Buyer Frequently Asked Questions

Buyer Frequently Asked Questions

Buying a home can be a complicated process. The below information was compiled through my years of expertise.  While it is not intended to replace a Real Estate agent, I am providing this content so that you can be better prepared.


Financing/Lending Questions

Q. What does a lender do?

A. The lender will consult with you to:

  • Help you determine if there is anything preventing you from obtaining a mortgage. If there are issues with your credit score or even lack of credit, income, amount of savings, high levels of debt, etc. the lender will let you know about these issues and what you can do to correct them.
  • Help you determine the best loan type and downpayment amount to get you to the monthly payment that works for you. Let’s face it, when buying a home, it is all about the monthly payment. Who wants to be house poor? This information will be used to determine your price range for your home search.
  • Provide you with an estimate of the additional home buying costs. On average these additional costs can be anywhere from 4-5%. This will help you understand how much cash on hand you need to buy a home for not only the down payment, but also these fees.
  • Identify home buying programs that you may qualify for to help you off-set your downpayment and closing costs.  These programs have income limits, and you want to understand if these programs will affect the interest rate. Remember, nothing is for free, including access to “free” money so please work with the lender to understand how these grant programs will affect your cash to close requirements and longer-term costs of owning the home.

Q. How do I know how much home I can afford?

A. The best way to understand how much home you can afford is to speak with a lender that you know, like, and trust.  If you do not have one, your realtor should be able to recommend several for you to speak with.  Now let’s be clear there are two aspects to affordability in my view.

  • Home Price – when you speak with the lender he or she can tell you the maximum purchase price that you can afford.  You may not want to look for homes at the upper end of your price range.  But let the lender tell you anyway. It is good to know that information in case you don’t like the housing inventory in the upper limit of the lower price range you set for your search.  For example, if you are approved for $300,000 but only want to search up to $250,000 you know you can increase the upper limit of your search if you desire.
  • Monthly Payment – I BELIEVE THIS TO BE THE MOST IMPORTANT OF THE TWO… And here is why.  It’s all about your monthly payment.  Who cares if you can afford a $300,000 home if you do not like the monthly payment? Always, ask your lender what the upper end of your price range looks like in a monthly payment so that you can determine whether it is in your comfort zone. No one wants to be house poor. So don’t be.  When qualifying you the bank will not consider expenses such as internet/cable services, food, utilities, etc.  So pay attention to your monthly budget when considering your monthly payment comfort zone.

To help you determine the above the lender will want to know your income, your debts, your credit scores, and cash on hand.  This information will allow the lender to work up your financial profile and thereby determine how much money the bank will be willing to lend you.  Overall, affordability is affected by the interest rate, the amount of your downpayment, and price of home.

Q. How much money will I need to buy a home?

A. The simple answer is – IT DEPENDS.  It depends on a number of factors including:

  • The purchase price of the home
  • The type of loan
  • What monthly payment is in your comfort zone.

When you purchase a home, you need to have enough money for the down payment, closing costs and pre-paid items. Closing costs are the costs of the various service providers in the process, including:

  • Your lender
  • Your realtor
  • Title company
  • Governmental fees
  • Per Diem Interest

Pre-paid items include funds that is placed in an escrow account for the purpose of paying your future property tax and homeowners insurance bill.  Pre-paid items are only collected and placed in an escrow account if you are obtaining a mortgage.  Cash purchases do not have pre-paid items or an escrow account.

The down payment amount will affect your monthly payment. The more you put down the lower your monthly payment will be.  Different loans require you to put down different down payment amounts. Regardless of what the loan-required minimum downpayments, you can choose to put down more money.  Discuss the best and highest use of your money with your financial planner.

Closing costs typically average between 3-5% of the purchase price of the home. Prior to putting an offer on a home, your lender will provide you with a worksheet that estimates what your TOTAL costs to close would be – Down payment plus closing costs.

Q. Can I go look at homes before speaking with a lender?

A. Technically, YES, you can go look at homes before you speak with a lender. However, this is not recommended.  Before going to visit homes, you want to understand first whether you can qualify for a loan, and if you can, how much you qualify for.  Why would you want to spend time looking at homes that are outside of your price range, only to later become disappointed when you want to make an offer and the lender tells you that you do not qualify?

