Your Home Buying Guide

Buying a home is part of the American dream. It is a significant long -term investment that often represents the foundation of our lives, providing financial and emotional security. It is also the largest single transaction that most people will ever make. That’s why it is so important to choose a home and mortgage that are well suited to your needs.

This guide is designed to help you learn about the home buying process, so that you can make informed decisions.

Champion Mission Statement

The Champion commitment to “Excellence In Service” provides our customers with a superior real estate experience during the transaction and beyond.
It creates an enduring professional

relationship and a Customer for Life.

In this guide we hope to acquaint you with the Champion Family of Services and provide you information that will assist you in purchasing a home. As a member provider of the Champion Realty Family of Services our guiding principles for our customers state that:

As a Champion I will:

1. Be fully committed to providing excellence in service

2. Listen and communicate to better serve my customers needs

3. Provide the information needed to assist in their decisions

4. Conduct myself with absolute integrity and sincere empathy

I will show you homes that are available, regardless of who is the listing

broker. I will be more than happy to accompany you to any open house,

new construction project or available listing of your choice. I will acquaint

you with the home buying process and help you identify homes within your requested price range having the features you desire.

At your first scheduled appointment, I will provide you with the State

required Agency Disclosure Form. This form was created by the Maryland Real Estate Commission to assist you in understanding the relationship choices you have with the Champion agent and to whom the Champion agent has fiduciary obligations. This is a standard disclosure form and is not a binding contract.

I will perform countless services for you and be faithful to their mission

statement “Commitment to Excellence in Service” throughout the entire home buying process.

Preparing your purchase agreement

Once you have identified your home of choice and decide to move forward with a purchase offer, I will prepare the purchase agreement specifying the details of your offer. I will use the standard Maryland Association of REALTORS® Contract of Sale and utilize all the forms necessary to comply with Maryland laws and local regulations that govern a home purchase. (See page 10 for contract synopsis)

After your offer to purchase has been completed and signed by you, I will

present it to the listing agent who works on behalf of the seller. The seller may accept your offer as written or choose to counter your offer. A counter offer means that the seller would modify one or more of the terms of your offer and return them to you for your consideration. You would have the option of first accepting the sellers counter offer by initialing changes made and once all changes were signed and initialed by all parties that would create a fully executed agreement. Other options would be either rejecting the sellers counter offer therefore nullifying the purchase offer, or creating a new counter offer for consideration by the seller. The seller when presented

with either your initial offer or any subsequent counter offer may choose to reject the offer therefore ending the negotiations.

Once the terms of the purchase offer are signed by all parties and all changes are initialed it is an executed agreement. I will provide you a copy of the executed agreement for your records. It’s important at this time to choose a company that will arrange settlement for you. We hope you will select Champion Realty Title as your settlement company. A Champion

Realty Title officer will be able to facilitate your settlement in one of the Champion Realty offices most convenient to you. Champion Realty Title will begin the process of collecting the information necessary to conduct your settlement. You need not wait until your loan is approved before beginning the process of arranging for your settlement. We will forward all of your contract information to your settlement company to avoid any delay of the settlement date.

How important is pre-approval?

Before you begin searching for a home, we highly recommend you ask your loan officer about pre-approval. If you do not have a loan officer I will be happy to give you recommendations. By completing a mortgage application prior to choosing a home, you can get a pre-approval letter that lets you know how much home you can afford. Getting this pre-approval letter is a smart move because it lets you know exactly how much you can spend, and shows prospective sellers and real estate agents that you are a serious

buyer. In addition, sellers will require that a pre-approval letter accompany a purchase offer.

Prior to the execution of your purchase agreement it is recommended that you make application for the financing of your home. Selecting a loan officer and the lending institution that will provide purchase financing is an important part of the home acquisition process. The loan officer is responsible for taking your loan application and managing the loan process as you move toward loan approval.

The qualifying process

Two general guidelines are used by lenders to determine the loan amount for which you may qualify. Based on your individual financial profile, these guidelines ensure that your housing expenses and debt payments don’t take up too much of your income. These guidelines can help you remain inside your financial comfort zone after you buy a home.

The first guideline, known as the housing expense-to-income ratio or front-end ratio, compares your proposed monthly payment (PITI) to your total household gross monthly income.

The second guideline, known as the debt-to-income ratio or back end ratio, compares your anticipated monthly housing payment to your gross (pretax) monthly earnings and your monthly debt requirements. Monthly debt includes expenses such as credit cards, car loans, student loans, consumer loans and other financial obligations such as child support and alimony.

It used to be that most loan programs required 28/36 ratios, which meant you could devote up to 28% of your gross monthly income to housing expenses (the front end ratio), while your monthly housing expenses plus your monthly debt combined could be as high as 36% (the back-end ratio). Many of today’s loan programs offer expanded guidelines and more flexible qualifying ratios (such as a 29/41 ratios) that allow you to devote more of your gross monthly income to your combined monthly debt.

