Home Buyer s Guide. rye BrokeraGe 49 Purchase Street Rye, NY juliabfee.com

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1 Home Buyer s Guide rye BrokeraGe 49 Purchase Street Rye, NY juliabfee.com

2 THE HOME SEARCH To find a home that meets your needs and budget, a Julia B. Fee Sotheby s International Realty agent can give you the personal and professional attention to make your search easier. Our thorough knowledge of the marketplace assures that you will find the perfect home at the right price in the shortest amount of time. New York State Disclosure Law. The Secretary of State has mandated that you have choices in the level of service of your representation. Any agent you work with must review and explain this information and have you sign an acknowledgment. How does Julia B. Fee Sotheby s International Realty find your dream home? We listen carefully as you describe the home and the community that will match your desired lifestyle. Our agents preview hundreds of homes every month during Broker Open House Tours. We are able to save you both time and energy as we share with you the entire inventory of homes on the market so that you can select those that best meet your wants and needs. What listings can a Julia B. Fee Sotheby s International Realty agent show you? Any and all listings in the Multiple Listing Service (MLS). Any listing that you see advertised on the internet in any newspaper by any broker. Any house listed by any brokerage office in our service area. How are we able to show you all these homes? The real estate brokerage community cooperates through the Multiple Listing Service (MLS) to make all homes listed by MLS available to all agents. The most effective way to market homes is to make them available to be seen by as many people as possible. What if you are interested in a property in another town? Please ask us to refer you to an agent in that area. Julia B. Fee Sotheby s International Realty is part of a network of brokers in neighboring towns, counties, states and other countries. You will be referred to an agent who will give you the same professional service you have received from us. Factors to consider during your search Locations and/or neighborhood Number of bedrooms and bathrooms Proximity to highways, airports and public transportation Condition of the home Property Taxes, maintenance fees Price Range

3 Mortgage Contingency If you have secured a mortgage commitment, you have satisfied this requirement. If not, you must start the mortgage process. Your agent can suggest several independent mortgage brokers if you need a contact. The mortgage broker or lending officer can provide pre-approval letters which can be advantageous during the bidding process. The lenders will look at the following criteria when issuing a pre-approval; cash available for closing costs, credit and income. The lender evaluates your financial ability to pay your mortgage payments. An appraisal is ordered by the lender to substantiate the fair value of the property. Closing Date This is an important date to establish between the buyer and seller. It is the target closing date. Inclusions and exclusions All property and fixtures that are included or excluded in the sale should be clearly spelled out. MAKING AN OFFER Once you have found a home you wish to purchase, the next step is to present an offer to the seller. Your agent will assist you in making the offer, which will be delivered to the seller s agent and then to the seller. Negotiations will continue until you and the seller reach an agreement on the offer. TERMS OF AN OFFER Down Payment The amount of cash you are prepared to invest in the purchase. Contingencies The two primary types of contingencies are stipulations regarding the mortgage and the home inspections. The mortgage commitment contingency will be satisfied once you have a mortgage commitment in place. Other contingencies include the completion of satisfactory home inspections (e.g., engineering, termite), appraisal, or signed contract. Personal Property Items that are not fixtures may not be included in the purchase. The acceptable offer and what it means When your offer has been accepted it does not guarantee that you have secured the sale. The sellers may continue to show their home until contracts are fully executed. Should a higher offer be submitted, they have the right to accept it. Therefore, it is incumbent on the buyer to act quickly. Inspections should be scheduled as soon as possible and a contract signed in a timely manner. When the contract is signed by both buyer and seller, even with a mortgage contingency, the contract is generally considered binding. It should be noted that contracts may contain many different and varying terms. Julia B. Fee Sotheby s International Realty does not provide legal advice. You should consult with an attorney who will advise you on the specific terms of your contract and your legal rights. The buyer is advised to personally verify all pertinent information that would be of concern prior to signing a contract, such as taxes, square footage, property size, maintenance or common charges. Your Julia B. Fee Sotheby s International Realty agent will be happy to assist you in confirming these details. The Closing Date The date upon which you would like to take the title to the property. This is often an on or about date, mutually agreed to by the buyer and seller.