Moreover, you only want to look at homes when you are ready, willing and able to do so. In my opinion you may be willing, but if you are not pre-approved and if you do not understand the financial side of this process, you ARE DEFINITELY NOT ABLE OR READY. This is the biggest purchase of your life. Take the time to remove the unknown!  Understand the numbers. And once you do, the fear and anxiety will be gone, and you can make clear headed decisions.

Q. What types of loans are available?

A. There are various types of loans available.

  • FHA (Federal Housing Authority) – Requires a minimum down payment of 3.5%.  Other costs associated with this loan are the up-front mortgage insurance premium and the monthly mortgage insurance premium that is charged to the buyer for participating in this program.  Seller can contribute up to 6% in closing costs assistance to the buyer.
  • Conventional Loans – Require minimum down payments of 5%, 10%, 15%, 20% or more (varies with each lender).   Monthly mortgage insurance may be required for down payment amounts less than 15%. Seller can contribute up to 6% in closing costs assistance to the buyer when the buyer’s down payment is 10% or greater.  3% closing costs assistance when the buyer’s down payment is 5%.
  • VA (Veteran’s Affairs) – Available to active duty and retired veterans only, this program does not require the buyer to have a down payment. Seller can contribute up to 6% in closing costs assistance to the buyer.
  • Doctor Loans – Currently only offered by a few banks, these loans are available only to MD’s.

In addition to the particular loan you choose, you can also select the duration of the loan – whether it be 30, 20, or 15 years, and whether you want a fixed or adjustable rate mortgage.  Shorter mortgage durations result in higher monthly payments, but save you interest over the total life of the loan. With a fixed rate mortgage, your interest rate remains fixed for the entire term of the loan. With an Adjustable Rate Mortgage (ARM), your interest rate and monthly payments usually start lower than a fixed rate mortgage but can change either up or down according to a pre-determined schedule.  NOTE: Speak with your lender about the specifics of each program and the associated pros and cons to help you select the right one for you.

Q. Do I need to have a down payment to purchase a home?

A. With the exception of the VA loan, all other loan types require that you have a down payment. FHA loan rates change and typically require a minimum down payment. Conventional loans can allow buyers to put down as little as 3% and if you are able to take advantage of the DR. Loan you may be able to put down as little as 0%, but that depends on the lender’s specific DR. Loan program.  It is always best to check with your lender regarding specific requirements and details of each program prior to looking at properties.

Q. What is included in the monthly mortgage payment?

A. Most loans are comprised of the following components that make up your total monthly bill:

  • Principal repayment – the amount you actually borrowed;
  • Interest – payment to the lender for the money you borrowed;
  • Homeowners insurance – 1/12 of your home insurance bill which is used to insure your home against loss from fire, smoke, theft, and other hazards required by most lenders; and
  • Property taxes – 1/12 of the property taxes you are required to pay.

For FHA loans and loans where you do not put down a 20% downpayment, the bank also add a Monthly Mortgage Insurance Premium to your mortgage payment.

NOTE: the banks collect your Homeowners Insurance and your property taxes as a convenience to you and pay them when the bills are due.

Q. Are there any other costs associated with the home purchase, other than the down payment?

A. In addition to the down payment, the other costs include the home inspections, closing costs and pre-paid items.  The costs for home inspections will vary based on the type of inspection you choose to perform and can include:

  • Home inspection
  • Wood destroying insect inspection
  • Mold inspection
  • Radon inspection
  • Chimney Inspection
  • Well inspection
  • Septic inspection
  • Environmental inspection
  • Water quality inspection.

You will pay a la carte for each of these inspections.

Closing costs are the costs of the various service providers in the process, including:

  • Your lender
  • Your realtor
  • Title company
  • Governmental fees
  • Per Diem Interest

Pre-paid items include funds that is placed in an escrow account for the purpose of paying your future property tax and homeowners insurance bill.  Pre-paid items are only collected and placed in an escrow account if you are obtaining a mortgage.  Cash purchases do not have pre-paid items or an escrow account.

Q. What is an escrow account?

A. An escrow account is an amount of money maintained by your bank with whom you have taken out a loan to pay the annual taxes and insurance on a mortgaged property. Approximately 1/12 of the estimated annual cost of taxes and insurance is paid into the account each month from the borrower’s monthly mortgage payment. The bank will then pay the taxes and insurance from this account when they are due. An escrow account is required by many banks to ensure that the taxes and insurance premiums are paid on time. They have to protect their investment and basically don’t trust that you will make these payments as required.

Q. Other than purchase price, are there other financial factors that I need to consider when buying a home?

A. Remember it is all about your monthly payment so make sure you are buying a home that will have a monthly payment in your comfort zone and fits within your budget.  You do not want to be house poor and you still want to go out with friends, buy food, save for your future, go on trips, buy clothes and pay for your utilities.

Other housing costs include condo and HOA fees (these will be considered by the bank when determining what you can afford), utilities, any and costs to maintain the home or home improvements.  Average monthly utility costs can be found by calling your local utility (BGE – 410 685-0123) and the Condo/HOA dues and any Front Foot/Water/Sewer charges will be disclosed by the seller. To help you determine average maintenance costs, your home inspector should be able to provide you with estimates or you can search the web for sites that provide averages.

Q. Are there any incentive programs available for first time home buyers or even home buyers in general?

A. Yes, there are many homebuyer programs and programs for home buyers in general.  Unfortunately, because they can change, I am not going to list them here.  I will, however, provide a categorical description of the types of programs available:

  • Programs to offset your downpayment and closing costs when purchasing a home.
  • Programs that can reduce your property taxes based on your income.
  • Programs that will give you income tax savings for renovating homes in historical neighborhoods.

If you want more information on these programs, feel free to reach out to me at:

c: 443-564-095w

o: 410-823-0033


Realtor Questions

Q. Do I have to use a Realtor to buy or sell a home?

A. While I do not recommend it to the uninitiated, you do not need to work with a Realtor to buy or sell a home.  Please understand that we are professionals that can guide you through the process. But, ff you decide to be unrepresented, just make sure you have the knowledge, capability and time to:

  • Comply with all state and federal laws
  • Understand the current market environment
  • Properly price home or if buyer, make offer in-line with the market
  • Properly prepare home for sale or if buyer, know what issues to look for
  • Understand the Contract forms that you will be using
  • Market your home to the widest audience
  • Make appointments to see homes or make appointments to show your home
  • Sellers – Negotiate so you can maximize your profits
  • Buyers – Negotiate so you can get the home you love at the right price
  • Ensure that the opposing party adheres to contract terms
  • Not engage in activities that will result in legal ramifications.

This is a complicated process that can have real negative implications. Please be careful when working without an agent.  We are here to protect you throughout the process.

Q. How do I know if the realtor I am working with is the right agent for me?

A. Simply put: if it feels right, then it is right.  When determining the realtor that you want to work with, it is best to interview several to help you get a sense of whether they would be the right fit for you.  In addition to experience (years and certification) and their understanding of the local market, you want to make certain that you get a sense that they understand your needs and that they are someone that you can trust.  Because this is going to be one of the most expensive decisions you will ever make, you want to make certain that you are working with someone that has the knowledge and experience to make you feel comfortable throughout the process and be able to provide you with all of the resources that you need.

Home Buying Questions

Q. What should I consider when buying a home?

A. When determining the requirements for your new home, it is best to first start with location.  After you have determined where you want to live, then focus on the home itself.  Be specific in the requirements that you want, realizing that you may never get all of them.  Your home should fit the way you live, with spaces and features that appeal you.  Requirements should, at a minimum, include home style, size, number of bedrooms and bathrooms, room for adequate storage, parking requirements, lot size, and age of home.

When looking at homes, you really need to consider resale value.  Pay attention to the home’s location and characteristics that could be seen as a negative to the future buyer. You want to make sure that your home appeals to the widest audience possible when you are ready to move on to your next adventure,

Q. What should I consider when identifying a community?

A. Select a community that will allow you to best live your daily life. Answer these questions:

  • Are the quality of the schools important to you?
  • Do you want access to shopping and public transportation?
  • Is access to local facilities like libraries and museums important to you?
  • Do you prefer the peace and quiet of a rural community?

When you find places that you like, talk to people who live there. They know the most about the area and will be your future neighbors. Another great way to check out an area is to speak with the mail carrier.  They know everything about the neighborhood and are a great resource.   More than anything, you want a neighborhood where you feel comfortable.  I always recommend driving or bicycling around neighborhoods at different times of day.  Pay attention to how people maintain their yards, what cars they drive, and who you see outside. If you are comfortable, then consider the neighborhood. It’s a personal choice.

Q. Should I really care about living in communities governed by a Homeowner’s or Condominium Association?

A. It depends if these type of community fits your lifestyle.  Communities governed by Homeowner (HOA) and Condominium Associations have rules and regulations governing the exterior of your home, including colors, landscaping, renovations, renters, etc.  People who choose to live in one of these types of communities must ask themselves whether they would like living within the rules that provide for the uniformity of structures that these communities can afford their residents.  You do get an opportunity to review the HOA or Condominium Association rules and regulations as part of the buying process.  If you do not like any aspect of the rules and regulations, you may cancel the contract, without having to provide any reason to the seller.

Q. How can I find out about local schools?

A. There are several great websites that will allow you to evaluate the schools for your particular community.  If you Google the county, that will take you to the specific website where you can enter the address of each home that you may be interested in to see what school it is zoned for.

Q. How can I find out about crime in the area?

A. There are several websites that maintain crime and sexual predator statistics.  Because crime and living next to a sexual predator are NOT reasons for you to break a contract, it is important for you to research this information before submitting an offer on any home.  Each local police department maintains crime statistics.

Q. Once I am in contract on a home, can I back out of the contract for any reason?

A. No.  The Maryland Realtor (MR) Contract is very clear regarding how you may terminate the contract.  Specifically, you are allowed to terminate the contract for the following contingencies:

  • Financing – If you lose your job or some other aspect of your financial situation changes and you are no longer able to obtain a loan, you may cancel the contract.
  • Inspections – You may cancel the contract any time during the inspection contingency timeframe once you have conducted an inspection. You do not have to ask for repairs.  If you do choose to negotiate for repairs and the seller does not agree to address your repair requests you can cancel the contract
  • Homeowner and condominium document review – You will have time to review the homeowner documents (5 days) and the condominium documents (7 days) as part of the contract of sale.  You may cancel the contract any time during these contingency timeframes.
  • You are NOT allowed to terminate the contract based on crime statistics or the presence of sexual predators in your neighborhood.  Always verify that information prior to making an offer on any home.

Q. How many homes should I see before making an offer?

A. The number of homes you see before making an offer is a personal decision.  You have to remember that before you go to visit a home in person you will most likely view homes online.  Through this on-line visitation process, you will narrow down the “favorite” homes that you want to see.  If a home that you go to visit “feels” like it is your home, then make an offer on it.  If you want to visit additional homes before making your decision you have that right as well.  But remember, the home that you love will continue to be visited by other buyers and could be bought by someone else while you are reviewing all of your other options.

Q. How long does it take to buy a home?

A. The typical time frame to purchase a home from the date of contract acceptance can take between 30-60 days.  Sometimes longer.  Sometimes shorter when it’s a cash deal.  This timeframe will be mutually agreed to during the contract negotiation process. The timeframe it takes you to find the home on which you want to make an offer cannot be determined.  It will all be based on how you make your decisions and how many homes you want to see.  You will know it when you see the right home.  Don’t talk yourself into it.

Q. Do I need to have homeowner’s insurance?

A. If you are purchasing a home with a mortgage, the lender will require that you maintain homeowner’s insurance on the property.  A paid homeowner’s insurance policy (or a paid receipt for one) is required at closing, so arrangements will have to be made prior to that day.  If you pay cash or have paid off the home, your decision to obtain or maintain a current home insurance policy is up to you.  If you choose to let your policy lapse, you will have no coverage pertaining to any loss that may occur on your home.

Q. Are home warranties the same thing as home insurance?

A. Home warranties offer you protection for a specific period of time (e.g. one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner’s insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash strapped.  Please make sure you read the home warranty coverage before selecting a specific policy so that you can make sure you understand the coverage you are getting.

Q. Do I really need to do a home inspection?

A. It is a good idea to have a home inspection so that you can have a better understanding of the condition of the home.  However, it is important to note that the home inspection provides you with information about the condition of house on that specific day. It does not guarantee the future condition of the home.

An inspector will look at your home from top to bottom. The home inspector or other qualified professional will examine aspects of your home that include:

  • Roof
  • Windows and doors
  • Outlets
  • Appliances
  • HVAC
  • Electrical
  • Plumbing
  • Well and septic
  • Water quality.

The inspection is not a cosmetic inspection nor is it a code inspection, meaning that homes are not penalized or required to be brought up to current code if they were built, let’s say in 1942.  Now, if the home was renovated, those renovations have to be done according to the code at the time of the renovation.

Be sure to hire a licensed home inspector who is qualified and experienced or other licensed professional if you are having an additional inspection pertaining to a specific aspect of the home.

A home inspection is an important contingency that will provide you some insights into the home that you are purchasing.

Q. What else should I consider when buying a home?

A. Aside from liking the location and layout of a home, you want to be aware of issues that could affect your overall quality of life in the home.  Issues to consider pertain to:

  • Insurability – check with your insurance agent to pull up an insurance claims history on the home because homes where high amounts of claims have been made could affect your ability to either get insurance on the home or the insurance rate that you pay.
  • Average monthly utility rates – contact your local utility to see what average monthly utilities are.  Be cognizant of the fact that if the home is vacant that it could have lower than average utility bills.  Also, understand that the previous owner’s personal preference and comfort have a bearing on the bills as well.
  • Location – Location of the home in an area that has a propensity to flood or located near a hazardous materials site.
  • Master development plan – you want to contact your local government to see if any master development planning has occurred that could affect your area – new homes, new roads, etc.
  • Permits – If the home is listed as remodeled/renovated by the listing agent, search the permits that have been registered with the local jurisdiction to make certain that the owner adhered to all regulations and building codes.
  • Local zoning laws – you want to identify current or potential future local zoning laws which could affect remodeling or making an addition in the future.
  • Home Owner/Condominium Association rules – is the home governed by rules and regulations that you feel that you can live with?

Q. Does the age of a home matter?

A. The simple answer is: It depends. You should look at each home for its individual characteristics. While a home’s structure may be older, the home may have been remodeled and therefore has all of the modern amenities of a newer home.   A home inspection will inform you about the condition of the home.
Q. When walking through a home what should I consider/pay attention to?

A. When visiting homes that have made your short list of contenders, pay attention to whether the home will accommodate your lifestyle. Other things to pay attention to include whether:

  • There is enough room for both the present and the future, including storage
  • There are enough bedrooms and bathrooms, and you are happy with their locations
  • The home is structurally sound
  • The mechanical systems and appliances work
  • They yard is big enough or have enough useable space
  • The floor plan works for you
  • Anything needs to be repaired or replaced

Q. What questions should I ask when looking at homes?

A. When looking at homes, one might think that just because a home looks nice it has been well maintained.  For many homes this can be true.  And while you will most likely perform a home inspection on any property you are intending to purchase, it is still important to dig a bit deeper and obtain information from the seller regarding:
The age of the roof and mechanical systems in the home – Heating, AC, Appliances, Plumbing, Electrical.  Whether the mechanical systems have been maintained on a regular schedule.  Whether the home has sufficient insulation in the walls and attic.  If the home is new construction or has gone through significant renovation, were the proper permits obtained?  Whether there are issues with moisture or water getting into the home?  Whether the seller has all necessary warranties, and if so, do they transfer to the new owner?

Maryland law requires that the seller disclose any issues that they are aware of.  To prevent surprises, it is always a good idea to review this statement before making an offer to purchase.

Making an Offer

Q. How do I know what price to offer for a home?

A. When you find a home that you would like to make an offer on, your realtor will provide a market analysis showing for the selling prices for homes in the neighborhood within the last 90-120 days.  The information provided in this analysis will show:

  • List price
  • Sold price
  • If any seller subsidy or closing cost assistance was provided to the buyer
  • Days on market.

This information will provide you with information regarding an acceptable range for your offer.  You will compare your home of choice against the homes listed in this analysis to come up with an offer that makes the most sense.

Q. When making an offer what items should I consider, other than purchase price?

A. In addition to purchase price, other typical items contained in your offer include:

  • Closing cost assistance,
  • Settlement date,
  • Inspections or contingencies you would like to have
  • Whether you would like the seller to provide you with a home warranty.

