should cover the cost to rebuild
the home. This insured amount may be higher or lower than the actual
purchase price as long as it meets the program requirements. The
insurance company you choose can give you an actual quote based on
specific information about the property.
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Insurance: Why is private mortgage insurance
(PMI) required?
Private mortgage insurance (PMI) is an actual insurance policy that
the lender takes out to protect them if the borrower defaults on the
loan. This protects the lender and at the same time, enables buyers with
minimal down payment the opportunity to purchase a home. PMI is usually
required for loans that are greater than 80% of the property value. Once
20% or more of equity has been achieved in a home, you can apply to have
the PMI removed from most loans.
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Privacy Policy: How will I use the personal
information you enter on this site? Can I guarantee your privacy?
I respect the fact that the information you provide me contains
confidential information which needs to be treated responsibly and with
care, just as I would treat private information entrusted to me by a
close friend or relative. Your information will only be used for the
purpose of meeting your real estate needs and will only be shared with
other real estate professionals who will honor this promise to you on a
need to know basis.
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Taxes: Are discount points tax deductible?
In many cases they are. We recommend that you contact your tax
preparer, Certified Public Accountant (CPA) or the IRS to obtain a
qualified opinion on the deductibility of points.
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Taxes: Can mobile homes qualify for Homestead
Exemption?
If you hold title to a mobile home and the land on which it is
situated and the mobile home is permanently affixed to the land, you can
make application to the Property Appraiser to have the property
appraised as real property. This application requires you to purchase an
"RP" sticker from the Tax Collector’s Office. You must make application
for the sticker between January 1st and March 1st. Homestead exemption
may be allowed if the mobile home meets the above qualifications and the
property owner meets the qualifications for the exemption. When no one
individual owns the land, as is the case with some mobile home parks,
the park is taxed for the land as a whole (real property) and the
improvements to the mobile home are taxed as Tangible Personal Property.
However, you still must buy a yearly "MH" tag for the mobile home itself
from the Tax Collector’s Office.
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Taxes: Can you tell me what my property taxes
will be?
I have displayed the annual property tax information for the
properties listed on this web site. Next to the tax amount is a
description of any tax exemptions. Property taxes are reassessed from
time to time so this amount may change. In Florida, there are several
tax exemptions available to qualified people. Permanent residents of
Florida are currently able to take a $25,000 tax exemption for their
"Homestead" residence. You should verify all tax information for
yourself carefully.
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Taxes: Does the Property Appraiser levy or
collect taxes?
No!! The Property Appraiser only appraises property and is neither a
Taxing Authority nor the Tax Collector and has nothing to do with the
amount of taxes levied or collected. However, as a property owner, you
are also interested in how the amount of taxes you pay is determined.
Three separate government entities each having unique and distinct
duties involved in producing your November tax bill. First, the Property
Appraiser annually appraises all property in Broward County at the
market value as of January 1. Next, each taxing authority within Broward
County sets their own millage rate based on the amount of tax dollars
necessary to fund their annual budget. Lastly, the Tax Collector takes
the amount of taxes due in order to bill and collect all taxes levied
within Broward County. The millage rate is multiplied by the value of
the property then divided by 1,000 to determine the amount of taxes. The
reason: "millage rates" are in dollars per thousand of assessed value.
You may also note that certain districts marked with an asterisk do not
deduct the Homestead Exemption value prior to calculating the amount of
taxes due. These districts are authorized by Florida Statute to use
assessed value without exemptions in their tax calculations.
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Taxes: How are property tax bills paid?
Depending on your loan program and state restrictions, your monthly
mortgage payment may or may not include funds to pay your property
taxes. If your payment includes money for property taxes these funds are
held in escrow by the lender and the lender pays your property taxes as
they are due. If your payment does not include property taxes, you are
responsible for paying them by the due date. Tax payments are due each
November 1 in Broward County.
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Taxes: How is property appraised by the Tax
Collector?
There are three approaches to value stipulated in the Florida
Statutes: 1.) "Direct Sales Comparison", 2.) "Replacement Cost", and 3.)
"Capitalization of Income". In Broward County, we use a computer
assisted mass appraisal system that incorporates elements of all three
approaches to value. Please keep in mind, however, that the best
evidence of the fair market value is when several properties similar to
yours sell. The property’s fair market value can be determined employing
one or more of three different methods. The first method is to find
properties like yours which have recently sold. However, their selling
prices must be analyzed very carefully to get the true picture. One
property may have sold for more than it was really worth because the
buyer was in a hurry to occupy it and would pay any price to get in.
Another may have sold for less than it was really worth because the
owner needed cash right away, so was willing to sell to the first buyer
making an offer. The Property Appraiser must always consider such over
or under sales price to arrive at a fair valuation of your property. The
second method is based on how much money it would take, at current
material and labor costs, to replace your property with one just like
it. If any improvements are not new, the amount of depreciation must
also be determined. The final method is used in addition to the other
two if you own property which does, or could, provide an income, such as
an apartment complex, retail store space, or office building. In that
case, the Property Appraiser must consider such dollar facts as your
revenues, operating expenses, insurance, maintenance costs, degree of
financial risk incurred by owning the property, and finally, the return
most people would expect to receive on that kind of property.
