The Home Buyer’s Guide/Washington Metropolitan

Photo © INEPOS Collection

By Charles Ngansop
Realtor®, Real Estate Consultant; Public Notary.
ngansoproperties@gmail.com
301-437-0163

Table of Contents page

A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008

The Home Buyer’s Guide
Warning------------------------------------------------------------------ 3
A Should one remain a Tenant or Buy a Home? ------------------- 4
A1 Renting: Advantages and Disadvantages.
A1.1 Advantages of renting:
A1.2 The disadvantages of renting
A2 Buying: Advantages and disadvantages.
A.2.1 The advantages of being a home owner
A.2.2 The disadvantages of being a home owner: ------ 4
B. If I decide to buy, how do I go about it------------------------- 5
B.1 Be ready-
B.2 Choose your Real Estate Agent (Realtor®)
B.2.1 Can I carry out the transaction myself without a Realtor®? ----------------- 5
B.2.2 What will be therefore, the role of the Realtor®? ------------------- 6
B.2.3 How do I choose my Realtor®?
B.3 Choose your Loan Officer. (L.O)
B.4 pre-qualification: What do we understand by that? ----------------- 6
B.4.1 What documents do I have to tender in for my pre-qualification? -------------- 7
B.4.2 These are my personal informations.Will they be secured? -
B.4.3 Once pre-qualified, what are the documents I have to receive from the Agent?
B.4.4 You talk of estimates: at what time do I know the definite figures?
B.4.5 Can if happen that the definite figures differ from the estimates figures? -------------- 7
B.4.6 If I’m qualified what other information do I have to know? --------------- 8
B.5 As concern the Credit Score.
B.6 Choose the type of house you wan to buy. ---------------- 8
B.7 House Hunting time: ------------------ 9
B.8 Purchase offer----------10
B.9 Inspection
B.9.1 Contingence
B.9.2 As-it is condition.
B.1.1 Insurance
B.1.2 Loan Approved
B.1.3 The walkthrough----------------- 10
B.1.4 closing the transaction. ------------- 11
C. Before you move to your new house.
D. After you moved to your new house
E. As Concern…
E.1 …Down Payment. (DP)-----------11
E.2 …Deposit (or Earnest money Deposit) ---------12
E.3.1 …Closing Cost
F.Closing Statement
References: ----------------------------------------------------- 12

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008
The Home Buyer’s Guide

Warning.

The information contained in this brochure has been collected from

sources of faith. It is solely prepared in this case to inform and educate
the consumer on the general plan. This document should not be considered a
judicial reference. The reader is therefore advised to seek the help of
lawyer specialized in real estate for more details.
All rights reserved. The text of this publication, or any part thereof, may
not be reproduced in any manner whatsoever except as permitted under Section
107 or 108 of the 1976 United State Copyright Act, without written permission
from the author.

Copyright 2008 by Charles Ngansop

This publication was translated from the French original version

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008
The Home Buyer’s Guide

A - Should one remain a Tenant or buy a home?

The answer to this question can differ from according to the various cases

A1 Renting: Advantages and Disadvantages.

A1.1 Advantages of renting:

o Affordable prices;
o No maintenance fees;
o Cheaper for a short term lodging.

A1.2 The disadvantages of renting

1. Obligations and exigencies of the landlord (For example, you can’t effect any modification in
your apartment without his permission);
2. You’re exposed to the worries and humburgs of the neighbors.
3. Limited space;
4. Limited time. Length of time as Tenant limited by the landlord;
5. You are limited by the humours of the landlord who can increase the rent anytime;
6. No tax benefit;
7. Costly at the long run.

A2 Buying: Advantages and disadvantages.

A.2.1 The advantages of being a home owner.

1. The prestige of proprietorship;
2. Tax benefit;
3. You enjoy more space and freedom. You can modify your house to your taste;
4. More privacy in your life;
5. Saving: in the course of time, your house will become valuable as such as constituting a
real capital saving.
6. You have the possibility of having access to new credit lines;
7. It proves your stability in the eyes of the local collectivity.

A.2.2 The disadvantages of being a home owner:

1 The need for big capital
2. The cost of maintenance is high

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008
The Home Buyer’s Guide
B. If I decide to buy, how do I go about it
B.1 Be ready

These are some ideas to help you to better prepare yourself.

1. Put in place a family budget. Its importance cannot be over emphasized. This helps you
to better control your expenses.
Reduce your dept.Investors are very particular about your depts which, in a general way,
should not exceed 36% of your monthly income?
Warning! Reducing your dept does not mean closing out your credit cards account which
you already have.
2. Increase your income; look for a part time job. This will increase your chance of being
qualified for a loan;
3. Save some money: Buying a house without having some money in saving account is a
real adventure. Indeed, investors insist on seeing your economies which must be, at least,
equal to three monthly payments of your future mortgage.
4. Do not quit your job. But if you’re forced to do so, be sure that you remain in the same
professional field.
5. Establish a detailed line of credit. Get some credit cards if you do not have any yet. After
using them, make sure you pay back on time.
6. If you’re in an apartment, respect the payments due dates of your rents. Do the same for
others bills such as telephone, car insurance, car payments etc.
7. Get a detail account of your score credit; you can obtain it freely from one of the offices
indicated in paragraph B.5

B.2 Choose your Real Estate Agent (Realtor®)

His job is to represent you all through the buying process. This procedure is very complex.
Without being a jurist, he defends your interest throughout the transaction. You’re related by
an agreement of faithfulness and loyalty towards each other. This agreement will be served to
you for signature at the first meeting or before visiting the houses. It’s advisable to tell him
the truth on your finances, in order for him to better preserve your interests.
The Realtor® is rewarded by the seller, through is company once the transaction is
accomplished. But in certain cases, he can insist on having money for transport to move
about showing the houses
.
B.2.1 Can I carry out the transaction myself without a Realtor®?
Sure. You can carry out the transaction without the assistance of a Realtor®, if you have the
necessessary competence. You do not need a license to carry out your own transaction.

B.2.2 What will be therefore, the role of the Realtor®?

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008
The Home Buyer’s Guide
Like in all professions, the real estate industry has its own peculiarities which are not always
evident to the outsider. A real estate transaction needs a lot of patience and endurance, the
enemy of time. Many documents to consult and sign, add to the complexity of a transaction.
The presence of an expert beside you will be more than beneficial. Sure, your house
constitutes, without doubt, one of the greatest investment of your life. Why take the risk to
venture in a domain as complex as this without the help of a guide? And , best of all, this is a
free service for you

B.2.3 How do I choose my Realtor®?

The following qualities to govern your choice of Realtor®:
o Availability: A good Realtor® has to be available. Generally, those who work part-
time will give you appointments they will hardly honor because they are occupied by
their first job
o Experience: If he is in the job for less than a year, there are high chances of him not
mastering all the rules of the transaction. He risk abandoning you, wasting your time
and money when the transaction becomes complicated.
o Fame, Honesty, Aggressiveness in work etc. A good Realtor® makes himself known
in his community by the quality of his work. Inform yourself from those who have
had his service in the past. Avoid the trap on the internet where you risk falling in the
hands of unscrupulous agents.

B.3 Choose your Loan Officer. (L.O)

It is generally advisable for you to seek the opinion of your Realtor® who can help you in
finding one. The Loan Officer controls all the financial aspect of the transaction starting with
your pre-qualification.

B.4 pre-qualification: What do we understand by that?

You are pre-qualified in the process of purchasing a house when you fulfill certain
preliminary conditions, established by Lenders. Among these criteria, one can quote:
o Your Credit score;
o Your annual income;
o Your debts;
o Your activities (at least two years in the same line of work);
o Your place of residence (at least two years in the same residence);
o Your asset (at least the equivalent of three months of your monthly payment of your
future house).

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The Home Buyer’s Guide

B.4.1 What documents do I have to tender in for my pre-qualification?

The documents to be tender vary depending on the Lenders. But following a general rule,
you have to produce:
1. Your social security card
2. The prove of your status in the USA (If you’re illegal alien, you cannot be qualified
for such loan .But somebody can be a guarantor for)
3. The prove of your incomes: the W-2 form for the last 2 years if you’re an employee
or the Profit and Lost Statement plus the last 2 years tax return, if your are a Self
employee
4. Two resents pay slips for the employee;
5. The last three months bank statement;
6. The prove of your residence during the past two years;
This list is far from being exhausted.

B.4.2 These are my personal informations.Will they be secured?

In general, there is no guarantee that your informations shall be in security. But the Agents
are supposed to respect the confidential of all the personal information that you give them.

B.4.3 Once pre-qualified, what are the documents I have to receive from the
Agent?
He has to give you at least two documents: your letter of pre-qualification and the transcript
of estimates of your expenses that you will have to engage in the transaction. It is called
“Good Faith Estimate” (GFE).If you don’t understand anything in this sheet, you have to at
least retain three things: your interest rate, your monthly payment and the closing fees for the
transaction, commonly known as “closing cost”. It is duty on the part of the loan officer to
give you these documents

B.4.4 you talk of estimates: at what time do I know the definite figures?
Just before the closing of the transaction, generally 24 hours before the closure. These figures
are contain in a form call HUD-1, given to you by the Title company in charge to close the
transaction

B.4.5 Can if happen that the definite figures differ from the estimates figures?
Yes. More or less, from a hundred to a thousand dollars at the most. It is for that reason you
should always have you check booklet with you on the day of the settlement, to “round up
the angles”

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008
The Home Buyer’s Guide

B.4.6 If I’m qualified what other information do I have to know?

These are some questions you will ask your LO
What are the different types of popular real estate loan that you offer?
1. What type of loan will be convenient for me and why?
2. Your interest rates, closing cost and miscellaneous are they negotiable?
3. Is mortgage insurance, commonly called PMI obligatory? If Yes, what will be the
amount?
4. Do not mistake it with hazard insurance with is obligatory. The Premium Mortgage
Insurance is generally insisted upon by investors if the borrowers personal
contributions less than 20% of the total of amount of the loan.
5. But as soon as your house accumulates a certain value, this insurance can be
cancelled at the discretion of the investor.
6. For how long will you lock up my interest rates.
7. How many points will you charge me? How much time do you need to close this
transaction?
8. Will there be an escrow account along with my mortgage? An Escrow account is an
account in which part of your monthly payment is deposited for the benefit of taxes
and hazard insurance.
9. Does my loan has a pre-payment penalty provision?

B.5 As concern the Credit Score. (C.S)

The Credit Score is a numerical evaluation, a detail account of your credit history. It is used
by investors to measure the degree of risk of every borrower. This variable is calculated by
complex mathematical formula which take into account, among others:, your debt, your
payment history, the length of your credit history etc.
The Credit score varies generally between 300 and 850.The more it is high, the more it is
good. Generally, any score less than 400 is said to be bad. Every score more than 700 is said
to be good. There exist in the USA many credit bureaux.The best known are:
Equifax (www.equifax.com) Po Box 740341, Atlanta, GA 30074
Experian (www.experian.com) Po Box 2002,Allen ,TX, 75013
Transunion (www.transunion.com) Po Box 1000, Chester, PA 19022.

B.6 Choose the type of house you want to buy.

Discuss this issue with your Realtor® Prices vary according to the model, size and location.
Single Family.(SFH),Town House (TH) and Condominium (CD) are the most common in
the Washington Metropolitan area.

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008
The Home Buyer’s Guide

B.7 House Hunting time :

Select your dream home, get a road map ready and write on it:
1 The characteristics of your future house. For example the style of the house, the number of
rooms and toilets, the necessity of a garage and a basement, the material of the floor, etc.
2 The location. Generally, many factors govern these criteria: the nearness to the place of
work, children’s school or place of worship, the existence of public transportation and many
other factors.
Select your house with your Agent. Examine it in and out. Be sure that this house answers to
at least 70% of your expectation. Avoid being guided in your choice by emotions. Be
rational. Compare the positive and negative points of each house before you decide. If you do
not find it easy to choose, ask the opinion of your Agent .A house might be pleasing to you
without being that which is convenient to you. Let a friend accompany you. His opinion can
influence your choice. A good or bad choice can make you loose or save money in your
transaction.

B.8 Purchase offer

Your Agent will prepare an offer which you are going to sign. The Agent will be in charge
and transmit it to the other party. The contract must absolutely have an engagement (Earnest
Money Deposit) in the form of a money order or check filled in the name of a neutral party.
(The Title company)The dollar amount of the Deposit is not determined by the law. In
case you desist or a break up of the contract this amount is not refundable.

B.9 Inspection

B.9.1 Contingence
If your offer is accepted, the law obliges you to make the house be inspected within seven
days following the acceptance of your offer. With the help of your Agent, recruit a Certified
Residential Home Inspector. His role is to establish a “medical “report of the house you
want to buy. He will insist on points such as: plumbing, A/C and heating and the electrical
systems, the roof, the foundation, the door, the windows, the kitchen appliances, etc
All the faults observed shall be contained in the inspection report. The seller has the
obligation to repair all the vital defects like the plumbing, electrical, AC and Heating
systems, the roof and the foundation. Minor defects can be repaired or constitute a point of
negociations.If no compromise is arrived at, you can breach the contract and insist on the
reimbursement of your deposit.

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008
The Home Buyer’s Guide

B.9.2 As-it is condition.

If the house is sold as it is, the seller is under no obligation to repair any defects as noted by
the inspection. All vital installations, however, should be in a good functioning condition
The law recommends the seller to give to the buyer a document that summarizes to his
knowledge the state of the house. Your Agent has to play a very important role in the
analysis of this document which can contain very unpleasant surprises.
The inspection fees vary from one Home Inspector to another, from one house to another. Be
prepared to pay at least $400 for SFH, $350 for a TH and $300 for a CD.
A certified Real estate Appraisal will equally be recruited by the Lender at your expenses to
determine the market value of the house you which you to buy.(It will cost you no less than
$450 for this service).If the report of the evaluation indicates a price inferior to the price
offered , the seller has to conform to it so that the lender can accept to finance it. If the report
indicates a higher price than that offered, it is to the advantage of the buyer.

B.1.1 Insurance
You will need to purchase hazard insurance. It is mandatory. The loan can be rejected if this
insurance is not bought.

B.1.2 Loan Approved

You will be informed by your Agent who during all the transaction works in collaboration
with the loan officer

B.1.3 The walkthrough

Once your loan has been approved, with your Agent, make a short tour of the property,
preferably one or two days before the close of the transaction. Take down notes for any
inadequate remark. Here your Realtor® has to show proof of his professionalism. He has to
have on his hands a document to verify point after point and room after room. Everything to
be corrected must immediately be reported to the seller through his agent. If no action is
taken to remedy, the imperfection observed, the report should be envisaged on the day of the
closing.

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The Home Buyer’s Guide

B.1.4 closing the transaction.

The D-day is the great day. Around the table will be:
The Seller and his Agent
The buyer and his Agent
A Real Estate Attorney. This attorney is chosen by the Buyer, according to law. Seek the
advice of your Realtor® in getting a reliable and an experienced one.
The Attorney will explain to you the pros and con the documents to be signed, the related
fees, from the beginning to the end of the transaction.
You will sign a lot of documents. So, be prepared for lot of paperwork signatures.
After all these, you’re done. Get the keys, give hook or shake hands with the other party.
Bravo! You’re now Proprietor. Welcome to the club! Do not forget to organize a HOUSE
WARMING PARTY. I’ll be there. See you.

C. Before you move to your new house.

Your Realtor® will direct you how to transfer your utilities subscriptions.
Recruit a pest control company to disinfect your house and keep away best such as
cockroaches, rats etc.Seek advice from your Realtor for the choice of who offers competitive
prices.

D. After you moved to your new house

Surely, you will receive letters from many marketing and advertising companies. Don’t
worry about them. But pay attention to your first bills which will start coming after about 45
days. Your Realtor®, if he is competent has to assist you from time to time for a follow –up.
Do not hesitate to call him if you have a question or concern.

E. As Concern…

E.1 …Down Payment. (DP)

Literally, DP is a personal endeavor in the process of asking loan. It is generally expressed in
term of percentage in relation to the purchase of house. The rate varies from zero to twenty
(or more) percent as the case may be. If the house you‘re buying is your first home and not
designed for investment, and your Credit Score conforms to their standard, many Lenders
will not ask you for any personal endeavor. It is the famous “Zero down” heard over radios
and TVs in the advert pages.
On the contrary, if you’re buying a house for investment, or if your Credit Score is not
conformed to the standard stipulated by the Lenders or lastly if you belong to the Diplomatic
corps then your personal endeavor will be asked.

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The Home Buyer’s Guide

E.2 …Deposit (or Earnest money Deposit)

It’s a caution fee. A proof of good faith. It assures the Seller of your real intention to buy his
house (see paragraph b.8).The amount of the money is not defined by law. But in practice it
varies depending on the price of the sale of the house. It has to be in the form of check or
money order, filled under the name of a third party.(the title company or your Realtor’s
company) This money will go towards the closing cost to the benefit of the Buyer in case the
transaction is totally performed. But if the Buyer unilaterally provokes a breach in the
contract, he looses this money.

E.3.1 …Closing Cost

It is fees inducted by the transaction. These fees are made up among things of: Loan
application, title insurance, Hazard insurance, Lawyer, taxes, recordation, courier etc. In
general these fees are estimated at about 4 to 6% of the price of the house. These fees are
imputed on the buyer, but the Seller can assist the Buyer if he desires in the form of
subsidies, in the payment of this amount. It all depends on the talent of your Realtor® to be a
good negotiator.

F.Closing Remark
If you have questions regarding this Guide or if you want to have a personal consultation as
to what concerns the buying and selling a house, contact the professional Charles Ngansop:
Fairfax Realty Inc.11333Woodglen Dr., Suite 150, Rockville ,MD 20850
Phone: 301-881-9800 Ext 543.Fax: 301-881-2270; Cell 301-437-0163
E-mail:ngansopcharles@yahoo.com.

References:

1/ Thomas A. Morgan: The Loan Officer’s Practical Guide to Residential Finance: 2007,
19th Printing; Quick Star Pub.
2/ The Federal Reserve Board: A Consumer’s Guide to mortgage financing; April 2007
3/ Long and Foster companies: The Buyers Guide: 2005
4/ Universal settlements: The guide to home buying
5/ US Department of housing and Development: Buying your home: Settlement cost and
helpful information, June 1997
6/ Realtor magazine online:www.realtor.org/realtormag.

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A publication of Ngansop, Properties Investment LLC; INEPOS Collection; © 2008