Homebuyer s Guide.

Transcription

1 Homebuyer s Guide Includes HUD-1 Form The Washington, D.C. Metropolitan area s most trusted name in residential real estate settlements for over 20 years.

2 W hen making a decision as important as purchasing a home, why not choose a settlement company that is the established leader in the industry? RGS TITLE has received more awards for providing outstanding customer service than any Washington, D.C. Metropolitan area title company. RGS TITLE has settled over 300,000 residential resale transactions. RGS TITLE will match any of our competitors settlement fees.* RGS TITLE has convenient locations throughout Virginia, Maryland, and the District of Columbia you choose where you want your settlement conducted. RGS TITLE operates the RGS Title Real Estate Academy offering your Realtor continuing education to help ensure their knowledge is always cutting edge. RGS TITLE was the first settlement company to offer area Realtors a 24-hour hotline, (877) offering them professional support around the clock. RGS TITLE was the first settlement company to produce a free, comprehensive Homebuyer s Guide to assist purchasers through the unique real estate settlement process. RGS TITLE was one of the first settlement companies to offer our services in Spanish. Please ask your local branch for more details. RGS TITLE was the first local settlement company to offer Realtors and clients on-line fee quotes 24 hours a day, seven days a week. Visit our unique Web site at for comprehensive explanations of settlement procedures and the company, educational updates and much more! RGS TITLE has set the standard in our industry for over 20 years. Our award-winning customer service, multiple locations and genuine dedication to our clients is unequaled. Contact the nearest branch office to experience the proven professionalism of RGS TITLE LLC. This booklet was designed to provide a no-nonsense approach to understanding the complications of the home-buying process. We hope it is helpful and urge you to call us with any questions. *Subject to certain conditions.

3 A Home Buyer s Guide Purchasing a Home Summary for the Buyer 2 The Home Buying Process (chart) 4 Resale Contract for Single Family Homes 5 Sample Contract 9 MAR Sample Contract 33 The Mortgage Loan Process 44 Items Needed for Loan Application 44 Estimate Your Mortgage Payment 45 Typical Mortgage Loan Process Flow Chart 46 What Can You Afford? 47 Finding the Cash 48 Settlement 49 Truth in Lending 51 Buyer s Estimate of Settlement Charges 55 Maryland Transfer and Recordation Taxes 56 Visit us on the web at for office directions, explanations of procedures, our exclusive on-line Realtor hotline and draft settlement statements! Buyer s Settlement Costs Worksheet 57 Seller s Settlement Costs Worksheet 58 Owner s Title Insurance 59 In Closing 60 Important Telephone Numbers 61 Glossary 64 MARYLAND & WASHINGTON, D.C. OFFICES BETHESDA 7101 Wisconsin Ave., Suite 112 Bethesda, MD FAX BOWIE 4201 Northview Drive Suite 407 Bowie, MD FAX ROCKVILLE Woodglen Drive Suite 202 Rockville, MD FAX SILVER SPRING* Prosperity Drive Suite 100 Silver Spring, MD FAX WASHINGTON, D.C Wisconsin Ave., NW Suite 440 Washington, DC FAX VIRGINIA OFFICES ALEXANDRIA 515 King Street Suite 502 Alexandria, VA (703) (703) FAX ANNANDALE* 7619 Little River Turnpike Suite 410 Annandale VA (703) (703) FAX ARLINGTON* 3319 Lee Highway Arlington, VA (703) (703) FAX ASHBURN (703) (703) FAX BURKE 6045-D Burke Centre Parkway Burke, VA (703) (703) FAX CENTREVILLE* 6101 Redwood Sq. Circle Suite 117 Centreville, VA (703) (703) FAX FAIR OAKS (703) (703) FAX FREDERICKSBURG 2015 Plank Road Fredericksburg, VA (540) (540) FAX GAINESVILLE 7512 Iron Bar Lane Gainesville, VA (571) (571) FAX LAKE RIDGE 2220 Tacketts Mill Drive Lake Ridge, VA (703) (703) FAX LEESBURG 109 N. King Street Leesburg, VA (703) (703) FAX (703) DATA (703) DATA LORTON 8971 Ox Road, Suite 190 Lorton, VA (703) (703) FAX MANASSAS 7702 Donegan Drive Manassas, VA (703) (703) FAX MCLEAN 1355 Beverly Road Suite 100 McLean, VA (703) (703) FAX OAKTON 2911 Hunter Mill Road Suite 202 Oakton, VA (703) (703) FAX STERLING Westlake Drive Suite 250 Sterling, VA (703) (703) FAX RESTON* 1801 Old Reston Avenue Suite 100 Reston, VA (703) (703) FAX SPRINGFIELD* 7202-B Old Keene Mill Rd. Springfield, VA (703) (703) FAX STAFFORD 45 Doc Stone Road Suite 103 Stafford VA (540) (540) FAX WARRENTON (540) (540) FAX WINCHESTER 500 West Jubal Early Dr. Suite 100 Winchester, VA (540) (540) FAX REALTOR HOTLINE (877) *English & Spanish

4 Page 2 A Homebuyer s Guide from RGS TITLE PURCHASING A HOME SUMMARY FOR THE BUYER GETTING STARTED The initial step in your purchase of a home is your selection of a real estate agent. The real estate professional that you select will help you to focus your search for the home that fits your needs and desires as well as the realities of your budget. Your Realtor will introduce you to the entire home buying process from identifying areas, features and types of homes in which you are interested, to assisting you in determining your qualifications for the financing of your purchase. Typically the Buyer will be working with a Realtor who is referred to as the Selling Agent. The legal and ethical responsibilities of your agent are established by Virginia statute and by Virginia Real Estate Board regulations. Disclosure of the brokerage relationship will be provided to you by your agent. The Realtor you work with may discuss the possibility of representing you as a Buyer Broker. If you and your Realtor agree to establish such a relationship, the real estate agent s obligation and fiduciary duty will be to you rather than to the Seller. Regardless of which type of relationship you establish, the real estate professional will perform countless services for you, all with the goal of making the home buying and settlement process as simple and enjoyable as possible. Your Realtor has available the tools and professionalism needed to help you achieve this goal. FINDING YOUR HOME In order to determine the attributes of the home you desire, it will be necessary for your real estate agent to ask many questions regarding your needs, your desires, and your finances. These questions are designed to focus your search for the perfect home to help you determine exactly what you want and what you can afford. Prior to meeting with your Realtor, you may wish to develop a wants and needs list of your own. The more details and characteristics you are able to identify, the more focused your search will be. Once you and your Realtor have identified the general characteristics, types and styles of homes you are interested in as well as the areas or neighborhoods in which you wish to purchase, and the price range which you can afford, your Realtor will formulate a list of homes that meet your guidelines. It is also customary at this point to select a lender and obtain a pre-approval letter. This letter enables a Purchaser to negotiate from a stronger position and can also expedite the loan application process. Selecting your lender and the loan officer who will oversee the approval of your application for financing is crucial to the smooth completion of the purchase. Your Realtor has ready access to the Metropolitan Regional Information System which lists all homes currently for sale and registered with the local Board of Realtors. Your Realtor will be able to show you these homes. SELLER PROPERTY DISCLOSURE STATEMENT When you have selected the house of your choice, the Selling Agent will help you write a purchase contract. The process for getting a signed contract is discussed in the next section. Before you have a ratified contract (i.e., one that is fully signed by all parties), Virginia law requires that the Seller furnish to you as the Buyer a Residential Property Disclosure Statement (the Disclosure ). If the required Disclosure is not provided to the Buyer by the Seller prior to ratification, then the Buyer has a qualified right to cancel the contract. The Disclosure includes several representations or statements made by the Seller regarding the parcel of real estate being sold. The form (provided by the Virginia Real Estate Board) and the representations are specific and mandated by Virginia law. While it is referred to as a disclosure statement, to a great extent the Disclosure is intended to put you, the Buyer, on notice that you should exercise whatever due diligence is necessary to determine if there are any issues or concerns with respect to the property. It does not provide any specific information about the condition of the property and will not inform you of any defects that

5 A Homebuyer s Guide from RGS TITLE Page 3 may exist. A prudent Buyer will have the property and structures inspected by a professional to determine its condition. CONTRACTING FOR YOUR PURCHASE Once you have identified the home that you wish to purchase, you will need to prepare a contract specifying the details of your purchase of the property. Your Realtor will help you to prepare the purchase contract utilizing your local Board of Realtors recommended forms. These standardized forms are used in order to address all important issues and to assure that both you and the Seller comply with the various laws and regulations that govern the home sale and purchase transaction. If there are specific issues you wish identified in the contract that are not provided for in the standardized forms, your Realtor or an attorney with Shreves Schudel Saunders Jackson Clarke & Parello, PLLC, (General Counsel to RGS TITLE) can recommend lan - guage tailored to meet those concerns. Once your contract has been completed and signed by you, your Realtor will present it to the Seller s agent (often referred to as the Listing Agent ) for presentation to the Seller. At this time your contract is an OFFER TO PURCHASE, and the Seller may proceed in one of three ways. First the Seller may ACCEPT your offer in the form presented. If the Seller accepts your offer and signs the contract you now have a RATIFIED contract. Often, however, the Seller, although interested in your offer, may make a COUNTER OFFER, by modifying one or more of the terms of your offer to purchase. At this point you have the option of a) accepting the Seller s counter offer and thus ratifying the contract; b) countering the Seller s counter offer; or c) rejecting the Seller s counter offer thereby nullifying the contract. The Seller s third option when presented with your initial purchase offer is to reject that offer. When your contract has been signed by all parties and ratified it is important that you contact RGS TITLE. In order to assure a smooth and timely settlement it is imperative that the contract be forwarded to the RGS TITLE office most convenient to you so that we may begin the process of gathering all of the information necessary to conduct the settlement. It is not necessary to await approval of your loan before forwarding the contract to our office; in fact, to do so may delay the date of settlement. OBTAINING YOUR LOAN Shortly after ratification of your Purchase Contract it will be necessary to make application for the financing of your purchase. Your loan officer will be responsible for taking your loan application and for overseeing the processing of that application as you move toward loan approval. Working with the loan officer is the loan processor. The loan processor is responsible for gathering the information and documentation necessary to document your application. The loan processor will be responsible for ordering your credit report, appraisal, employment verification and several other documents. Once this information has been received it must be organized by the processor for submission for loan approval. It is imperative that your lender, loan officer and loan processor be capable and qualified. Your Realtor will be able to provide you with the names of loan officers with whom they have worked in the past and had successful transactions. A more detailed analysis of the loan process begins on page 44 of this booklet. SETTLEMENT Settlement is the culmination of your hard work and time when the purchase of your home is completed. RGS TITLE s role is to coordinate all of the parties involved in this transaction, to conduct the settlement and to complete the vast post-settlement work. The legal aspects of your transaction will be overseen by the attorneys of Shreves Schudel Saunders Jackson Clarke & Parello, PLLC, General Counsel to RGS TITLE. On page 49, you will find a more detailed discussion of the settlement process and the services performed by RGS TITLE. PURCHASING A HOME SUMMARY FOR THE BUYER

