Frequently Asked Questions

1. How do I know what I'm Qualified For?

2. What are the Current Interest Rates, and what would my Payments Be?

3. What is a 90% Letter?

4. What do I need to know about Property Taxes?

5. What is Mortgage Insurance?

6. What is a Resale Certificate or Public Offering Statement?

7. How do I find the Home I'm Looking For?

8. What happens if I have a Home I need to Sell?

9. What goes into an Offer to Purchase?

10. How much of a Down Payment do I need?

11. What and how much is the Earnest Money Deposit?

12. What will my Closing Costs be?

13. Why do I need an Inspection?

14. What is Title Insurance? Why do I need it?

15. When will I be able to Move In?

How do I know what I'm Qualified For?

In Anchorage, most lenders use a method of qualifying buyers called "LP", which is short for Loan Prospector, Freddie Mac's software program for evaluating credit worthiness. This is a tremendous benefit to you, the buyer, since you are no longer held exclusively to the old fashioned method of what your "ratios" are. The program takes many compensating factors into consideration to deliver a recommendation on a buyer's credit worthiness, including:

• How long you've been in your present job or line of work.

• What your credit history looks like.

• Your cash and other assets along with your net worth.

• The amount of debt you have.

• The loan to value ratio on the house your buying (Loan Amount / Appraised Value = LTV%)

• And of course your income.

As a result, the old calculators won't work. Try them... they're on almost every real estate web site you see. They simply don't take enough factors into consideration to make a reasonable decision on your ability to repay your loan. To find out the TRUE amount you're qualified for, take a moment to fill out the form below.

All applicable fields are required. Monthly income is before taxes or deductions.

What are the Current Interest Rates, and what would my Payment Be?

Rates fluctuate often, and are primarily based on the performance of the bond market, not the cuts you hear about the Federal Reserve making. If you would like to receive a daily rate sheet by e-mail, fill in these fields:

The following table will show you what your Principal and Interest payment would be based on the rate and  $1,000 of loan amount. So if your loan is for $150,000, multiply the appropriate factor below by 150.

Example: An FHA/VA 30-Year fixed rate loan at 6.500% in the amount of $137,000 would have a Principal & Interest payment of 137 x $6.32 = $865.84.

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What is a 90% Letter?

After you have delivered all the pertinent information to your lender and your credit has been run, your loan officer will make a determination of the amount you'll be qualified for. A 90% letter quite simply states that he/she is 90% certain that you are qualified. Normally, the only thing left is verification of the information you gave them. Here's what a typical 90% letter looks like:

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What do I need to know about Property Taxes?

Property Taxes in Alaska are computed based on a mill rate of the assessed value, typically 15-19 mills. That means that your annual taxes will be approximately 1.5% to 1.9% of the assessed value of your home. After your purchase, you may receive a letter from the county tax assessor asking for information about the purchase price and / or value of your home. YOU ARE NOT REQUIRED TO RESPOND TO THIS REQUEST. If the assessor's estimate of value is lower than your purchase price, let it go. If it is higher you may appeal, although very few appeals in Anchorage are successful.

Your property taxes will most likely be collected monthly by your lender and held in an escrow account. Your lender will pay your tax bill on your behalf when due. Property taxes are due in two installments, the first on June 15th, and the second on August 15th. To view complete information on property taxes in Anchorage and to view your account online, visit the Anchorage Real Estate Property Taxes Web Site.

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What is Mortgage Insurance?

Basically, protection for the lender. Private Mortgage Insurance (or, PMI) protects mortgage lenders against potential losses in the event of borrower default. By covering the risk on residential loans, mortgage insurance makes it easier for the originating lender to sell your loan in the secondary market. It has become the standard practice in the United States, and is virtually unavoidable when your down payment is less than 20% of the purchase price. The cost of mortgage insurance is included in your total monthly payment, and depends on the type of loan you get as well as your loan to value (LTV) ratio. For a conventional loan with 5% down, it is safe to estimate your monthly mortgage insurance as 0.7% of the loan amount divided by 12. For an FHA loan with 3% down, it is safe to estimate your monthly mortgage insurance at about 0.5% of the loan amount divided by 12. Some lenders will allow you to have your home re-appraised after a period of time and eliminate your mortgage insurance if your equity in the home has risen to over 20%, others will not.

On the plus side, private mortgage insurance does make it possible and even normal for lenders to do extremely low down payment loans. If it were not for the presence of PMI, it's a pretty safe bet you'd have to put far more cash into your transaction.

By the way, if you qualify for a VA loan, you may have to pay an upfront funding fee, but you will not have to pay monthly mortgage insurance.

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What is a Resale Certificate or Public Offering Statement?