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Taxes: What causes the loss of the Homestead
Exemption?
The rental of an entire dwelling previously claimed to be a homestead
for tax purpose shall constitute an abandonment of said dwelling as a
homestead.
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Taxes: What documents are required to file for
a Homestead Exemption?
(1) Applicants must hold a valid Florida Driver's License or a valid
Florida I.D. Card. A "Valid in Florida Only" license is not acceptable
(if you drive a vehicle in Florida.) If you do not drive, please include
a copy of your Florida ID Card. (2) Florida vehicle license plate
numbers for all vehicles. (3) Voter's Registration Number or Declaration
of Domicile (if not a U.S. Citizen) if you do not wish to register to
vote. (There is a nominal charge for the recording of a Declaration of
Domicile.) (4) A Permanent Residency Card is required if you are not a
U.S. Citizen. (5) Social Security Number for applicant. If married, you
must also provide spouse's SSN. (6) Date of Birth for applicant(s). Your
most recently paid tax bill with Parcel Identification Number or
recorded Deed or recorded Contract for Deed.
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Taxes: What does "Just Value" mean?
"Just Value" - "Just Valuation", "Actual Value" and "Value" - Means
the price at which a property, if offered for sale in the open market,
with a reasonable time for the seller to find a purchaser, would
transfer for cash or its equivalent, under prevailing market conditions
between parties who have knowledge of the uses to which the property may
be put, both seeking to maximize their gains and neither being in a
position to take advantage of the exigencies of the other.
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Taxes: What if I disagree with the Property
Appraiser’s market value?
Annually in August, the Property Appraiser sends the Notice of
Proposed Property Taxes (TRIM Notice) to all property owners of record.
The Florida Constitution and Statutes require that we make appraisals at
market value. If you agree that the value of your property is at least
as much as shown in the notice, you do not have to do anything. However,
if you have any questions about this value we encourage you to contact
this Office. If, after contacting Property Appraiser, you still believe
that the appraisal exceeds the market value of the property, you may
file a petition before the Value Adjustment Board. This Board is created
by State Law and is comprised of three members of the Broward County
Commission and two Members of the School Board. Petitions to the Board
are available from the Property Appraiser’s Office. The Board appoints
Special Masters, who are qualified real estate appraisers or attorneys,
independent of the Property Appraiser’s Office, to conduct valuation
hearings The Special Masters are appointed only to determine is whether
the appraised value of the property exceeds its market value as of
January 1. Further details concerning this process can be obtained from
the Property Appraiser’s Office or on the TRIM Notice.
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Taxes: What is "Save Our Homes (SOH)" in
Broward County?
Save Our Homes is a constitutional benefit approved by Florida voters
in 1992 which places a limitation of 3% on annual assessment increases
on Homestead properties. For all property granted Homestead Exemption in
the prior year, that assessed value will be the base value for the
implementation of "Save Our Homes". Thereafter, the assessed value will
not increase more than 3% or the percentage change in the Consumer Price
Index, whichever is less. Exceptions to that limitation include new
additions or construction which escaped taxation in the past. Another
exception would occur when a homestead property sells: the assessed
value returns to the fair market value in the year following the sale.
That fair market value assessment then becomes the base value for "Save
Our Homes" purposes for the new owner/homestead applicant. S
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Taxes: What is Market Value according to the
Tax Collector?
Florida Law requires that the just value of all property be
determined each year. The Supreme Court of Florida has declared "just
value" to be legally synonymous to "full cash value" and "fair market
value." The fair market value of your property is the amount for which
it could sell on the open market. The Property Appraiser analyzes these
market transactions annually to determine fair market value as of
January 1. It’s no small task, however, since fair market value must be
determined for every piece of property in Broward County each year -
over 478,000 parcels of land, including thousands of acres of citrus,
pasture and farmland, buildings and improvements, and ±60,000 tangible
personal property accounts. The Property Appraiser must also oversee
±100,000 homestead exemptions as well as widow, widower and disability
exemptions. In addition, exemption eligibility must be determined for
certain religious, charitable, educational, and governmental use.
Finally, Agricultural classifications are reviewed annually.
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Taxes: What is Tangible Personal Property?
Tangible Personal Property refers to all assets used in a business or
rental activity that are subject to an ad valorem assessment. More
specifically, it is furniture, fixtures, tools, machinery, household
appliances, equipment, signs, leasehold improvements, supplies, leased
equipment -- whatever is used to generate income. Florida Statute
193.052 requires that all tangible personal property be reported each
year to the Property Appraiser’s Office. Anyone in possession of assets
on January 1 who has either a proprietorship, corporation or is a
self-employed agent or contractor, must file each year. Property owners
who lease, loan or rent property must also file. The deadline for filing
a timely return is April 1 of each year. For untimely filings, Florida
Statutes provide guidelines for the penalties that may be applied: 5%
for each month the return is filed late, 15% for unreported property and
a 25% penalty if no return is filed. Further information regarding
Tangible Personal Property may be obtained by writing or calling our
Office.