4 THE INSpECTION process it is important to know what you are buying. if possible, schedule your engineering inspections when you are able to be present. this will allow you to really get to know your prospective new home, its present condition and the repairs and maintenance necessary to protect your investment for the future. we recommend that you retain the services of licensed professionals to perform your inspections. RADON - radon is an invisible, odorless and slightly radioactive gas that may seep into a house from the surrounding soil. after prolonged exposure, high levels of radon may be a health hazard. in most cases, if elevated levels of radon are found, a mitigation system can be installed to correct the situation. For further information, please visit ENGINEERING - this covers the major structural elements of the home, including heating, plumbing, air-conditioning, and electrical. this inspection may include pools and accessory buildings. ASbESTOS - this is a mineral fiber that was once used for insulation and fire protection. Fibers released into the air may present a health hazard. asbestos in good condition may not need to be removed but instead, covered and sealed. any asbestos work must be done by a licensed contractor, and an air test should be provided to the buyer ascertaining proper levels. For further information, please visit CARbON MONOxIDE - this odorless, colorless, and tasteless gas can be fatal if inhaled at sufficient levels. carbon monoxide in the home is produced from fuel-burning sources such as gas, oil, or wood-fired heating systems. each home is required by law to have at least one operable carbon monoxide detector on the lowest bedroom level. compliance will be affirmed at the closing. FEMA FlOOD ZONE - the Federal emergency Management agency (FeMa) has generated maps based on flood risk assessments. information on your area, including local maps and rates, is available at pest AND TERMITES - although commonly referred to as the termite inspection, this should cover all wood destroying insects. inspections will be made of the home and all outbuildings. Your report should contain a certification of non-infestation and/or a report of any damage and recommended treatment. water - if there is a well on the property, laboratory analysis of the water will assure you of the quality of the water. tests should also be performed to determine the capacity of the well. as of November 19, 2007, westchester county, under the Private well-water testing law, requires that sellers and landlords conduct a well water test to identify substances which affect the quality of drinking water. See OIl TANKS - oil tanks of 1,000 gallons or more must be tested for leakage. Be sure to ask if the seller has purchased tank insurance. it is advisable to test all buried oil tanks. lead paint - Paint chips and dust from deteriorating lead paint are toxic and can cause poisoning when the particles are inhaled or ingested. reliable and quick detection is necessary. in case of houses built before 1978, the buyer and the seller must, by law, be presented with a lead disclosure booklet and sign an acknowledgment that they have received it. For further information, please visit www. epa.gov/lead. SEpTIC - Most engineers will not perform an inspection of the system. a specialist should be contacted to determine its condition. MOlD - Mold spores are a common element in household dust. when it is present in large quantities, it presents a health hazard. Mold specialists are often called upon to inspect for mold conditions that may be toxic to the home.

