Frequently Asked Questions

Why Aliya?  We have sold millions of dollars of real estate and have experience in selling residential (including multi-family), buying at auction, note purchases and office/medical buildings so we understand all aspects of the real estate market.

Below are answers to some of the most commonly asked questions.

• What does a title company do?
• What do all these terms in the Multiple Listing Service (MLS) mean?
• What questions should I ask a Mortgage Lender?
• Interest Rate vs. APR
• How do I cancel my P.M.I.
• How do I safety proof my home for children?

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I. What does a title company do?
You’re almost there. You and the seller have agreed on terms. The title company has gotten the paperwork and the check from your lender. All you have to do is sign a bunch of papers, hand over the down payment and pay the fees.

• Set up closing. The formal closing, or the meeting where the final papers are signed and the house officially becomes yours, is coordinated by the title company and generally takes place at the company’s office. A title company (or title insurance company) checks the property’s title history and looks for liens or any other obstacles to sale. Once the title is deemed legally “free and clear,” the company offers insurance as reassurance of a clear transfer of the home. Your mortgage loan officer will probably suggest a title company to use; if not, your accountant or real estate attorney can help. Because your escrow account will probably include your annual homeowners insurance premium, your insurance provider and the closing agent (the agent at the title company you’re using for closing) will need to be in contact before the closing date.
• Close that deal. Closing makes many first-time buyers nervous because it seems like a forbidding procedure where you sign your life away on a bunch of papers you don’t have time to read. Actually, by the time closing rolls around, the hard part is truly over with. Closing actually feels a little bit giddy — at the end, you have the keys to your new house! Your loan officer will be there, as will the seller and the closing agent. You will sign your name 487 times, but if you’ve done everything right up to this point, it will not be stressful. Relax.

Three things to remember:

1. You’ll get the final settlement statement that details all closing costs and terms of the loan just a day or two before closing. Review it carefully to make sure it jibes with the good faith estimate you received earlier. The GFE is not final; the settlement statement is. If anything is weird, call your loan officer immediately.
2. You must get a cashier’s check made out for whatever final amount you owe at closing, including the down payment. This amount is generally at the bottom of the settlement statement and takes into account any earnest money or upfront closing costs you paid beforehand. You cannot write a personal check for this amount! So don’t forget.
3. Bring your driver’s license.

If you’re keeping your down payment in an account that isn’t immediately liquid (like a high-interest online savings account, because you’re so smart!), don’t forget to move the funds to your checking account several days ahead of closing. Actually, go put that on your calendar right now;  you can thank us later.

Finally, celebrate! If you have two nickels left to rub together after the last paper is signed, we suggest spending them on a bottle of champagne. You deserve it!

 

II.  What do all these terms in the Multiple Listing Service (MLS) mean? Sale pending, AWC, TOM, DOM, etc?

This is the terminology currently used in the Phoenix area Multiple Listing Service (ARMLS). They may be different than what is used outside of the Phoenix area, however it is likely that any large MLS will have very similar terminology.

“Active”: If a listing is active, then it is available for sale and there has not been an offer accepted. An offer may have been submitted, but it hasn’t been accepted by the seller yet.

“Pending”: This means an offer has been submitted and accepted, and there are no contingencies in the contract. Basically this means the property has been sold and is waiting for closing (although deals fall apart all the time between contract acceptance and close.) See AWC below for an explanation of contingencies.

“AWC”: Stands for Active With Contingencies. This means an offer was submitted and accepted, but there are contingencies that must be settled before the deal can close. There are numerous possible contingencies, but by far the most common one is that the deal is contingent on the buyer’s selling an existing property. The buyer needing to secure financing is also a common contingency. If a listing is in AWC status, additional offers can be submitted, but will be in “second position” to the original offer (ie: a backup offer). If the contingency can not be met, then the contingent contract would be canceled and the backup offer moves into first (primary) position. Once the contingency is met, the listing should be moved to a Pending state, but most agents never seem to do that.

“TOM”: Contrary to what a lot of people believe, TOM does not stand for Taken Off Market. It means Temporarily Off  Market. This isn’t a widely used category. A property may go TOM if a seller is going to be out of town for an extended period, or if the seller decides to do some repairs to the property and doesn’t want it shown while repairs are being done. If you are an agent and you start calling owners who property is in TOM status to try and “relist” their home, then you are violating all kinds of listing and ethical rules and regulations. (And trust me, this happens all the time.) A property in TOM status is still under a signed listing agreement with the listing agent, hence any solicitation of a TOM property is a serious violation and you can lose your license if you pursue it!

“Sold”: This indicates the property has been sold to a buyer. Sold in this case means the transaction has closed — title/deed have been transferred to a new owner.

III.  What questions should I ask a Mortgage Lender?   It is important that you understand how each loan program differs before making the loan application.

We would like to suggest you ask these questions.

1. What fixed and adjustable loan programs are available?
2. What are the origination fees and points on these loans?
3. What will the closing costs be?
4. What prepaid items will I be expected to pay?
5. How long does the loan application to approval process take?
6. Will there be a prepayment penalty on the loan?
7. Is there an interest rate lock-in policy?
8. Does the loan have a call provision?
9. Are escrows required for taxes and insurance premiums?

