Typical Mortgage Providers

There are four main sources from which you can obtain a home loan:

• Savings and loan associations
• Commercial banks
• Mortgage bankers
• Mortgage brokers

Savings and loan associations (S & Ls)
Historically, Savings and Loan organizations have concentrated on home loans. However, with deregulation, the U.S. government has opened the door for S & Ls to provide checking accounts, savings accounts, personal and business loans, etc. Nevertheless, their primary lending focus still is on home loans. Commercial banks
The largest and most diverse of all finance institutions, commercial banks offer a wide variety of services including savings accounts, investments, charge cards, as well as commercial, personal, residential and business loans, among others.
Mortgage bankers
Mortgage bankers typically use their own money to fund mortgages; however, they ultimately sell the loans to another entity such as a bank, a savings and loan, pension or retirement funds, private investors or government agencies such as FNMA ("Fannie Mae") or GNMA ("Ginnie Mae"), which purchase residential mortgages. When mortgage bankers sell a block of mortgages, they often will continue to service the loan and will be responsible for the collection of your payments. The mortgage banker is paid a small percentage of the interest (usually 1/4 % to 1/2 %) for this servicing agreement.
Mortgage brokers
Unlike mortgage bankers, mortgage brokers do not loan their own money. Mortgage brokers will arrange financing for a borrower from a lender, which could be a bank, savings and loan, a private individual or a credit union or pension fund. As the liaison between borrowers and lenders, they are paid a commission or a fee, which is paid by the borrower, the seller or even the lender.

Choosing A Mortgage

While there seem to be hundreds of different mortgages available, they all fall into a few basic categories. Some may fit your needs well, while other programs may be unwise or unattainable. It’s important to realize that the best product depends on where you are in your life. The best choice is the loan program that best fits your needs at the time you purchase a home.
In recent years, lenders have developed a greater variety of loan programs, mainly because they have found that homebuyers have a variety of different needs. First Time buyers, families "moving up" into larger homes as they need more space, or moving into smaller homes after children have gone on to start their own families; all have different needs. There are so many different individual loan programs available that to compare them all would be impossible. The following provides brief descriptions of the most common categories of mortgage loans.
Fixed Rate Mortgages
Fixed-rate mortgages are the most popular type of mortgage. With this mortgage, the interest rate will remain the same for the entire term of the loan. Typically, the longer the term of the mortgage, the more interest is paid over the life of the loan.
Adjustable-Rate Mortgages
Adjustable rate mortgages all have certain similar features. They have an adjustment period, an index, a margin, and a rate cap. The adjustment period is simply how often the rate changes. Some change monthly, some change every six months, and some only adjust once a year. An Adjustable-rate mortgage (ARM) is a mortgage in which the interest changes periodically according to corresponding fluctuations in an index. All ARMs are tied to indexes. Indexes are simply an easily monitored interest rate that moves up and down over time. Adjustable rate mortgages vary and are tied to different indexes.
Conventional
This is a "traditional" mortgage, not directly insured by the Federal Government. Most conventional loans under $300,700 are administered through Fannie Mae or Freddie Mac (private corporations but regulated by the government). Loans greater than this amount are called "jumbo loans" and are funded by the private investment market.
FHA
These loans are insured by (but not funded by) the Federal Housing Administration (FHA) a division of the U.S. Department of Housing and Urban Development (HUD), and designed for, in general, low- to middle-income borrowers and many first time buyers. There are, however, limits to the maximum loan amount which will vary from county to county. FHA loans have somewhat more relaxed qualifying standards and ratios than conventional loans and have the availability of both 15 and 30 year fixed as well as 1 year adjustable mortgages.
VA
For those qualified by military service, the Veteran’s Administration (VA) insures (but does not fund) 15 and 30 year fixed as well as 1 year adjustable mortgages with lower down payment requirements and somewhat more lenient qualifying ratios.
No/Low Down Payment Mortgages
Sometimes having enough funds for the down payment and closing costs as required by a basic fixed-rate mortgage is not achievable. There is an array of no and low down payment mortgages. These types of loans are designed for homebuyers' varying needs and take into account the many other factors that qualify the financial condition of the borrower. Some loans are designed for buyers with good credit histories, some offer more flexible qualifying requirements and may be helpful for limited incomes, and others balance a low down payment with a higher interest rate.
Negative Amortization
Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this plan is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.
Hybrid Mortgage
Mortgage hybrids are a cross between a fixed rate and an adjustable-rate mortgage. They generally have fixed rates for the first three, five, seven or ten years and then they convert to adjustable-rate mortgages (ARMs) for the remainder of the loan term. With hybrid loans the fixed rate is established up front. Once the fixed-rate portion of the loan ends, the mortgage then behaves like an ARM with rate changes and monthly payments moving up and down each year as interest levels change. The attractiveness of these types of loans is that a borrower can sometimes find a 5/1 ARM rate at up to a full percentage point below a comparable fixed rate loan, and for several years the homeowner can benefit from a lower rate. Generally, the shorter the fixed-rate period, the better the up-front discount, the longer the fixed-rate period, the smaller the discount when compared to 30-year financing.
Loan Terms: 15, 20 or 30 Years
As the term of the loan (period over which the loan is paid) decreases, so does the amount of total interest paid. It is a good exercise to make a comparison between a 15 year term monthly payment and a 30 year term monthly payment. The monthly payment difference is often smaller than anticipated. The savings over the term of the loan, however, can be substantial. For example, comparing a 15 year term to a 30 year term, $100,000 mortgage at an 8.5% fixed rate yields the following:

Fixed Rate Mortgages

Thirty-year fixed rate loans are what most people think of when they hear the word "mortgage." Fixed rate loans are also referred to as "fully-amortized" loans. One of the aspects that buyers like about fixed rate loans is that the payments stay the same for the life of the loan. Generally, these loans are offered in a 15- or 30-year duration.
A 30-year loan will provide larger tax deductions, as you will be paying more interest than principal during the first 23 years of the loan. A 15-year loan, on the other hand, is paid off twice as quickly and usually has a lower interest rate. You build more equity because your payments pay more principal. As mentioned earlier, you (or the seller) also can "buy down" your loan by paying more tax-deductible points up front, to lower your fixed interest rate.
Balloon Loan A fixed loan that is amortized over a 30-year period but becomes due and payable at the end of a shorter term (i.e., 5, 6, 7 or 10 years). Some of these loans have an option to be extended with a new rate or rolled into another type of loan. Usually, the rates of these loans are lower than those for a regular 30-year fixed rate loan, but they are not recommended if you plan to stay in the home for a longer period of time.
Graduated Payment Mortgage (GPM) A fixed-rate loan that has payments starting lower than the payments on a standard fixed rate loan, which increase by a predetermined amount each year for a specific number of years, usually five years.

Adjustable Rate Mortgages

Adjustable Rate Mortgages (ARMs) are attractive to many homebuyers for one reason: lower payments in the first years of the loan. Typically, an ARM will have a low introductory rate, sometimes called a "teaser" rate. This rate is usually much lower than the fixed rates available at that time.
Adjustable rate mortgages (ARMs) have payments that increase or decrease on a regular schedule, and are linked to specific economic indexes or margins. These indexes measure borrowing and lending costs throughout the United States and are independent of the lender and can be independently verified at any time. (Many ARMs are indexed to Treasury bills or securities, Certificates of Deposit and other rates.)
How and When do ARMs Adjust?
When comparing ARMs that have different indexes, look at how the index has performed recently. Some indexes are published in newspapers, making them easy to track. Lenders are required to provide you with information on how to track the index and a 15-year history of the index, but keep in mind that past performance is not necessarily indicative of future performance.
An ARM will have a low Initial Interest Rate, sometimes called "teaser" rate. The loan will begin to adjust at a certain interval, usually every six months or annually. When the loan adjusts, the lender will use three things to determine the new interest rate: the index, the margin and the cap(s).
Index
The index is a benchmark by which changes in the market interest rates are gauged. Common indexes include the 1 Year T-bill, the 11th District Cost of Funds, Prime, LIBOR, or even Certificate of Deposit (CD) rates.
Margin
In order to determine the new rate on the adjustment date, the index is added to the margin. The easiest way to understand the margin is to put the word "profit" in front of it. It is the amount of excess of the index that the lender is going to charge in interest; it is essentially the lender’s profit margin.
Rate Caps
To insure that your payments do not change dramatically in any given six-month or one-year period, adjustable rate mortgages provide protection in the form of interest rate caps. There are two kinds of interest rate caps: periodic (annual, semi-annual, etc.) and lifetime. For example, a loan may have a semi-annual rate cap of 1%, or an annual rate cap of 2%. The loan will also have a lifetime rate cap, frequently 6% over the initial rate. The caps insure that even if interest rates rise rapidly, the monthly mortgage payment will not be as dramatically affected.
Is an ARM for You?
Would you like a loan with an interest rate below a 30-year fixed rate mortgage and pay zero points? A loan for which you do not have to document your income, savings history or source of down payment? These benefits can all be possible with an Adjustable Rate Mortgage. There are numerous advantages to ARM loans. Some common advantages are:

• The ability for borrowers to qualify when they might not do so with a fixed rate mortgage;
• The possibility of obtaining a larger loan and a more expensive home;
• The chance that the rates may go down without refinancing; and,
• Often, there are less costs to obtain the loan.