5 CONTRACT OF SALE You have come to an agreement on an offer! What happens next? 1. If you have not retained an attorney to represent you, now is the time to do so. 2. The listing broker sends a memorandum of agreement to the seller, the seller s attorney and your agent. It is then sent to you and your attorney. 3. The seller s attorney usually prepares the contract of sale and sends it to your attorney. 4. Your attorney will review the contract and discuss modifications, if any, with you and with the seller s attorney. 6. The customary down payment on contract signing is 10% of the purchase price. It is usually held by the sellers attorney in an escrow account until the closing. 7. The seller will sign the contract and return a fully executed copy to your attorney. Once this happens, a binding contract exists. 8. Prior to closing, you will satisfy any contingencies that remain in the contract, such as finalizing your financing and performing any further inspections. 5. You will sign the contract. Then your attorney will forward it to the seller s attorney with your down payment check. THE CLOSING PROCESS This is the day you have been waiting for. At the closing you complete the purchase of your new home as the title to the property is legally passed from the seller to you. Prior to the closing - Your attorney will order a title search of the property and the appropriate Title Insurance policy. It may also be necessary to obtain an updated survey of the property. If you are financing your purchase, the lender s attorney will review all required documentation before the closing date can be set. Your attorney will schedule the date, time and location of your closing with the agreement of the seller s attorney and the lender s attorney. Your attorney will advise you of the documents necessary to close. He or she will prepare a list of closing costs and inform you which checks must be certified. You should request your final walk-through of the property just prior to the closing to assure that it is in satisfactory condition. Who will be at the closing? - You and your attorney, the seller and the seller s attorney, the lender s attorney and the title closer will be at the closing. The realtors involved in the transaction usually attend as well. What happens at the closing? - The attorneys and the title closer will review all documents and agree on the calculation of adjustments. It is the responsibility of the title closer to assure your attorney and the lender s attorney of the following: clear title to the property, that any mortgages, liens, judgments on the property have been satisfied, that all taxes have been paid to date, that there are no violations on the property, and that a Certificate of Occupancy has been issued. When all necessary documents have been signed, all adjustments made and the seller has received his or her monies, the deed and any other required documents are given to the title closer to file at the County Clerk s office. You will receive the keys to the property. Congratulations - The purchase of your home is accomplished! No other firm has the wealth of local knowledge and years of experience to assist you in finding the most appropriate home to suit your needs. Call us for a consultation. We welcome the opportunity to work with you. PERTINENT WEBSITES FOR BUYERS Fair Housing Information: US Environmental Protection Agency: Flood Plains and Insurance: Lead Paint Information: Mortgage Information: Insurance Information: Carbon Monoxide and Amanda s Law: ny.us/code/coalarm.html Megan s Law Information of convicted pedophiles: New York State School Report Cards: gov/irs/reportcard/

6 Glossary Terms ADJUSTABLE-RATE MORTGAGE (ARM) A loan in which the interest rate can adjust up or down according to an interest rate index at set adjustment periods. The initial monthly payments will be lower with an ARM than with a fixedrate mortgage and payments will fluctuate according to index performance. ADJUSTMENT CAP The maximum percentage the interest rate can go up or down each time it is adjusted. ADJUSTMENT PERIOD The time period between interest rate changes on an ARM. You can select an adjustment period from six months up to ten years. AMORTIZATION The payment of debt in regular installments of principal and interest, reducing the mortgage balance owed. ANNUAL PERCENTAGE RATE (APR) The interest rate reflecting the annual cost of the mortgage annually. It is usually higher than the advertised rate because it takes into account points and other credit costs, allowing comparison of real costs. APPRAISAL An estimate of the current value of a property based upon recent, similar home sales within the area, the current condition of the home, real estate market conditions, and other factors. ASSUMPTION OF MORTGAGE A buyer s agreement to assume liability under an existing note secured by a mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower (usually the seller) from liability. BALLOON PAYMENT A lump sum principal payment due at the end of certain types of mortgages or other long-term loans. CERTIFICATE OF OCCUPANCY (CO) A certificate issued by the town s building inspector declaring that the house and any improvements have been constructed in compliance with all applicable state, county, and town codes and confirms that the homeowner has legal permission to use these improvements. CLOSING The meeting during which the deed to the home is legally transferred from the seller to the buyer and final documents involving the sale and its financing are signed. CLOSING STATEMENT The financial disclosure summary accounting for all funds received and expended at closing, including deposits for taxes, hazard insurance, and mortgage insurance. COMMITMENT An agreement or written promise from a lending institution to provide a loan of a specific amount on specified terms to finance a home purchase. CONDOMINIUM A form of real estate ownership in which the owner has title to a particular unit of a multi-unit complex and also has a proportional interest in certain common areas. The unit s interior surfaces generally serve as boundaries of the owned space. CONTINGENCY A condition agreed upon by both parties that must be satisfied before a contract is binding. CONVERSION CLAUSE A provision in some ARMs offering the option to change the ARM to a fixedrate mortgage, usually after the first adjustment period. COOPERATIVE (CO-OP) A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements. COVENANTS, CONDITIONS, AND RESTRICTIONS Documents that control the usage, and stipulate the requirements and restrictions of, a property. CREDIT REPORT A report compiled by one or more credit bureaus that details credit history, credit inquiries, and facts about all accounts ever opened with respective credit lines and on-time or late payment behavior. DEED A legal document that transfers ownership of a property (i.e., title) from the seller to the buyer. DUE-ON-SALE CLAUSE An acceleration clause requiring full payment of a mortgage or deed of trust when the secured property changes ownership. EASEMENT A right conferred by grant or agreement that allows use of another owner s land for a specific purpose. ENCROACHMENT Construction (e.g., a fence, driveway, or building) that illegally intrudes on another owner s property. EQUITY An owner s financial interest in a property, representing the property s current market value minus the mortgage balance. ESCROW A procedure in which a third party acts as a stakeholder for both buyer and seller, assuming responsibility for handling the paperwork and the distribution of funds.