Your loan officer will assist you in identifying the maximum mortgage amount you can afford. Depending on your financial profile and the mortgage program you choose, your loan officer may use standard or flexible ratios as part of the qualifying process.

Once you have this maximum figure, it’s up to you to decide if this is the right amount for you, or if you would feel more comfortable with a smaller mortgage and a lower monthly payment.

How much can I afford?

Lenders look at all the elements that make up your financial profile, including a credit history, the cash you have available for a down payment and closing costs, your income and your existing debt and financial obligations. Then, taking the current market interest rate into account, a lender can give you an estimate of the maximum mortgage amount you can afford. By adding your maximum mortgage amount to the funds you plan to use for your down payment, you’ll know you’re home purchase price range.

About the qualifying process:

The ratios most commonly used would be 30% on the first mortgage and 41% on the second mortgage, note that these ratios could be exceeded with good credit scores.

There are programs that enable you to qualify for an increased loan amount utilizing interest-only programs and buy-downs. They MUST provide a good faith estimate of your closing costs within three days from the time that you lock in your interest rate.

How important is my credit?

Your credit report is an important consideration to lenders reviewing your financial profile. If you have a history of paying monthly obligations on time, that’s a signal to a lender that you are likely to make your monthly mortgage payments on time as well. Your credit history can also affect the amount required for a down payment, the amount of money you can borrow in relation to your income, and the interest rate you are offered.

Keep in mind that even if you have no established credit history or less than perfect credit, there are still loan programs that can help you buy a home.

Here are some of the steps you can take to establish or improve your credit rating:

• If you’ve always paid cash or use checks to make purchases and haven´t established a credit record, it’s a good idea to do so before you buy a home. You can use credit to purchase low priced items, make prompt payments and pay off the balance.

• Some loan program guidelines allow “alternative” credit records. If you had a limited credit history, your paid receipts and canceled checks for rent and utility payments can help you document a pattern of paying your monthly obligations on time.

• If you already have loans or credit card debt, try to pay off as many as possible. The amount of monthly debt you are responsible for paying reduces your capacity for taking on housing debt.

• Even if you are a consistent, on-time bill payer, you can damage your credit rating by having a lot of credit cards with large credit lines. Contact any creditors regarding accounts you no longer use and request those accounts be closed.

Your loan officer can give you more information on average closing cost percentages for specific areas and loan programs. And shortly after you apply for your home mortgage, you will be sent a good-faith estimate, which provides details on the approximate cost you will be required to pay at or before closing. While it is only an estimate, it will help you budget for your closing.

Tips to consider when loan shopping

Ask about discount points

When inquiring about rates, be sure to ask if the quoted interest rate reflects payment of discount points. Many loan programs, allow you to receive a discounted interest rate by paying a point or origination fees. One point equals 1% of the loan amount and the more points you can or wish to pay; the more you can lower your rate. Paying points is not a requirement; it’s just an option that lenders offer to accommodate the immediate or long-term monthly payment concerns of mortgage customers.

Locking versus floating

An interest rate “lock” gives you a specified period of time — from 30 to 120 days — of

protection from financial market fluctuations. Your rate may still be affected by changes in the loan’s characteristics or in your credit profile. If you choose to float, your pricing and your rate will fluctuate with the market. The benefit to floating is that you would have the option of locking at a lower rate if interest rates should decrease. The risk, of course is that you would face a higher interest rate should interest rates rise before you lock.

Generally, you’ll be able to lock once you’ve found a property and as late as up to five days before closing. Programs allowing you to lock pricing before finding a property may also be available.

When you lock, make sure the lock allows enough time for your loan to be processed. If your lock expires before your ready to take ownership of the house, your loan pricing may be adjusted to reflect current market conditions.

If you are planning on building a new home, some lenders provide the ability to lock your

pricing for up to one year to accommodate lengthy construction time frames. You may also get this extended lock with an option to reset your interest rate once during the rate lock period, provided you qualify at the time you seek the new rate.

Completing the application

Your loan officer will assist you in completing a Uniform Residential Loan Application form. Much of the information on your application can be pre-filled from your credit report, so the amount of information you’ll need to provide is not overwhelming.

Preparing for loan application

Your loan officer will require some information at the time of your application. Here are some of the most commonly required items:

• Legible copy of the contract of sale including all addenda signed by all parties

• Social security number of all applicants

• All income earned from all employers for the past two years and the name and address of the employers

• Copies of all W-2 forms for the last two years

• A complete list of your residence addresses for the past seven years

• Copy of your most recent pay stub

• Names, addresses and account numbers of all installment loans, charge accounts, student loans, mortgage loans and auto loans — monthly payments and current balances

• Names, addresses, account numbers and balances of all checking accounts, savings, equities, and other assets

• Three months history of any deposit accounts

• The inclusion of child support and/or alimony is optional, if you decide to provide information please bring copies of your records

• If you are self-employed or paid by commission you will need two years federal income tax returns and a year-to-date profit and loss statement

• If you are applying for a VA loan you will need your certificate of eligibility,

DD-214, or a statement from your commanding officer if you were on active duty

• If you own other properties you will need to provide property addresses and current

estimated market value, names and addresses of the current mortgage holders, account

numbers, monthly payment and current balance. Copies of your federal income tax returns with all schedules for the previous two tax years. If the properties are leased you will need to provide a copy of the leases.

