What Your Realtor, Loan Officer and Appraiser Forgot to Tell You!: A Guide for First Time Home Buyers

By Richard S. Kosoff

You are in the market to buy a house. To be successful, you want to:

A. find a local Real Estate agent who is a professional.
B. obtain financing and determine how much you can afford.
C. understand the process.
D. be TAKEN TO THE CLEANERS.

If you selected A, B, or C, then this books definitely for you. What Your Realtor, Loan Officer and Appraiser Forgot to Tell You, is an inside look that combines facts regarding the how to and how much with plenty of unique stories from past clients. The result is an enjoyable read that maps out how to purchase a home and SAVE MONEY.

• Language: English
• Publisher: AuthorHouse
• Release date: Jul 27, 2005
• ISBN: 9781452057156

Richard S. Kosoff

Richard Kosoff grew up in Philadelphia. My dad, as a builder, had a dream of relocating us to the area where he did his military training, Southern California. At nineteen, I relocated to Woodland Hills, California. I went to California State–Northridge and graduated in 1985 with a BS degree in MSA. I had about five jobs before settling on a career, met my beautiful wife through my sister, and have two great kids, who are now nineteen and seventeen. I think that covers it.

Book preview

TABLE OF CONTENTS

WHO AM I?

REAL ESTATE – THE PLAN

THE LOAN PROCESS

Where Do I Start?

Direct Lenders, Mortgage Bankers and Mortgage Brokers

Was Barry Kinston Lucky?

Preapproved vs. Prequalified vs. Approved

Defining a Good Borrower

Credit Profile

John Duey is the Exception

Income and Debt Ratios

Down Payment and PMI

Employment

The Reiner’s

The Property Appraisal

The Right Loan for the Right Home

A Variety of Loans

Indexes

Interest Rates vs. Points vs. A.P.R.

Good Faith Estimate

How Much House Can I Afford?

A Word or Two About Rates

First Time Home Buyer Programs

Tricks of the Trade

Tax Advantages

THE INTERNET

APPRAISAL

REAL ESTATE AGENTS (THE GOOD ONES)

Who Pays the Commission?

Buyers’ Market vs. Sellers’ Market

THE PURCHASE CONTRACT TIME LINE

THE HOME INSPECTION

How Not to Cancel an Escrow

THE ESCROW COMPANY

Mr. Adori’s Expensive Surprise

IN CONCLUSION

APPENDIX

Amortization Tables

Mr. Adori’s Settlement Statement

WHO AM I?

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I started in the Real Estate business in 1987. Back then I was hired by Home Fed. Bank and was trained as an appraiser. In 1990, I switched companies and appraised for Citibank. In mid-1991, I attended a Citibank meeting with the mortgage loan officers at an offsite hotel. They had breakfast, omelets, fresh fruit, rolls and warm muffins. They laughed and appeared to be having much fun, a lot more fun than any meeting I had attended with the appraisers. That was it. In 1991, after already passing several appraisal competency exams, I decided to jump to the loan origination department and start over as a home loan officer for Citibank. I worked there until 1993, when I was offered a position with PNCMortgage, one of the biggest regional banks in the country. In 1997, I was made an Area Sales Manager and still maintained my production. In 1998 and 1999, I was the top loan officer for PNC in Southern California. In February 2001, the mortgage division of PNC was purchased by Washington Mutual, where I maintained my production and continued making President’s Club, an honor awarded to less than 5% of the company nationwide. In that time, I can truly say that I’ve learned a few things that I’m happy to share.

By the time you get done reading this book you will understand the home buying process from selecting an agent, selecting and qualifying for the right loan, avoiding being an easy mark for the unscrupulous and saving a lot of money.

Real estate is the best game in town! Of course, people need a place to sleep, but real estate offers so much more: tax write-offs, a hedge against inflation, a savings plan and potential large returns on your investment are a few facts that come to mind. Best of all is that you get all of these things today with as little as 20%, 5%, 3% and even 0% down. How many investments can promise that? There’s lots to talk about, but for now welcome to the best game on earth: real estate.

REAL ESTATE – THE PLAN

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YOU’VE GOT TO HAVE A PLAN. Where does it start? I suppose it might start one Sunday morning when you are sitting around looking at the newspaper. Suddenly the Real Estate section falls out onto your lap and a picture of a new, beautiful Spanish-style home is staring at you. You’re working! You’re making money! And if you have to listen to those bratty kids in the next apartment one more time, you’ll scream. Not to mention how much you are paying for this dump. Then it hits you! Let’s call an agent. Let’s buy something. We can afford it if we can pay for this. Plus I hear it’s a good tax write-off, a good stepping stone, and a good investment plan. HOLD ON THERE!

Before you reach for that phone on the second biggest decision of your life, you are going to need a plan. And this plan is good if you are a first-time buyer or have decided to move up. Of course, if you already own a home, you may already feel comfortable with the process. Use this book as a refresher course. Maybe it can help you point out your successes and failures the first time out.

Here it is, The Plan:

1)   Make a budget to see where your income is spent.

2)   Determine how much money you have for your new mortgage payment.

3)   Use this book to determine how much of a mortgage you can handle.

4)   Determine how much money you have saved for the down payment.

5)   Add the down payment to the loan amount to determine your sales price.

6)   Call a Lender. Have your credit checked and get PRE-APPROVED.

7)   Make a list of areas in which you’d like to live.

8)   Use the newspaper to determine if these areas have homes in your price range.

9)   Find an agent, find a home inspector, and find an escrow company.

10)   Buy a home, get fire insurance.

11)   Be nervous – it’s OK. It’s a big decision.

12)   Be happy – you’re living the American Dream.

Therefore, I’ve written this book in this order. First the loan, then the agent. Trust me, it’s a lot less stressful looking at houses when you know you can afford to buy them. In fact, most sellers will not even consider an offer unless it comes with a bonafide pre-approval letter. A pre-approval letter comes from a reputable lender and confirms that your credit has been reviewed, you spoke to a professional and that you can afford to buy the house on which you are writing an offer.

THE LOAN PROCESS

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Maybe you have a good friend or family member in the mortgage profession. If so, that’s great. He or she can ask you all of the appropriate financial questions, get you pre-approved and into your first home. If you don’t have a friend in the business, then you’re wise to do a little research. This can be a daunting process. It can be expensive and, for some, even more expensive. There are many options to getting a loan and many terms to confound you. By reading this book you have decided to be a partner in the home buying process and not a mere participant. The difference is between one who buys a home and one who is put in a home. If you are like me, your funds are limited and throwing money away is not something you relish. A hundred dollars in my pocket is a lot more valuable than in the lender’s pocket. Of course, I’m kidding when I say hundreds. Apathy can cost you thousands.

The following pages don’t explain everything, just the information you need to understand the complexity of the mortgage industry and the information you need to make a good decision.

Where Do I Start?

Find a good loan officer. That’s a BIGGIE. A good loan officer will be a good listener. He will get you the loan that you want and not the one that earns him a bigger commission. He will communicate with you often and keep you well informed as to where the loan is in the system. He will discuss the costs of the loan with you, and these costs will be reasonable when compared to other lenders. This being said, let’s look at where these individuals reside and how their roles differ.

Direct Lenders,