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Taxes: What is a Homestead Exemption?
The Homestead Exemption is a constitutional benefit of a $25,000
exemption removed from the assessed value of your property. It is
granted to those applicants who timely file by March 1, possess title to
real property and are bona fide Florida residents living in the dwelling
and making it their permanent home on January 1.
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Taxes: What is an "AG" classification in
Broward County?
An agricultural classification is the designation of land by the
Property Appraiser, pursuant to F.S. 193.461, in which the assessment is
based on agricultural use value. To qualify for Agricultural
classification, a return must be filed with the Property Appraiser
between January 1 and March 1 of the tax year. Only lands which are used
for bona fide agricultural purposes shall be classified agricultural.
"Bona Fide Agricultural Purposes" means good faith commercial
agricultural use of the land. The Property Appraiser, prior to
classifying such lands, may require the taxpayer or the taxpayer’s
representative to furnish such information as may reasonably be required
to establish such lands are actually used for a bona fide agricultural
purpose. The Property Appraiser may deny agricultural classification to
the following lands: * Lands which are not being used for or diverted
from agricultural use * Land that has been zoned non-agricultural at the
request of the owner * Land on which a sub-division plat is recorded *
Land which is purchased for a price three or more times the agricultural
appraisal placed on the land
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Taxes: What other tax exemptions available in
Broward County?
WIDOW/WIDOWER’S $500 EXEMPTION - To file for Widow or Widower’s
Exemption you must be a widow or widower prior to JANUARY 1st of the tax
year and bring proof of your spouse’s death. (Divorced persons do not
qualify for this exemption.) $500 DISABILITY EXEMPTION - In addition to
Florida residency, you must provide one of the following: (1) Proof of
total and permanent disability from two [2] professional unrelated
licensed Florida physicians, the U.S. Veteran’s Administration; (2)
Proof of 10% or more war-time disability from Veteran’s Administration;
(3) Present proof of legal blindness. TOTAL EXEMPTION OF HOMESTEAD
PROPERTY FROM AD VALOREM TAXATION - Section 196.101, F.S., provides that
real estate qualifying for the homestead exemption on January 1, owned
by quadriplegic, paraplegic, hemiplegic, or other totally and
permanently disabled persons, who must use a wheel chair for mobility,
or are legally blind and produce certification of that fact from two [2]
professionally unrelated licensed Florida physicians, or the U.S.
Veteran’s Administration, shall be exempt from ad valorem taxation.
(Except for quadriplegics & Veterans, there is also a gross income
limitation for this exemption, governing all persons residing upon the
homestead, which is adjusted annually.) Section 196.081, F.S. , provides
that real estate qualifying for the homestead exemption on January 1,
owned by veterans honorably discharged with a service connected total
and permanent disability, shall be exempt from ad valorem taxation.
Confirmation of the disability from the U.S. Veteran’s Administration is
required for this exemption. A surviving spouse could enjoy the benefit
of this exemption if the veteran was a permanent resident of Florida on
January 1 of the year he or she died.
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Taxes: Where (How) to File for the Homestead
Exemption?
New applications for Homestead, Widow/Widower or Disability Exemption
MUST BE MADE IN PERSON BETWEEN JANUARY 1 and MARCH 1. These applications
may be made in the Property Appraiser’s Office or in your various local
communities at a time and place designated by the Property Appraiser.
The schedule indicating the time and place for filing exemptions is
published in your local newspaper, on the Homestead Exemption page at
this web site, or you may call the Property Appraiser’s Office in
January and be advised of this schedule.
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Taxes: Who is eligible for the Homestead
Exemption?
To qualify for this exemption, the following requirements must be
complete for all owners of the property: If you drive, all applicants
must hold a valid Florida Driver’s License. (A "valid in Florida only"
license is not acceptable.) Florida vehicle tag (license plate) numbers
for all vehicles. Florida voter registration number, or Declaration of
Domicile if you do not wish to register to vote. (A nominal charge is
made for the recording of a declaration of domicile.) Social Security
number(s) for owner(s) and/or spouse. Date(s) of birth for owner(s)
and/or spouse. If not a U.S. Citizen, a permanent residency card is
required. Your most recent paid tax bill with parcel identification
number or recorded deed or recorded contract for deed.
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Taxes: Who must file for the Homestead
Exemption?
Those individuals whose names appear on the Deed and who reside on
the property must file unless the property is held in title by
"Tenancies by the Entireties" (husband and wife) or "Joint Tenants With
Right of Survivorship". In these instances, only one person is required
to file.
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Taxes: Why Does Appraised Value Change From
Year To Year?