• If you have filed bankruptcy in the last seven years you will need to provide a copy of the petition and discharge and an explanation for the reason for the bankruptcy.

All documents received relative to the loan process will be organized by the loan processor prior to submission for final loan approval.

A successful transaction is comprised of many components and I, the loan officer, title officer work together to ensure a successful conclusion to your transaction.

Contract to settlement

Once you´ve chosen Champion Realty Title to prepare for and conduct settlement for you, the following items are done on your behalf as required by your contract of sale and your lender:

1. Order title abstract

2. Order the survey – either a house location survey or a metes and bounds survey

3. Champion Realty Title attorney will review the title abstract to determine its insurability

4. Your lender is contacted to schedule settlement

5. Contact the seller´s lender to obtain their mortgage payoff information

6. Prepare the title insurance binder to meet your lenders specifications

7. Contact local taxing authority to verify the amount and calculate prorations for settlement

8. Contact the Homeowners or Condominium Association to verify the amount of the fees and calculate prorations for settlement

9. Receive the loan package and funds from the lender for settlement

10. Prepare the settlement sheet (HUD 1), deed and other required documents

Your Champion Realty Title Officer will conduct the settlement. The difference between your loan amount and the sales price less your escrow deposit plus any settlement costs should be brought to settlement in the form of a cashiers/certified check or bank wired funds. The check should be made payable to you and you will endorse the check to the settlement company at settlement. Check with your loan officer and title officer prior to

settlement to determine if there are any additional documents that will be required for you to bring to settlement.

If you have a mortgage to secure the purchase of your new property there will be multiple

settlement documents for you to review and sign at settlement. Your Champion Realty Title officer will explain the purpose of each document to you. After all documents have been signed you will receive the keys to your new home. You should plan on settlement taking approximately 1 hour.

Items signed at closing

Note

The note is a promise to repay borrowed funds to the lender.

Deed of trust

This is a standardized security document that will be recorded at the courthouse to establish a lien on the property by the lender for the original amount of the loan. This secures the lender with the home as collateral for the repayment of the debt.

Loan commitment letter

This document will state the terms and conditions of the loan, to include the interest rate and length of the loan.

Escrow disclosure

The lender will disclose to you how much will be in the escrow account after each

monthly payment during the first year of the mortgage. It will also show when taxes,

insurance and mortgage insurance will be paid.

All the components of the transaction come together at settlement where your home purchase is completed. Your Champion Realty Title officer will have your title search and settlement sheet prepared and the loan package ready for your review and signature.

The title would already have been reviewed by the Champion Realty Title attorney Edward E. Cohee Jr., who has over 30 years experience in real estate law and has dealt with most of the title issues that could arise in your home-buying process.

Settlement

All components of the transaction come together at the time of settlement as your home purchase is completed. Your Champion Realty Title officer will have your title search and settlement sheet prepared and the loan package ready for your review and

signature.

Maryland first-time homebuyer

If this is your first purchase of a primary residence in Maryland you may be exempt from paying a portion of the state transfer tax. If you qualify as a first-time Maryland homebuyer, the law provides that the state transfer tax will be reduced from .5% to .25% of the sales price. The remaining state transfer tax of .25% will be paid by the seller.

To be eligible for the exemption, this home must be the first principal residence in Maryland for all of the buyers in the transaction. A cosigner of the mortgage who is merely signing documents for the loan approval, but will not live in the house and has purchased in Maryland before, will not disqualify you for the exemption.

Residential contract of sale

Under the statute of frauds, all contracts for the purchase or sale of real property must be in writing.

The terms and conditions of a contract of sale must represent the intentions of the parties

and be signed, and initialed by all parties in the transaction to be a fully executed agreement. A contract is not binding until it has been fully executed by all parties. Verbal promises regarding the terms of a purchase agreement are not enforceable.

I will provide you with the proper forms and documents to complete your

purchase and will use the standard Maryland State Association of REALTORS® Contract of Sale.

The following is a synopsis of the Maryland State Association of REALTORS® Contract of Sale to help clarify the terms and conditions of the document. A sample copy of the contract is attached. A number of addenda may accompany the contract of sale as well as required disclosures.

The term “time is of the essence” is included in the contract of sale and indicates that all the times and dates set forth in the agreement must be met faithfully. Failure to meet the time obligations may result in default of the contract.

Paragraphs as numbered in the contract of sale:

1. Date of the offer: This date represents the date that the purchase offer is made by the buyer.

2. & 3. Seller and Buyer: Your full name as you would like it to be represented when you take legal title to the property.

4. Property description: The property address, county and zip code are entered here.

5 & 30. Estate: the type of property interest that will be conveyed to the buyer. If there is an annual ground rent, that amount would be included. It also includes the county where the property is located.

