Homebuyer's Guide

MEET OURTEAM

M I GU EL B RI O N EZ

REAL ESTATE BROKER

Miguel isaBellinghamnativewith over 20 years experience in Real Estate, Construction, and Sales Miguel has cultivated a successful, award winning career by continually embracing a client first philosophy, and operating hisbusinesswithhonesty andintegrity.

CH ELSEA BRI O N EZ

M ARKETING & CONTRACT

ADM INISTRATION

Holding her Real Estate License and a Business Administration degree from Western Washington University, Chelsea brings over 15 years of marketing and sales experience to our team Chelsea specializes in applying her marketing expertise and local market knowledge to help our clients achievetheir real estategoals

Wha t Our ClientsSay

"Miguel is a truly kind and caring individual who loves what he does. He is extremely hard working and immensely patient He'sa 'people person' and worksto understand the sellers' agents so that he can position his client in the best possible way We worked with Miguel for 4 months... and would highly recommend him. Once we made an offer on a house, he kept us informed every step His wife, Chelsea, is also involved in the business and she is equally as wonderful and professional to work with Additionally, he recommended excellent people for mortgage loans and homeowners insurance. You won't go wrong with Miguel and Chelsea. "

-Karen L. , LosAngeles, CA

"

Miguel was very responsive to my needs, willing to show properties with very little notice and went above and beyond when I was ready to make my offer He stayed in contact with me every step of the way Because I was looking for a certain type of financing, he went out of hisway to find me a bank that had the exact product I was looking . "

-Teresa R. , Bellingham, WA

WHYUSE A BUYER'SAGENT

Expert Negotiato r Workingfo r You

T RA I N ED PRO FESSI O N A L

A good agents knows all the ins and outs of buying and selling a home, from real estate contract law to negotiationtactics,your agent istrainedtorepresent you. The paperwork involved in a real estate transaction has increased dramatically as industry disclosuresandregulationsareconstantly changing

A good agent will keep track of moving deadlines that, if missed, can break the contract, and cost you timeandmoney

N EGOTI ATE TH E BEST TERM S PO SSI BLE

There are many pointsin the transaction when keen negotiation skills are needed. Whether negotiating sale price, possession dates, inspection concessions, or unplanned modification to the contract, it is vital tohaveaseasonednegotiator workingfor you.

K EEP T H E D EA L TO GET H ER

The ideal transaction followsthe contract time lines with no hiccups, but not all transactions are ideal. Whether there a is a delay with lending, a cloud on title, or an unforeseen personal issue, we strive to find a win win solution that is equitable for both buyer andseller

CO N T RA CT S A N D L EGA L I T Y

Theoffer topurchasecontract istheretoprotect you and ensurethat you areableto back out of thedeal if certain conditions aren't met An experienced real estate agent deals with the contracts and contingenciesfor aliving,and isfamiliar with how to usethecontractstoprotect your interests

REA L ESTA T E A GEN T S CA N ' T L I E

Real Estate professionals are bound by a fiduciary relationship.In other words,agents must act in their clients' best interest,not their own.

WHATWEDO FOR

CLIENTS We'reHeretoHelp

Every Stepo f theWay

HOW A BRO K ER I S PA I D

Real Estate brokers are independent contractors that work strictly for commiss that are paid at the closing of a sale. Typically, the seller offers the buyer brok commission that is paid out of their net proceeds at closing. Buyers are technic payingthebroker commissionsby payingthesalepriceof thehome.I will haveyou a buyer agency contract which allows me to represent you fully. If necessary, I negotiatewith theseller for my compensation to bepaid out of seller'sproceeds.Be isabreakdownof wheremy compensationgoesafter thesalecloses.

CompensationBreakdown

sions ker a cally sign will elow

CHOOSING A LENDER

Finding a mortgage lender involves more than just gettingagood interest rate; you want to work with the best mortgagecompanies,staffedby professionalswho will guide you through the process The number one criterion that will help you to pick the best mortgage lender iscustomer service. Your lender's performance is extremely important in a real estate transaction Most transactions that don't close on time are traced directly to the lender's inability toperform.