Q. How do I make an offer on a home?

A. Your Realtor will work closely with you and your lender to provide you advice and guidance on preparing your offer.  While your Realtor is relying on their professional expertise, the content of your offer is solely up to you, and you do not have to take any recommendations from your Realtor.  They are just that, recommendations.  Using Maryland Realtor Contract forms, you and your Realtor will complete these documents communicating the terms of your offer:

  • Price
  • Settlement Date
  • Closing Costs
  • Inspections
  • Other contingencies you would like added.

Your Realtor will then have you sign these documents and will then submit them to the Listing Brokerage’s Agent representing the seller.

Q. What is a competitive Bid?

A. One of the most important pieces of information you will need to know when making an offer is whether there are competing bids from other interested buyers.  Your Realtor will reach out to the Listing Broker’s Agent to ask if there are other offers expected to be received or if there is an offer deadline.  The best-case scenario, for you as a buyer, is that you are the only interested party in that home. That way, you may have a more likely chance of getting offer terms favorable to you accepted.  Such terms could include a reduced purchase price or seller provide closing cost assistance.

In situations where there is more than one interested party, also known as competitive bids, the seller has the upper ground! Your Realtor will not know the terms of the other offer and you will not only be competing against those other interested buyers, but also against yourself.  My advice in these situations is to make the best offer you can make knowing that if you are not selected then you know you did the best you can.

NOTE: I would not recommend making offers in competitive bids if the home you are interested in is at the top of your price range.  In these situations, the purchase price will go higher than the listed sales price.

In competitive bid situations the winning buyers often:

  • Offer above the seller’s asking price
  • Offer a quicker or longer settlement timeframe based on seller needs
  • Offer a rent back if the seller needs to settle quickly but needs or wants to stay in the home after settlement
  • Waive inspections (be careful with this one)
  • Offer appraisal gap waivers if the price of the home goes significantly above what both Realtors believe the home would appraise for.

When deciding how favorable to make your offer to the seller you need to be aware of your risk tolerances. This is a big decision and you do not want to have buyer’s remorse.  Don’t let the emotion of wanting the home take over the logical part of the process.

Q. Once I make an offer, what can I expect?

A. Once the offer has been submitted to the Listing Broker’s agent, the seller and their agent will meet to evaluate the offer.  The agent will call your lender to evaluate whether your financial situation is strong and whether your loan has a high probability of being approved.   Don’t worry, your lender will not divulge any personal information about you.  After reviewing your offer, the seller will either accept your offer as is, counter the offer with different terms, or reject the offer.  If the seller counters your offer, you can either accept their terms or counter their counter offer. Again, the seller could choose to accept the new offer or counter again.  The process will continue until either party accepts the terms or decides to not continue negotiations. If the seller rejects your offer, they feel that your offer was too low to even consider. At this point you either choose to make a more reasonable offer or suspend negotiations because you never really wanted the home to begin with.

Q. Is there a typical response time to hear back from the seller once I make the offer?

A. There is no typical response time and you cannot dictate that the seller respond to your offer according to your schedule. You can try, but they are not bound to your requests for a response deadline.

Q. When does an offer become a contract?

A. An offer becomes a contract when both buyer and seller have signed, initialed, and dated in all of the appropriate places and the document has been returned to the buyer’s agent.

Q. Can I rescind my offer before accepted by the seller?

A. Yes, an offer is just that, an offer. So, anytime before it becomes a contract it can be rescinded.  You want to rescind offers in writing.

Q. What types of contingencies are available in a contract?

A.  The Maryland Realtor (MR) Contract allows for the following contract contingencies:

  • Financing.
  • Inspections
  • Homeowner and condominium document review.

Q. What types of inspections are typically available?

A. Inspections may include:

  • Structural/Mechanical
  • Wood destoying inspect
  • Mold
  • Lead
  • Radon
  • Environmental
  • Well and septic
  • Water quality

Based on the results of these inspections you may decide to terminate the contract or negotiate for repairs. Your decision is your decision alone.

Closing/Settlement Questions

Q. What happens at settlement?

A. Sometimes referred to as a settlement, your closing is the final step of your real estate transaction. In Maryland, this is the day that you will receive the keys to your new home, and you will officially become its new steward until you sell it!