6. Purchase price: the final price agreed on by the parties is represented here.

7. Payment terms: all deposits are to be held in escrow as part of the contract of sale and the contract names the escrow agent.

8. Settlement: the date as agreed upon by the parties as the date of settlement.

9. Financing: specifies the particular financing plan that the buyer has chosen to finance the property. The terms must be specific. Loan origination/Discount Fees: the payment of loan origination or discount points charged by the lender in association with the mortgage and who will pay them

10. Financing application and commitment: this paragraph gives the time lines in which the buyer will make application for the financing and obtain a written loan commitment from their lender. The buyer must diligently pursue his financing.

11. Alternate financing: buyer can apply for financing other than that specified as long as it does not increase the cost to the seller or extend the date for settlement.

12. Home and/or environmental inspection: provides the buyer with the opportunity to conduct a home and/or environmental inspection of the property. Buyer must make a selection in a separate addendum.

13. Inclusions/exclusions: the list of permanently attached items that will convey as part of the sales price. Additional items not specifically listed should be itemized here.

14. Agriculturally assessed property: if the property is agriculturally zoned there may be an additional tax due; specifies the party responsible for paying the additional tax.

15. Forest Conservation and Management Program: if the property is subject to this program the parties must negotiate the payment of any program taxes which will be paid at settlement.

16. Lead-based paint hazards: applicable to housing constructed prior to 1978; provides details regarding Federal and Maryland laws, and seller disclosure requirements of the presence of lead-based paint; notifies the buyer of his rights for an inspection.

17. Addenda: identifies all addenda included in the standard contract of sale offer.

18. Termite inspection: the buyer at his expense will have an opportunity to have a visual termite inspection performed on the property of accessible areas. If current infestation is found after visual inspection and there is evidence of present or prior damage as a result of infestation in the residence or within 3 feet of the residence, then the seller will be responsible for repairs up to 2% of the purchase price including treatment of the property. The seller will provide a certificate at settlement for the work completed.

19. Deposit: the buyer authorizes the broker to direct the money to the escrow agent as soon as there is a fully executed agreement. The buyer has the right to choose an interest-bearing or non-interest-bearing account. The deposit monies will be credited towards the buyers total cost of acquisition at settlement. If at some point prior to settlement the contract is declared null and void by either party, the parties agree to sign releases directing the escrow agent to disburse the funds as set forth in Maryland law.

20. Deed and title: seller agrees to convey the property to the buyer and provide a good and merchantable title free of liens and encumbrances except as provided for in the contract of sale. If the seller is unable to give good and merchantable title the contract will be extended

automatically for an additional 14 days for the seller to cure the defects in the title. If the

seller is unable to cure such title defects or is unable to obtain a title insurance policy to the benefit of the buyer without paying any special premium, the buyer can either accept such title as the seller can provide or declare the contract null and void.

21. Condition of property and possession: at settlement the seller shall deliver to the buyer the property vacant and clear of trash and debris, broom clean with all mechanical systems in operating condition and in substantially the same condition as it was at the date of contract acceptance. Other than the items noted, the property is sold “as is”. A provision is made for an opportunity for pre-settlement inspection by the buyer to confirm the property’s condition.

22. Adjustments: all ground rent, homeowners association and condominium fees, and water rent shall be adjusted and apportioned as of the date of settlement; and all taxes, general or special, and all public or governmental charges shall be adjusted and apportioned as of the date of settlement. The buyer will assume responsibility for all of these items on the day of settlement.

If the property has an oil or propane tank, there will be no adjustments made and all fuels will become the property of the buyer at settlement.

23. Settlement costs: notice to the buyer that they are responsible for all settlement costs

associated with the acquisition of the property and the creation of their loan unless prohibited by law. The seller is responsible for any fees related to clearing the seller´s mortgage.

24. Transfer charges: unless otherwise provided by addendum, the cost of state and local transfer and recordation taxes other than agricultural will be shared equally by the buyer and the seller. If the buyer is a first-time Maryland homebuyer there will be a separate addendum provided.

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25. Broker liability: broker does not assume any liability or responsibility for the condition of the property; only written representations should be relied upon.

26. Broker’s fee: addresses the agents and companies involved in the negotiation of this contract and confirms how they will be paid.

27. Seller responsibility: the seller agrees to keep the existing mortgage free of default until settlement and further agrees that there are no violations of law or code pending against the property that will not be resolved prior to settlement. Risk of loss of the property is at the risk of the seller until legal title has been conveyed or possession given to the buyer. If prior to settlement a substantial part of the property is destroyed or damaged the buyer has the option to void the contract. The buyer should have his own homeowners´ insurance policy in effect the day of settlement. We hope you will select Champion Realty Insurance and notify your Champion Realty agent and loan officer of your choice.

28. Buyer responsibility: the buyer must be truthful regarding his financial status and must work diligently to pursue the financing referenced in the contract.

29. Homeowner´s association: unless acknowledged by an addendum, this property is not part of a development subject to the imposition of mandatory fees.