REFERRA L S

Consult friends and family who have purchase or refinanced ahome recently. Additionally,we can offer our recommendations and share firsthand knowledge of our interactionswithlenders

PERSO N A L RESPO N SI B I L I T Y

The best mortgage lenders are those who take personal responsibility for your loan. They communicate in a timely and prompt manner; deliver necessary documents without delay; anticipate complications and take proactive steps to avoid these problems; oversee the loan application process thoroughly and competently and they meet crucial deadlines

REV I EW S & RECO M M EN D A T I O N S

Almost every person in a service business today has online reviews Most reviews are legitimate, from

actual customers. Look for a mortgage lender with the highest level of customer satisfaction.

CH O O SE LO CA L

Ingeneral it isbest tochoosealocal lender,opposed to an out of stateor online mortgagebroker

LO CA T I O N

Although location or close proximity isn't a requirement for the best mortgage lender, try to ensure that your lender is at least located in our timezone.

There will be crucial funding deadlines and tight time frames. Lack of accessibility can cause lending delays, which can result in breach of purchase and sale contract and loss of earnest money

O PPO SI TI O N FRO M LI STI N G A GEN TS

A pre-approval letter from a local, well-known, and trusted mortgage lender is likely to carry more weight than an out of area or online lender A buyer should not be forced to lose her dream home simply because the listing agent is unfamiliar with a non local mortgage lender, but it cananddoeshappen.

I SSU ES W I T H T H E A PPRA I SA L

Another potential drawback involves how the company will choose an appraiser. Will the appraiser have extensive experience in the neighborhoodwhereyour property islocated?

Many borrowers have had bad experiences with the appraisal selection You don't want an appraiser from another town trying to appraise your home in an area where he has little knowledge or experience. This can result in a low appraisal which can require more money downor kill thedeal all together

QUESTIONS TO ASK YOURLENDER

No t All LendersaretheSam e

The type of loans available, interest rates, and fees can vary Interviewing lenders is an important step in determining what type of homeloanisbest for you.

Q U EST I O N S TO A SK

- Whichtypesof homeloansdoyouoffer?

- What will my interest andannual percentageratesbe?

What will my monthly payment be?

Istheloanafixedrateor adjustableratemortgage?

- DoI qualify for any special programsor discounts?

- What estimatedclosingcostscanI expect topay?

- What isyour averageloanprocessingtime?

LOAN

CHECKLIST

DocumentsYour Lende r Will AskFo r

I N CO M E D O CU M EN T S

A SSET D O CU M EN T S

O T H ER D O CU M EN T S

MORTGAGE PRE-APPROVAL

Bereadytomakeanoffe r

Securingapre-approval isthefirst step towardsobtaininga mortgage. Your pre-approval letter should be submitted along with your offer to show sellersthat you are a serious andqualifiedbuyer.

W H Y D O I N EED A PRE A PPRO VA L?

There are many reasons why you should get pre approved. The most important reason is that you will get an accurate idea of how much home you can afford A pre approval letter also helps you prove to sellers that you?re a credible buyer.Most sellersrequire buyersto submit apre-approval letter with their offers. If you make an offer on a house without a pre approval, your offer may not be taken as seriously as an offer from another person with a pre approval

W H A T I S A PRE- A PPRO VA L?

When you are pre approved for a mortgage, it means a lender hasdetermined how much you can borrow,the loan programs that you may qualify for, as well as the interest rate you qualify for. This assessment is based on factors such as credit score, income, debts, and employment history.

PRE Q U A L I FI ED V S PRE A PPRO V ED

PRE-QUALIFIED In order to be pre-qualified, a lender may or may not check your credit scoreand won't require documentation, only going off what you tell them. This will giveyouanideaof what youcouldqualify for.

PREAPPROVED To be pre approved,the lender will pull your credit and ask you for documentation to verify your finances. Before making an offer on a house it is best to get pre-approved to show sellersyour offer isseriousand that alender hasalready approved you for enough money topurchasethehome

HOW LONG DOES M Y PRE APPROVAL LAST ?

A pre approval is generally good for 60 90 days. If the time from the original credit report to funding is greater than 50 days, borrowers should anticipate that their lender will pull a new credit report and re-analyze financial documents.

DOES M Y PRE APPROVAL GUARANTEE A LOAN ?