Normally found on condominiums in Alaska, a Resale Certificate outlines the operating information for the homeowner's association governing the subdivision. It includes detailed information about:

• Covenants

• Bylaws

• Rules and regulations

• Assessments

• Anticipated capital expenditures

• Reserves

• Balance sheet and income statement

• Current operating budget

• Pending legal action

• Insurance coverage

• History of the unit's conformity and participation

• Maintenance responsibilities

• Minutes of the association meetings

By law, a Buyer has 10 days to review the Resale Certificate and accept it or reject it and walk away from the transaction.

Covenants are the rules and regulations that are permanently attached to a particular parcel of land. They are intended primarily for the benefit of the neighborhood to ensure that each homeowners' real property is held to a high standard of care, maintenance, and appearance. They seek to enhance the value of homes in an area, and attempt to make the experience of home ownership as enjoyable to as many as possible.

Also called CC&R's (Covenants, Conditions and Restrictions) or simply Deed Restrictions, covenants control things like property use, exterior appearance, types of residences, outbuildings, fences, the keeping of animals, and even landscaping. These restrictions are normally placed on the land by developers who record the Declaration of Restrictions then sell the parcels subject to the restrictions.

In Alaska, home buyers wishing to purchase newly constructed homes with restrictions in place are notified of the details of the declaration through a Public Offering Statement (POS). A POS is submitted in lieu of a Resale Certificate, since often the association will not yet be fully operational. By law, a Buyer has 15 days to review the Public Offering Statement and accept it or reject it and walk away from the transaction.

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How do I find the Home I'm looking for?

I have many resources available to me to find the home that's right for you, and I'll exhaust all of them until we find the home you're looking for. There's no need to sift through all the Realtor ads in the newspaper anymore... do the crossword instead! Some of those resources include:

Multiple Listing Service - The biggie. Our MLS currently displays over 600 homes in the Anchorage area alone that available for purchase. Our service allows me to search on virtually any aspect of a home that is important to you, including garages, square footage, lot size, schools, etc. In addition, the "Hotsheet" feature allows me to pull up brand new listings on a daily basis to see when a new home has come on the market that may meet your standards. Ask me about my SmartBuy Program which sends the listings right to your inbox!

Interoffice Cooperation - Often it can be as long as a week between the time an agent knows that he or she is going to get a listing and the time it is entered into the MLS. Re/Max agents are diligent about communicating their future listing opportunities to other agents in our office, keeping you a big step ahead of the competition!

For Sale By Owner Homes - I presently track over 45 homes in the Anchorage area that are For Sale By Owner or FSBO (pronounced fizz-bow), as we call them. Upon receiving your criteria for your new home, I will immediately search my FSBO database to see if one of those homes fits your needs. If so, I will contact the owner of the property and arrange a tour for you.

Letters to Homeowners - If you know what you're looking for and it simply is not presently available on the market, I have the ability to pull up a list of homes in Anchorage that meet your needs. I will send out letters to those homeowners letting them know that I am working with a Buyer who is searching for a home similar to theirs. Often we'll find one or two people who hadn't even considered selling until they found out there was a ready, willing, and able buyer interested in their house.

With all those resources working for you, I'm confident we'll have no trouble finding the home that's right for you. Take a moment to fill out the following sheet to tell me what you're looking for, and I'll get right back to you with the homes that match your criteria.

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What happens if I have a Home I need to Sell?

You're not alone, but there are a few things you should know. The traditional model would allow you to make an offer on a home for sale and have your closing contingent upon selling your home. However, in this strong Seller's market where homes are selling within days of being listed for sale, there is nothing to motivate a homeowner to accept a contingency offer. Timing, then, becomes the key to getting your transaction completed.

Your first step is to get your home on the market. Your negotiating position when buying a home is stronger the closer you are to having a contract on your home for sale. The second step is to leave yourself some flexibility and "wiggle room" in any contract you accept on your home. A clause requiring a concurrent close of escrow for your purchase and sale is one way of accomplishing that. Another way is to make your acceptance of a contract subject to successfully contracting for a home you want to buy. Either way, keep in mind you may lose a valuable buyer over it. Your third step is to develop an alternate residence plan. Consider a brief rental period during the transition from your current home to your new one. Although it's inconvenient, it's one of the smoothest ways to accomplish your objectives.

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What goes into an Offer to Purchase?

In Anchorage, the offer to Purchase is fairly straightforward, but contains several distinct elements.

• A complete description of the property and who is contracting to sell and purchase.

• The amount of the Earnest Money Deposit and how it is to be held.

• How much you're offering to purchase the property for and how your purchase is going to be structured (loan, etc.).

• Who is going to pay for what costs associated with the transaction.

• When you would like to complete the transaction and take possession of the property.

• Rigid time frames for completing your loan application, inspections, preliminary title report, and other contract terms.

• The agency relationships involved in the transaction.

• How you intend to handle any disputes that arise.

• References to required disclosures.

• Your signature.

• The Seller's signature.

If you would like to receive a copy of the Earnest Money Receipt and Agreement to Purchase prior to beginning your process, simply e-mail me and I'd be happy to send one to you.