31. Sale/settlement or lease of other real estate: states that the buyers loan is not

conditioned upon the sale, settlement or lease of any other real estate unless provided by

separate addendum

32. Leases: no new leases affecting the property may be negotiated, renewed or extended beyond settlement without the buyer´s written consent.

33. Default: addresses the legal remedies available to the parties if either party fails to settle as outlined in the contract of sale. If the buyer defaults, the seller may elect to accept the deposits or take further legal action against the buyer. If the seller defaults the buyer may pursue all legal rights including specific performance.

34. Mediation of disputes: requires the buyer and seller to mediate any disputes arising out of the contract prior to resorting to the courts or administrative action. The mediation is not binding if the parties do not reach a resolution.

35. Attorney´s fees: if there is a legal proceeding as a result of any action or inaction by a party, the prevailing party of the lawsuit may have his attorney’s fees and court costs paid by the other party.

36. Notice of buyer´s right to select settlement service providers: The buyer has the right to select the buyer´s own title insurance company, title attorney, settlement company, escrow company mortgage lender or financial institution as defined in the financial institutions article of the Annotated Code of Maryland.

37. Limited warranty: notice to buyer that if a warranty is being offered it may be a limited warranty. Buyer should request a copy of a brochure which describes the specifics of the coverage provided.

38. Property insurance brochure: an informational brochure published on issues relative to obtaining homeowner´s insurance coverage.

39. Guaranty Fund: notice to buyer that he may seek recovery under Guarantee Fund of

Maryland for covered losses up to $25,000 for any claim.

40. Single-family residential real property disclosure notice: buyer has the right to receive a “Disclosure and Disclaimer Statement” from the seller as required by law.

41. Maryland non-resident seller: if the property is not the seller’s principal residence and the seller is not a Maryland resident, the seller may be subject to a withholding tax due at the time of settlement unless an exemption is filed. For additional information please speak to your Champion Realty Title officer.

42. Internal Revenue Service filing: notifies the parties that the settlement officer is required to report all necessary information to the Internal Revenue Service as required by the IRS code.

43. Notice to buyer concerning the Chesapeake and Atlantic coastal and critical area: Allegheny, Carroll, Frederick, Garrett, Howard, Montgomery and Washington counties do not include land located within the critical areas. To obtain information as to whether a specific property is located within a critical area, contact the local Department of planning and zoning where the property is located.

44. Wetlands notice: advises the buyer of existing requirements if a portion of the property contains protected wetlands.

45. Forest Conservation Act notice: in the event the property is currently subject to any forest conservation plan or management agreement, the seller must provide written notice.

46. Foreign investment taxes -FIRPTA: provides for possible IRS withholding from the sellers proceeds, if the seller is a foreign person pursuant to IRS rules and regulations. For more information regarding this statute please contact your Champion Title settlement officer.

47. Criminal activity and sexual offenders: advising the buyer of public web sites available to determine criminal activity and or the presence of sexual offenders who live or work within the vicinity of the property.

48. Military Installations: Buyer is advised that the property being purchased may be near a military installation where military operations may increase noise levels.

49. Notice to the parties: a disclaimer as to particular circumstances which may affect the property and that no representations are being made regarding those items.

50. Non-assignability: buyer may not sell or assign their interest in this contract to another without the sellers´ agreement in writing.

51. Paragraph headings: headings are provided for reference.

52. Computation of Days: Explanation of how “days” are calculated under the contract of sale.

53. Entire agreement: the parties to the contract acknowledge that the contract and addenda contain the final and entire agreement. The parties are not relying nor will they be bound by any oral or written representations not contained therein.

54. Electronic delivery: original signatures on the contract form are not required for the contract to be enforceable; faxed or emailed signatures may be used and are considered legally binding.

Moving checklist

Eight weeks before moving:

• Create a move file to keep track of estimates and receipts..

• Start pulling together medical and dental records, including prescriptions and inoculation records. Ask your current physician if they can refer you to a health provider in your new location.

• Obtain copies of school records and have them transferred to your child’s new school or day care provider.

• Obtain copies of veterinarian records.

• Contact any club or organization where you have membership and inquire about transferring or selling your membership.

One month before moving

• Start collecting boxes and other packing supplies; and schedule a date with your mover.

• Start packing items that you don’t use on a regular basis and dispose or donate unwanted items.

• Make arrangements to transport your pets.

• Take inventory of your personal belongings before they’re packed. Take photographs of

valuables and recorded serial numbers of electronic equipment.

• Start using up perishable food items so there is less to pack and or possibly spoil.

Two weeks before moving

• Contact utility providers regarding transfer or initiation of services.

• Inform newspaper and magazine subscriptions of your new address.

• Make arrangements to transfer or terminate telephone and cable service.

• Plan ahead for children, the elderly and those with special needs.

• Collect valuables from safe deposit box and make copies of other important documents.

• Return all library books and movie rentals.

• Pickup dry-cleaning.

• Dispose of flammables, corrosives and poisons.