However, with an ARM, there is the likelihood that your rate and payment will increase during the life of the loan. Adjustable Rate Mortgages all have an adjustment period, an index, a margin and a rate cap. The "adjustment period" simply indicates how often the rate changes. Some rates change monthly, some change every six month, and some only adjust once a year. Indexes are monitored interest rates over time. ARMS have different indexes. The margin does not change during the life of the loan.

Common Questions

How do I choose the best loan program for me?Your personal situation will determine the best kind of loan for you.

• Do you expect your finances to change over the next few years?
• Are you planning to live in this home for a long period of time?
• Are you comfortable with the idea of a changing mortgage payment amount?
• Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?

Your lender can help you use your answers to questions such as these to decide which loan best fits your needs. The remainder of this article will outline for you why these questions – and the answers you provide to them – are a crucial part of your loan search. How large of a down payment do I need?
There are mortgages now available that only require a down payment of 5% or less. But, generally speaking, the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a private mortgage insurance policy (PMI), which can be expensive.
Nevertheless, PMI is a fact of life for many homeowners. Even if you begin your mortgage with PMI, with time and appreciation, you often can reach 20 percent equity – at which time you can have the PMI removed. Often, removing PMI is just a matter of asking the lender, paying for an appraisal, paying a fee to the lender (approximately $300 - $500) and providing the necessary paperwork.
What does the interest rate really mean to me?
A lower interest rate allows you to borrow more money than a high rate with the same monthly payment. Interest rates fluctuate from day-to-day, so ask lenders if they offer a rate "lock-in," which guarantees a specific interest rate for a certain period of time.
Remember that a lender must disclose to you the Annual Percentage Rate (APR), which shows the cost of a mortgage in terms of an annual interest rate. Because it includes the cost of points, mortgage insurance and other fees, the APR generally will be higher. It will provide you with a good estimate of the actual cost of the loan.
What happens if interest rates drop after I finalize my fixed-rate loan?
If rates drop more than two percentage points or so and you plan to be in your home for the next 18 months, you may want to consider refinancing. However, since refinancing may require you to pay many of the same fees paid at the original closing, plus origination and application fees, you should make this decision carefully.
What are discount points?
Discount points (or just plain "points," as they are frequently called) allow you to lower your interest rate by paying prepaid interest up front. Each point equals 1% of the loan amount, and generally, each point paid on a 30-year mortgage will reduce the interest rate by 1/8 (or.125) of a percentage point. Sometimes lenders will provide you with the opportunity for a "buy down" – which literally offers you a chance to buy down the cost of the loan by paying more points up front.
When you shop for a loan, ask lenders for an interest rate with no points. Then, ask them how much the rate decreases with each point paid. Discount points are smart if you plan to stay in a home for some time since they can lower your monthly loan payment. Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay some of them.
What’s considered a reasonable loan fee?
In most cases, loan fees should not exceed 5 percent of the loan amount, unless you are paying for a lower interest rate. However, there may be exceptions. I can help you evaluate loan fees and to understand exactly how much the entire loan will cost. It’s important to know all your loan costs up front.

Loan Applications

Once you have selected the type of loan you prefer and qualify for, the lender will ask you to complete a loan application, which will require a great deal of personal and financial information, including the following:
1) Your residence history
• Your previous addresses for the past two years
• The length of time you’ve lived at each address
• If you currently rent, your landlord’s name and addresses (for past 12 months)
2) Your employment history
• The names and addresses of all your employers for the past two years
• The dates you worked at each place of employment
• If there have been any gaps in your employment, explain why
3) All outstanding loans and credit cards
• The creditor’s name(s) and address(es)
• Your account number(s)
• The current total balance you owe and the months left to pay
• The amount of the monthly payment
4) Savings, checking or investment accounts
• The names and addresses for each financial institution
• Your account numbers
• The current balance or value
5) Real estate you currently own
• The property address(es)
• The estimated market value
• The outstanding loan balance
• The amount of your monthly payment (including taxes, insurance, homeowner’s association dues)
• The amount of your rental income (if applicable)
6) Personal property you own
• The net cash value of your life insurance
• The make, year and value of your automobile(s)
• The value of your furniture, jewelry and other personal property
7) Tax records
• Some lenders may require copies of your tax records from the previous two years

Loan Application Checklist

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Being prepared with the necessary documentation will expedite the mortgage loan process. Here’s a checklist, so you don’t forget what you’ll need to efficiently move the loan process along: Real Estate Contracts ____ Purchase Agreement (for the purchase of your new home). ____ Sales contract (if you are selling a home). Residence History ____ Past 24 months of residence with complete addresses. ____ Length of time you lived at each address. ____ Name of landlord and his/her address (if currently renting). Employment History ____ All original pay stubs for past 30 day period. ____ Employers for the past two years with complete addresses. ____ Dates of employment for each job. ____ W2s for most recent two years. ____ Most recent tax returns (with all schedules) for past two years. ____ If there have been any gaps in employment, prepared explanations. Financial History ____ Copies of most recent monthly statements for all loans and credit card balances. ____ Copies of most recent three months' bank statements for all accounts, stock brokerages, mutual funds, IRAs, Pensions, etc. ____ If you are self employed or received a 1099, your most recent tax returns for the past two years with all schedules and a year-to-date profit and loss statement and balance sheet. ____ If you own 25% or more of a corporation, the most recent corporate tax returns for the past two years with all the schedules and a year-to-date profit and loss statement and a balance sheet. Current Real Estate ____ Property addresses. ____ Estimated market values of property. ____ Amount of monthly payment and outstanding loan balances (bring copy of most recent loan statement). ____ If you own rental property, your most recent tax returns for the past two years with all schedules and a current agreement. Personal Property ____ Net cash value of your life insurance. ____ Year, make and value of all vehicles. ____ Value of your furniture and personal property. Special Situations Self-employed Bring your federal tax forms for the past two years, along with a profit and loss statement. Separated or divorced Bring a copy of your divorce decree and separation agreement, plus documentation of any alimony or child support payments you are required to make. If you are receiving alimony or child support and want it to be considered as income, you’ll need proof of this income such as the court clerk’s history of payments or cancelled checks for the past 12 months. Public Assistance Including pension, disability, Social Security or any other form of public assistance with your income. Bring a copy of an award certificate or a check from the issuing agency. Bankruptcy If you have had a bankruptcy, a foreclosure or judgments against you over the past seven years, bring information on the proceedings. Information on bankruptcies should include a copy of the bankruptcy discharge and schedule of both debts and assets. Judgments against you should include an attorney’s letter that discusses the outcome of the proceedings. Applying for a Department of Veterans Affairs (VA) loan Bring your DD214 form (discharge) papers or your certificate of eligibility.

The Underwriter

When your loan is submitted for underwriting, it goes directly into the hands of an underwriter whose job is to determine your "creditworthiness" or your ability to repay the loan. An underwriter takes into consideration the following aspects when deciding whether or not to approve your loan:
Your work history
A stable history of employment in the same line of work is considered ideal. Job-hopping is not. However, if you have switched jobs within the same line of work for advancement in your field, it should not be a problem.
Your income
In looking at your ability to repay the loan, your job stability and gross income (in relation to your expenses) are critical.  Most income must be verified as having been received for at least two years to be used for qualifying purposes.
Your credit history
Via your credit report, the underwriter looks at your past payment history. A consistent pattern of late payments, collections, etc., obviously is not looked upon favorably – and you will be asked to explain about your bad credit conditions. Bankruptcies generally must be discharged for at least two years, the reason explained, and you generally must reestablish credit to be considered.
Your assets
The underwriter wants to see your net worth, determined as: the money you have available for a down payment, closing costs, cash reserves (money left over after closing of escrow to cover 2-3 months mortgage payments) and other liquid assets. The underwriter also will want to see the "source of funds" - where the money for the down payment and closing costs is coming from. Don’t move money around (pay off bills, receive a gift, etc.) without first consulting your loan officer about the best way to do it, since it may affect the underwriter’s view of your loan.
Your debts
The underwriter will be concerned with the amount of debt you have because it affects your qualification and ability to repay the loan. Excessive use of credit may not be looked upon favorably.
The property
Because the property is the lender’s collateral for the loan, the value, marketability and condition of the property are extremely important. The underwriter looks at the appraisal for this information, and generally verifies that the appraisal and the purchase price are in the same ballpark.