No, a pre-approval does not guarantee the lender will provide a loan. A pre-approval is a high level look at the buyer's creditworthiness, and is just the first step in the lender'sprocessof qualifyingabuyer.

MORTGAGE GUIDE

Wha t Typeo f LoanisRigh t fo r You?

CO N V EN T I O N A L LO A N

The most common type of home loan,which isoffered through privatelenders

FH A LO A N

Loans designed for those with high debt-to-income ratios and low credit scores, and most commonly issued to first time home buyers. Offered by FHA approved lenders only and backedby theFederal HousingAdministration

VA LO A N

Loans designed for veterans, spouses, and reservists, offered through private lenders and guaranteed by the US Department of VeteranAffairs

U SD A LO A N

Loansfor homebuyersin designated rural areas,backed by the US Department of Agriculture

TYPE OF LOAN

CONVENTIONAL

FHA VA USDA

DOWN PAYMENT TERMS

MORTGAGE INSURANCE MINIMUM CREDIT

CREDIT DOs & DON'Ts

Dur ing t he Home Buying Pr ocess Do...

K N O W YO U R CRED I T SCO RE

Whether seeking a mortgage pre approval or not, it's always good to know where you stand credit wise. Better credit results in better loan terms and a smoother loan process. If your score is low, you may want towork onraisingit beforeapplyingfor aloan

H AV E FI N A N CI A L RECO RD S H A N D Y

This includes pay stubs, bank statements, and other important financial documentsyour lender will need

STAY CU RREN T O N FI N A N CI A L O B L I GA T I O N S

Continuetomaketimely paymentsonall current debts.

PRA CT I CE GO O D SPEN D I N G H A B I T S

It's extremely important to have enough money saved up when buying a home. In addition to your down payment you will incur closing costs, third party fees and general costs that come with moving. Accounting for these costs helps to keep your home purchase withinyour means

Don't...

Q U I T O R CH A N GE JO B S

Job stability is key to your loan approval. If possible, stay in your present position until your purchase is closed If you do need to change jobs, consult with your lender

M A K E A N Y L A RGE PU RCH A SES

Large purchases should be postponed until after you moveinto your new home Purchasessuchasanew car, furnitureor appliancescan set off red flagsand change your financial portfolio.

O PEN N EW CRED I T A CCO U N T S

Openinganew credit card or takingout anew loan will add an additional inquiry to your credit score, change your mix of credit types, and impact on your debt to income ratio All of these factors can have a negative affect onyour credit scoreandresult inaloandenial

CLO SE, PAY O FF, O R CO N SO L I D A T E A N Y CRED I T A CCO U N T S

Closing accounts can adversely impact your score by decreasing your credit capacity Consult your lender beforepayingoff any accounts.

OPEN A NEW CELL PHONEACCOUNT

Cell phone providers pull your credit when you open a new account. If you're on the boarder credit-wise, this inquiry could drop your score enough to negatively impact your loaneligibility

MOVEMONEY WITHOUT A PAPERTRAIL

Your lender isgoingto need documentation for all your transactions to make sure you have enough money to paythenecessary costs

ADDITIONALCOST CONSIDERATIONS

A

A RE CLO

N

CO ST S

APPRAISALFEE

RECORDINGFEEpaidtothecounty

FINDINGTHE RIGHT HOME

Many considerationsgo into choosing the home that is right for you When conducting your home search it is important to identify your wants vs needs, and prioritize their importance to you. It is rare to find a home that meets all of your desires, carefully prioritizing your needs and wants and determining which areas you are willing to compromise is key to a successful homesearch

TheBigThree

LO CATI O N | PRI CE | FEATURES

LO CA T I O N

NEIGHBORHOOD

SCHOOL DISTRICT VIEW

WALK-ABILITY COMMUTE

ACCESSTO TRAILS

RECREATION SHOPPING

PRI CE

Price is often the most important aspect for home buyers Areyouwillingtopay morefor anideal location and features,or do you have a strict budget to adhere to?