6 Page 4 A Homebuyer s Guide from RGS TITLE PURCHASING A HOME SUMMARY FOR THE BUYER

7 A Homebuyer s Guide from RGS TITLE Page 5 The standard contract used in this area is the Regional Sales Contract (the Contract ) (re- printed following this explanation). The Con tract, a document outlining the specifics of financing and price as well as the parties rights and responsibilities, is used in Northern Virginia, the District of Columbia, and parts of Maryland, Delaware, West Virginia and Pennsylvania. In Maryland there is an alternative contract form created by the Maryland Association of Realtors (MAR). Some points not directly addressed in the Contract are addressed in attachments to the Contract known as addenda. We have filled in the blanks of the sample Contract and will refer to it throughout our discussion. Please note that we have addressed most but not all of the terms of the Contract in this explanation. We strongly recommend that you read the Contract in full prior to ratification and discuss it with your Realtor. Of course, you may also wish to have it reviewed by an attorney. Our discussion begins with the preamble to the Contract. This first section contains blank spaces for the date that the Contract offer is written by the Purchaser, and a space for the Purchaser s name, Seller s name, and the names of the listing and selling real estate companies. You will notice that this section also provides for the parties to specify whom the real estate companies represent. The real estate companies (agents ) duties to the Purchaser and Seller are now established by Virginia Statute, Maryland Statute, or Washington, DC law. Previously, both the listing and selling companies were agents of the Seller. Many Purchasers hire Realtors who represent just the Purchaser s interest. Such a Realtor is known as a buyer agent. If you are interested in a buyer agent arrangement you should contact your Realtor for more details. In the sample contract, our Purchaser has chosen a buyer agent relationship. 1. REAL PROPERTY. The property to be conveyed is described in this paragraph. This is done by way of the tax map #, lot, block, and section number and the subdivision or condominium name. There are also spaces for the condominium unit and parking space numbers, street address, Deed Book/Liber, Page/Folio and county or municipality. 2. PRICE AND FINANCING. The financial terms of the transaction are itemized in this paragraph. Subparagraph A is where the Purchaser specifies the amount of the down payment. In our example, we have chosen a down payment of $40, The down payment is to be paid by the Purchaser at settlement by a certified or cashier s check, or by bank wired funds. The earnest money deposit specified in Paragraph 4 is part of the down payment. Please note that the down payment is in addition to any closing costs that the Purchaser might pay at settlement. The financing which the Purchaser will need in order to purchase the property is set forth in Subparagraph B. The term Trust used in this paragraph refers to the deed of trust (or mortgage) that the lender will require the Purchaser to sign at settlement. The deed of trust is the document whereby the Purchaser pledges the property as collateral for the loan. The down payment plus the total of the financing sought equals the total sales price of the property. 3. DEED(S) OF TRUST. The specifics of the first deed of trust loan and, if applicable, the second deed of trust are entered here. The Purchasers state whether they are obtaining a new loan or assuming the Seller s existing loan. The type of loan is also specified. If the Purchaser is assuming the existing loan, the parties will use the check boxes to specify whether there will be a release of liability (FHA) or a substitution of the Seller s eligibility under a VA loan. In our case the Purchaser has chosen to obtain a conventional thirty year fixed rate loan. Our Purchaser has a loan with an interest rate of 7% per year. Given the loan amount of $160,000, this equates to a monthly payment of principal and interest of approximately $1, DEPOSIT. The amount of the deposit or earnest money paid by the Purchaser is entered here along with the form of payment, such as a check or money order, etc. This deposit is to be held in an escrow account by the named Escrow Agent and applied to the purchase price of the property at settlement. Except for matters constituting gross negligence or willful misconduct, the Escrow Agent is released from any and all liability. 5. DOWN PAYMENT. This is a reminder that the balance of the down payment (the total down payment minus the earnest money deposit) is to be paid on or before settlement by certified or cashier s check or by bank-wired funds. It also prohibits the use of an assignment of funds unless prior written consent of the Seller has been obtained. 6. SETTLEMENT. The date chosen for settlement is inserted here. The Purchaser has the right to choose the Settlement Agent. In Virginia however, this is achieved by designating the entity in Paragraph 10 of the Virginia Jurisdictional Addendum. We recommend that you select our firm by writing RGS Title in paragraph 10 of the addendum as well as in the blank for Settlement Agent in this Paragraph EQUIPMENT, MAINTENANCE AND CON- DITION. Here the Purchaser and Seller agree that the Purchaser will accept the property in its condition, as of the contract date, except as otherwise agreed by the parties. Nonetheless, unless provided otherwise, THE SELLER DOES WAR- RANT THAT ITEMS SUCH AS THE EXISTING APPLIANCES, HEATING AND COOLING SYS- TEMS, PLUMBING, AND ELEC TRICAL SYS- TEMS AND OTHER SPE CI FICALLY ENUMER- ATED ITEMS SHALL BE IN NORMAL WORK- ING ORDER AS OF THE DATE POSSESSION IS GIVEN TO THE PURCHASER. The property shall be delivered to the Purchaser in broom clean condition and in substantially the same condition as it was at the date of Contract acceptance. Seller is required to have all utilities in service until settlement. 8. UTILITIES WATER, SEWAGE, HEATING AND CENTRAL AIR CONDTIONING. Here is a checklist to identify the type of water supply, sewage disposal system and the type of hot water, heating and air conditioning system for the property. 9. PERSONAL PROPERTY AND FIXTURES. The contract here specifies certain items that are included and others that are not included in the conveyance to the Purchaser. It also provides a RESALE CONTRACT FOR SINGLE FAMILY HOMES

8 Page 6 A Homebuyer s Guide from RGS TITLE RESALE CONTRACT FOR SINGLE FAMILY HOMES checklist itemizing specific personal property and fixtures to identify whether the items convey to the Purchaser, and space to list others. In addition to identifying the items, the Seller can specify which convey without warranty as to their condition or working order. Leased items, which do not convey, are listed in this paragraph as well. 10. CONVENTIONAL FINANCING TERMS. Subparagraph A SELLER SUBSIDY begins with a blank space for providing any possible Seller contributions toward the Purchaser s settlement charges. In our example, the Seller has agreed to pay $2,000 of these charges. It is the Purchaser s responsibility to confirm that the entire credit may be utilized. Subparagraph B APPRAISAL provides boxes, one of which must be checked, to select the OPTION to choose whether the contract is contingent or not contingent on an appraisal. The appraisal contingency provisions appear in Paragraph 4 of the Virginia Jurisdictional Addendum. Subparagraph C FINANCING also provides boxes, one of which must be checked, to select the OPTION to choose whether the contract is contingent or not contingent on financing. If OPTION (1) is chosen the Contract will be contingent upon the Purchaser securing approval for the new financing or lender s approval of assumption. The Purchaser and the Seller need to agree upon the length of time for the contingency and insert the agreed number of days in the blank space provided ( Financing Deadline ) and then choose whether a Lender s Letter as defined here shall be required with the notice removing the contingency. Regional Form #100 is the form of notice required to remove the contingency. PUR - CHASERS SHOULD BE AWARE that upon delivery to the Seller of the required notice, the contract is no longer contingent on financing. If the Purchaser is unable to secure approval for the specified financing during the contingency period and deliver the required Regional Form #100 to the Seller, then the Seller may give notice that the Contract will be void, unless Form #100 with required attachment is provided within 3 days. The financing contingency will continue, however, until the required Regional Form #100, with the lender s letter, if required, is delivered to the Seller, or the Seller delivers notice to the Purchaser that the Contract will be void. If the loan is rejected during the contingency period, then upon delivery of a copy of the written rejection to the Seller the Contract will become void. 11. VA or FHA FINANCING AND APPRAISAL. VA or FHA FINANCING AND APPRAISAL. This paragraph contains boxes for the Purchaser to select if VA or FHA financing applies and select the corresponding addendum. IT IS WORTH NOTING that the contract provides that even if there is no such agreement, the Seller will pay any lender charges that by law or regulation cannot be charged to a Purchaser. Under both VA and FHA loans, the Purchaser shall not be obligated to complete the purchase of the property or be made to forfeit their earnest money deposit if the lender s appraisal is lower than the sales price. 12. FINANCING APPLICATION. The Purchaser agrees to make application for specified financing and for any lender required property insurance no later than seven days after the date of ratification of the contract, if contingent on financing. The Purchaser also gives permission for the selling company and lender to disclose information to the listing company regarding the status of the Purchaser s loan. 13. ALTERNATE FINANCING. The Purchaser may choose a different loan and/or lender for what is identified in Paragraphs 2 and 3 and the Lender s Letter under 10(C), provided the conditions in this paragraph are met, including no delay in settlement. 14. PURCHASER S REPRESENTATIONS. Here the Purchaser represents whether or not the property will be occupied as principal residence. The Purchaser also represents that the ability to obtain the specified financing is not contingent upon the sale or lease of other real property. In addition, there are boxes to check indicating whether or not the Selling Company may disclose the Purchaser s financial information to the Listing Company and Seller. 15. ACCESS TO PROPERTY. The Purchaser, inspectors, appraisers, and Realtor are allowed reasonable access to the property, including the right to make a final inspection within 5 days prior to settlement. 16. TERMITE INSPECTION. Check boxes are provided to indicate who will procure and pay for a report from a licensed pest control firm establishing that the dwellings or structures are free from termites and other wood destroying insects. Any required extermination and/or structural repairs shall be made at Seller s expense. 17. REPAIRS. Here the parties agree that if the Purchaser s lender requires repairs to the property as a condition of the loan, then the Seller shall make the repairs. If the Seller refuses to do so, the Purchaser may either make the repairs and bear the expense or the Contract becomes void. 18. DAMAGE OR LOSS. The risk of loss by fire or other casualty remains with the Seller until execution and delivery of the deed of conveyance to the Purchaser at settlement. 19. TITLE. The Seller must comply with any notices of violation from county or local authorities or condominium or homeowner s associations. For example if the Seller had been cited by the homeowner s association for a fence built in violation of the association rules, the Seller may have to remove the fence prior to settlement. Further, the Seller is required to give good and marketable and insurable title to the Purchaser. In other words, the title to the property must be free of all liens and encumbrances except those expressly assumed by the Purchaser. This also means that the title must be insurable with no additional risk premiums. If defects exist in the title and the Seller cannot cure them within 30 days the Purchaser may void the Contract. 20. POSSESSION DATE. The Purchaser has the right to take possession of the property at the time of settlement unless otherwise agreed by the parties. If the Purchaser has to take legal action to obtain possession, Seller shall be responsible for any and all damages and losses so incurred by Purchaser. 21. FEES. The division of settlement fees between Purchaser and Seller is discussed here. See also