What Will Be Included In My Mortgage Payments?

Your monthly mortgage payment is made up of several components. This housing expense is commonly referred to as "PITI" or principal, interest, taxes and insurance. PMI (see below) and homeowner’s association dues may also make up a portion of your total payment.
Principal
The original balance of money loaned, excluding interest. Also, the remaining balance of a loan, excluding interest. Interest is calculated based on the principal.
Interest
The charge, in dollars, for the use (loan) of the money.
Taxes
The county assessor determines the property tax based on the value of your home. There are two tax installments due each year. The first installment is due November 1st and is delinquent after December 10th. The second installment is due February 1st and is delinquent after April 10th.
Taxes may be impounded, depending on the amount of your down payment. (A down payment of less than 20% usually requires an impound account).
An impound account, set up by the lender, is a trust account to which a portion of the monthly payment is credited so that funds will be available for the payment of taxes and insurance when they’re due. This way, the lender actually pays your tax bill for you. (Supplemental taxes usually are still the responsibility of the homeowner.)
Hazard Insurance
An insurance policy pays for the loss of a home from certain hazards, including fire. You obtain homeowner’s insurance from your own insurance agent. The standard policy pays replacement costs, minus depreciation based on actual cash value. Talk to your insurance agent about the different types of insurance available. Hazard insurance expense may also be impounded in the trust account with taxes.
Private Mortgage Insurance (PMI)
Depending on the amount of your down payment, you may be required to have PMI. A down payment of less than 20% usually requires PMI. Because loans with small down payments involve substantially more risk for the lender, they need protection in case the loan goes into foreclosure. Mortgage insurance helps cover the lender’s loss in the event of a foreclosure. Because of this insurance, lenders are able to offer loans with lower down payments.
PMI premiums are collected monthly as a part of your mortgage payment. The cost of PMI varies with the amount of your down payment. Can you pay off your loan ahead of schedule? Yes. By sending in extra money each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal. Most lenders allow loan prepayment, though you may have to pay a prepayment penalty to do so. Ask your lender for details.

Your Rights As A Consumer

In addition to the right to view your credit report and know your FICO score, you also are protected by RESPA, the Real Estate Settlement Procedures Act passed by Congress. RESPA requires your lender to provide you with a "Good Faith Estimate of Settlement Costs" early in the loan process. Be aware, however, that the amounts contained are only estimates. Keep your Good Faith Estimate so you can compare it with the final settlement costs, and ask the lender questions about any changes.
Through a Servicing Disclosure Statement, which will be given to you by your lender, RESPA also requires your lender to tell you if it expects someone else to be servicing your loan. Your lender will have three days from the time you apply for the loan to let you know about this.
RESPA regulations also require all parties involved in your transaction to disclose affiliated business arrangements. If anyone involved in your transaction (your lender, agent or title officer, for example), refers you to another service provider (including lenders, title officers, inspectors, etc.), the "Servicing Disclosure Statement" indicates that you generally are not required to use these providers, and are free to shop for other affiliates.
HUD-1 Settlement Statement
The U.S. Department of Housing and Urban Development also provides protection via the HUD-1 Settlement Statement. One business day before closing, you have the right to inspect this statement, which itemizes the services provided to you and the accompanying fees charged. Be sure to call the settlement agent if you wish to inspect this form. The form generally must be delivered or mailed to you at or before the settlement.
Escrow Account Operation and Disclosures
Your lender may require you to establish an escrow or impound account to insure that your taxes and insurance premiums are paid on time. You probably will have to pay an initial amount at the settlement to start the account and an additional amount with each month’s regular payment. Your payments may include a "cushion" or extra amount to ensure that the lender has enough money to make the payments when due. RESPA limits the amount of the cushion to a maximum of 2 months of escrow payments.
At closing or within the next 45 days, the person servicing your loan must give you an initial escrow account statement. That form will show all of the payments which will be expected to be deposited into the escrow account, and all of the disbursements that are expected to be made from the escrow account during the year ahead. Your lender or servicer will review the escrow account annually and send you a disclosure each year, which shows the prior year’s activity and any adjustments necessary in the escrow payments that you will make in the forthcoming year.
For more information on RESPA
Visit the web page at http://www.realtor.org or call (800) 217-6970 for a local counseling referral.
There are several Federal laws, which provide you with protection during the processing of your loan. T he Equal Credit Opportunity Act (ECOA), the Fair Housing Act and the Fair Credit Reporting Act (FCRA) prohibit discrimination.
ECOA prohibits lenders from discriminating against you on the basis of race, color, religion, national origin, sex, marital status, age, if any or all of your income comes from any public assistance program or if you have exercised any right under any Federal consumer credit protection law.
The Fair Housing Act also prohibits discrimination in real estate transactions on the basis of race, color, religion, sex, handicap, familial status or national origin. Frequently, there are differences in the amounts of settlement costs charged to you – they may be based on your credit worthiness or they may be unlawfully discriminatory. It is important that you examine your settlement documents closely, especially lines 808-811 on the HUD-1 settlement statement. If you feel you have been discriminated against by a lender or anyone else in the homebuying process, you may file a private legal action or complain to a state, local or Federal administrative agency.

What Is Escrow?

It is customary and prudent for a buyer and seller to have a third, disinterested party to assist them in carrying out the terms of their agreement. In California, this procedure is known as an escrow. When opening an escrow, the buyer and seller establish terms and conditions for the transfer of ownership of property. Your escrow is created shortly after you execute the contract to purchase your home. The escrow becomes the depository for all monies, instructions and documents. The Escrow Officer has the responsibility of seeing that all terms of the escrow are carried out.
NOTE: In some states, the process of completing the purchase of a home is known as the "Settlement" process. Often the seller and buyer will come together at the Settlement table where documents are signed and exchanged. There may be a settlement attorney who facilitates this process. In California, the term "Escrow" is used to describe the process of completing the sale of property.
How does the escrow process work?
The escrow holds all monies, instructions and documents for the purchase of your home, including your down payment funds and your lender’s funds and documents for the new loan. The escrow officer takes instructions based on the terms of your purchase agreement and your lender’s requirements. The escrow officer can hold inspection reports and bills for work performed as required by your purchase agreement. Other elements of the escrow include hazard insurance, title insurance and the grant deed from the seller to you. Escrow cannot be completed until the instructions (requirements) have been satisfied, and all parties have signed escrow documents.
The escrow holder’s duties include:

• Serve as the neutral agent and the liaison between all parties involved.
• Prepare the escrow instructions.
• Request a Preliminary Title Search to determine the status of title to the property.
• Comply with the lender’s requirements as specified on its instructions to escrow.
• Receive and handle purchase funds from the buyer.
• Prepare or secure the deed and documents related to the escrow.
• Prorate taxes, interest, insurance and rents.
• Secure releases of all contingencies or other conditions imposed on the escrow.
• Record the deed and any other documents.
• Request title insurance policy.
• Close the escrow pursuant to instructions supplied by the seller, buyer and lender, if any.
• Disburse funds as authorized by the instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs.
• Prepare final statements for all parties involved that account for the disposition of all funds held in the escrow account.

How do I open an escrow?
Your real estate agent will open the escrow for you. As soon as you execute your purchase agreement, your deposit is given to the title company for deposit into the escrow account. How will you know where your money has gone? Written evidence of your deposit generally is included in your copy of your purchase contract. Your funds will then be deposited in your separate escrow or trust account and processed through your local bank. Escrow Instructions
Escrow instructions define all the conditions that must occur before the transaction can be finalized. Your escrow instructions specify, in a debit and credit format, the disposition of your purchase funds. They also provide for title protection for your home.
What information will I have to provide?
You may be asked to complete a statement of identity. Because many people have the same name, the statement of identity is used to identify the specific person in the transaction through such information as date of birth, social security number, etc. This information is kept confidential.
How long is the escrow?
The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months. On average, it takes 30 to 45 days.

The Sale Process

While there’s no such thing as a typical homesale – each has a character and a flow of its own – there are certain aspects you can expect. While local real estate practices may vary, here are the basic activities that occur during the transaction, from receiving an offer to closing escrow.