CLOSE TO PARKS

H O M E T Y PE & ST Y L E

From historic craftsman in one of Bellingham's core neighborhoods to new construction on acreage, Whatcom county offers a variety of home styles Your personal preferences and lifestyle usually impact the styleof homeyouchoose

H O M E SI Z E

Is your family growing and needing more space? Are you looking to simplify and downsize? How important issizetoyou?

LO T SI Z E

How much property would you like to own? Do you prefer a low maintenance yard, room to entertain, spacefor thekidstoplay,or arural settingonacreage?

FLO O R PL A N

What type of layout do you prefer? Closed compartments or open concept?Does the flow of the home matter to you? Newer homes and newly renovated homestend to have an open concept with a high focus on the kitchen, master bedroom and en suite, older homes usually are space defined by walls and compartmentalized with more focus on gathering spaces and less focus on the kitchen, master bedroom andensuite.

HOUSE HUNTING TI PS

Tipsfo r FindingYour Idea l Hom e

IN V EST I GA T E T H E A REA

Drive around neighborhoods that interest you to get a feel of the area,how homesarecaredfor,what trafficislike,etc.

K EEP A N O PEN M I N D

Findingyour dreamhomeisn't alwaysaneasy task! Haveapriorities list,but keepanopenmindwhenviewinghouses

TA K E PI CT U RES & N O T ES

When you visit multiple houses it gets difficult to remember specificdetailsabout each one.Takephotosand noteswhiletouring houses so you can reference them later when comparing the propertiesyou'veseen

B E REA D Y TO M A K E A N O FFER

When you find a home you want to buy keep in mind there may be othersinterested in it aswell Beready to makeasolid offer quickly inorder tohavethebest chanceat gettingthehome

WRITING AN OFFER

PreparingtheOffe r toPurchase

When you find theright homewewill guideyou through theoffer process Wewill

Analyzetheselling circumstancesandpricesof comparablesoldhomes,andrecommendanoffer strategy

Prepareanoffer withyouthat meetsyour needs

Negotiateall thetermsandconditionsof the offer inyourbest interest

Present theoffer onyour behalf totheseller or theseller'sagent

All offers will be made in writing and presented to the seller's agent. All accepted terms and conditions carry through the life of the contract unless both parties agreetoamendinwriting

KeyConsiderations

PU RCH A SE PRI CE

You want a good buy, but your offer must also be reasonabletotheseller Low offerscansometimesupset the seller and prevent further discussions Make sure your offer price isfair andreasonable.

We will provide a detailed analysis of recently sold comparable properties, and estimated market value of

the home to help guide you through the process and find a reasonable offer to present. Ultimately, you decidehow much theproperty isworth to you and what youarewillingtopay for it

EA RN EST M O N EY D EPO SI T

The importance of this item is often overlooked This shows your commitment to the offer and can be a determining factor in your offer being accepted or rejected.

M ET H O D O F PAY M EN T

Will you pay cash for the property or secure a mortgage? How much money will you put down on a mortgage?The more money you put down the stronger your offer lookstotheseller

I N CL U D ED I T EM S

What items do you want to include? Refrigerator, washer,dryer,window coverings,hot tub,etc?

CLO SI N G & PO SSESSI O N

When does the property legally change ownership. Closing is generally set 30 60 days from the offer date, depending on lending and moving time frames for both parties This is an important piece as it helps you organize thetransition of your move an makenecessary preparations.

HOME INSPECTION

DueDiligence

H O M E I N SPECT I O N

Although a home inspection is optional, it is highly recommended A home inspection is a limited, non invasive examination of the condition of a home We recommend hiring a licensed home inspector who has the training and certifications to perform such inspections. While there are no absolute guarantees when buying a home, the inspection is a crucial step in the process that provides you with detailed information on the home's condition and will highlight any potential issues or concerns that may need to be addressed before completing the purchase of the property.

Inspectionscan identify deficienciesand/ and or safety issuesthat may exist,including...

SEW ER L I N E I N SPECT I O N

A scope of the sewer line can reveal any potential defects with line running from the house to the sewer main The homeowner is responsible for all repairs on thisportion of thesewer line.It isimportant to know of any defects a that exist before buying, as repairs are costly

STRUCTURAL | ELECTRICAL | INTERIOR | EXTERIOR ROOF LEAKS & WARE | HVAC SYSTEM | PLUMBING

BUILDING CODE VIOLATIONS | FAILING SIDING APPLIANCE LIFE EXPECTANCY | CRAWL SPACE WINDOWS

W EL L I N SPECT I O N

If the property's water source is a private well, it is recommended that thebuyer arrange awell inspection toevaluatethewater quality.