When the market value changes, naturally so does appraised (just)
value. For instance, if you were to increase the total market value of
your property by building a swimming pool in your backyard, the
appraised value will increase proportionately. Similarly, should your
property’s value be decreased by fire or storm damage, the appraised
value will decrease to reflect the downward effect on your property’s
market value. In addition, the entire community’s economy, as well as
the forces of supply and demand, will affect your property’s appraised
value. The Property Appraiser does not create this value: he simply
discovers it as it exists and values the property accordingly. Buyers
and sellers set value by their transactions in the market place.
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Real
Estate Seller Frequently Asked Questions (FAQ)
Closing: Can I bring a personal check to a
property closing?
No, you will need a cashier's check or certified check for closing.
This is to insure that the funds are equivalent to cash.
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Closing: So what will happen at closing?
At the closing, you will most likely sit at a table with me, the
broker for the seller, probably the seller, and a closing agent. The
closing agent will have a stack of papers for you and the seller to
sign. While he or she will give you a basic explanation of each paper,
you may want to take the time to read each one and/or consult with me to
make sure you know exactly what you are signing. After all, this is a
large amount of money you are committing to pay for a lot of years!
Before you go to closing, your lender is required to give you a booklet
explaining the closing costs, a "good faith estimate" of how much cash
you'll have to supply at closing, and a list of documents you will need
at closing. If you do not get those items, be sure to call your lender
BEFORE you go to closing. Be sure to read the HUD booklet on settlement
costs . It will help you understand your rights in the process. Don't
hesitate to ask questions, I will be happy to answer them to the best of
my ability.
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Closing: What are closing costs?
Closing costs are the costs associated with processing the paperwork
to buy a house. Closing costs which you will pay at settlement average
3-4% of the price of your home. These costs cover various fees your
lender charges and other processing expenses. When you apply for your
loan, your lender will give you an estimate of the closing costs, so you
won't be caught by surprise.
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Closing: What is an escrow account?
An escrow account is an account that is established by your lender to
pay your real estate taxes, homeowner's insurance and mortgage insurance
on your behalf.
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Closing: What is earnest money?
Earnest money is the deposit you make on the home when you submit
your offer. Earnest money proves to the seller that you are serious
about wanting to buy the house. When you make an offer on a home, your
real estate broker will put your earnest money into an escrow account.
If the offer is accepted, your earnest money will be applied to the down
payment or closing costs. If your offer is not accepted, your money will
be returned to you. The amount of your earnest money varies.
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Closing: What is equity?
Equity is the value of your property that is in excess of claims
against it. When you make loan payments, the principle part of your
payment increases your equity in your home.
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Closing: What law establishes escrow account
guidelines?
Real Estate Settlement Procedures Act (RESPA) is a federal law that,
in general, dictates how lenders establish and maintain an escrow
account for you. A few states also have regulations regarding an escrow
account for a homeowner within their state; if the state does not have a
regulation, the governing of your escrow account falls back to RESPA
regulations. Florida has strict escrow account regulations.
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Closing: Where do you go to close on a
property?
You will go to a local title company or attorney who will perform the
closing. All your mortgage documents will be waiting for you at closing
as well as any other documents requiring your signature.
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Closing: Who chooses the Title Company?
In Broward County it is customary that the seller selects the title
company, however, this can be negotiated.
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Financing: Can you apply for a loan before
you've found a property?
Yes! You have the opportunity to get pre-approved for a mortgage
today. A pre-approval will take into consideration your personal
information such as income, debt and credit history. If you receive a
pre-approval, we will use this information to determine your maximum
loan amount. Once you find a property we can complete the remaining
pieces of the application.
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Financing: Do you need help choosing a lender?
Trying to choose a lender can be a difficult task. Start by asking
for referrals from friends, family, neighbors and your real estate
agent. If you are building, ask the builder for a referral, since most
are willing to help you find financing. Find out what kind of rates the
lender offers and the terms of the loan, especially on adjustable rate
mortgages (ARM). Find out what their "junk" fees are.
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Financing: Do you need to sell your existing
home before you apply for a new mortgage loan?
The answer to this question is "No". You can apply for a new mortgage
loan before you sell your current home. However, depending on your
income and debt levels, you may be required to sell your current home
before you can close on your new loan.
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Financing: Have you ever wondered when you
should start the mortgage process and how much of a loan you can afford?
The best time to look for a mortgage is before you look for a house.
This enables you to determine the amount of money you can borrow and how
much house you can afford.
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Financing: How much of a down payment will you
need to purchase a home?
The minimum down payment required depends on the loan program you
select. Most lenders offer loans with various down payment options,
including no down payment and low down payment programs.
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Financing: How often do mortgage interest
rates change?
Due to market fluctuations, interest rates are subject to change
daily. Many lenders will allow you to lock and/or float the interest
rate once you have been approved for a loan. Check with your lender
about any interest rate protection they may offer.
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Financing: What are lease-options and
lease-purchase options?
Buyers who lack funds to make a down payment might want to consider
using a lease-option or a lease-purchase agreement. With a lease-option
agreement, the buyer leases the home for a specified amount of time,
usually 12 to 24 months, after which he/she has the option to buy the
home at a price agreed upon during the lease term. With a lease-purchase
option, the buyer leases the property for an agreed upon amount of time
and is obligated to purchase the property when the lease expires.