7 ESCROW ACCOUNT An account maintained by the lender to pay for future taxes, hazard insurance, and other items. A portion of your monthly mortgage payment (exceeding principal and interest) is deposited into this account for such usage. FEE SIMPLE The most comprehensive form of real estate ownership, in which the owner has unrestricted power to dispose of the property as desired, including leaving by will or inheritance. FINANCE CHARGE The total charge for obtaining a loan, including interest payments, any interim interest paid at closing, origination fee, and other charges levied by the lender. FIXED-RATE MORTGAGE A mortgage in which the interest rate and monthly payments remain the same over the life of the loan. INDEX A published rate used to determine changes in the interest rate of an ARM over the term of the loan. INSPECTION A comprehensive and exhaustive examination of a home by a licensed inspector. Often required as part of a mortgage and home loan process. JOINT TENANCY An equal undivided ownership of property by two or more persons. Upon the death of any owner, the survivors assume the decedent s interest in the property. LIEN A legal hold or claim on property as security for a debt or charge. LIFETIME ADJUSTMENT CAP The maximum interest rate that can be charged on an ARM. NEGATIVE AMORTIZATION An increase in the mortgage balance occurring when monthly payments do not cover the interest cost. The uncovered interest is then added to the unpaid principal balance. ORIGINATION FEE A fee charged by the lender for work involved in evaluating, preparing, and submitting a proposed mortgage. POINT A one-time charge equal to one percent (1%) of the total loan amount. Points may be tax-deductible in some cases. PRE-APPROVAL The commitment a lender makes to a potential borrower of a loan amount based on a completed loan application. This application contains credit reports, income, debt, and savings information. The commitment is subject to the borrower meeting qualification requirements at time of purchase and review of collateral by an underwriter. PREPAYMENT PENALTY A fee charged to the mortgagor for payment of a loan before it is due. PRIVATE MORTGAGE INSURANCE (PMI) Insurance written by a private company to protect the lender against loss if the borrower defaults on the mortgage. RATE CAP The limit of how much the interest rate may change on an ARM at each adjustment and over the life of the loan. RATE LOCK A guarantee of a specific current interest rate through the closing date if it occurs within a specific time period. REAL ESTATE SALES CONTRACT A contract for the sale of real estate, in which the purchaser promises to pay the agreed purchase price and the seller agrees to deliver title to the property. LOAN TO VALUE RATIO (LTV) The ratio of the loan amount to the value of the property. Different loan programs have different maximum LTVs. SURVEY A measurement or drawing determining the exact location, boundaries, and other physical features of a property. MANSION TAX A NY State tax levied on all home sales of $1,000,000 and over. TERM The length of time it will take to pay a mortgage in full. MARGIN The percentage added to the index rate for each interest rate adjustment on an ARM. TITLE INSURANCE POLICY A policy that protects the purchaser and/or lender against loss resulting from defects of title. MORTGAGE LIFE INSURANCE A life insurance policy whose coverage decreases as the mortgage balance declines. If the borrower dies while the policy is still in force, the debt is automatically covered by insurance proceeds.

8 Rye Brokerage 49 Purchase Street Rye, NY juliabfee.com

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