 

Your Responsibilities

Your role during the escrow process should be an active one. Don’t wait for the seller to volunteer information – stay on top of it yourself and take reasonable care, along with me, your agent, to protect yourself.
For example, when you review the Transfer and Disclosure Statement, TDS, keep an eye out for questions answered "unknown" or left unanswered. Ask about them until you are satisfied with the answers.
Let's talk about your specific concerns or plans for the property. Concerned about the open parcel behind the house? Ask about it!
You may also wish to investigate the following non-physical conditions, including:

• Governmental zoning, requirements and limitations
• Governmental permits, inspections or certificates
• Limitations, restrictions and requirements affecting use of the property
• Rent and occupancy control
• Schools
• Proximity and adequacy of law enforcement, crime statistics, proximity of registered sex offenders (see section on Megan’s Law) and other criminals
• Proximity to fire, police and other services
• Proximity to commercial, industry or agricultural activities
• Existing and proposed transportation, construction and development, which may affect noise, view or traffic, airport noise, or odor
• Wild and domestic animals, other nuisances, hazards or circumstances

For Further Protection – Home Warranties: Home warranties have become a more popular option on homes for sale. For protection you may wish to have a home warranty that either you or the seller pays for. (It’s negotiable.) Warranties range in price from $300 - $600 and, for a fixed rate, generally cover limited aspects including plumbing, electrical, pest control and a host of other related areas. If you have a problem, generally you’ll pay $35-$50 to have a professional come out inspect and fix problems that are covered. Warranty agents typically are on hand 24 hours a day, 7 days a week to take your calls in emergencies.

Buyer Disclosures 101

During the escrow process, you will be informed of specialized conditions that affect the home you wish to purchase. They may include the following:
Lead Paint
Sellers of properties built prior to 1978 have the following obligations to you:

• Give you a HUD pamphlet entitled "Protect Your Family From Lead in Your Home"
• Disclose all known lead-based paint and related hazards and provide you with any available reports
• Include a standardized warning as an attachment to the contract
• Complete and sign statements verifying that requirements have been met
• Retain the signed acknowledgement for 3 years
• In addition, sellers must give you a 10-day opportunity to test for lead

Natural Hazards
California law requires sellers to disclose to you, via a "Natural Hazard Disclosure Statement" or NHD, if properties are located in one of six predetermined "natural hazard" zones. (If the property is not within one of these zones, sellers, of course, have no such obligation.) The six zones are:

• A flood hazard zone as designated by the Federal Emergency Management Agency (FEMA)
• An area of potential flooding after a dam failure (also known as an inundation area)
• A very high fire hazard zone
• A wildland fire area, also known as a state fire responsibility area
• An earthquake fault zone
• A seismic hazard zone

If an NHD is delivered to you after you signed the Purchase Agreement, you will have three days to rescind the agreement. However, if you receive the NHD before you signed the Purchase Agreement then you cannot use the NHD to rescind. Mello-Roos Districts
Especially (but not exclusively) if you are buying a home in a newer area, you may be locating into a Mello-Roos tax district, and the seller must provide to you a "Notice of Special Tax" to let you know. If this notice is delivered to you in person, you have three days to rescind your offer. If it’s delivered via U.S. mail, you have five days to decide.
Basically, a "Mello-Roos Community Facilities District" is formed by a local government, district, or agency to finance public services and facilities including police and fire departments, ambulance and paramedic services, parks, schools, libraries, museums and cultural facilities.
Condominiums etc.
If you’re buying a condominium, townhouse or other planned development (for purposes of this discussion, we will call them all "condominiums"), there are things you need to know about common areas (such as greenbelts and recreational rooms) and the homeowner’s association.
You will be required to make monthly payments, known as regular assessments, to maintain common areas, as well as special assessments to replace a roof or repair the plumbing, as determined by the homeowner’s association (HOA.)
Condominiums also may have regulations regarding architectural requirements, limitations on pets, and age restrictions (i.e., senior housing). These must be formally disclosed to you during escrow. You may receive this information via the following documents, to the extent that they exist and are available:

• Declaration of Restrictions: Commonly known as "CC&Rs", or Conditions, Covenants and Restrictions
• Articles of Incorporation or Articles of Association Bylaws
• All current financial information and related statements, including operating budget, estimated revenue and expenses, HOA reserves, estimated remaining life of major components (including roofs, plumbing etc.), and regular and special assessments
• A statement describing the HOA’s policies and practices in enforcing lien rights or other legal remedies for default in payment of its assessments
• A summary of the HOA’s property, general liability, and earthquake and flood insurance policies
• On existing HOA’s, a statement describing any restrictions on the basis of age, such as authorized senior citizen housing

Many smaller HOAs will not have all of these documents, but must provide what they do have. We recommend that you review these documents thoroughly, because they will affect you firsthand. Megan’s Law.
If a registered sex offender lives in the neighborhood in which you want to locate, you have the right to investigate – this is made possible due to a 1996 statute known as "Megan’s Law." (Note that the seller does not have an obligation to provide this information to you.)
To investigate, you may:

• Log on to: http://caag.state.ca.us/megan/index.htm
• Call (900) 448-3000 to access the California Sex Offender Information Database. (There may be a charge to check names by telephone.)
• Call your local police department to locate a CD-ROM records viewing station.

The Loan Process

Step 1. The Application The key to the loan process going smoothly is the initial application interview. At this time the loan officer obtains all pertinent information and documentation so unnecessary problems and delays may be avoided. This is the best time to discuss loan programs best suited to meet the homebuyer’s needs.
Step 2. Automated Underwriting
After the application is completed, the loan officer inputs the application into the automatic underwriting system. This is an automated financial evaluation program that analyzes the data from the loan application of the borrower, such as income, credit history, debts, property details, debt-to-income rations, etc. This process evaluates the borrower’s financial picture and makes a credit decision. In conjunction with this review, the loan officer requests a credit report run on the borrower(s).
Step 3. Requesting Documentation
The next step after receiving the initial lending decision is that the loan officer will request certain documents such as bank statements, W2's (2 years), verification of funds, landlord details and any other supporting documentation that has been requested.
Step 4. The Homebuyer Goes into Contract on a Property
Step 5. Loan Submission
Once all of the necessary documentation has been acquired, the loan officer puts the loan package together and submits it to the underwriter for final approval. The final loan package includes the contract on the property, the property appraisal, preliminary title reports and any conditions that were identified in the automated underwriting process. The loan officer submits the final loan package to the underwriter for formal loan approval.
Step 6. Loan Approval
The underwriter reviews the contract, property appraisal and preliminary title reports and validates the conditions from the automated underwriting process. File disposition is achieved. Assuming all criteria are met, the loan is approved and/or other conditions may be requested as terms of funding.
Step 7. Rate Lock
The loan officer will discuss the loan programs available to the homebuyer(s) in conjunction with discussing the final loan approval and conditions. Based on the outcome of the property purchase and final loan approval process, the buyer may wish to or need to review other loan programs. A final loan program decision is reached and the request for rate lock is made.
Step 8. Documents Are Drawn
After the loan approval, the loan documents (including the note and deed of trust) are completed and sent to the title company. The escrow officer calls the borrowers to come in when the papers are ready for final signature. At this time, the borrowers are told how much money they will need to bring in to close the loan.
Step 9. Funding
Once all the parties have signed the loan documents, they are returned to the lender, who reviews the package. If all of the forms have been properly executed, the funds are then transferred. At closing, the borrower must present a cashier’s check or arrange for a wire transfer of funds directly to the title company for the required closing costs and payments. No personal checks are accepted. Also, funding conditions must be submitted and satisfactorily met at this time.
Step 10. Recordation
When the title company receives the funding check from the lender, the title company makes the lender’s security for the loan a matter of public record. This is done by recording both the note and deed of trust at the County Recorder’s office. Escrow is now officially closed.