• If applicable, prepare to have your automobile registration transferred.

One week

• Finish packing and prepare a box of essentials.

• Drain the gas and oil from your lawn mower and other motors that you’ll be transporting.

• Gas grill and kerosene heaters need to be emptied.

• Notify friends and family of your new address and telephone number.

• File a change of address form with the post office.

Moving day

• Double check closets, storage shelves, attic and garage to be sure everything is empty.

• Keep important documents with you including currency and jewelry with you.

• Take your plants with you or gift them to a neighbor.

• After the move keep all receipts and documentation of your move in your moving file.

• Register to vote in your new location.

• Contact the local newspaper for a new subscription.

• Revise legal papers, and will to reflect your new address.

• Familiarize yourself with local hospitals, police station and fire stations.

After the move:

• Keep all receipts and documentation of your move in your moving file.

• Register to vote in your new location.

• Contact the local newspaper for a new subscription.

• Revise legal papers, and your will to reflect your new address.

• Familiarize yourself with local hospitals, police station and fire stations.

Packing tips

• Use strong boxes that can be secured tightly; purchase special boxes for dishes.

• Keep handy marking pen, bubble wrap, and wrapping tissue, tape and scissors.

• Place cables and screws place in a plastic bag and tape them to the object they are

removed from.

• Avoid loading more than 50 pounds into one box; label each box, with a room destination and an indicate of fragile contents with a marker.

• Pack books tightly on end in small boxes.

• Have pet food available.

• Have a supply of paper plates, paper towels, toilet paper, disposable cups and drinks and snacks easily accessible.

• Pack a box that includes towels, bed linens, soap and toiletries, to be opened first at the

new destination.

Insurance

How can insurance availability/affordability affect the real estate transaction?

The affordability and availability of insurance affects both buyers and sellers. Buyers will

typically be obtaining mortgage financing to pay the purchase price of the property. The

lender will require that there be property insurance to cover their interest in the property. If proof of insurance is not available at closing the lender will likely refuse to release the funds and therefore delay the transaction. It could also result in the entire transaction falling through. Either of these situations would impose great inconvenience to both buyer and seller. Even in a cash transaction the buyer may be hesitant to complete a transaction where insurance is not available to cover the buyer’s equity in the property.

When should a buyer apply to obtain an insurance policy to cover the property

being purchased?

Buyers should begin their search for insurance as soon as they have a fully executed contract of sale. It’s important to have a firm commitment for the issuance of a policy well in advance of the settlement date. Waiting until the last days or the closing day can limit the opportunities of the buyers to address the affordability and availability issue and, if needed, time to find alternatives for difficult to insure properties.

What kinds of events/records can affect the availability to obtain insurance on a

property being purchased?

A number of factors can affect the availability and cost of homeowner insurance on a

property being purchased. Some of the factors include:

1. Past claims filed on the property in the previous five years

2. Poor insurance score of the prospective buyer

3. Past claims filed by the buyer on other properties they own

4. Physical characteristics of the property, (e.g., leaky roof)

5. Characteristics of the property’s location (e.g., proximity to fire station, fire hydrant,

regional weather conditions)

How does the insurance company know what claims have been filed in connection with the property?

Approximately 90% of all insurance companies contribute information regarding claims to an insurance industry database. When underwriting a new policy the insurance company may obtain a report via this system to determine the property’s claims history. This report is most often identified as a comprehensive loss underwriting experience report or a “CLUE” Report.

The report contains information regarding property claims filed in connection with a

particular property and claims filed by a particular insured person. For a fee the current

owner of the property may obtain a copy of this report.

Should I get a copy of the CLUE Report?

While this decision is up to the property owner, it is important to understand the limitations of the report. The report contains only raw information and how that information will affect the insurability of a property isn’t explained as part of the report. Moreover, not all insurance companies use the report and those that do use it don’t all use the information in the same way. As a result having the report may not enable you to predict whether a particular company will insure the property.

If you want information on how a CLUE Report or other similar report that may affect your ability to obtain insurance contact your agent.

Are there factors unique to a buyer that can affect their ability to obtain insurance?

Yes, although not used by all insurance companies in determining eligibility for insurance, some companies review the claims filed by the buyer on properties owned by the buyer during the preceding five years. This is another aspect of the CLUE Report database that focuses upon the insured individual rather than the insured property.

Another more controversial factor is the use of Insurance Scores. Insurance Scores, which

are formulas developed by insurance companies in an effort to predict the likelihood of an individual filing claims are sometimes used to determine to whom or at what price an

insurance policy will be issued.

Insurance Scores are not standardized within the insurance industry how they are calculated and how they are used are generally not known outside of the individual insurance companies. If you want additional information on how insurance scoring may affect your ability to obtain insurance contact your insurance agent.

Can an insurer rate my insurance risk based on my credit score?

No. In Maryland, insurance companies are prohibited from using credit score is to determine a property owner´s insurance risk.

If I have questions about insurance practices whom should I contact?

