Q: My wife and I currently rent an apartment. We want to buy a home but don't know how to get started. Could you give us some tips?
Tom Pitler, Towson
A: Here is a 14-point home purchase and settlement checklist you can use:
* Save at least enough for a down payment and settlement costs (usually 5 percent to 10 percent of the sales price).
* Select a real estate agent and the general areas where you might want to live.
* Locate your new home -- inspect at least three to six houses.
* Sign a real estate contract.
* Select a lender and apply for a loan (talk to at least two lenders).
* Provide the lender with required documents.
* Arrange for inspections (home inspection, termite report, well/septic certification, etc.)
* Contact a title company to arrange settlement date and do title search.
* Obtain homeowners insurance policy, pay for it and get a receipt.
* Contact utility companies.
* Check with real estate agent, lender and title company for final instructions.
xTC * Get bank, cashier's, or certified check for settlement.
* Conduct final presettlement inspection or walk-through.
* Attend settlement and close on your home.
Q: We own our home free and clear. We are planning to sell it and have another one built. What would be the advantage to us and to the buyer of our home if we held the mortgage?
Michael Locke, Columbia
A: Generally speaking, if a seller takes back the mortgage or financing, it makes the sale of the home easier and more attractive to a buyer since the buyer will not have to go to a bank or mortgage broker for a mortgage.
It also would be less expensive for the buyer since the buyer will not pay appraisal and application fees, points and other charges.
The major advantage to the seller would, of course, be that the house would be easier to sell -- important especially in a buyer's market, like the one we have experienced recently.
The other advantage to the seller could be the income, since the yield on a seller take-back mortgage would be higher than on a certificate of deposit (perhaps 7 percent vs. 3.5 percent).
The major drawbacks to the seller are that there may not be enough cash from the sale of the house to pay off the existing mortgage. Also, a seller take-back mortgage may be illiquid -- that is, it may be hard to turn into cash in case of an emergency before the due date on the mortgage.