Lease-option and lease-purchase tenants may have to pay an above market
rent and in return they receive rent credits toward the down payment on
the property.
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Financing: What does "Pre-Qualification" mean?
In a pre-qualification, you will be asked basic information about
yourself and the type of home you are interested in buying. You will
have the opportunity to view various mortgage programs and their rates.
This will help you narrow down which mortgage programs best fit your
needs before you apply. If you'd like to determine the maximum loan
amount you may qualify for, you can visit the calculator section of the
Cendant site. You can save this information for a future visit by
registering on the site.
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Financing: What is a down payment?
The down payment is a percentage of the cost of the home that you
must pay when you go to settlement. The more money you can put into your
down payment, the lower your mortgage payments will be. Some types of
loans require 10-20% of the purchase price. That's why many first-time
homebuyers turn to HUD's FHA for help. FHA loans require only 3% down -
and sometimes less.
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Financing: What is seller financing?
Sometimes the seller is willing to finance the purchase of their
property. The buyer negotiates a note with the seller and then makes a
monthly payment to the seller, the seller then passes that payment on to
the mortgage company. If the seller is no longer making a mortgage
payment on the property, he/she simply accepts the down payment and
monthly payments from the buyer. The seller becomes the lender.
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Financing: What paperwork will be necessary
during the mortgage process?
Once you have submitted your application form, the lender will send
you a complete loan package including documents for your review and
signature. All you need to do is review the application for accuracy,
sign where indicated and return the package, along with any requested
documentation. Paperwork will vary by lender as well as the speed the
documents are processed. Starting early on this process is beneficial to
your home buying process.
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Inspections: Is a termite inspection required?
For conventional loans, the investor or lender will require a termite
inspection if there are visual signs of infestation. All government
loans require a pest inspection on any structure that is ground level or
of total wood construction (including condos). There are termites in
Southwest Florida and even though many homes are concrete block
construction (CBS), it is wise and highly recommended to have any home
inspected for termites regularly.
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Inspections: What are Betterment Fees?
A betterment fee is a tax that can be assessed by the city for
properties that have been "bettered" by the construction of a public
water or sewer line. Therefore a property may have some assessments paid
but still have a water or sewer betterment fee. This fee is about $1,000
for water and about $2,000 for sewer. Most of the betterment fees are
for vacant lots in the older sections of the city. The fee is paid when
the building permit is purchased.
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Inspections: What are the facts on mold?
Here are some things to consider on this topic of growing importance.
There is no such thing as a mold-free home; and doorways, windows, and
heating, ventilation, and air conditioning systems serve as the main
points of entrance. Though mold is not hazardous to healthy people, it
can make asthma, hay fever, and allergies worse or cause infections in
people with compromised immune systems.
Mold thrives in moist areas and can ruin paint, wallpaper, drywall, and
wood surfaces. To keep the substance in check, the American Society of
Home Inspectors urges homeowners to quickly fix plumbing or roof leaks;
immediately wash and completely dry mold-infested areas; replace ceiling
tiles, carpeting, and other absorbent materials that have been
contaminated; clean and dry air conditioner, refrigerator, and
dehumidifier drip pans often; and use exhaust fans or open windows when
showering and cooking. They also are advised to keep indoor humidity
levels at 30 percent to 50 percent relative humidity; use bathroom
cleaning products that kill mold; add mold inhibitors to paint; and
avoid carpeting bathrooms.
Source: Copley News Service (12/23/02); Gary, Gene
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Inspections: What does the term "as-is" mean?
The term "as is" means the seller is not going to make any repairs to
the property. This, however, does NOT mean that the seller is exempt
from disclosing known problems with the property. The seller must
disclose all known defects to the buyer. Not disclosing known defects is
fraud, a very serious crime. Homes sold "as is" often bring a lower
sales price, as the buyer will make price adjustments for known,
necessary repairs. It is wise, and recommended, that the buyer have a
professional home inspection done on the property. I also recommend that
the buyer have a roof inspection done by a qualified roofing company, as
well as have the pool and air conditioning system inspected by a service
company.
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Inspections: Why is a home appraisal necessary
for getting financing? Can't you just use the tax value of the home?
Appraisals compare your home to other homes in your area that have
recently sold. Tax values obtained from your taxing authority can
sometimes be higher or lower and may not reflect the actual appraised
value of the home. An appraisal is necessary for the lender to justify
the loan amount being requested, as required by secondary investors. You
should not rely on the appraisal for assurance about the condition of
your home.
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Insurance: How do I know if I need flood
insurance?
Most standard homeowner's insurance policies do not cover loss due to
flood. The law requires that if your home is located in a Flood Hazard
Area you must purchase flood insurance. If you choose, you can obtain
flood insurance coverage even if you are not required to do so by the
lender. The law requires lenders to do a flood hazard determination on
all properties securing a mortgage. Many properties in Broward County
Florida are located in flood zones. Be sure to verify your property's
elevation above sea level as this can effect your insurance rates.