Closing Costs

Below are some of the costs you may incur. Some are one-time fees, while others recur over the life of the loan. When you first apply for your loan, you will receive a Good Faith Estimate of Settlement Charges and a booklet explaining these costs, to minimize surprises. Generally, you can expect closing costs to equal from 3 to 6 percent of your mortgage loan amount. Appraisal Fee This is a one-time fee for an "appraisal," a statement of property value required on most loans. An independent fee appraiser makes the appraisal. Unique and more expensive homes usually have a higher appraisal fee. Credit Report Fee: This one-time fee covers the cost of your credit report, which is processed by an independent credit-reporting agency. Document Preparation Fee: There may be a separate, one-time fee that covers preparation of the final loan papers, including the note and the deed of trust. Loan Origination Fee Often referred to as "points," one point is equal to one percent of the mortgage loan. As a rule, if you are willing to pay more in points, you will get a lower interest rate. Anything in addition to one point is referred to as "discount points." Miscellaneous Title Charges The Title Company will charge fees for a policy of title insurance and escrow services, which may include charges for document preparation, notary fees, recording fees and a settlement of closing fee. These are all one-time charges. Local custom by county will dictate whether buyer or seller pays all or a portion of these fees. Private Mortgage Insurance (PMI) Premium: Depending on the amount of your down payment (generally less than 20%), you may be required to pay a fee for private mortgage insurance, which protects the lender against loss due to foreclosure. You may also be required to place funds into a special reserve account (called an impound account) for PMI, which will be held by the lender. Prepaid Interest Depending on the day of the month your loan closes, this charge may vary from a full month of interest to just a few days of interest. If your loan closes near the end of the month, you will have to pay only a few days of interest. Taxes and Hazard Insurance: Based on the month you close, property taxes will be prorated between you and the seller. You may also be required to pay a full year’s hazard insurance (or homeowner’s insurance) premium in advance. In addition, you may also be required to place funds into a special reserve account (impound account) for taxes and insurance, which is held by the lender. You absolutely must have this to obtain a mortgage. The "dwelling coverage" portion of your hazard insurance covers costs to completely rebuild your home, while the "liability coverage" protects you against accidents that occur on your property. "Personal Property Coverage" pays to replace your possessions and generally totals 50 to 75 percent of the dwelling coverage amount. Flood and earthquake insurance policies also are available and are recommended if you are in high-risk areas. Title Insurance Fees There are two title polices - a buyer’s policy, which protects the new homeowner, and a lender’s title policy that protects the lender against loss due to a defect in the title. These are both one-time fees. Closing Costs: The Good Faith Estimate The Good Faith Estimate The Good Faith Estimate of loan closing costs are made pursuant to the requirements of the Real Estate Settlement Procedures Act (RESPA). These are estimated settlement costs which the buyer will be responsible for in conjunction with the settlement of the mortgage loan. There are two general categories of closing costs, non-recurring and recurring. Non-recurring closing costs are items that are paid once, while recurring costs are items paid repeatedly over the life of the loan. This is a detailed summary of costs you may have to pay when you buy or refinance your home. They are listed in the order in which they should appear on a Good Faith Estimate you obtain from your mortgage lender. Elements of the Good Faith Estimate are: (Costs will apply differently to each homebuyer and are not particular in total to all homebuyers)

Non-Recurring Closing Costs Associated with the Lender: Loan Origination Fee Loan Discount Fee Appraisal Fee Credit Report Fee Lender’s Inspection Fee Mortgage Broker Fee Tax Service Fee Flood Certification Fee Flood Monitoring Other Lender Fees Document Preparation Fee Underwriting Fee Administration Fee Appraisal Review Fee Warehousing Fee Items Required to be Paid in Advance Prepaid Interest Homeowner’s Insurance VA Funding Fee Up Front Mortgage Insurance Premium (UFMIP) Reserves Deposited with the Lender: Homeowners Insurance Impounds Property Tax Mortgage Insurance Impounds Non-Recurring Closing Costs not associated with the Lender: Closing/Escrow Fee Title Insurance Notary Fees Recording Fees Pest Inspection Home Inspection Home Warranty Homeowner’s Association Transfer Fee Refinancing Associated Costs Interest Reconveyance Fee Demand Fee Sub-Escrow Fee Loan Tie-In Fee

Closing Costs: An Explanation of Terms

NON-RECURRING CLOSING COSTS ASSOCIATED WITH THE LENDER:

Loan Origination Fee: The loan origination fee is often referred to as "points". One point is equal to one percent of the mortgage loan. As a rule, if a borrower is willing to pay more in points, then the borrower will get a lower interest rate. Loan Discount Fee: On a government loan, the loan origination fee is normally listed as one point or one percent of the loan. Any points in addition to the loan origination fee are called "discount points". On a conventional loan, discount points are usually lumped in with the loan origination fee. Appraisal Fee: Since the property serves as collateral for the mortgage, lenders want to be reasonably certain of the value and they require an appraisal. The appraisal is used to determine if the price you are paying for the home is justified by recent sales of comparable properties. The appraisal fee varies, depending on the value of the home and the difficulty involved in justifying value. Unique and more expensive homes usually have a higher appraisal fee. Appraisal fees on VA loans are higher than on conventional loans. Credit Report Fee: As part of the underwriting review, the mortgage lender will want to review the borrower’s credit history. The cost varies depending upon the type of report requested. Lender’s Inspection Fee: This is generally associated with new construction and is associated with what is called a 442 inspection. Since the property is not finished when the initial appraisal is completed, the 442 inspection verifies that construction is complete with carpeting and flooring installed. Mortgage Broker Fee: About seventy percent of loans are originated through mortgage brokers and sometimes the points associated with the loan are listed here instead of under Loan Origination Fee. They may also add in any broker processing fees in this area. The purpose is to clearly indicate how much is being charged by the wholesale lender and how much is charged by the broker. Wholesale lenders offer lower costs/rates to mortgage brokers than you can obtain directly, so you are not paying "extra" by going through a mortgage broker. Tax Service Fee: During the life of the loan the borrower makes monthly property tax payments, either on one’s own or through an impound account with the lender. Since property tax liens can sometimes take precedence over a first mortgage, it is in the lender’s interest to pay an independent service to monitor property tax payments. Flood Certification Fee: The lender must determine whether or not the property is located in a federally designated flood zone. This fee is usually charged by an independent service to make that determination. Flood Monitoring: From time to time flood zones are re-mapped. Some lenders charge this fee to maintain monitoring on whether this re-mapping affects the property.

OTHER LENDER FEES:

Document Preparation Fee: Before computers made it fairly easy for lenders to draw their own loan documents, they used to hire specialized document preparation firms for this function. This was the fee charged by those companies. Now lenders draw their own documents and a fee is charged on almost all loans. Underwriting Fee: A fee is charged for the cost of underwriting the loan. Administration Fee: If an Administration fee is charged, then generally there will not be a fee for underwriting. Appraisal Review Fee: Even though a borrower will probably not see this fee on a Good Faith Estimate, it is charged occasionally. Some lenders review appraisals as a quality control procedure and charge for the activity. Warehousing Fee: This is rarely charged, however, some lenders have a warehouse line of credit and add this as a charge to the borrower.

ITEMS REQUIRED TO BE PAID IN ADVANCE:

Prepaid Interest: Mortgage loans are usually due on the first of each month. Since loans can close on any day, a certain amount of interest must be paid at closing to get the interest paid up to the first of the month. Homeowner’s Insurance: This is the insurance paid to cover possible damages to the home and other items. Normally the first year’s insurance is paid at the close. When purchasing a condominium, the Homeowner’s Association Fees normally cover this insurance. VA Funding Fee: On VA loans, the Veteran’s Administration charges a fee for guaranteeing the loan. Based upon the use of the borrower’s VA eligibility, the fee is either two or three percent of the loan balance. Instead of paying for this as an expense, commonly it is financed into the loan balance. Up Front Mortgage Insurance Premium (UFMIP): This is charged on FHA purchases of single family residences or Planned Unit Developments and is 2.25% of the loan balance. Like the VA Funding Fee it is normally added to the balance of the loan. Mortgage Insurance: Though rare, some first time homebuyer programs require the first year mortgage insurance premium to be paid in advance. Most mortgage insurance is simply paid monthly along with the mortgage payment. Mortgage insurance covers the lender and covers a portion of the losses in those cases where borrowers default on the loan.

RESERVES DEPOSITED WITH THE LENDER:

Homeowners Insurance Impounds: The lender will divide the annual premium by twelve to determine the estimated monthly payment to the impound account. Since the lender is allowed to keep two months of reserves in the account, the borrower will need to deposit two months' premiums into the impound account in the beginning. Property Tax Impounds: This amount varies according to when the real estate transaction closes and when the taxes are due. Mortgage Insurance Impounds: When required, lenders allow this premium to be paid monthly. However, a borrower may be required to put two months' worth of mortgage insurance payments as an initial deposit into the impound account.

NON-RECURRING CLOSING COSTS NOT ASSOCIATED WITH THE LENDER:

Closing/Escrow Fee: The fees associated with the closing. Title Insurance: Title Insurance assures the homeowner that they have clear title to the property. The lender also requires it to insure that their new mortgage loan will be in first position. Notary Fees: Most loan documents have multiple sets that must be notarized. Recording Fees: Certain documents are recorded with the local County Recorder’s Office. Pest Inspection: This is also referred to as Termite Inspection. This inspection tests for pest infestations and other items such as wood rot and water damage. If repairs are required, the amount to cover those repairs is usually covered by the seller, but it is a negotiable item. Usually the pest inspection fee is paid by the seller and is not normally reflected on the Good Faith Estimate. Home Inspection: Since it is the homebuyer’s choice to obtain a home inspection, this cost may not be reflected on the Good Faith Estimate. However, it is highly recommended. Home Warranty: This is an optional item. A Home Warranty usually covers such items as the major appliances, should they break down within a specific time. Often this is paid by the seller. Homeowner’s Association Transfer Fee: When buying a condominium or a home with a Homeowner’s Association, the association often charges a fee to transfer all of their ownership documents to the buyer.