The Maryland Insurance Administration has a consumer complaint line for all forms of

insurance. In the case of homeowner´s insurance, you would contact the Consumer

Complaints Department for Property and Casualty at 410 468-2341.

UNDERSTANDING THE CLOSING DOCUMENTS

Buyer´s Transaction Page 1

Lines 100-120 charges to the buyer

Lines 200-220 credits to buyer

Line 101 Contract sales price

Line 103 Total of fees from page 2

Line 104 Homeowner´s dues for 1 month (varies by subdivision)

Line 107 Reimbursement to seller for property taxes (Maryland taxes are paid on a

semi-annual basis and are due on July 1st and December 31st)

Line 109 Reimbursement to seller for Homeowner´s Association for balance of month

Line 110 FFBC (front foot benefit charge) reimbursement to seller of an annual fee for

installation of sewer and or water lines

Line 120 Gross amount due from buyer before credits

Line 201 Buyer´s earnest money deposit made at time of contract

Line 202 Amount of buyer´s purchase money loan

Line 213 Seller´s credit to buyer towards future water bill that covers period before settlement

Line 220 Total credits to buyer

Line 301 Total from line 120

Line 302 Total from line 220

Line 303 Total due from buyer at settlement (must be in form of certified or cashier´s check)

Buyer´s Transaction Page 2

Line 705 Administrative Commission to real estate broker

Line 801 and 802 depending on loan terms you may pay a loan origination fee or

discount points (your Champion Realty loan officer can give you the particulars based on

your loan program)

Line 803 and 804 Appraisal and credit. Report fees usually required by lender to be paid at time of loan application

Line 805 thru 811 Fees charged by your lender for preparing and servicing your loan

Line 901 Interest from the date of settlement through the end of the month ?Interest is

paid in arrears, the first payment on a June 15th settlement would be due on August 1st

Line 903 Buyer must provide and pay for an annual homeowner´s insurance policy with

lender named as a loss payee – Contact your Insurance representative for a quote

Lines 1001 thru 1005 Escrows to be held by lender for future payments of taxes and insurance

Line 1009 Adjustment made at settlement to ensure that the lender´s escrow does not exceed federal guidelines

Lines 1100 thru 1113 Contact Champion Realty Title representative for an explanation

of fees and title insurance

Lines 1201 thru 1205 Fees charged by state and county to transfer title (transfer taxes

vary from county to county)

Line 1301 A house location survey is often required by lender

Line 1302 Fee for having property inspected for insect infestation

Line 1304 and 1305 Fees to overnight and download lender´s documents and bank charge for receiving wired funds

Line 1400 Charges to buyer shown on Line 103 of first page

Seller´s transaction Page 1

Lines 400-420 credits to seller

Lines 500-520 charges to seller

Line 401 Contract sales price

Line 407 Buyer´s reimbursement to seller for taxes paid in advance

Line 409 Buyer´s credit to seller for HOS fees paid in advance

Line 410 Buyer´s credit to seller for sewer charges paid in advance

Line 420 Gross amount due to seller before charges

Line 502 Charges to seller from page 2

Line 503 Payoff of seller´s mortgage

Line 513 Credit to buyer for water usage prior to settlement

Line 520 Total charges to seller

Line 601 Total amount due to seller

Line 602 Total charges to seller

Line 603 Net proceeds to seller

Seller´s Transaction Page 2

Lines 701 thru 702 Real Estate Commission

Line 1201 County fee to record release of seller´s mortgage

Lines 1202 thru 1204 Seller´s portion of transfer taxes-varies by county

Line 1303 Title company fee to secure and prepare payoff and release of seller´s mortgage

Line 1306 Fee to overnight seller´s payoff to lender

Line 1308 Administrative Commission to real estate broker

Line 1400 Total charges to seller shown on Line 502 of page 1

Financing Glossary

1. Conventional Financing – traditional method of financing real estate purchases.

Typically referred to as thirty year fixed-rate mortgages; they may have level payments

or graduated payments. If less that 20% down payment is made, private mortgage

insurance is required. The usual minimum down payment for these loans is 5%.

2. VA Loans – eligible veterans may qualify for Veterans Administration loans. VA guarantees a portion of these loans. The veteran, depending on the sales price and financial qualifications may obtain a no down payment loan. VA determines the maximum interest rate.

3. FHA Loans – These loans are insured by the Federal Housing Administration. There is an upfront mortgage insurance premium (MIP) regardless of the down payment. FHA has a variety of loans, some with down payments of less than 5%; fixed rate, graduated payments and adjustable rate loans are also available.

4. Adjustable Rate Mortgages (ARM) – the interest rate may change at regular intervals based upon a pre-determined index.

5. Credit Report – a report of the past ability of a loan applicant to pay installment payments, and also provides the lender with the applicants credit score.

6. Appraisal — a report written by a qualified expert stating an opinion of value of the

property based on its particular characteristics and the selling prices of similar properties

in the area.

7. Fixed rate mortgage – a loan with an interest rate that remains constant for the entire

repayment term.