SEPT I C I N SPECT I O N

The seller is required by law to have a licensed septic inspector evaluate the septic system to ensure it is functioningproperly

NegotiatetheHomeInspection

Your inspector(s) discovered areas that need repairs, now what?

We coordinate specialty contractors to evaluate the repairs needed and estimate the cost We then work together to come up with an proposal that we feel is equitablefor bothparties.

The negotiation of the inspection allows for the buyer toproposeany of theany of thebelow scenarios.

SEL L ER M A K ES REPA I RS

Buyer requests that seller complete repairs prior toclosing.

SELLER RED UCES PURCH A SE PRI CE

Buyer requests that seller reduce the purchase priceof thehomeinlieuof repairs

O T H ER

Buyer requestsother meansof compensation in lieu of repairs,such asatradefor alawn mower, appliance,hot tub,etc

The seller has the option of accepting, countering, or rejectingthebuyer'sproposal

SPECIAL CIRCUMSTANCES

FO R SA L E B Y O W N ER

if you find a for sale by owner home you're interested in, let us know! Many FSBO sellers are willing to work with a buyer's agent, which allows you to proceed with your home purchase under the care and guidanceof alicensed professional.Thedown side to FSBO salesisthat the sellers are working without the same professional representation; they often overprice their home (which can lead to appraisal problems) and they may not fully understand real estate practices and law, which canleadtoacomplicatedsale

FI X ER U PPER

For abuyer who isDIYsavvy or hasthe money to invest in professional contractors,afixer can be agreat investment Dependingon the extent of the repairs needed, a fixer may be limited to a cash only sale as lendersmaynot bewillingtofinancethehome.

SH O RT SA L ES

A short saleisahomethat isbeingsold at apricelessthan themortgage owedtothethelender. Short saleissubject tothelienholder'sapproval and can be a lengthy process. Most short sales take 6 12 months to close.

FO RECLO SU RES

Are most often sold "asis" at auction and it isoften not possible to tour or conduct an inspection. Foreclosures can not be financed through conventional financing,cash or hard money lender isrequired to buy at auction

RECOMMENDED SERVICEPROVIDERS

MORTGAGELENDERS

BJBLOCK

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CARMEN DENSEN

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HOMEINSPECTOR

KNIGHT INSPECTIONS, LLC

K

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LANDSCAPER

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WATER& SEWER

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CITY OF FERNDALE 360.384.4269

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REALESTATE TERMINOLOGY

ADJUSTABLE RATE MORTGAGE

(ARM) The interest rate istied to a financial index making the monthly mortgage payment go up or down over time

ANNUAL PERCENTAGE RATE (APR) The percent of interest that will be charged on a home loan APR includes the interest rate plus other costs such as broker fees, discount points and some closing costs,expressedasapercentage

APPRAISAL A professional determination of value Mortgage companies usually require an appraisal of the property by a licensed,disinterested party before agreeing to loan money on the property Methods of determining valuemay bebased on many things, such as comparable sales in the area,thecost approach,theincome approach, or the highest and best useof theproperty.

APPRAISED VALUE The worth of the property as determined by a professional appraiser

ASSESSED VALUE The dollar value assigned to your home by a public tax assessor for the purposes of city/state taxes. This number is typically different from the value assigned by a private home appraisor, and sometimes different from what a home will sell for on themarket.

BALLOON A mortgage where therearepaymentsover aperiodof timebut thefinal payment isalump sum which isquite large,compared tothepreviouspayments.

BRIDGE LOAN (SWING LOAN) A short term loan used to transition

in between the paying off of an old loan, and the inception of permanent financing. This is often used to build or purchase a new home, when the previous home is still owned,but isup for sale. Once the previous home is sold, and the owner receives the proceeds from that sale, permanent financing is usually obtained

CASH RESERVES The money the buyer has left over after the down payment andall thoseclosingcosts.