Please visit FEMA for
more information.
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Insurance: How much title insurance do you
need?
The amount of title insurance needed is based on the value of your
home and the amount of your mortgage. Title insurance guarantees the
lender and/or the owner against the possibility that there may be an
unknown lien or discrepancies in ownership on the property they are
purchasing. Lenders need to be covered for the full value of the
mortgage; this policy is required and will vary from state to state.
There is a one-time fee for the policy that is paid at closing. You can
obtain a separate home owner's insurance policy to cover the full value
of your home. However, this additional policy is not required. It is
customary for the seller to provide the buyer with a new title insurance
policy in Broward County, however, this can be negotiable.
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Insurance: What amount of homeowner's
insurance is required?
Your homeowner's insurance policy should cover the cost to rebuild
the home. This insured amount may be higher or lower than the actual
purchase price as long as it meets the program requirements. The
insurance company you choose can give you an actual quote based on
specific information about the property.
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Insurance: Why is private mortgage insurance (PMI)
required?
Private mortgage insurance (PMI) is an actual insurance policy that
the lender takes out to protect them if the borrower defaults on the
loan. This protects the lender and at the same time, enables buyers with
minimal down payment the opportunity to purchase a home. PMI is usually
required for loans that are greater than 80% of the property value. Once
20% or more of equity has been achieved in a home, you can apply to have
the PMI removed from most loans.
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Privacy Policy: How will I use the personal
information you enter on this site? Can I guarantee your privacy?
I respect the fact that the information you provide me contains
confidential information which needs to be treated responsibly and with
care, just as I would treat private information entrusted to me by a
close friend or relative. Your information will only be used for the
purpose of meeting your real estate needs and will only be shared with
other real estate professionals who will honor this promise to you on a
need to know basis.
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Taxes: Are discount points tax deductible?
In many cases they are. We recommend that you contact your tax
preparer, Certified Public Accountant (CPA) or the IRS to obtain a
qualified opinion on the deductibility of points.
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Taxes: Can I exclude the gain from the sale my
home?
You may qualify to exclude from your income all or part of any gain
from the sale of your main home. This means, if you qualify, you can
exclude the entire gain on the sale of your main home up to $250,000 for
single tax filers, or $500,000 for married tax filers, if all of the
following are true. 1) If you are married and want to qualify for the
$500,000 exclusion, you must file a joint return for the year. 2) You,
or your spouse if filing as married, must meet the ownership test. 3)
For married persons, both you and your spouse must meet the use test.
Singles must also meet the use test. 4) You, nor your spouse in the case
of married filers, have not excluded the gain from the sale of another
home in the past two years. Read the complete text on the IRS web site
at
Excluding the Gain, you should also consult with your CPA or tax
advisor on this subject.
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Taxes: Can mobile homes qualify for Homestead
Exemption?
If you hold title to a mobile home and the land on which it is
situated and the mobile home is permanently affixed to the land, you can
make application to the Property Appraiser to have the property
appraised as real property. This application requires you to purchase an
"RP" sticker from the Tax Collector’s Office. You must make application
for the sticker between January 1st and March 1st. Homestead exemption
may be allowed if the mobile home meets the above qualifications and the
property owner meets the qualifications for the exemption. When no one
individual owns the land, as is the case with some mobile home parks,
the park is taxed for the land as a whole (real property) and the
improvements to the mobile home are taxed as Tangible Personal Property.
However, you still must buy a yearly "MH" tag for the mobile home itself
from the Tax Collector’s Office.
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Taxes: Does the Property Appraiser levy or
collect taxes?
No!! The Property Appraiser only appraises property and is neither a
Taxing Authority nor the Tax Collector and has nothing to do with the
amount of taxes levied or collected. However, as a property owner, you
are also interested in how the amount of taxes you pay is determined.
Three separate government entities each having unique and distinct
duties involved in producing your November tax bill. First, the Property
Appraiser annually appraises all property in Broward County at the
market value as of January 1. Next, each taxing authority within Broward
County sets their own millage rate based on the amount of tax dollars
necessary to fund their annual budget. Lastly, the Tax Collector takes
the amount of taxes due in order to bill and collect all taxes levied
within Broward County. The millage rate is multiplied by the value of
the property then divided by 1,000 to determine the amount of taxes. The
reason: "millage rates" are in dollars per thousand of assessed value.
You may also note that certain districts marked with an asterisk do not
deduct the Homestead Exemption value prior to calculating the amount of
taxes due. These districts are authorized by Florida Statute to use
assessed value without exemptions in their tax calculations.
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Taxes: How are property tax bills paid?
Depending on your loan program and state restrictions, your monthly
mortgage payment may or may not include funds to pay your property
taxes. If your payment includes money for property taxes these funds are
held in escrow by the lender and the lender pays your property taxes as
they are due. If your payment does not include property taxes, you are
responsible for paying them by the due date. Tax payments are due each
November 1 in Broward County.
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Taxes: How is property appraised by the Tax
Collector?
There are three approaches to value stipulated in the Florida
Statutes: 1.) "Direct Sales Comparison", 2.) "Replacement Cost", and 3.)
"Capitalization of Income". In Broward County, we use a computer
assisted mass appraisal system that incorporates elements of all three
approaches to value. Please keep in mind, however, that the best
evidence of the fair market value is when several properties similar to
yours sell. The property’s fair market value can be determined employing
one or more of three different methods. The first method is to find
properties like yours which have recently sold. However, their selling
prices must be analyzed very carefully to get the true picture. One
property may have sold for more than it was really worth because the
buyer was in a hurry to occupy it and would pay any price to get in.
Another may have sold for less than it was really worth because the
owner needed cash right away, so was willing to sell to the first buyer
making an offer. The Property Appraiser must always consider such over
or under sales price to arrive at a fair valuation of your property. The
second method is based on how much money it would take, at current
material and labor costs, to replace your property with one just like
it. If any improvements are not new, the amount of depreciation must
also be determined. The final method is used in addition to the other
two if you own property which does, or could, provide an income, such as
an apartment complex, retail store space, or office building. In that
case, the Property Appraiser must consider such dollar facts as your
revenues, operating expenses, insurance, maintenance costs, degree of
financial risk incurred by owning the property, and finally, the return
most people would expect to receive on that kind of property.
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Taxes: What causes the loss of the Homestead
Exemption?
The rental of an entire dwelling previously claimed to be a homestead
for tax purpose shall constitute an abandonment of said dwelling as a
homestead.
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Taxes: What documents are required to file for
a Homestead Exemption?
(1) Applicants must hold a valid Florida Driver's License or a valid
Florida I.D. Card. A "Valid in Florida Only" license is not acceptable
(if you drive a vehicle in Florida.) If you do not drive, please include
a copy of your Florida ID Card. (2) Florida vehicle license plate
numbers for all vehicles. (3) Voter's Registration Number or Declaration
of Domicile (if not a U.S. Citizen) if you do not wish to register to
vote. (There is a nominal charge for the recording of a Declaration of
Domicile.) (4) A Permanent Residency Card is required if you are not a
U.S. Citizen. (5) Social Security Number for applicant. If married, you
must also provide spouse's SSN. (6) Date of Birth for applicant(s). Your
most recently paid tax bill with Parcel Identification Number or
recorded Deed or recorded Contract for Deed.
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Taxes: What does "Just Value" mean?
"Just Value" - "Just Valuation", "Actual Value" and "Value" - Means
the price at which a property, if offered for sale in the open market,
with a reasonable time for the seller to find a purchaser, would
transfer for cash or its equivalent, under prevailing market conditions
between parties who have knowledge of the uses to which the property may
be put, both seeking to maximize their gains and neither being in a
position to take advantage of the exigencies of the other.
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Taxes: What if I disagree with the Property
Appraiser’s market value?
Annually in August, the Property Appraiser sends the Notice of
Proposed Property Taxes (TRIM Notice) to all property owners of record.
The Florida Constitution and Statutes require that we make appraisals at
market value. If you agree that the value of your property is at least
as much as shown in the notice, you do not have to do anything. However,
if you have any questions about this value we encourage you to contact
this Office. If, after contacting Property Appraiser, you still believe
that the appraisal exceeds the market value of the property, you may
file a petition before the Value Adjustment Board. This Board is created
by State Law and is comprised of three members of the Broward County
Commission and two Members of the School Board. Petitions to the Board
are available from the Property Appraiser’s Office. The Board appoints
Special Masters, who are qualified real estate appraisers or attorneys,
independent of the Property Appraiser’s Office, to conduct valuation
hearings The Special Masters are appointed only to determine is whether
the appraised value of the property exceeds its market value as of
January 1. Further details concerning this process can be obtained from
the Property Appraiser’s Office or on the TRIM Notice.
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Taxes: What is "Save Our Homes (SOH)" in
Broward County?
Save Our Homes is a constitutional benefit approved by Florida voters
in 1992 which places a limitation of 3% on annual assessment increases
on Homestead properties. For all property granted Homestead Exemption in
the prior year, that assessed value will be the base value for the
implementation of "Save Our Homes". Thereafter, the assessed value will
not increase more than 3% or the percentage change in the Consumer Price
Index, whichever is less. Exceptions to that limitation include new
additions or construction which escaped taxation in the past. Another
exception would occur when a homestead property sells: the assessed
value returns to the fair market value in the year following the sale.
That fair market value assessment then becomes the base value for "Save
Our Homes" purposes for the new owner/homestead applicant.
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Taxes: What is Market Value according to the
Tax Collector?
Florida Law requires that the just value of all property be
determined each year. The Supreme Court of Florida has declared "just
value" to be legally synonymous to "full cash value" and "fair market
value." The fair market value of your property is the amount for which
it could sell on the open market. The Property Appraiser analyzes these
market transactions annually to determine fair market value as of
January 1. It’s no small task, however, since fair market value must be
determined for every piece of property in Broward County each year. The
Property Appraiser must also oversee homestead exemptions as well
as widow, widower and disability exemptions. In addition, exemption
eligibility must be determined for certain religious, charitable,
educational, and governmental use. Finally, Agricultural classifications
are reviewed annually.
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Taxes: What is Tangible Personal Property?
Tangible Personal Property refers to all assets used in a business or
rental activity that are subject to an ad valorem assessment. More
specifically, it is furniture, fixtures, tools, machinery, household
appliances, equipment, signs, leasehold improvements, supplies, leased
equipment -- whatever is used to generate income. Florida Statute
193.052 requires that all tangible personal property be reported each
year to the Property Appraiser’s Office. Anyone in possession of assets
on January 1 who has either a proprietorship, corporation or is a
self-employed agent or contractor, must file each year. Property owners
who lease, loan or rent property must also file. The deadline for filing
a timely return is April 1 of each year. For untimely filings, Florida
Statutes provide guidelines for the penalties that may be applied: 5%
for each month the return is filed late, 15% for unreported property and
a 25% penalty if no return is filed. Further information regarding
Tangible Personal Property may be obtained by writing or calling our
Office.
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Taxes: What is a Homestead Exemption?
The Homestead Exemption is a constitutional benefit of a $25,000
exemption removed from the assessed value of your property. It is
granted to those applicants who timely file by March 1, possess title to
real property and are bona fide Florida residents living in the dwelling
and making it their permanent home on January 1.
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Taxes: What other tax exemptions available in
Broward County?
(IMPORTANT - Please visit
http://www.bcpa.net for up to date
information.)
WIDOW/WIDOWER’S $500 EXEMPTION - To file for Widow or Widower’s
Exemption you must be a widow or widower prior to JANUARY 1st of the tax
year and bring proof of your spouse’s death. (Divorced persons do not
qualify for this exemption.) $500 DISABILITY EXEMPTION - In addition to
Florida residency, you must provide one of the following: (1) Proof of
total and permanent disability from two [2] professional unrelated
licensed Florida physicians, the U.S. Veteran’s Administration; (2)
Proof of 10% or more war-time disability from Veteran’s Administration;
(3) Present proof of legal blindness. TOTAL EXEMPTION OF HOMESTEAD
PROPERTY FROM AD VALOREM TAXATION - Section 196.101, F.S., provides that
real estate qualifying for the homestead exemption on January 1, owned
by quadriplegic, paraplegic, hemiplegic, or other totally and
permanently disabled persons, who must use a wheel chair for mobility,
or are legally blind and produce certification of that fact from two [2]
professionally unrelated licensed Florida physicians, or the U.S.
Veteran’s Administration, shall be exempt from ad valorem taxation.
(Except for quadriplegics & Veterans, there is also a gross income
limitation for this exemption, governing all persons residing upon the
homestead, which is adjusted annually.) Section 196.081, F.S. , provides
that real estate qualifying for the homestead exemption on January 1,
owned by veterans honorably discharged with a service connected total
and permanent disability, shall be exempt from ad valorem taxation.
Confirmation of the disability from the U.S. Veteran’s Administration is
required for this exemption. A surviving spouse could enjoy the benefit
of this exemption if the veteran was a permanent resident of Florida on
January 1 of the year he or she died. SENIOR EXEMPTION - Additional
$25,000 Homestead Exemption for persons 65 and over.
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Taxes: Who is eligible for the Homestead
Exemption?
To qualify for this exemption, the following requirements must be
complete for all owners of the property: If you drive, all applicants
must hold a valid Florida Driver’s License. (A "valid in Florida only"
license is not acceptable.) Florida vehicle tag (license plate) numbers
for all vehicles. Florida voter registration number, or Declaration of
Domicile if you do not wish to register to vote. (A nominal charge is
made for the recording of a declaration of domicile.) Social Security
number(s) for owner(s) and/or spouse. Date(s) of birth for owner(s)
and/or spouse. If not a U.S. Citizen, a permanent residency card is
required. Your most recent paid tax bill with parcel identification
number or recorded deed or recorded contract for deed.
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Taxes: Who must file for the Homestead
Exemption?
Those individuals whose names appear on the Deed and who reside on
the property must file unless the property is held in title by
"Tenancies by the Entireties" (husband and wife) or "Joint Tenants With
Right of Survivorship". In these instances, only one person is required
to file.
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Taxes: Why Does Appraised Value Change From
Year To Year?
When the market value changes, naturally so does appraised (just)
value. For instance, if you were to increase the total market value of
your property by building a swimming pool in your backyard, the
appraised value will increase proportionately. Similarly, should your
property’s value be decreased by fire or storm damage, the appraised
value will decrease to reflect the downward effect on your property’s
market value. In addition, the entire community’s economy, as well as
the forces of supply and demand, will affect your property’s appraised
value. The Property Appraiser does not create this value: he simply
discovers it as it exists and values the property accordingly. Buyers
and sellers set value by their transactions in the market place.
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