8. Equity – your ownership interest or the portion of the value of the property that exceeds the current amount of your home loan. Example – If the property is $100,000 and the loan is $75,000, you have $25,000 in equity in the home.

9. Commitment letter – a binding, written pledge, by the lender, to a mortgage applicant

,to make a loan, usually under certain stated conditions.

10. Debt-to-income ratio – a formula that lenders use to determine the loan amount for

which you may qualify. This is also known as back-end ratio.

11. Bridge loan – a loan which enables homebuyers to obtain financing on a new home

prior to selling their currently owned home.

12. FICO score – a numerical rating developed and maintained by Fair Isaac, the company that indicates a borrower’s credit worthiness based on specific criteria.

13. Front-end ratio – also known as the housing expense to income ratio, it compares your proposed monthly house payment (PITI) to your total household gross monthly income.

14. Float the rate – this term is used when a mortgage applicant chooses not to secure a rate lock, but instead allows the interest rate to fluctuate until the applicant decides to lock in; usually no later than five days prior to closing.

15. Good faith estimate – a document that tells mortgage borrowers the approximate cost they will pay at or before closing.

16. Homeowners or hazard insurance – real estate insurance policy required of the buyer by the lender, protecting the property against loss caused by fire, some natural causes, vandalism, etc.

17. HUD 1 – a settlement statement which is a standard form used to disclose costs at closing.

18. Mortgage insurance – an insurance policy which will repay a portion of the loan if the borrower does not make payments as agreed upon in the note. Mortgage insurance may be required in cases where the borrower makes less than a 20% down payment on the home loan.

19. Origination fee – the amount collected by the lender for making a loan. It is generally equal to a percentage of the principal amount borrowed.

20. Points – 1 point equals 1% of the loan amount. Total points on the loan include origination points, used to offset the cost of making a loan and discount points, which can be paid to reduce the interest rate.

21. Pre-approval – a written commitment from a lender, subject to specific conditions such as a property appraisal and other stated conditions, that lets you know exactly how much home you can afford.

22. Pre-paids – that portion of your loan closing costs which must be collected at settlement to cover future taxes, interest and insurance.

23. Principal – the amount of the loan, excluding interest; or the remaining balance of a loan, excluding interest.

24. Private mortgage insurance (PMI) – a mortgage insurance policy on a conventional

mortgage issued by a private insurance company.

25. Processing – the completion of a mortgage loan application with supporting documents.

26. Rate lock ? the borrower and the lender agree to protect the interest rate, points and term of the loan while the loan is being processed.

27. Sub-prime loan – a home financing program that accommodates borrowers with special qualifying factors, including poor credit histories.

28. Truth in lending statement – required by federal regulations; the statement tells

buyers the cost of financing their loan expressed as an annual percentage rate (APR).

Do not confuse the APR rate with your interest rate, which is used to determine your

monthly principal and interest payment.

29. Annual percentage rate (APR) – a term used to represent the percentage relationship

of the total finance charge to the amount of the loan, over the term of the loan. Do not

confuse the APR with your quoted interest rate, which is used to determine your

monthly principal and interest payment. The APR reflects the cost of your mortgage

loan as a yearly rate. It will be higher than the interest rate stated on the note because

it includes (in addition to the interest rate) loan discount points, fees and mortgage

insurance.

30. Underwriting – the process of the lender reviewing the application, documentation and property prior to rendering a loan commitment.

Potomac Estate Homes

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All property information provided by MRIS
Copyright © 2007 Metropolitan Regional Information Systems, Inc.

Michael Hamby
Champion Realty, Inc.
711 Bestgate Road
Annapolis, MD 21401

Direct Office: (410)224-7184
Mike’s Cell: (443) 226-4901
Office: (410) 224-0600
Fax: (410) 224-0632
Email: mhambyrealtor@yahoo.com

http://www.CallMike.org

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The information contained in this web site is provided by the various listing agent or brokers for the sole purpose of consumers’ personal use and to assist consumers in identifying properties for potential purchase and not all listings may be visible on this site. This information is deemed to be reliable, but is not guaranteed. You should independently verify the information regarding property that interests you. Neither the listing agents/brokers Michael Hamby, The Hamby Group, LLC, The MLSExpert.com nor Champion Realty, Inc., shall be responsible for any typographical errors, misinformation, misprints or other mistakes. This information is subject to change without notice. All properties are subject to prior sale, change or withdrawal without notice. You should know that, given the volume of listings, delays in removing or posting listings, in correcting misinformation, or in supplementing information on this web site are inevitable. If you have an interest in certain properties, then please confirm their availability and facts as soon as possible. Neither the listing agents/brokers Michael Hamby, The Hamby Group, LLC, The MLSExpert.com nor Champion Realty, Inc., make any express or implied warranties for any of the information provided herein to a potential purchaser of a listed property or any consumer. Copyright 2007, Michael Hamby, The Hamby Group, LLC, The MLSExpert.com and Champion Realty, Inc.,, Inc. All rights reserved. Equal Housing Opportunity

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