CONFORMING LOAN A mortgage loan that meets underwriting guidelines for Fannie Mae and FreddieMac

CONVENTIONAL LOAN A real estate loan,which isnot insured by the government agency FHA nor guaranteed by the Veterans Administration Typically subject to the terms of their particular institution, the conditions may be more flexible, as the lender is not required to follow federal guidelines The lender looks to the credit of the borrower and the security of the property to insure payment of thedebt

COVENANT A clause in a written document,such as a mortgage or a deed, that the owner will abide by certain rules and conditions. These are not uncommon in subdivision and are usually intended to maintain the value and integrity of theproperty,

CLOSING Themeetingin which the sale of a property is completed Buyers and sellers sign documents and exchange funds, this is sometimescalledasettlement

CLOSING COSTS All of the miscellaneous expenses and fees paid by the buyer (and sometimes seller) when a deal closes Some examplesof theseexpensesinclude commissions, mortgage fees, recording fees, title insurance, and more.

CLOSING DISCLOSURE A breakdown of final detail of the mortgage loan It includes loan terms, projected monthly payments, and total cost of extra fees

COMPARATIVE MARKET ANALYSIS(CMA) Sometimesthese are also referred to as ?comps?This is a report of similar homes in the area that were recently sold or are currently on the market This is used to help determine an accurate valuefor your home

CONTINGENCY A clause in an agreement that keeps things from being legally binding unless a condition ismet.Themost common contingencies on a purchase contract are the right to have a home inspection before buying the home or obtain acceptable financingfromalender

DEED The document that sellers and buyers sign when transferring title to real estate. It legally transfers the property from the seller to the buyer, and is then recorded by the closing agency in county records

DUAL AGENT An agent who represents both the seller and the buyer inareal estatetransaction.

DUE DILIGENCE The act of best effort of ensuring that all

statementsabout the real property aretrue

DUE ON SALE CLAUSE Language in the mortgage closing agreements that inform the borrower that if they allow their loan to be assumed or transferred in any way,the lender hasthe right todemandthebalanceinfull.

EARNEST MONEY DEPOSIT

Usually given with an offer,thisisa payment to aseller to show you are serious about buying the property It is counted toward the down payment, and refundable if the offer isnot accepted

EASEMENT A legal document on certain property giving persons other than the owner the right of way, access and limited use or enjoyment of the land involved. (Example, power companies sometimes need a right of way for power lines.) Closing documents and/or land surveys will describe and show such easements These easements must be acceptable to the mortgage company before the buyer can consummate a binding closing.

EQUITY The difference between the home?s fair market value, and the unpaid balance of the mortgage

ESCROW This term has multiple meanings; earnest money is typically held in "escrow" by athird party until closing It canalsobethe timeperiodfromwhenthecontract is written and accepted by the seller towhenthehomesalecloses

ESCROW ACCOUNT An account setup by the lender that receives monthly payments from buyers to pay for things like insurance or taxes

FHA LOAN A mortgage that?s insured by the Federal Housing Administration FHA loans allow

down paymentsof as little as3.5%, and options for borrowers with lower credit scores

FIXED RATE The interest rate will remain the same for the entire life of themortgage.

HOME EQUITY LINE OF CREDIT (HELOC) A loan or line of credit that is determined based on the equity or home's value after subtractingloansowed.

HOME INSPECTION The process in which aprofessional inspectsthe seller'shomefor issuesthat arenot openly apparent, then creates a report for thebuyer toreview

HOMEOWNERS INSURANCE The sameashazard insurance It covers the property mortgaged against lossdue to fire, hail, theft, etc. The borrower selects the insurance, and pays the annual premiums, oftenthroughanescrow account.

JOINT TENANCY A legal way for parties to co-own real property with equal rights to the real estate Should any of the joint tenancy owners die, no interest in the property can be transferred by will as the remaining joint tenant(s) acquiresall ownership.

JUMBO OR NON CONFORMING LOAN A loan that exceeds Fannie Mae?s legal legislated mortgage amount of $417,000 in most markets.