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How much of a Down Payment do I need?

That depends. If you have served active military duty, you may have VA eligibility available to you. In that case you may not need a down payment at all. If you meet certain economic criteria, your down payment requirements may be significantly reduced. An FHA loan carries a minimum down payment of 2.25% of the purchase price. The minimum down payment on a conventional loan is typically 5%. If your credit is poor, a higher down payment than the minimum may be required. The best way to determine the right loan and down payment for you is to fill out the brief form in the prequalification section and get your answer from a qualified lender.

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What and how much is the Earnest Money Deposit?

Your Earnest Money Deposit is the amount of collateral you're putting up to show the Seller how serious you are about your offer. It also is intended to cover the Seller's economic loss and additional marketing expenses in the event you should breach your contract. The traditional deposit made with an offer in Anchorage is $1,000. If you are making an offer on new construction, the builder may ask for 2-3% of the purchase price as Earnest Money and make it non-refundable.

The purchase contract provides for specific regulation as to how your deposit is handled. Make certain you have a clear understanding of the situations where your Earnest Money may be retained, and under what circumstances you are entitled to have it returned.

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What will my Closing Costs be?

Who pays for what costs in a transaction is of course negotiable, but traditionally the Buyer is responsible for the following costs:

• Lender Origination Fee - typically 1% of the loan amount

• Credit Report - about $95

• Mortgage Insurance Premium - may be financed. Approximately 1% of the loan amount

• Establishment of Reserves - property taxes, insurance, association dues, and other necessary reserves as required by the lender

• Recording Fee - typically split between Buyer & Seller. Approximately $50-$100 each

• ALTA Title Insurance Policy - extended coverage for your lender. Approximately 0.1% of the loan amount + $150

• Discount Points - points to reduce your interest rate. Not necessary, but at your cost if you do. Percentage of the loan amount

• Escrow Closing Fee - split between Buyer and Seller. Your portion would be approximately $0.50 per $1,000 of the loan amount plus $100

• Flood Determination - about $20

• Home Inspection - anywhere from $180 to $350 depending on the inspector. Paid at the time of inspection

For a complete workup of what your closing costs would be in a particular transaction or at a specific purchase price, please e-mail me and I'll send you a breakdown.

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Why do I need an Inspection?

Although not required, it is highly recommended that you have an inspection performed prior to purchasing any home. An inspection will give you a detailed, impartial, physical evaluation of the overall condition of the home and items that need to be repaired or replaced. The inspection gives a detailed report on the condition of the structural components, exterior, roofing, plumbing, electrical, heating, insulation, ventilation, air conditioning and interiors. It will also estimate the remaining useful life of the major systems, equipment, structure, and finishes.

It is your responsibility to be an informed buyer. Be sure that what you buy is satisfactory to you in every respect. You have the right to carefully examine your potential home with a qualified home inspector. You may arrange to have an inspection within specific time frames of signing the contract according to the Right and Duty of Inspection addendum.

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What is Title Insurance? Why do I need it?

Title Insurance is a policy that protects you from unknown defects in the chain of ownership on the property you are purchasing. There are two distinct policies: The Owner's Policy covers your entire interest in the property from loss in the event a problem arises affecting the past ownership of the property. The extended lender's policy covers your lender's beneficial interest in the property... in other words the amount of money they have loaned you to purchase the home. Although they are commonly referred to as the Owner's Policy and the ALTA Policy, in Alaska both are ALTA (American Land Title Association) policies.

Title insurance is issued after a careful search and examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Here are just a few of the most common hidden risks that can cause a loss of title or create an encumbrance on title:

•  False impersonation of the true owner of the property

•  Forged deeds, releases or wills

•  Undisclosed or missing heirs

•  Instruments executed under invalid or expired power of attorney

•  Mistakes in recording legal documents

•  Misinterpretations of wills

•  Deeds by persons of unsound mind

•  Deeds by minors

•  Deeds by persons supposedly single, but in fact married

•  Liens for unpaid estate, inheritance, income or gift taxes

•  Fraud

Title insurance will pay for defending against any lawsuit attacking the title as insured, and will either clear up title problems or pay the insured's losses. For a one-time premium, an owner's title insurance policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under a warranty in any conveyance of it. Owner's title insurance, issued simultaneously with a loan policy, is one of the best title insurance values a property owner can get.

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When will I be able to Move In?

A typical purchase of an existing home in Anchorage takes anywhere from 30-60 days. Most of that time is spent with various inspections and loan processing, and then with the appraisal and any final information needed by the loan underwriters. If you have a home to sell first or if you are purchasing new construction, your timeline may be significantly longer. Closing is performed at the title company, and is no more glamorous than signing your name about 30-40 times. Transactions typically record here the next business day after closing, and possession of the property is traditionally upon recording. Other arrangements may usually be made if earlier or later occupancy is desired.

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Revised: March 12, 2003 .