IV. Interest Rate vs. APR

Confusing and mysterious is “annual percentage rates” for mortgage loans. The interest rate and APR don’t always make sense.Interest rate is simply the percentage rate that a lender applies to your mortgage balance to determine the amount of interest due.

The annual percentage rate (APR) includes the interest rate, plus other charges and fees. These can include “points”, mortgage insurance, prepaid interest, origination fees, tax service fee, and any buy-down funds.

The lender is required to disclose both the mortgage interest rate and annual percentage rate. If you have a choice of several loan programs, the APR is a good indicator of the true costs of both.

Best suggestion is to go to Fannie Mae http://www.HomePath.com website. Then access the true cost calculator from the calculator link at the top. The system will give you before-tax and after-tax cost of your loan.

V. How do I cancel my P.M.I.

If your down payment on your existing loan was less than 20% of the purchase price or value, you are paying a “private mortgage insurance premium” as part of your mortgage payment.These premiums are not tax-deductible. But thanks to the 1998 Homeowners’ Protections Act as well as measures instituted by Fannie Mae and Freddie Mac, there are now 2 basic instances where your PMI can be cancelled.First, if your mortgage is now less than 80% of the current value of the home, you can request that the PMI be cancelled. Usually, the loan must be at least 2 years old to request PMI termination.

Second, if your mortgage was originated after July 29, 1999, the lender is required to automatically terminate your PMI when your equity is scheduled to reach 22 percent using the original amortization table for your loan.

Request to terminate PMI premiums must be in ! writing to your lender. Additionally, most lenders will require additional proof of value; such as an appraisal.

VI. How do I safety proof my home for children?

Whether you are just now guessing which color to paint your nursery or have a little one that is ready to crawl, taking preventive measures to childproof your home against unintentional accidents is essential. Even if you don’t want your children to get into something, it seems that they can always find a way to do so. Specialists in child safety recommend that parents get down on their hands and knees and take a look around the house from a child’s viewpoint.

Consider the following room-by-room tips to help make your home safer for your children:

SAFETY MEASURES FOR ALL ROOMS

• Install child-resistant covers on all unused electrical outlets.
• Keep all mini-blind cords out of reach.
• Tape down the corners of area rugs or electrical cords that might trip children.
• Place furniture well away from all windows.
• Keep cigarettes, matches and lighters out of reach.
• Place screened barriers around fireplaces, radiators and portable space heaters.
• Keep firearms and ammunition safely locked away.
• Secure unsteady furnishings.
• Be vigilant about choking hazards. ( Anything that fits inside a toilet paper tube has the potential to choke a child. )

LIVING ROOM

• Secure bookcases to the wall, using shelf brackets attached to the side and/or top of the bookcase, and then screw into the wall.
• Secure or remove heavy or breakable items from tables, as children are likely to grab or shake them, causing whatever is on top to move or fall off.
• Use corner bumpers on furniture and fireplace hearth edges.
• Keep the houseplants high. ( The objective here is two-fold: to keep a falling plant from hurting your child and potentially poisonous houseplants out of reach. )

KITCHEN

• Install childproof latches on all cabinets and appliances within a child’s reach.
• Keep knives, cleaning supplies, and plastic bags out of reach.
• On stoves, keep the handles of pots and pans turned toward the wall. Never leave cooking food     unattended.
• If stove knobs are easily accessible to children, use protective covers to prevent kids from turningthem on.
• Keep chairs and step stools away from counters and stove.
• Keep syrup of ipecac on hand.

BABY’S ROOM

• Place infants under one year of age on their backs to sleep.
• Crib bar spacing should be no greater than 2-3/8 inches, smaller than the diameter of a soda can.
• Position the Crib away from all drapery, electrical cords, and windows.
• Be sure the crib sheet fits snugly.
• For crib bumpers, make sure it’s firm ( not fluffy ) and secured tightly with at least six ties.
• Remove mobiles and other hanging toys from the crib as soon as a child can reach up and touch them.
• Never use an electric blanket in the bed or crib of a small child or infant.

STAIRS AND HALLWAYS

• Have two safety gates, one at each end of the staircase.
• Brighten dark hallways.
• Install carbon-monoxide (CO) alarms and smoke alarms in each room on every level of the home.

WINDOWS AND DOORS

• Mark sliding glass doors with colored tape or stickers to distinguish them from open doorways.
• Place sleeves on doorknobs to prevent toddlers from accessing dangerous areas of the house.
• Use doorstops to ensure that doors can’t slam shut.

BATHROOMS

• Turn down the hot water heater temperature to a maximum of 120 degrees.
• As in the kitchen, lock or tie cabinet doors, and move all soaps and shampoos to higher surfaces ( especially colorful ones, or varieties that have tempting scents like vanilla or strawberry ).
• Place a non-slip mat or stickers on the bottom of your bathtub.
• Put locks on medicine and cleaning supply cabinets.
• Cover the bathtub waterspout with a soft, protective cover.
• Install toilet lid locks.
• Install ground-fault circuit interrupters on outlets near all sinks and bathtubs.

If you are unsure about any of the items listed, ask a professional. Professionals may come to your home to “child or baby-proof” it by installing protectors and locks, while looking for hazards that might go unnoticed. Your family doctor or pediatrician may be a great resource for locating reliable, inexpensive professionals that may perform these services in your area.