LIEN A monetary claim against a property that must be paid off when aproperty issold in order for the new ownership to be legally recordedincounty records

LOAN TO VALUE The ratio of the amount of the loan divided by the valueor salespriceof thehome

LOCK IN An agreement in which the lender guarantees a specified interest rate for a certain amount of timeat aparticular cost

MULTIPLE LISTING SERVICE (MLS) An organization that collects and distributes home sale information to its members. MLS data is used to populate home listingsites suchaszillow

MORTGAGE BROKER An independent individual (or company) who brings together borrowers and lenders together Unlike a mortgage banker, a mortgage broker doesnot fund the loan Instead, the broker originates and processes the loan, and places it with a funding source, such as a bank

OWNER FINANCING ? The seller provides financing so that the buyer does not have to go through a bank or traditional sources to obtain funding to purchase the property The seller does not receive all proceedsat once,asin a traditional closing where the buyer obtains bank financing, but the seller does receive interest in additiontotheprincipal

PITI Principal, interest, taxes and insurance combined When less then 20% is paid as a down payment on a property, most lenders will require that each monthly payment include at least 1/12 of the annual taxes and 1/12 of the annual insurance in addition to the required principal and interest

POSSESSION The buyer occupying the property that is purchased or a tenant occupying the property that is leased. In a real estate sale, possession is rarely granted prior to closing when the seller receives their funds.

PRE APPROVAL The process in which a buyer must provide a mortgage professional information on income, debts, and assets that will beusedtomakean initial credit only loandecision

PREPAID Items paid in advance of closing, such as real estate taxes and homeowner?s insurance premium

PRE-QUALIFICATION Once approved for a loan, this is the processin which the maximum sale price, loan amount, and monthly payments are calculated for the borrower.

PRINCIPAL The amount of money borrowedtobuy your home.

POINT A point is equal to 1% of the value of a mortgage loan. Buyers have the option of buying discount points by paying more money up front in exchange for a lower interest rate

PRIVATE MORTGAGE INSURANCE (PMI) ? PMI is an insurance premium paid by the buyer to the lender to protect the lender if you areunableto pay your mortgage. Once you have 20% equity inthehome,thisinsuranceis discontinued PMI allows people to have access to homes that they don? t yet have a 20% down payment for

PROPERTY TAXES These are the taxes that are enforced by the city, town, county, and state. These taxes are included in the monthly mortgage payment and are held in the escrow account maintained by thelender

PURCHASE AND SALE AGREEMENT

The contract between the buyer and seller stating terms, conditions, sales price and other pertinent information about the property beingpurchased.

QUIT CLAIM DEED A document by which one property owner releases hisor her claims,rightsand interest inaparticular property

RATE LOCK When the lender issues a written commitment to a

borrower as to a specific interest ratefor aspecificperiodof time

REO Real Estate owned properties or foreclosed properties currently ownedbyafinancial institution

REVERSE MORTGAGE A loan program specifically designed for seniors which allows them to convert equity in their home to cash

SETTLEMENT STATEMENT The form showing all fees, charges and monetary transfers involving the buyer, seller, and all parties involvedinthetransaction

SHORT SALE A situation when the seller's lender is willing to accept an offer and allows the sale to be completed for an amount less than the mortgage amount owed by the seller.

SPECIAL ASSESSMENT A tax or levy against real property for improvements The fee is not necessarily imposed on all residents of a community, but to the owners of specific properties Also, condominium owners may have a special assessment imposed for specificimprovements

TEN THIRTY ONE EXCHANGE (1031 EXCHANGE) A means of deferringcapital gainstaxeson real estate exchanges for like kind properties This is allowed under the US Internal Revenue Code, Section1031

TITLE A legal document providing current and proper ownership of the property Also referred to as a Title Deed, this document highlights the history of the property ownershipandtransfers

TITLE INSURANCE An insurance policy that protects owner or lender interest in the property from unexpected claims of ownership UNDERWRITING The process in

which the potential home buyer is evaluated for their financial ability toobtainandrepay aloan.

VA LOAN Typically a 100% loan which are given to Americanswho have served in the armed forces They are administered by the Department of VeteranAffairs

ZERO LOT LINES When a building is positioned so that it rests either directly on the lot?s boundary line, or so close to the boundary line that there is minimal yard or space between the structure and adjacent structure.