9 A Homebuyer s Guide from RGS TITLE Page 7 Paragraph 12 of the Virginia Jurisdictional Addendum. 22. BROKER S FEE. The settlement agent is given irrevocable instructions to disburse the listing and selling real estate brokers commission as agreed. 23. ADJUSTMENTS. This provision allows for all the expenses incurred on the property to be charged to the appropriate parties as of the settlement date. In our example, the settlement date is January 21. Since taxes are paid semi-annually (first half from January 1 through June 30, and second half from July 1 through December 31), this means that the Purchaser will pay for the whole first half of the year even though he will not acquire the property until January 21. To remedy this problem, Paragraph 23 requires the Seller to credit back to the Purchaser the Seller s share of the enumerated expenses including taxes. The Seller will pay at settlement twenty days of taxes directly to the Purchaser who will then be responsible for paying the full six months when the bill comes due. Any heating or cooking fuel remaining in supply tanks at the time of settlement will become the property of the Purchaser, unless they are leased items. 24. ATTORNEY S FEES. Any attorney s fees incurred as a result of a dispute arising under the Contract shall be paid by the non-prevailing party. 25. PERFORMANCE. This paragraph sets out what would constitute sufficient tender of performance by the parties of their obligations under the Contract. It also states that funds from the transaction may be used to pay off existing liens and encumbrances affecting the property. 26. DEFAULT. If the Purchaser is in default under the Contract, the Seller has the option to either sue to enforce the Contract or to seek mone tary damages. Remember, the earnest money deposit may not be the extent of the Pur chaser s liability. If the Seller defaults, the Pur chaser may sue for specific performance of the Contract or to seek monetary damages. If either party wrongfully fails to sign a release, they shall pay all court costs and expenses of the party seeking the release. Except for matters constituting gross negligence or willful misconduct, the Es crow Agent is released from any and all liability. 27. OTHER DISCLOSURES. The Seller and Purchaser are reminded that they should seek advice from appropriate professionals, if desired. Subparagraph A is designed to alert the Purchaser to certain items that might not otherwise be apparent. The provision suggests that the Purchaser may wish to avail themselves of a home inspection service and home warranty programs, and investigate such things as soil conditions, possible property use restrictions due to zoning, and other issues related to the property. The purpose is to let the Purchaser know that the property is sold without warranty or guarantee as to certain items and conditions, and it is left to the Purchaser to ask the right people the right questions to find out what as is includes or does not include. Subparagraph B puts the parties on notice that all contracts and addenda must be in writing to be enforceable. The parties also acknowledge that they have the right to seek legal counsel. In Subparagraph C, the Purchaser acknowledges responsibility for negotiating financing terms and that the future availability of mortgage money is speculative. Subparagraph D is a disclosure of the real estate broker s possible other real estate related activities. Subparagraph E directs the Purchaser to the local tax authority for information on property tax. Subparagraph F reminds both parties of the importance of securing and maintaining property insurance with assistance from an insurance professional. 28. ASSIGNABILITY. The Contract is not assignable unless both the Seller and Purchaser so agree in writing. Further, even if the Seller and/or Purchaser agree to assign their interest to a third party or parties, the original parties to the Contract remain liable until settlement. 29. DEFINITIONS. This provision defines certain words used in the Contract, i.e., what these words mean in the context of the Contract. 30. MISCELLANEOUS. Among other things, the parties to the Contract are informed that any typed or handwritten provisions of the Contract will supersede any conflicting pre-printed provisions. 31. VOID CONTRACT. In the event that the contract becomes void under any of its provisions, then the parties to the contract agree to sign a release document. 32. ADDITIONS. Additional forms or documents to be incorporated as a part of the Contract are identified in this paragraph. 33. HOME WARRANTY. If a home warranty program is being purchased, the cost and name of the provider, as well as who pays for it, are inserted here. 34. OTHER TERMS. Additional conditions and agreements may be added to the Contract in this paragraph. 35. ENTIRE AGREEMENT. This provision states that the Contract will survive the deed, meaning that even after settlement the agreements contained in the Contract which have not been satisfied are still binding. Further, this provision states that all agreements must be in writing and contained in the Contract or made a part of it (i.e., addenda). VIRGINIA JURISDICTIONAL ADDENDUM The Regional Sales Contract is used in many jurisdictions, each with its own laws and customs. The Virginia Jurisdictional Addendum must be signed and attached to bring the Contract into compliance with Virginia laws and the customs of the Northern Virginia real estate industry. 1. DELIVERY. This paragraph specifies when delivery is deemed to have occurred and where it is to be sent. Purchaser and Seller are to indicate in the blanks their delivery addresses. Copies are to be provided to the real estate brokers as a courtesy. 2. NOTICES. In order to be binding, notices must be in writing and delivered to the locations specified in the Delivery paragraph. 3. FHA/VA FINANCING. As noted in paragraph 11 of the Contract, if Purchaser is obtaining FHA or VA financing, the appropriate Addendum must be signed and attached. 4. APPRAISAL CONTINGENCY FOR CON- VENTIONAL FINANCING (ONLY). This para- RESALE CONTRACT FOR SINGLE FAMILY HOMES