The closing is handled by a third party, either a title company or an attorney (if you go the attorney route, you want to make sure that they are experienced in real estate transactions). At a closing, major events include:

  • Buyer’s and lender will wire their money to the title company
  • A home’s title (and the keys) are transferred from seller to buyer.
  • The proceeds of the sale are distributed to the seller.

Closings involve signing a lot of paperwork, including the deed, which grants legal rights and is signed by the seller and given to the buyer. The deed will then be registered with the city or county to protect the ownership rights of the new owner. Keys are also given from the seller to the buyer. If a loan was taken, buyer’s will also sign a promissory note agreeing to pay the bank back for the loan.

As a buyer or seller, it’s important to review the settlement statement before closing. The HUD-1 shows line-by-line each and every expense, as well as who is responsible for paying each amount. You should get this document a minimum of one day prior to closing, but hopefully several days before.  As a buyer, you will typically have to pay your share of closing costs and escrow fees at closing, so you will need to bring a cashier’s check with you for the balance of what you owe for closing costs, as stated in the HUD-1. Of course, if closing cost assistance has been negotiated, this assistance will reduce the amount of funds that you need to bring with you.

Q When do I receive the keys?

A. You receive the keys to your new home on the day of settlement once all parties have signed all appropriate paperwork and money has changed hands.

Q. Do I need a lawyer to purchase a home?

A. Laws vary by state. Some states require a lawyer to assist in several aspects of the home buying process while other states do not, as long as a qualified real estate professional is involved. Even if your state doesn’t require one, you may want to hire a lawyer to help with the complex paperwork and legal contracts. A lawyer can review contracts, make you aware of special considerations, and assist you with the closing process. Your real estate agent may be able to recommend a lawyer. If not, shop around. Find out what services are provided for what fee, and whether the attorney is experienced at representing homebuyers.

Q. What is a Title or Settlement Company?

A. Maryland allows you to select either an attorney or Title/Settlement company to ensure that the home you are purchasing properly transfers from the current owner to you.  Real estate title companies work with the lenders and real estate agents of both the buyer and seller to facilitate the terms of a real estate contract.  And while buyers typically have very little interaction with these companies until the day of settlement, they perform an important role throughout the real estate transaction.

Once a contract has been received, the title company examines the public land records to investigate the title to the property to establish that that the contract seller is the legal owner; if there are open mortgages, judgments, or any liens which must be satisfied before “clear” title can be conveyed; if there are existing restrictions, easements, public utilities, etc., which may limit rights to the use of the property, or grant rights to others who are not property owners; and determine the status of property taxes and other public or private assessments.

Throughout the process, the title company maintains close contact with the lender and buyer and seller agents to obtain the documentation necessary for closing the transaction. Working closely with the bank, the title company compiles all the lender’s charges, miscellaneous fees, title company fees, and other closing costs into a final Settlement Statement. When all of the parties have been assembled at a time they have prearranged, the papers and fees will be explained by the title company and the papers will be reviewed and executed. The title company assumes the responsibility of collecting all funds necessary for the transfer and the prompt and accurate disbursement of such monies. After the closing has taken place, the title company will make sure that the legal documents have been filed for record, the mortgage lender’s requirements have been fulfilled and all of the necessary paperwork returned to them, all outstanding liens have been fully paid, and the title policies prepared and sent out.

Property Tax Questions

Q. Where can I find the latest information regarding property taxes?

A. The Maryland State Department of Assessment and Taxation website will allow you to look up the property taxes for any home Simply click on the link “Real Property Data Search” and enter the County and property address and the property tax information will be available.
Q. Can I appeal the property taxes?

A. If you feel that your property is assessed at a value that is not in-line with the current values of the local market, you do have the right to appeal those taxes.  Simply click the link “Assessment Petition for Review”  on the home page of the Maryland State Department of Assessment and Taxation website at

Q. Are there any incentives that reduce property taxes for home owners?

A. Yes, the State of Maryland does have several programs that will help reduce a home owner’s property taxes.  For more information on these programs click the link “Tax Credit Programs and Exemption Information” on the home page of the Maryland State Department of Assessment and Taxation website at