REFINANCING ASSOCIATED COSTS:

Interest: When closing the transaction on a refinance, there may be outstanding interest due on the old loan. Reconveyance Fee: This fee is charged by the existing lender when they "reconvey" their collateral interest in the property back to the borrower through recording of a Reconveyance. Demand Fee: The existing lender may charge a fee for calculating payoff figures. Sub-Escrow Fee: This fee is actually charged by the Title Company. Loan Tie-In Fee: This fee is charged by the Escrow Company.

The Escrow Process

After all of the contingencies have been removed or satisfied, your loan has been finally approved and documents have been drawn, you are now ready to close the escrow. Here are some of the things that you should think about in advance of closing.
When do I sign escrow instructions and where do I do this?
Your escrow officer or myself will contact you to make an appointment for you to sign your escrow instructions and final loan papers. At this time, the escrow officer will also tell you the amount of money you will need (in addition to your loan funds). Your loan funds will be sent directly to the escrow by the lender. You may sign your escrow instructions and loan documents at a title company office, your real estate agent’s office or some other location agreed upon by all parties.
What should I look out for during the final walk-through?
Prior to your closing-day escrow appointment, if provided in your Purchase Agreement, you will have the chance to perform, with your agent, a walk-through. This will likely be the first opportunity to examine the house without furniture, giving you a clear view of everything. Check the walls and ceilings carefully, as well as the results of any work the seller has agreed to do in response to the inspection’s findings. Any problems discovered previously that you find uncorrected which the seller agreed to correct, should be brought up prior to closing.
Good Funds
In order for escrow to close, you must provide what is known as "Good Funds." This means that escrow can close:

• On the same day as your deposit if the final down payment and closing funds are deposited by cash or electronic transfer ("wired funds").
• On the next business day after the business day of the deposit, if the funds were deposited by cashier’s check, teller’s check or certified check.
• If the payment is made by personal or business check, when the deposit is made available for withdrawal by depositors. Depositing banks may hold these types of funds for up to three business days for most "local" items and up to seven business days for "non-local" items.

The Escrow Appointment
Once your loan is approved, you will be asked to go to the Title Company to sign the loan documents and escrow instructions that specify disposition of your loan funds. You will sign these documents in the presence of a notary public. When you’ve signed everything, your lender will make one final review of the documents and conditions for closing. Once completed, the lender will send the loan funds to escrow. Often, lenders require three business days before the loan is funded. Below is a list of items you will need in preparation for the appointment to sign escrow papers:

• Identification — One of the following forms of identification must be presented at the signing of escrow in order for the signature to be notarized: a current driver’s license, passport, State of California Department of Motor Vehicles ID card.
• Cashier’s Check — You need a cashier’s check or a certified check issued by a California (or your state) or your financial institution made payable to the title company. If using a personal check, the title company may delay the closing until the check has cleared.
• Fire and Hazard Insurance — You must have fire and hazard insurance in place before the lender will send the money to fund the loan. Whenever you buy a home, you must have insurance. Provide your escrow officer with the insurance agent’s name and contact information so they can make sure that the policy complies with your lender’s requirements.

What’s the next step after I’ve completed my sign-off?
After you have signed all the necessary instructions and documents, the escrow officer will return them to the lender for a final review. Upon completion, the lender advises your escrow officer that the loan is ready to be funded. What is an "escrow closing?"
Once all the conditions of the escrow have been satisfied, the escrow officer advises you of the date the escrow will close and takes cares of the technical and financial details. The culmination of the transaction, an escrow closing signifies legal transfer of title from the seller to you. Usually the Grant Deed and Deed of Trust are recorded within one working day of the escrow officer’s receipt of loan funds. This completes the transaction and signifies the "close of escrow."
What do I get at closing?
Escrow will record the deed of trust, disburse the funds, provide both parties with a final financial accounting in the form of a settlement statement, and close the escrow.

• Settlement Statement
• HUD-1 Form (itemizes services provided and the fees charged; it is filled out by the closing agent and must be given to you at or before closing)
• Truth-in-Lending Statement
• Mortgage Note
• Mortgage or Deed of Trust
• Keys to your new home

What can I expect to happen on closing day?
You'll be asked to present your paid homeowner's insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc. Once you're sure you understand all the documentation, you'll sign the mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed. You'll pay the lender's agent all closing costs and, in turn, the lender will provide you with a settlement statement of all the items for which you have paid. The deed and mortgage will then be recorded in the County Recorder’s office. At that point, you officially will be a homeowner.
Disbursement of Funds Held in Escrow
In some cases, the escrow agent will be instructed to hold funds in escrow to pay off obligations, which may not be completed until after the close. For example, funds may be set aside to correct a structural problem, remodeling or termite repair work. Upon completion of the project, the escrow agent, having received proper documentation and releases will disburse the reserved funds.
When will I receive the deed?
The original deed to your home will be mailed directly to you at your new home by the County Recorder’s office. This usually takes several weeks and may take longer depending on regional activity.
After the close…
If the funds from the new loan are being used to pay off an existing loan (generally, if you are selling one property and buying another), the old lender is required by law to issue a full reconveyance (release) of its loan. As soon as the deed of reconveyance removing the previous deed of trust is received, it must be recorded and the original will be returned to you. This may take several weeks. However, this delay is normal, and is nothing to be concerned about.
Your lender may retain this loan in its own portfolio or may sell the loan to either a private or public agency, such as the Federal National Mortgage Association (Fannie Mae). In either case, you will receive specific instructions as to how to make your loan payments.

Property Tax Calendar

Who Pays For What?

A major question in every escrow is: "Who pays what?" The answers vary by county ordinances and standard practices.  What is listed below are "customary" practices.  All fees charged are governed by terms of the sales contract and other written escrow instructions. Note: on some FHA, VA or other government-backed loans, the buyer will pay some fees that governmental regulations will not allow you to pay.

Sellers Generally Pay: Real estate commission Document transfer tax ($1.10 per $1,000 of sales price) Notary fees Property tax proration (to date of acquisition) Special delivery/courier fees, if required Document preparation fees Document recording charges Homeowner’s association statement fee and prorata dues Home warranty (according to contract) Work/repairs required (according to contract) Matters of record against the property or seller (loans, tax liens, judgments, etc.) and fees required to clear them (statement fees, reconveyance/trustee fees and prepayment penalties) Bonds and assessments (according to contract)

Buyers Generally Pay: Title insurance policy premiums (lender’s and Buyer's) Escrow fees Notary fees Property tax proration (from acquisition date) Special delivery/courier fees, if required Document preparation fees Document recording charges Homeowner’s association transfer fee and prorata dues City costs Home warranty (according to contract) Inspection fees (according to contract) Matters of record against the buyer including tax liens, judgments and fees required to clear them Fire insurance premium for the first year Assumption/change of records fees if the buyer is taking over an existing loan Lender’s new loan charges Interest on new loan from date of funding to 30 days prior to the first payment Other prorations (rents, insurance etc.) if applicable

San Carlos City Repair in San Carlos

San Carlos is a Great Place to Walk In.

Soil errosion can cause damage to sidewalks in our city. Repair is necessary.

See video link for more information: http://www.mctv.tv/SanCarlosSidewalk2.html

Hometown Days at Burton Park

Hometown Days at Burton Park: May 16-18

5/12/2014

Friday, May 17th at 5:00pm marks the beginning of the 33rd Annual edition of San Carlos Hometown Days at Burton Park.

This uniquely San Carlos event features family fun for everyone including a dinner on Friday evening, a parade on Saturday, May 18th that starts at 9:45 am, as well as live music, food, entertainment and fun all weekend long.

Check here for more the Hometown Days schedule and events.

http://www.cityofsancarlos.org/news/displaynews.asp?NewsID=1112&TargetID=1

Silicon Valley Dominates Top Luxury Market List -Daily Real Estate News | Friday, April 04, 2014

Silicon Valley is home to three of the top nation’s top five luxury markets, according to an index by Coldwell Banker Previews International, which ranks markets by average sale price gains and the sales volume of luxury homes.
“The market is just incredibly strong,” Scott Dancer, a real estate professional with Coldwell Banker in Silicon Valley, told CNBC. “The issue now is getting quality inventory.”
Silicon Valley is not just seeing a lift in its housing market from technology companies but also bankers, venture capitalists, hedge funders, as well as foreign buyers – particularly from China – who are propelling the market there, CNBC reports about the survey’s results.
The Coldwell Banker survey found that overall luxury markets tended to be near water too. Seventy percent of the luxury markets in the index were located near a body of water, which the report says supports the view that the luxury markets offering water views are always in demand.
The following cities are the nation’s top housing markets, according to the Coldwell Banker Previews International survey:

1. Woodside, Calif.
2. Bal Harbour, Fla.
3. Portola Valley, Calif.
4. Hillsborough, Calif.
5. Thousand Oaks, Calif.
6. Glenbrook, Nev.
7. Arcadia, Calif.
8. Southport, Conn.
9. Incline Village, Nev.
10. Atherton, Calif.
11. Kailua Kona, Hawaii
12. Hobe Sound, Fla.

Source: “Silicon Valley Is Crowned No. 1 Luxury Home Market,” CNBC (April 2, 2014) and Coldwell Banker Previews International

The Best Uses for a Bay Window

See how to furnish a bay window or merely enjoy the view more, in both casual and formal settings

  Elizabeth Miller

With a background in preservation and architecture, Boston-based interior designer Liz Miller combines classic style with a focus on function, providing timeless solutions for her clients. A mother of two, she's always on the lookout for family-friendly solutions that can make your house a home. Visit her at ermillerdesign.com

 

 

The bay window is a blessing and a curse. If you have one, you might not know what to do with it. If you don’t have one, you dream of all the things you could do with it.

No matter which group you fall into, these ideas for either utilizing a bay window or adding one can help.

dSPACE Studio Ltd

Bay windows — or bow windows, as they are called when they’re more rounded, as on this building — date back to medieval times. In those days a small bump-out was often used as a chapel or altar.

Roots of Style: Does Your House Have a Medieval Heritage?

Todd Davis Architecture

They caught on in Britain in Victorian-style architecture and were adopted into American buildings in the late 1800s, where they proved popular on the West Coast. A bay window is probably one of the first things you think of when you picture a house in San Francisco.

Kathy Corbet Interiors

The added floor space and light make bay windows an attractive home feature. But figuring out how to get the most out of one can be a challenge. One of the most common uses is with a window seat. Here an antique table in front of the seat provides a place for a game, but the height hinders its use for dining.

More about adding a bay window to your home

Jan Gleysteen Architects, Inc

A built-in banquette is your best option when using a bay window for dining. Be sure to choose a pedestal-style table, make sure the height is right and leave plenty of legroom underneath.

This is a snug curved arrangement, but it works well.

Jan Gleysteen Architects, Inc

When installing a banquette inside a bay window, consider not only the height of the seat and room for legs, but also the height of the back cushions. In this home a shelf behind the back cushion provides a transition to the windowsill.

Orrick & Company

If you want a casual look and your bay window is located on the ground level (and you don’t have children), install the banquette just below the sill and toss on some pillows.

It’s a good idea to cover the seat cushion with a washable slipcover made from indoor-outdoor fabric, since dirt is an inevitable by-product of bringing the outside in.

Tiffany Eastman Interiors, LLC

Or go with a high windowsill, to provide back support without the need for a built-in upholstered back.

Prentiss Architects

If you’re adding a bay window and want to make it a spot for eating, consider raising the windowsills so they’re right above table height, then build a dining counter directly into the bay.

Hillary Thomas Designs

Built-in desks are a beautiful way to use a bay window too. Again, make sure your windowsills are at the proper height for the desktop, and it’s ideal if you don’t have any baseboard heaters in the way. Keep an eye on the sunlight to make sure the glare isn’t too strong on your computer monitor; window treatments can regulate the light, but if they’re closed all day, it could defeat the purpose of sitting in the bay.

John Lum Architecture, Inc. AIA

A bay window is also the perfect place to showcase a freestanding desk, especially a vintage or unique piece. Here wood blinds help moderate the light and still allow a view to the outside.

Jo Alcorn

Maybe you have a tall, freestanding radiator in your bay window. In this home, the owners accepted that fact and used a single chair and window treatments to define the space but still make it feel like part of the room.

Hanson General Contracting, Inc.

If you can accommodate a floor-to-ceiling bay window, you won’t regret it, given the amount of light and perceived space it can create. Just keep in mind what you’ll be looking at and who might be looking in at you if you’re in a more populated area.

Learn more about this kitchen bump-out

Martha O'Hara Interiors

In a more suburban or rural setting, a floor-to-ceiling bay window with no window treatments can push a space right into the backyard, with no interruption even near ground level. The gloss finish on this floor highlights the effect, while the transom breaks up the height of the bays.

Goff Architecture

On a smaller scale, consider a transitional-style bay bumped out onto the patio, again linking the activity of the outside space to the inside space.

Karen Houghton Interiors

In the dining room, a bay window is a natural fit for a bar cart or a console outfitted as a bar.

Dietz & Associates Inc.

With no other furniture to distract, this dining table comfortably mimics the shape of the bay window, so it looks as if the table and window could fit together like puzzle pieces.

Antonio Martins Interior Design

You’re typically limited as to the size of furniture you can fit within a bay window. However, a love seat can provide plenty of seating when paired with other pieces of furniture.

Banducci Associates Architects, Inc.

Consider creating a “faux” bay window by building out the walls on either side of a conventional window. Insert bookcases into the sides of the bay, and use the space below the seat for drawer or cabinet storage.

S.A.N Design Group, Inc.

Storage that opens from the top is smart for families with little ones that they want to keep away from pullout drawers or cabinets, but the seat cushion will have to be removed for someone to get to the storage underneath. Storage accessed from the top also benefits those of us who tend to lose things at the backs of cabinets.

In a kids’ room, use curtains to make a nook special.

Sullivan Building & Design Group

Minimalists can make a bay window the focal point with bare glass and sconces on either side.

Hutker Architects

In bathrooms, tubs are typically built into bay windows, much like window seats. For a different take on the idea, use a freestanding tub and let the space around it work to highlight the depth of the room. Wood blinds keep the focus on the view beyond the windows here. (Conventional shades would have blocked the top of the view, and curtains would have attracted undue attention to the height of the counter.)

Hanson General Contracting, Inc.

Whether a bay window is on the facade of a home, tucked into a snug corner, or an element that pulls a backyard in, it’s an architectural feature that can transform nearly any room.

More:
Micro-Additions: When You Just Want a Little More Room
The Bay Window Goes Modern

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More in Windows

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Key Measurements to Help You Design Your Kitchen 

12 Key Decorating Tips to Make Any Room Better 

8 Kitchen Design Tips for Foodies 

judilindquist

Master bay windows?

April 6, 2014 at 1:02pm   Like  2

Bronwyn Hall

Beautiful bath in a bay love the storage in the wall space

April 6, 2014 at 2:06pm   Like  3

wuff

Love bay windows, would have loved to have had one

April 6, 2014 at 3:40pm   Like  3

Luciana

I love bay windows, with all their awkwardness and despite being difficult at times :)). This ideabook is great, I think it covers almost all the solutions one could think of.

I wanted a built-in window seat in our bedroom, my husband didn't, he kept saying to him they look old fashioned. We agreed on this spare sofa we had; luckily it fitted there quite well.

April 6, 2014 at 5:59pm   Like  3

PRO

Lauren Elyse Fine Art, LLC.

Oh how I dream of bay windows and one day being able to do any number of things with it as this idea book beautifully illustrates. Thanks for satisfying my craving for bay windows today!

April 6, 2014 at 7:40pm   Like  6

robngailwood

Love the round table

April 6, 2014 at 9:27pm   Like  1

BluePrince Architectural

I'm partial to having a desk (Or piano, if the sill is high) in a bay window- I've never been able to see the appeal of window-seats; to me they seem quite awkward for sitting and looking out the window.

Along the faux-bay window lines, another option in a bedroom is to put closets on either side and a raft of drawers beneath the window.

April 7, 2014 at 8:24am   Like  4

motownmom

When I had my windows replaced several years ago I had the first floor living room window replaced with a bay window. However, it's simply a "bump out", no support put under it to use it as a seat. Currently I use it as a garden window, growing the starts for this year's herbs and veggies, plus some plants. If I don't keep it "full" the kitties find it a nice spot to sit, then they mess with the top-down/ bottom-up blinds, and then I'm really not a happy kitty-mama, LOL.

April 7, 2014 at 10:20am   Like  1

Bernice Coccodrilli

Top cabinets

April 7, 2014 at 1:24pm   Like

PRO

Dura Supreme Cabinetry

A built-in bench can also make a space feel more like a bay window. These designs do a great job at creating this appearance…
NW Saltbox Kitchen Remodel
Rustic Modern Lake House
Leeman House

NW Saltbox Kitchen Remodel

Rustic Modern Lake House

Leeman House

April 7, 2014 at 2:35pm   Like  3

PRO

Robin Storie

Great discussion and shows what can be done with bay window spaces. Window treatments can be tricky.

April 7, 2014 at 6:11pm   Like  4

carolkelley

I've loved bay and bow windows since I was a little girl when my grandfather had a beautiful old spinning wheel in the bay window in his living room. When my grandmother was still alive, apparently they put their Christmas tree there.

I've considered a bow window for our sunroom when we renovate it this year. I don't know if I'll do it or not.

April 7, 2014 at 11:21pm   Like  1

Samantha L

Not only are my windows built out so they can't be used for seating for lack of support but they're also too high, about the height of a desk. As they're built out they can't serve in that capacity either. So far they're just bare horizontal surfaces. Thank you for this idea book for potential inspiration.

April 8, 2014 at 10:06am   Like  2

cogo46

We've got a bay window which is delightful but makes it awkward on how to arrange the sofas as the room isn't that large (3.5 x 3.5 metres). In the end we've gone for an arrangement of sofas facing the telly in the corner (boring and yet most practical) and we've got an antique chest under the window that our cat also likes to use for neighbourhood watch sessions. At Christmas it becomes the best spot for a Christmas tree. Frames the tree nicely on the inside and also when looking at it from the street. But we did have to buy more decorations and lights for the 360 degree view!

April 8, 2014 at 1:29pm   Like  1

lulyon

We built a box bay last year to allow more space for dining in the eat-in kitchen. On the adjoining wall we included a greenhouse window, in which I grow herbs. The bay allows more light, which is good in the rainy northwest and on sunny days, I'm glad I used a sunshade fabric on the bench backs. A tree has outside has yet to leaf out for summer heat. The bonus: the bench under the greenhouse windows doubles as a storage area for recycling and flats of canned goods, necessary in a compact space.

April 9, 2014 at 11:30am   Like  3

PRO

Killeen Studio Architects

so many bay windows.... who knew

April 9, 2014 at 1:45pm   Like

dreacorator

Also asked at another post but ... does anyone have pricing info on installing a window seat into a bay window (which needs replacing too)? Thanks!

April 9, 2014 at 7:38pm   Like

PRO

Dura Supreme Cabinetry

dreacorator - you could contact your nearest Dura Supreme Dealer for pricing... You can find locations near you by going to: http://www.durasupreme.com/dealer-locator

April 10, 2014 at 3:40pm   Like

PRO

Erika Bierman Photography

Lots of beautiful examples, love the light they can bring to an interior space.

April 11, 2014 at 3:40am   Like  1

PRO

Charmean Neithart Interiors, LLC.

Definitely best use for a bay window, in my opinion, is a breakfast table.

by Charmean Neithart...

by Charmean Neithart...

Colonial Kitchen in San Marino

April 11, 2014 at 8:16am   Like  9

suikerchiller

Inspiration

April 16, 2014 at 2:42am   Like

Shadia Zeineldin

Thanks for the nice ideas.

April 16, 2014 at 3:19am   Like  1

Herbal Bohemia

I have never had a bay window, but I would like one as a window seat!!!

April 16, 2014 at 3:45am   Like  1

PRO

Fresh Quarters - Brooke L. Willmes Realty Team

We have 3 in our house: 1 in our bedroom where we put our bed--not built in and not fend shui but we like it. One in a future child's bedroom where I envision a crib but the only the eludes me is in our dining room, which is very formal. The only thing I can picture is a window seat...currently home to my daughter's bouncy horse!

April 16, 2014 at 4:26am   Like

ginadaisy

I'm not a big fan of my bay window. It isn't supported underneath so it can't be used for seating. But I placed a chair and a half in front of it and fluffy dog beds in the window...the pups fly up from the chair and spend their days in the window watching the world go by. I do like it better knowing they at least get enjoyment out of it! I'd post a pic but I don't want everyone to see I've been remiss in vacuuming dog hair!

April 16, 2014 at 5:56am   Like  2

Peggy Tupper

Love the craftmanship in photo #4. The curved seat is stunning. cc Jan Gleysteen Architects, Inc

April 16, 2014 at 6:37am   Like  1

baha

Love bay windows! Considering putting two in our small dining room to create more light and feeling of space.

April 16, 2014 at 7:15am   Like

walnuttown

I have three bay windows. We have a love/hate relationship. The bay window in my kitchen which houses my kitchen table has a slider in the middle window which opens onto my sweeping back porch. I have that same set up off that same porch in my master bedroom. I lived here nearly a year before I noticed that the sliders in the middle windows did not match the height of the windows on either side. ARGH!!!!! Due to the fact we have a massive sliding door in our great room that opens up onto that same porch, we don't exit those bay window doors so I treated them as if they don't slide and hung wooden blinds. The third bay is home to my master bathroom tub and while it doesn't have a slider, it does present a problem. I currently am forced to climb in and out of that tub to open/close those blinds. Today's solution is: I will be removing that built in tub for a free standing to make those windows more reachable. Next I am going to find a master carpenter to manipulate the wood work around those sliders so everything in the bays appear to be the same height. Or maybe just hang curtains which hide the tops of the windows' woodwork...or maybe.... Sigh.

April 16, 2014 at 8:32am   Like

JAC Frances

All of these photos were beautiful, but the second picture of the bay window curved seating made me drool--that's excellent!

April 16, 2014 at 9:07am   Like  1

lordoftheappes

Tapalpa

April 16, 2014 at 9:23am   Like

PRO

LB Interiors

Living room bay window

April 16, 2014 at 2:16pm   Like

victoran

Floor to ceiling bay window is delightful. Feels like you are outside but still protected from the weather.
Love the photo of the bay window with a "desk" built in so when you sit at the table/desk, you look out at the glorious view of trees. I want a bay windoW!!! and NEVER ANY DRAPES ON IT....TOO BEAUTIFUL THE WAY IT IS.

April 16, 2014 at 4:20pm   Like

jeanmariehill

About 30 years ago we added this bay window to the bathroom. Claw foot fits perfectly under it. The best bath ever with total privacy and view to private forested backyard. Just recently put porcelain tile on window sill as wood water damaged over the years. Didn't think it could be any better!

April 16, 2014 at 4:22pm   Like  6

jrt3

I'd go nuts trying to find a suitable desk or table for one of these windows. I think a built in would be best, with a few nice examples shown.

April 16, 2014 at 9:13pm   Like

elenajh

The eighth photo of a built in table might be my favorite although I have always thought a bay window was the perfect reading nook. You can still enjoy reading with all the light coming in and you can eat at the same time. But the best thing I can imagine for that space in a kitchen is a place for freshly baked pies to cool and tease those outside to come in for a bite

April 16, 2014 at 9:19pm   Like  2

PRO

Studio NOO Design

Here in Montreal, we say "bow window" ???

April 17, 2014 at 7:33am   Like  1

lulyon

I think there can be a distinction between "bow" and "bay"--the bow is made up of several skinny windows so that the overall wall of windows maintains a smooth curving profile, whereas a bay is usually three or possibly five panes creating a less smooth and more geometrical-looking profile with a definite flat middle. (This explanation is probably as clear as dirty glass!)

April 17, 2014 at 9:24am   Like  2

oldblackdog

Love a lot of them - especially the design with the desk, and the imaginative creation of a "faux bay" in the flat wall - I would guess you could use the built out wall sections for storage, and have the nice little nook

April 18, 2014 at 9:26am   Like

lruedy

Bay window

April 18, 2014 at 4:25pm   Like

zweiback

I have bay window envy… {sigh}

April 23, 2014 at 9:58am   Like  1

divinemrsm

As beautiful as the first picture of the banquet table in the bay window looks, how comfortable would that really be to live in? It looks like a very cramped space. To have to scooch into that space to sit a few people is always awkward and certainly doesn't lend itself to large and/or tall people. The accompanying text says 'be sure to leave lots of leg room'. In that photo, I only see enough leg room for small children whose legs don't touch the floor!

on Tuesday at 4:33am   Like

lulyon

In my banquette area, we have large-sized sliders on the two pedestal bottoms (three on each), so the table is easily pulled out for people to walk around. Once the meals starts, the person in a chair on the outside has to do fetching duty. (This means that sometimes people park themselves in the bay so they can be waited on!) The picture divinemrsm refers to does seem to show a heavy table with little leg room. And the table is probably only suitable for small meals such as breakfast or lunch. Long legs might be cramped in this situation, I'll agree.

on Tuesday at 8:18am   Like

PRO

Comfort Shades

Great collection of pictures, it definitely helps visualize the numerous options available to treat these spaces, great post thank you.

Yesterday at 5:44am   Like  1

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