10 Page 8 A Homebuyer s Guide from RGS TITLE RESALE CONTRACT FOR SINGLE FAMILY HOMES graph applies if Option 1 in Paragraph 10(B) of the contract is selected. It provides a blank to identify the time period for Purchaser to obtain an appraisal for conventional financing and specifies notice requirements, as well as elections to be made in the event that the lender s appraisal is less than the sales price. 5. VIRGINIA RESIDENTIAL PROPERTY DISCLOSURE ACT. Virginia law requires the Seller to deliver a disclosure statement, on forms provided by the Real Estate Board, related to the condition of the property based on the Seller s actual knowledge. Failure by the Seller to deliver the disclosure statement by the date of ratification of the Contract gives the Purchaser a qualified right of cancellation or action for damages. 6. TARGET LEAD-BASED PAINT HOUSING. Most residential dwellings constructed before 1978 are considered Target Housing for leadbased paint hazards. If the property is Target Housing, there are two additional forms listed in this paragraph which must be completed before the Contract is binding. 7. PRIVATE WELL AND/OR PRIVATE SEWAGE SYSTEM. In the event that the property has a private well and/or septic system, either the Purchaser or the Seller shall procure certified test results from the appropriate local government (i.e., the health department) or private company. Check boxes are provided to indicate whether the Purchaser or Seller will procure and pay for the tests. If either system is found defective or substandard, according to current government standards, the Seller shall take appropriate action to cure the defect at Seller s expense. 8. VIRGINIA PROPERTY OWNERS ASSOCIA- TION ACT. If the property is within a development subject to a homeowner s association, certain disclosure requirements apply. The Property Owners Association Act requires the Seller to furnish the Purchaser with the association disclosure packet containing the rules and financial information of the association. The Purchaser may cancel the Contract within 3 days of receipt of the packet or notice that the packet is not available. 9. VIRGINIA CONDOMINIUM ACT. The Condominium Act requires the Seller to furnish the Purchaser with the condominium association disclosure package containing the rules and financial information of the association. The Purchaser may cancel the Contract within 3 days of receipt of the package or notice that the package is not available. 10. CONSUMER REAL ESTATE SETTLE- MENT PROTECTION ACT. The parties to the transaction are notified that the Purchaser has the right to choose the settlement agent. Also some of the settlement agent s duties and/or obligations are defined here. We hope that you will choose RGS TITLE by entering our name in the blank space. 11. POSSIBLE FILING OF MECHANICS LIENS. The Purchaser is put on notice as to the possible filing of mechanics liens. These liens are filed against property for work done on the property. Mechanics liens for work done prior to closing may be filed after closing. In almost every case, owner s title insurance purchased from RGS TITLE will provide complete protection against mechanics liens for the home buyer. However, feel free to call one of our offices for questions and answers concerning your particular situation including the possibility of mechanics liens. 12. ADDITIONAL FEES. The Seller agrees to pay the Virginia State Grantor s tax (.1% of the sales price). The Purchaser agrees to pay recordation charges for the deed and any deeds of trust. 13. ARBITRATION. This paragraph simply indicates that the Contract does not preclude the arbitration provisions of the Code of Ethics and Standards of Practice governing real estate professionals. 14. TIME IS OF THE ESSENCE AS TO ALL TERMS OF THIS CONTRACT. Time is of the essence means that the parties to the transaction must complete their obligations in a diligent and timely manner, by the date and time specified. 15. REAL ESTATE LICENSED PARTIES. An agent or broker who is related to one of the parties is required to disclose that relationship. FHA AND VA FINANCING CONTINGENCY ADDENDA The Regional Sales Contract form provides for Conventional Financing terms, but there is a separate addendum for the loan in the event FHA or VA financing is to be obtained. FHA and VA loan programs have distinct requirements, so the appropriate addendum must be signed and attached in order to incorporate those required provisions, indicate the loans terms and specify the Financing Deadline. Under either a VA or FHA loan program, the Purchaser will not be obligated to complete the purchase of the property or be made to forfeit the earnest money deposit if the lender s appraisal is lower than the sales price as set out in Paragraph 3 of each addendum. In Paragraph 4, there is a space to specify the amount of Purchaser s charges that Seller agrees to pay. It should be noted that even if there is no such agreement, the Seller agrees to pay any lender charges that by law or regulation cannot be charged to a Purchaser. OTHER ADDENDUM FORMS Your Realtor may also prepare other addenda to add critical terms to the Contract. One commonly used addendum is the CONTINGENCIES/ CLAUSES ADDENDUM which becomes a part of the Contract if attached with all parties signing. This addendum allows the parties to make the Contract contingent on the happening of certain named events, for example, the sale of the Purchaser s current home, as well as to modify some of the terms of the Contract, such as providing for a pre- or post-settlement occupancy agreement. A HOME INSPECTION AND RADON TESTING ADDENDUM is also frequently used to provide a contingency to allow the Purchaser to obtain a satisfactory inspection of the home to determine its general condition and for the presence of radon. NOTE: The Washington DC Jurisdictional Addendum or The Montgomery County, MD Jurisdictional Addendum must be attached, when appro priate and applicable, to address local issues and concerns not reflected in the body of the Contract.

11 A Homebuyer s Guide from RGS TITLE Page 9 REGIONAL SALES CONTRACT This SALES CONTRACT ( Contract ) is made on December 1, 2010 ( Contract Date ) between Paul Purchaser ( Purchaser ) and Sue Seller ( Seller ) who, among other things, hereby confirm and acknowledge by their initials and signatures herein that by prior disclosure in this real estate transaction Listing Agent s Company ( Listing Company ) represents Seller, and Selling Agent s Company ( Selling Company ) represents X Purchaser or Seller. The Listing Company and Selling Company are collectively referred to as ( Broker ). (If the brokerage firm is acting as a dual representative for both Seller and Purchaser, then the appropriate disclosure form is attached to and made a part of this Contract.) In consideration of the mutual promises and covenants set forth below, and other good and valuable consideration the receipt and sufficiency of which is acknowledged, the parties agree as follows: 1. REAL PROPERTY Purchaser will buy and Seller will sell for the sales price ( Sales Price ), Seller s entire interest in the real property (with all improvements, rights and appurtenances) described as follows ( Property ): TAX Map/ID # A Legal Description: Lot(s) 1 Block/Square Section Subdivision or Condominium Anywhere Estates Parking Space(s) # County/Municipality Fairfax Deed Book/Liber # 123 Happy Trails Court Page/Folio # Street Address Unit # City Fairfax State VA Zip Code PRICE AND FINANCING A. Down Payment $ 40, B. Financing 1. First Trust (if applicable) $ 160, DEED(S) OF TRUST 2. Second Trust (if applicable) $ 3. Seller Held Trust $ Addendum attached (if applicable) TOTAL FINANCING $ 160, SALES PRICE $ 200, X A. First Deed of Trust Purchaser will Obtain or Assume a X Conventional FHA VA Other First Deed of Trust loan amortized over 30 years at a X Fixed or an Adjustable rate bearing (initial) interest of 7 % per year or market rate available. Special Terms (if any): Regional Sales Contract Rev 03/09 Page 1 of 10 Please Initial: Seller / Purchaser /

12 Page 10 A Homebuyer s Guide from RGS TITLE B. Second Deed of Trust Purchaser will Obtain or Assume a Second Deed of Trust loan amortized over years at a Fixed or an Adjustable rate bearing (initial) interest of % per year or market rate available. Special Terms (if any): C. Assumption Only Assumption fee, if any, and all charges related to the assumption will be paid by the Purchaser. X If Purchaser assumes Seller s loan(s): (i) Purchaser and Seller will, or will not obtain a release of Seller s liability to the U.S. Government for the repayment of the loan by Settlement, (ii) Purchaser and Seller will, or will not obtain substitution of Seller s VA entitlement by Settlement. Balances of any assumed loans, secondary financing and cash down payments are approximate. 4. DEPOSIT A. Purchaser has delivered a deposit ( Deposit ) to ( Escrow Agent ) of X $ 5, check and/or $ by note due and payable on. B. The Deposit will be placed in an escrow account of the Escrow Agent after Date of Ratification in conformance with the laws and regulations of the appropriate jurisdiction and/or, if VA financing applies, as required by Title 38 of the U.S. Code. This account may be interest bearing and all parties waive any claim to interest resulting from the Deposit. The Deposit will be held in escrow until: (i) Credited toward the Sales Price at Settlement; (ii) All parties have agreed in writing as to its disposition; (iii) A court of competent jurisdiction orders disbursement and all appeal periods have expired; or, (iv) Disposed of in any other manner authorized by the laws and regulations of the appropriate jurisdiction. Seller and Purchaser agree that Escrow Agent will have no liability to any party on account of disbursement of the Deposit or on account of failure to disburse the Deposit, except in the event of the Escrow Agent s gross negligence or willful misconduct. 5. DOWN PAYMENT The balance of the down payment will be paid on or before the Settlement Date by certified or cashier s check or by bank-wired funds. An assignment of funds shall not be used without prior written consent of Seller. 6. SETTLEMENT Seller and Purchaser will make full settlement in accordance with the terms of this Contract ( Settlement ) on, or with mutual consent before, ( Settlement Date ) except as otherwise provided in this Contract. Purchaser selects: RGS Title LLC ( Settlement Agent ) to conduct the Settlement. (For transactions in Virginia, use the Virginia Jurisdictional Addendum to select the Settlement Agent.) Either party may retain their own legal counsel. Purchaser agrees to contact the Settlement Agent within 10 Days after the Date of Ratification to schedule Settlement and to arrange for ordering the title exam and, if required, a survey. 7. EQUIPMENT, MAINTENANCE AND CONDITION Purchaser accepts the Property in the condition as of the Contract Date except as otherwise provided herein. Seller warrants that, except as otherwise provided, the existing appliances, heating, cooling, plumbing, electrical systems and equipment, and smoke and heat detectors (as required), will be in normal working order as of the Possession Date. Seller will deliver the Property in substantially the same condition as on the Contract Date and broom clean with all trash and debris removed. Purchaser and Seller will not hold the Broker liable for any breach of this paragraph. Seller will have all utilities in service through Settlement or as otherwise agreed. Regional Sales Contract Rev 03/09 Page 2 of 10 Please Initial: Seller / Purchaser /

13 A Homebuyer s Guide from RGS TITLE Page UTILITIES -WATER, SEWAGE, HEATING AND CENTRAL AIR CONDITIONING (Check all that apply) Water Supply: X Public Private Well Community Well Sewage Disposal: X Public Septic for # BR Community Septic Alternative Septic for # BR: Hot Water: Oil X Gas Elec. Other Air Conditioning: Oil Gas X Elec. Heat Pump Other Zones Heating: Oil X Gas Elec. Heat Pump Other Zones 9. PERSONAL PROPERTY AND FIXTURES The Property includes the following existing personal property and fixtures: built-in heating and central air conditioning equipment, plumbing and lighting fixtures, sump pump, attic and exhaust fans, storm windows, storm doors, screens, installed wall-to-wall carpeting, window shades, blinds, window treatment hardware, smoke and heat detectors, TV antennas, exterior trees and shrubs. Unless otherwise agreed to in writing, all surface or wall mounted electronic components/devices DO NOT convey. If more than one of an item convey, the number of items is noted. The items marked YES below are currently installed or offered. Yes No # Items Yes No # Items Yes No # Items X Alarm System X Freezer Satellite Dish X Built-in Microwave Furnace Humidifier Storage Shed X Ceiling Fan X Garage Opener X Stove or Range X Central Vacuum w/ remote X Trash Compactor X Clothes Dryer X Gas Log X Wall Oven X Clothes Washer X Hot Tub, Equip,& Cover X Water Treatment System X Cooktop Intercom X Window A/C Unit Dishwasher X Playground Equipment X Window Fan X Disposer X Pool, Equip, & Cover X Window Treatments X Electronic Air Filter X Refrigerator X Wood Stove Fireplace Screen/Door w/ ice maker X X OTHER X X X X X AS IS ITEMS Seller does not warrant the condition or working order of the following items and/or systems: If entire Property is sold As Is, appropriate addendum must be attached. LEASED ITEMS Any leased items, systems or service contracts (including, but not limited to, fuel tanks, water treatment systems, lawn contracts, security system monitoring, and satellite contracts) DO NOT CONVEY absent an express written agreement by Purchaser and Seller. The following is a list of the leased items within the Property: Regional Sales Contract Rev 03/09 Page 3 of 10 Please Initial: Seller / Purchaser /

14 Page 12 A Homebuyer s Guide from RGS TITLE 10. CONVENTIONAL FINANCING TERMS A. SELLER SUBSIDY Based on the financing terms specified in this Contract, Seller will pay at Settlement $ 2, toward Purchaser s charges, (including but not limited to loan origination fees, discount fees, buy down or subsidy fees, prepaids or other charges as allowed by the lender). Purchaser will pay all remaining Purchaser s charges. If applicable, Purchaser will pay at Settlement or finance any initial private mortgage insurance required by lender. It is Purchaser s responsibility to confirm with his lender, if applicable, that the entire credit provided herein may be utilized. If lender prohibits Seller from the payment of any portion of this credit, then said credit shall be reduced to the amount allowed by the lender. B. APPRAISAL (Must Select Option 1 or 2) Option (1) This Contract is contingent on Purchaser obtaining an Appraisal certifying the value of the Property to be no less than the Sales Price. See Attached Addendum. If the appropriate Appraisal Contingency Addendum is not attached, this Contract is not contingent on an Appraisal and Option (2) below will apply. Option (2) This Contract is not contingent on an Appraisal. Purchaser shall complete Settlement without regard to the value of the Property set forth in any Appraisal and acknowledges that this may reduce the amount of financing available from lender and may require Purchaser to tender additional funds at Settlement. If Purchaser fails to settle except due to any Default by Seller, then the provisions of paragraph #26 (Default) shall apply. C. FINANCING (Must Select Option 1 or 2) Not to be used with Seller Financing Option (1) This Contract is contingent on Purchaser obtaining approval for loan(s) to purchase the Property (The Financing Contingency ). This Contract is contingent until 9 p.m. Days after Date of Ratification ( Financing Deadline ) upon Purchaser Delivering Notice to Seller on the Regional Form #100 removing this Financing Contingency. Such Notice shall or shall not be accompanied by a letter from the lender ( Lender s Letter). Such Lender s Letter shall include the following statements or statements substantially similar thereto: 1) Purchaser is approved for the Specified Financing, 2) a ratified Contract has been received, 3) a written application for the financing has been made, 4) income, asset, and liability documentation on Purchaser have been received, 5) Purchaser s credit has been reviewed, and 6) the application has been reviewed and meets underwriter and investor guidelines. If Purchaser fails to Deliver Regional Form #100 and Lender s Letter (if required) by the Financing Deadline, this contingency will continue, unless Seller at Seller s option gives Notice to Purchaser that this Contract will become void. If Seller Delivers such Notice this Contract will become void at 9 p.m. on the third day following Delivery of Seller s Notice unless prior to that date and time: a) Purchaser Delivers to Seller Regional Form #100 and Lender s Letter (if required); or OR b) Purchaser Delivers to Seller Regional Form #100 and provides Seller with evidence of sufficient funds available to complete Settlement without obtaining financing. Regional Sales Contract Rev 03/09 Page 4 of 10 Please Initial: Seller / Purchaser /

15 A Homebuyer s Guide from RGS TITLE Page 13 Upon Delivery to Seller of either (a) or (b) above, this Contract will no longer be contingent on Purchaser being approved for the Specified Financing and this Contract will remain in full force and effect. Prior to satisfaction or removal of the Financing Contingency, if Purchaser receives a written rejection for the Specified Financing and Delivers a copy of the written rejection to Seller, this Contract will become void. OR Option (2) This Contract is not contingent upon Purchaser obtaining approval for loan(s) to purchase the Property. Purchaser acknowledges that there is not a Financing Contingency. Purchaser has provided sufficient documentation to satisfy Seller that Purchaser has been approved for the Specified Financing or has sufficient funds available to complete Settlement without obtaining financing. If Purchaser fails to settle except due to any Default by Seller, then the provisions of paragraph #26 (DEFAULT) shall apply. 11. VA or FHA FINANCING AND APPRAISAL FHA Addendum Attached? Yes No If yes, see attached FHA Addendum VA Addendum Attached? Yes No If yes, see attached VA Addendum 12. FINANCING APPLICATION If this Contract is contingent on financing, Purchaser will make written application for the Specified Financing and any lender required property insurance no later than 7 days after the Date of Ratification. Purchaser grants permission for the Selling Company and the lender to disclose to the Listing Company and the Seller general information available about the progress of the loan application and loan approval process. If Purchaser fails to settle except due to any Default by Seller, then the provisions of paragraph #26 (DEFAULT) shall apply. 13. ALTERNATE FINANCING Purchaser may substitute alternative financing and/or an alternative lender for Specified Financing provided: (a) Purchaser is qualified for alternative financing; (b) There is no additional expense to Seller; (c) The Settlement Date is not delayed; and (d) If Purchaser fails to settle except due to any Default by Seller, then the provisions of paragraph #26 (DEFAULT) shall apply. 14. PURCHASER S REPRESENTATIONS Purchaser will, or will not occupy the Property as Purchaser s principal residence. Unless specified in a written contingency, neither this Contract nor the financing is dependent or contingent on the sale and settlement or lease of other real property. The Selling Company is, or is not authorized to disclose to the Listing Company and Seller the appropriate financial or credit information statement provided to the Selling Company by Purchaser. Purchaser acknowledges that Seller is relying upon all of Purchaser s representations, including without limitation, the accuracy of financial or credit information given to Seller, Broker or the lender by Purchaser. 15. ACCESS TO PROPERTY Seller will provide the Broker, Purchaser, inspectors representing Purchaser and representatives of lending institutions for Appraisal purposes, reasonable access to the Property to comply with this Contract. In addition, Purchaser and/or Purchaser s representative will have the right to make a final inspection within 5 days prior to Settlement and/or occupancy, unless otherwise agreed to by Purchaser and Seller. Regional Sales Contract Rev 03/09 Page 5 of 10 Please Initial: Seller / Purchaser /

16 Page 14 A Homebuyer s Guide from RGS TITLE 16. TERMITE INSPECTION The Purchaser at Purchaser s expense or Seller at Seller s expense, will furnish a written report from a pest control firm dated not more than 30 days prior to Settlement showing that all dwelling(s) and/or garage(s) within the Property (excluding fences or shrubs not abutting garage(s) or dwelling(s)) are free of visible evidence of active termites and other wood-destroying insects, and free from visible structural insect damage. Any extermination and structural repairs identified in the inspection report will be made at Seller s expense. 17. REPAIRS If, as a condition of providing financing under this Contract, the lender requires repairs to be made to the Property, then Purchaser will give Notice to Seller of the lender s required repairs. Within 5 Days after such Notice, Seller will give Notice to Purchaser as to whether Seller will make the repairs. If Seller will not make the repairs, Purchaser will give Notice to Seller within 5 Days after Seller s Notice as to whether Purchaser will make the repairs. If neither Seller nor Purchaser will make the repairs, then this Contract will become void. This clause will not release Seller from any responsibilities set forth in the paragraphs titled UTILITIES; PERSONAL PROPERTY AND FIXTURES; EQUIPMENT, MAINTENANCE AND CONDITION; WELL AND SEPTIC; TERMITE INSPECTION; or OTHER TERMS, or any terms specifically set forth in this Contract and any addenda. If the Property is sold as is, Purchaser will be responsible for all repairs. 18. DAMAGE OR LOSS The risk of damage or loss to the Property by fire, act of God, or other casualty remains with Seller until the execution and delivery of the deed of conveyance to Purchaser at Settlement. 19. TITLE The title report and survey, if required, will be ordered promptly and, if not available on the Settlement Date, then Settlement may be delayed for up to 10 business days to obtain the title report and survey after which this Contract, at the option of Seller, may be terminated and the Deposit will be refunded in full to Purchaser according to the terms of the DEPOSIT paragraph. Fee simple title to the Property, and everything that conveys with it, will be sold free of liens except for any loans assumed by Purchaser. Title is to be good and marketable, and insurable by a licensed title insurance company with no additional risk premium. Title may be subject to commonly acceptable easements, covenants, conditions and restrictions of record, if any; otherwise, Purchaser may declare this Contract void, unless the defects are of such character that they may be remedied within 30 Days beyond the Settlement Date. In case action is required to perfect the title, such action must be taken promptly by Seller at Seller s expense. The Broker is hereby expressly released from all liability for damages by reason of any defect in the title. Seller will convey the Property by general warranty deed with English covenants of title (Virginia); general warranty deed (West Virginia); special warranty deed (D.C. and Maryland) ( Deed ). Seller will sign such affidavits, lien waivers, tax certifications, and other documents as may be required by the lender, title insurance company, Settlement Agent, or government authority, and authorizes the Settlement Agent to obtain pay-off or assumption information from any existing lenders. The manner of taking title may have significant legal and tax consequences. Purchaser is advised to seek the appropriate professional advice concerning the manner of taking title. Unless otherwise agreed to in writing, Seller will pay any special assessments and will comply with all orders, requirements, or notices of violations of any county or local authority, condominium unit owners association, homeowners or property owners association or actions in any court on account thereof, against or affecting the Property on the Settlement Date. 20. POSSESSION DATE Unless otherwise agreed to in writing between Seller and Purchaser, Seller will give possession of the Property at Settlement, including delivery of keys, if any. If Seller fails to do so and occupies the Property beyond Settlement, Seller will be a tenant at sufferance of Purchaser and hereby expressly waives all notice to quit as provided by law. Purchaser will have the right to proceed by any legal means available to obtain possession of the Property. Seller will pay any damages and costs incurred by Purchaser including reasonable attorney fees. 21. FEES Fees for the preparation of the Deed, that portion of the Settlement Agent s fee billed to Seller, costs of releasing existing encumbrances, Seller s legal fees and any other proper charges assessed to Seller will be paid by Seller. Fees for the title exam (except as otherwise provided) survey, recording (including those for any purchase money trusts) and that portion of the Settlement Agent s fee billed to Purchaser, Purchaser s legal fees and any other proper charges assessed to Purchaser will be paid by Purchaser. Fees to be charged will be reasonable and customary for the jurisdiction in which the Property is located. (Recording, Transfer and Grantor s Taxes are covered in the appropriate jurisdictional addenda). Regional Sales Contract Rev 03/09 Page 6 of 10 Please Initial: Seller / Purchaser /

17 A Homebuyer s Guide from RGS TITLE Page BROKER S FEE Seller irrevocably instructs the Settlement Agent to pay the Broker compensation ( Broker s Fee ) at Settlement as set forth in the listing agreement and to disburse the compensation offered by the Listing Company to the Selling Company in writing as of the Contract Date, and the remaining amount of Broker s compensation to the Listing Company. 23. ADJUSTMENTS Rents, taxes, water and sewer charges, front foot benefit and house connection charges, condominium unit owners association, homeowners and/or property owners association regular periodic assessments (if any) and any other operating charges, are to be adjusted to the day of Settlement. Any heating or cooking fuels remaining in supply tank(s) at Settlement will become the property of Purchaser, unless leased. Taxes, general and special, are to be adjusted according to the certificate of taxes issued by the collector of taxes, if any, except that recorded assessments for improvements completed prior to Settlement, whether assessments have been levied or not, will be paid by Seller or allowance made at Settlement. If a loan is assumed, interest will be adjusted to the Settlement Date and Purchaser will reimburse Seller for existing escrow accounts, if any. 24. ATTORNEY S FEES In any action or proceeding involving a dispute between Purchaser and Seller arising out of this Contract, the prevailing party will be entitled to receive from the other party reasonable attorney s fees to be determined by the court or arbitrator(s). In the event a dispute arises resulting in the Broker being made a party to any litigation or if the Broker is required to bring litigation to collect the Broker s Fee, Purchaser and Seller agree to indemnify the Broker, it s employees, and/or licensees for all attorney fees and costs of litigation against the responsible party, unless the litigation results in a judgment against the Broker, its employees and/or licensees. 25. PERFORMANCE Delivery of the required funds and executed documents to the Settlement Agent will constitute sufficient tender of performance. Funds from this transaction at Settlement may be used to pay off any existing liens and encumbrances, including interest, as required by lender(s) or lienholders. 26. DEFAULT Purchaser will be in Default even if the Financing Contingency has not been removed if Settlement does not occur on the Settlement Date for any reason other than Default by Seller, including without limitation the following: A. Failure to lock-in the interest rate(s) and the rate(s) increase so that Purchaser does not qualify for such financing; OR B. Failure to comply with the lender s reasonable requirements in a timely and diligent manner; OR C. Application is made with an alternative lender (one other than the lender who provided Lender s Letter) and the alternative lender fails to meet the Settlement Date; OR D. Does not have the down payment, closing fees and any other required funds, including without limitation, any additional funds required to be tendered by Purchaser if the Appraisal is lower than the Sales Price; OR E. Makes any deliberate misrepresentations, material omissions or inaccuracies in financial information that results in the Purchaser s inability to secure the financing; OR F. Failure to make application for property insurance, if required, by lender within 7 days of Date of Ratification; OR G. Goes or fails to do any act following the Date of Ratification that prevents Purchaser from completing Settlement. If Purchaser fails to complete Settlement for any reason other than Default by Seller, at the option of Seller, the Deposit may be forfeited as liquidated damages (not as a penalty) in which event Purchaser will be relieved from further liability to Seller. If Seller does not elect to accept the Deposit as liquidated damages, the Deposit may not be the limit of Purchaser s liability in the event of a Default. If the Deposit is forfeited, or if there is an award of damages by a court or a compromise agreement between Seller and Purchaser, the Broker may accept and Seller agrees to pay the Broker one-half of the Deposit in lieu of the Broker s Fee, (provided Broker s share of any forfeited Deposit will not exceed the amount due under the listing agreement). If Seller fails to perform or comply with any of the terms and conditions of this Contract or fails to complete Settlement for any reason other than Default by Purchaser, Purchaser will have the right to pursue all legal or equitable remedies, including specific performance and/or damages. If either Seller or Purchaser refuses to execute a release of Deposit ( Release ) when requested to do so in writing and a court finds that such party should have executed the Release, the party who so refused to execute the Release will pay the expenses, including, without limitation, reasonable attorney s fees, incurred by the other party in the litigation. Seller and Purchaser agree that no Escrow Agent will have any liability to any party on account of disbursement of the Deposit or on account of failure to disburse the Regional Sales Contract Rev 03/09 Page 7 of 10 Please Initial: Seller / Purchaser /

18 Page 16 A Homebuyer s Guide from RGS TITLE Deposit, except only in the event of the Escrow Agent s gross negligence or willful misconduct. The parties further agree that the Escrow Agent will not be liable for the failure of any depository in which the Deposit is placed and that Seller and Purchaser each will indemnify, defend and save harmless the Escrow Agent from any loss or expense arising out of the holding, disbursement or failure to disburse the Deposit, except in the case of the Escrow Agent s gross negligence or willful misconduct. If either Purchaser or Seller is in default, then in addition to all other damages, the defaulting party will immediately pay the costs incurred for the title examination, Appraisal, survey and the Broker s Fee in full. 27. OTHER DISCLOSURES Purchaser and Seller should carefully read this Contract to be sure that the terms accurately express their respective understanding as to their intentions and agreements. The Broker can counsel on real estate matters, but if legal advice is desired by either party, such party is advised to seek legal counsel. Purchaser and Seller are further advised to seek appropriate professional advice concerning the condition of the Property or tax and insurance matters. The following provisions of this paragraph disclose some matters which the parties may investigate further. These disclosures are not intended to create a contingency. Any contingency must be specified by adding appropriate terms to this Contract. The parties acknowledge the following disclosures: A. PROPERTY CONDITION See paragraph #7 (EQUIPMENT, MAINTENANCE AND CONDITION) Various inspection services and home warranty insurance programs are available. The Broker is not advising the parties as to certain other issues, including without limitation: water quality and quantity (including but not limited to, lead and other contaminants;) sewer or septic; soil condition; flood hazard areas; possible restrictions of the use of the Property due to restrictive covenants, zoning, subdivision, or environmental laws, easements or other documents; airport or aircraft noise; planned land use, roads or highways; and construction materials and/or hazardous materials, including without limitation flame retardant treated plywood (FRT), radon, urea formaldehyde foam insulation (UFFI), mold, polybutylene pipes, synthetic stucco (EIFS), underground storage tanks, asbestos and lead-based paint. Information relating to these issues may be available from appropriate government authorities. B. LEGAL REQUIREMENTS All contracts for the sale of real property must be in writing to be enforceable. Upon ratification and Delivery, this Contract becomes a legally binding agreement. Any changes to this Contract must be made in writing for such changes to be enforceable. C. FINANCING Mortgage rates and associated charges vary with financial institutions and the marketplace. Purchaser has the opportunity to select the lender and the right to negotiate terms and conditions of the financing subject to the terms of this Contract. The financing may require substantial lump sum (balloon) payments on the due dates. Purchaser has not relied upon any representations regarding the future availability of mortgage money or interest rates for the refinancing of any such lump sum payments. D. BROKER Purchaser and Seller acknowledge that the Broker is being retained solely as a real estate agent and not as an attorney, tax advisor, lender, appraiser, surveyor, structural engineer, mold or air quality expert, home inspector or other professional service provider. The Broker may from time to time engage in the general insurance, title insurance, mortgage loan, real estate settlement, home warranty and other real estate-related businesses and services. Therefore, in addition to the Broker s Fee specified herein, the Broker may receive compensation related to other services provided in the course of this transaction pursuant to the terms of a separate agreement/disclosure. E. PROPERTY TAXES Your property tax bill could substantially increase following settlement. For more information on property taxes contact the appropriate taxing authority in the jurisdiction where the Property is located. F. PROPERTY INSURANCE Obtaining property insurance is typically a requirement of the lender in order to secure financing. Insurance rates and availability are determined in part by the number and nature of claims and inquiries made on a property s policy as well as the number and nature of claims made by a prospective Purchaser. Property insurance has become difficult to secure in some cases. Seller should consult an insurance professional regarding maintaining and/or terminating insurance coverage. Regional Sales Contract Rev 03/09 Page 8 of 10 Please Initial: Seller / Purchaser /

19 A Homebuyer s Guide from RGS TITLE Page ASSIGNABILITY This Contract may not be assigned without the written consent of Purchaser and Seller. If Purchaser and Seller agree in writing to an assignment of this Contract, the original parties to this Contract remain obligated hereunder until Settlement. 29. DEFINITIONS A. Appraisal means a written appraised valuation of the Property. B. Day(s) or day(s) means calendar day(s) unless otherwise specified in this Contract. For the purpose of computing time periods, the first Day will be the Day following Delivery and the time period will end at 9 p.m. on the Day specified. If the Settlement Date falls on a Saturday, Sunday, or legal holiday, then the Settlement will be on the prior business day. C. Date of Ratification means the date of final acceptance in writing of all the terms of this Contract (not the date of expiration or removal of any contingencies). D. For Delivery and Notices definitions, see appropriate Jurisdictional Addendum. E. Specified Financing means the loan type(s) and amount(s), if any, specified in both paragraph #2 (PRICE AND FINANCING) and paragraph #3 (DEEDS OF TRUST). F. The masculine includes the feminine and the singular includes the plural. G. Possession Date - See paragraph #20 (POSSESSION DATE). 30. MISCELLANEOUS This Contract may be signed in one or more counterparts, each of which is deemed to be an original, and all of which together constitute one and the same instrument. Documents obtained via facsimile machines will also be considered as originals. Typewritten or handwritten provisions included in this Contract will control all pre-printed provisions that are in conflict. 31. VOID CONTRACT If this Contract becomes void and of no further force and effect, without Default by either party, both parties will immediately execute a release directing that the Deposit be refunded in full to Purchaser according to the terms of the paragraph # 4(DEPOSIT). 32. ADDITIONS The following forms, if ratified and attached, are made a part of this Contract. (This list is not all inclusive of addenda that may need to be attached). Yes X Jurisdictional Addendum for: DC VA X MD/County WVA Other Yes No Addendum of Clauses (DC/MD) Yes No Lead Based Paint Inspection Contingency Yes No Contingency Clauses (NVAR) Yes No Pre-Settlement Occupancy Yes No Condo/Coop Addendum Yes No Post-Settlement Occupancy Yes No Dual Agency Form Yes No Property Disclosure or Disclaimer Yes No Designated Agency Form Yes No Radon Testing Contingency Yes No FHA Home Inspection Notice Yes No Sale of Home Contingency Yes No Home Inspection Contingency Yes No Seller Held Trust Yes No Lead Based Paint Disclosure Yes No Well and Septic Contingency Yes No Other (specify) : 33. HOME WARRANTY Yes No Home Warranty Policy paid for and provided at Settlement by: Purchaser or Seller. Cost not to exceed $. Warranty provider to be Regional Sales Contract Rev 03/09 Page 9 of 10 Please Initial: Seller / Purchaser /

20 Page 18 A Homebuyer s Guide from RGS TITLE 34. OTHER TERMS 35. ENTIRE AGREEMENT This Contract will be binding upon the parties, and each of their respective heirs, executors, administrators, successors and permitted assigns. The provisions not satisfied at Settlement will survive the delivery of the deed and will not be merged therein. This Contract, unless amended in writing, contains the final and entire agreement of the parties and the parties will not be bound by any terms, conditions, oral statements, warranties or representations not herein contained. The interpretation of this Contract will be governed by the laws of the jurisdiction where the Property is located. SELLER: PURCHASER: / (SEAL) / (SEAL) Date Signature Date Signature / (SEAL) / (SEAL) Date Signature Date Signature Date of Ratification see paragraph #29 (DEFINITIONS) ************************************************************************************************* For information purposes only: Listing Company s Name and Address: Selling Company s Name and Address: Office # FAX # Office # FAX # MRIS Broker Code and Office ID Agent Name Real Estate License Number & Jurisdiction Agent MRIS ID# Team Leader/Agent Agent Address MRIS Broker Code and Office ID Agent Name Real Estate License Number & Jurisdiction Agent MRIS ID# Team Leader/Agent Agent Address This is a suggested form owned by certain REALTOR Associations ("Associations"). This form has been created and printed exclusively for the use of REALTORS and members of the Associations, who may copy or otherwise reproduce this form in identical form with the addition of their company logo and with any other changes being set forth in a clearly marked separate addendum. Any other use of this form is prohibited without prior written authorized consent of the Associations. Regional Sales Contract Rev 03/09 Page 10 of 10 Please Initial: Seller / Purchaser /

21 A Homebuyer s Guide from RGS TITLE Page 19 December 1, 2010 Paul Purchaser Sue Seller 123 Happy Trails Court, Fairfax, Virginia

22 Page 20 A Homebuyer s Guide from RGS TITLE

23 A Homebuyer s Guide from RGS TITLE Page 21

27 A Homebuyer s Guide from RGS TITLE Page 25 RGS TITLE LLC

46 Page 44 A Homebuyer s Guide from RGS TITLE THE MORTGAGE LOAN PROCESS The majority of home purchases involve financing obtained from an institutional lending source. Whether that source is a mortgage loan broker, a federal savings bank or the bank you ve been associated with your entire banking life, you, as the borrower, will be required to supply that lender with a myriad of documents and a seemingly endless flow of information. The purpose of obtaining this information is to document and support your request that the lender invest its money for your purchase of a new home. Throughout the mortgage loan process you will be assisted by various representatives of the lender who are responsible for compiling your personal financial information and for presenting that information in a manner that will best support your request for financing. Generally, the first person you will deal with will be the mortgage loan officer or mortgage banker, who will help you complete a loan application and provide you with a list of documents you will need to provide the lender. Following, you will find a list of documents which are typically required for loan approval. You may wish to collect these documents prior to loan application to expedite the approval process. This list is not all inclusive, but does include the basic documents required to support your application. Assisting you and the loan officer will be the loan processor. The processor s role is to oversee your loan application as it proceeds toward loan approval and to manage your file. The processor is responsible for obtaining documentation from you, from the credit bureau, the appraiser, your insurance company as well as others. It is important that you communicate with the processor on a frequent basis and provide requested information in a timely fashion. Your ability to communicate with the lender and to quickly provide needed documentation will expedite the loan approval process. On page 46 you will find a flow chart which will familiarize you with the general path that your loan will follow. It is important to be aware that although the time frames noted are estimates they can be greatly delayed if you, the borrower, do not provide complete and accurate information. The loan officer and processor are bound by guidelines set by both the lender s risk assessors ( underwriters ) as well as guidelines imposed by mortgage regulating authorities known as Fannie Mae and Freddie Mac as well as VA and HUD. Your loan officer and loan processor will interpret these guidelines for you so that they may be quickly satisfied. ITEMS NEEDED FOR LOAN APPLICATION Social Security number of all applicants. Complete address for the past 7 years (including complete name and address of landlords for past 24 months). Name, address, and all income earned from all employers for past 24 months. Copies of previous two years W-2 forms. Copy of most recent year-to-date pay stub. Name, address, account number, monthly payment and current balance for: installment loans, revolving charge accounts, student loans, mortgage loans, and auto loans. Name, address, account number, and balance of all deposit accounts, including: checking account, savings accounts, stocks, bonds, etc. Three months most recent statements for deposit accounts, stocks, etc.

47 A Homebuyer s Guide from RGS TITLE Page 45 If you choose to include income from Child Support/Alimony bring copies of court records or cancelled checks showing receipt of payment. If you are applying for a V.A.* Loan: DD-214, Certificate of Eligibility, or statement from your Commanding Officer if you are on active duty. If you are self-employed or paid by commission: Previous two years Federal Income Tax Returns with all schedules and a year-to-date profit and loss statement. If you own other properties: Address of properties and current market value. Any debt owed on properties, Lender s name, address, account number, monthly payment, and current balance. Copy of previous two years Federal Income Tax Returns with all schedules. If rented, copy of lease. If you have filed bankruptcy in the last seven years: Copy of petition and discharge, handwritten explanation of the reason for bankruptcy. *A loan insured by the Veteran s Administration. THE MORTGAGE LOAN PROCESS ESTIMATE YOUR MORTGAGE PAYMENT Multiply your monthly payment per thousand by the number of thousands you plan to borrow. Interest Monthly Payment Interest Monthly Payment Rate Per Thousand Dollars Rate Per Thousand Dollars 15 years 20 years 30 years 15 years 20 years 30 years 4.25% $7.53 $6.21 $ % $10.29 $9.16 $ % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % %

48 Page 46 A Homebuyer s Guide from RGS TITLE Precise steps may vary from lender to lender, and time frames are estimates only.

49 A Homebuyer s Guide from RGS TITLE Page 47 WHAT CAN YOU AFFORD? To be considered for a mortgage, you generally have to meet two conditions before your lender checks your credit: you must be able to handle the monthly payments of principal, interest, taxes and insurance (PITI), and you must have an adequate down payment. Below is a rough guideline of what you can afford and how lenders make this decision. Check the newspapers or with your real estate agent to determine the prevailing rates, required down payment percentages, and loan terms. AFFORDABLE MORTGAGE AMOUNT Column A Column B Annual income before taxes $ $ Divide by number of months Monthly gross income $ $ Record it in both columns. Perform operations only on figures in the same vertical columns. Many lenders will not allow you to spend more than 28% of your monthly gross income on housing expenses: (column B) x.28 Maximum monthly housing expense allowance: (column B) =$ THE MORTGAGE LOAN PROCESS Many lenders allow 36% of monthly gross income for long-term debt: x.36 Long-term monthly expense allowance: =$ Figure out your total monthly long-term obligations below, and subtract it from the allowance: child support $ auto loan $ credit cards $ association fees $ other $ Less $ Total long-term obligations =$ Look at the last amount in each column above. Record the smaller amount: $ About 20% of the housing expense allowance is for taxes and insurance, leaving 80% for payment of mortgage (principal and interest): x.80 Allowable monthly principal and interest (PI) expense: =$ Divide by monthly payment per thousand dollars on page 45 =$ Multiply by $1,000 to find what the Lender will lend x 1,000 =$ In addition to the mortgage you borrow from a lender, normally you will be required to make a down payment a percentage of the purchase price you must pay in cash. A standard down payment is 20 percent of the purchase price, but it could be almost any amount, depending on the requirements of your lender. You can afford a house that is the total of your affordable mortgage amount plus the down payment and closing costs.

50 Page 48 A Homebuyer s Guide from RGS TITLE FINDING THE CASH Hidden assets can put a down payment and closing costs within your reach. Even if you don t have the cash now, your friends and family may make an informal loan against future tax refunds (items 1 and 2). There are other sources too (items 3 through 10). Verify your options with your tax consultant, mortgage lender, and real estate professional. FINDING THE CASH THE MORTGAGE LOAN PROCESS Get a refund on your income tax for your monthly mortgage payment. In this example, we ll use a person in the 33% tax bracket who meets the standard deduction, borrows $200,000 at 7.00% interest for 30 years, and closes on May 30. $ Avg. monthly interest, first 12 mo. $ Avg. monthly interest, first 12 mo. x.33 Tax rate (10, 15, 25, 27, 33 or 35% in 2006) x Tax rate =$ Avg. monthly tax break, first =$ Avg. monthly tax break, first 12 mo. 12 mo. x 7 No. of payments, first tax year x No. of payments, first tax year =$ Additional refund possible =$ Additional refund possible for new buyer for new buyer Informal loan against tax refund $ Take a first-year tax deduction for points paid on a mortgage. In this example, we ll use a person in the 33% tax bracket who meets the standard deduction, and who pays 3.5 points to borrow $75,000. $75,000 Total mortgage amount $ Total mortgage amount x.035 Points (if 3.5, multiply by.035) x Points =$2,625 Deduction for points =$ Deduction for points x.33 Tax rate (10, 15, 25, 27, 33 or 35% in 2006) x Tax rate =$ Additional refund possible =$ Additional refund possible for new buyer for new buyer Informal loan against tax refund First-time buyers: keep abreast of the news, as there may be special programs designed to help you State-run programs, deductions, and tax credits Your employer may have a program to help valued workers buy a home Money in savings Sell something of value, such as a boat or car Loan from a relative or friend Borrow against a life-insurance policy or pension fund Cash in an IRA prematurely (consult a tax expert, first) TOTAL HIDDEN FUNDS $ $ $ $ $ $ $ $ $ $

51 A Homebuyer s Guide from RGS TITLE Page 49 After the contract has been ratified and the loan has been approved, you and the Seller will attend settlement to complete the sale. At settlement you will sign your loan documents and pay the Seller and the Seller in turn, will deed the property to you. BEFORE SETTLEMENT When RGS TITLE receives your contract from your real estate agent, we do the follow ing (as required by your contract or lender): (1) Order title abstract and survey (2) Review title abstract and survey to determine marketability and insurability (3) Contact your lender to schedule settlement and prepare any required documents (4) Contact the Seller s lender to obtain the amount needed to pay off the Seller s existing loan(s) (5) Prepare title insurance commitment pursuant to Lender requirements (6) Contact the local taxing authority to verify the amount of property taxes and determine prorations between Buyer and Seller (7) Contact Homeowner s Association to verify the amount of homeowner s dues and determine prorations between Buyer and Seller (8) Obtain the lender s loan documents and proceeds check (9) Prepare the settlement sheet and any other required documents. On the day prior to settlement, you should contact us to determine the amount of money you will need. Your contract requires that funds be in the form of a cashier s or certified check or by bank-wired funds which MUST be received by our office PRIOR to settlement in order to comply with state law and your loan conditions. The check should be made payable to RGS TITLE. Also, your lender will require you to provide evidence of homeowners insurance prior to settlement. Please also check with your loan processor prior to settlement to see if you are required to bring any documents to settlement. DURING SETTLEMENT A settlement at RGS TITLE will be conducted by an attorney or licensed settlement agent. We will go through the settlement documents as you sign them, explaining the purpose of each. Since many of the documents you will be signing at settlement need to be notarized, you will need to bring to settlement a current form of identification containing your picture. Examples of acceptable forms of identification include driver s licenses or passports. This process usually takes 45 minutes to an hour. If any problems arise during settlement, we will assist the parties in reaching an agreement. An attorney with Shreves Schudel Saunders Jackson Clarke & Parello, PLLC, General Counsel to RGS TITLE, will be available to conduct the settlement or to assist in the resolution of disputes that may arise during settlement. Unless you are assuming an existing loan or paying cash, you will be signing quite a few documents at settlement. The following are examples and explanations of the documents you will typically see. HUD-1 SETTLEMENT STATEMENT The first document you will review and sign is the HUD-1 Settlement Statement. This form details all the charges and credits to the Buyer and Seller. The Buyer s figures are on the left-hand side of the page, the Seller s on the right. There is also a page comparing the charge estimates from the GFE to the actual charges from page 2 of the HUD-1 statement, so the borrower/buyer can easily see if the lender is within allowed tolerances. We have provided a sample of this document for your review on the following pages. After signing the settlement sheet, you will review and sign numerous other documents. Here are some of the forms seen in most settlements. HOUSE LOCATION SURVEY If the home you are purchasing is a single family detached home or a townhouse, SETTLEMENT

52 Page 50 A Homebuyer s Guide from RGS TITLE your lender may require that you obtain a House Location Survey. This document is prepared by a licensed surveyor for the purpose of showing the location of the improvements (structures within the boundaries of the property). RGS TITLE will arrange for this document to be prepared on your behalf and will submit it to your lender. You will receive copies of the survey at settlement. LOAN APPLICATION You may be asked to sign a printed copy of the loan application. This typed form is a confirmation of the form the loan officer filled out when you applied for the loan. The lender is asking you to verify that the information is substantially correct, and that there have been no material changes in your employment, marital or financial status. SETTLEMENT NOTE The Note is your agreement to repay the borrowed funds to your lender. This document will detail terms and conditions of your loan and the manner and form of repayment of the borrowed funds. DEED OF TRUST This document is a standardized security instrument filed at the courthouse to establish the lender s lien on the property for the original principal amount of the loan. The deed of trust secures the home as the collateral for the repayment of the loan. This document provides that in the event of default or non-payment, the lender may direct the trustees to foreclose on the property in order to recoup the loan proceeds. FIRST PAYMENT LETTER This document gives a breakdown of the total amount of your monthly payment. The total monthly payment will typically include principal and interest as well as any escrow for taxes, hazard insurance or mortgage insurance. LOAN APPROVAL LETTER OR LOAN COMMITMENT LETTER This is a letter from the lender which explains that your loan has been approved on certain terms and subject to certain requirements. The letter will state the terms of the loan, i.e., loan amount, interest rate, length of the loan. The lender will also list any additional requirements, such as a hazard insurance policy naming the lender as mortgagee, a survey or a termite report. FLOOD INSURANCE This document will inform you whether your home is located in a flood zone. If it is, the lender will require you to carry flood insurance on the property. If it is not, as is usually the case, the form will inform you that if the Federal Government ever deems your property to be within a flood zone, the lender will require you to obtain flood insurance. NAME AFFIDAVIT By signing this document you certify to the lender that you are known by all the variations of your name that the Lender has found on the credit report or other documents used in processing your loan. SIGNATURE AFFIDAVIT Your lender may require you to sign a statement that your signature on the loan documents is your legal signature, and that you agree to be bound by documents with this signature. TAX AUTHORIZATION Some lenders have you sign written instructions to the local real estate taxing authority authorizing it to send the tax bill directly to the lender who is holding money in escrow for payment of that bill. TERMITE INSPECTION You will be asked to acknowledge receipt of a copy of the termite inspection report. This report is prepared by a licensed exterminator and indicates whether any evidence of infestation has been discovered.

53 A Homebuyer s Guide from RGS TITLE Page 51 TRUTH-IN-LENDING STATEMENT The Truth-in-Lending disclosure is required by Federal law to be provided to each borrower. The purpose of this document is to disclose to the borrower an estimate of the annual cost as well as the total cost of the loan over the full term of that loan, factoring in all costs and fees incurred in placing the loan. Below is a detailed explanation of this form. W-9 AFTER SETTLEMENT In order to complete the process of settlement, we do the following, as required: (1) record the deed, deed of trust or assumption documents in the land records at the county courthouse, (2) audit the disbursement sheet, (3) disburse all proceeds, (4) issue the title insurance policy, (5) send the lender the packet of all signed documents, (6) pay off the Seller s lender, if any, and obtain and record a release of the Seller s deeds of trust, and (7) disburse any funds required to be escrowed at closing. This is an IRS form giving your social security number and new mailing address. You fill this out so that at tax time you can deduct the interest you pay to the lender. TRUTH-IN-LENDING ANNUAL PERCENTAGE RATE The cost of your credit at a yearly rate. FINANCE CHARGE The dollar amount the credit will cost you. Amount Financed The amount of credit provided to you or on your behalf. Total of Payments The amount you will have paid after you have made all payments as scheduled. SETTLEMENT A% $ B $ C $ D Q. What is a Truth-in-Lending Disclosure and why do I receive it? A. The Disclosure is designed to give you information about the costs of your loan so that you may compare these costs with those of other loan programs or lenders. Q. What is the Annual Percentage Rate? (Box A above.) A. The Annual Percentage Rate (A.P.R.) is the cost of your credit expressed as an annual rate. Because you may be paying loan discount points and other prepaid finance charges at closing, the A.P.R. disclosed is often higher than the interest rate of your loan. This A.P.R. can be compared to the A.P.R. on other loan programs to give you a consistent means of comparing rates and programs. