Turn your dream of home ownership or moving up into a reality, but do it right. The real estate market is a difficult one, and should not be entered casually. There are so many legal/real estate terms, contracts, listing agreements, disclosure statements, title documents, etc. Getting as much good home buying advice and becoming an intelligent homebuyer is one of the best things you can do to avoid making costly mistakes. Do your homework, know your real estate terms, get your hands on as much expert information as you can, and hire a good agent. With this in mind, the following items are important elements for a homebuyers core knowledge.

Buyers Agent
Buyer's Agent is the real estate broker or licensed agent with who created a legal contract with a buyer to become the exclusive buyer's representative in searching and negotiating for real property. An exclusive buyer agent has, by code of ethics, your interests in mind with the planning and evaluating property, negotiations, financing, inspections, etc.

Exclusive Agency Listing
This is a common type of real estate listing agreement. A specific broker is given the exclusive right and authorization to market the seller's property. A key to this agreements is that if the property is sold while the listing is in effect, the seller must pay the broker a commission regardless of who sells the property. Therefore, this type of listing agreement offers the best opportunity for brokers to earn a commission. The Exclusive Agency Listing is also known as an exclusive right to sell listing.

Debt-to-Income Ratio
The debt-to-income ratio is a percentage figure used in the lending industry to estimate how much (as a percentage) of your monthly income will be going to pay your monthly debt payments (and how much you can afford). The debt-to-income ratio is easily calculated by dividing your fixed monthly debt expenses by your gross monthly income. It is calculated by taking your prospective monthly debt payments (PITI, auto loans, credit cards, student loans, personal loans, alimony, child support, etc.), divided by your gross monthly income. A percentage of less than 40% is considered to be a good debt service indicator.

Earnest Money
Earnest Money (escrow deposit) is the specific monetary funds provided to bind an real estate sales agreement or some other transaction requiring a deposit. The deposit acts as evidence of good faith in purchasing real estate. The amount of earnest money varies based on the type of property being purchased and local market conditions, but is truly one mort part of the sales contract that must be agreed to by both parties. The seller or broker places the money in an escrow or trust account until closing, when it becomes part of the funds applied to the purchase price. Earnest money is forfeited by the buyer if they fail to carry out the terms of the contract agreement. In the event the property does not close, the sales agreement spells out the conditions under which buyer would forfeit the earnest money.

Grant Deed
The grant deed (or just deed) is the legal document that is used as mechanism to transfer ownership of real estate from one party (grantor) to the new owner (grantee). The grantor will sign the deed as part of the closing and the deed will be notarized by your title agent officer (acting as a qualified notary public). The conveyance through a deed (by gift or sale) is considered a voluntary act of an owner.

Lead Paint Disclosure
In March of 1996, the Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD) published a final rule, Lead; Requirements for Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards in Housing, (61 FR9064-9088). This final rule requires persons selling or leasing most residential housing built before 1978 to provide purchasers and renters with a federally approved lead hazard information pamphlet and to disclose known lead-based paint and/or lead-based paint hazards.

Purchase and Sale Agreement
Ah....you find the house you want to call home and you will make your offer by submitting a contract for purchase and sale agreement. This is your blueprint for the entire transaction. The contract defines both parties legal relationship and spells out their rights and duties.

Sellers Disclosure
In the purchase and sale of an existing home, the sellers must complete a seller's disclosure statement regarding the home. Disclosures cover a variety of topics, including the condition of title, the availability services, flood issues, easements, zoning, and details regarding the history and the condition of the house. Unless the buyer waives review of this statement, the seller must deliver a completed statement to the buyer for review prior to or within a certain time after the purchase and sale agreement has been signed by both parties. The buyer then may elect to terminate the transaction by giving timely and appropriate notice to the seller. If the buyer does not object, then the disclosures are deemed to be acceptable to the buyer.

Most state laws mandate that disclosures be on special forms the seller must sign and date. Also note, that if there is a real estate broker or agent involved in the transaction, and if they have personal knowledge of any latent defects, the agent is legally obligated to disclose those defects to the potential purchaser, regardless of whether the seller discloses or disclaims.

Title Insurance
Title insurance is the insurance which protects both the lender and/or the homeowner against loss resulting from any defects in the chain of title or claims against a property that were not uncovered in the title search, and were not specifically listed as exemptions to the title coverage on the title insurance policy. Potential defects may run to through fee history (chain of title) and to any lien encumbrances.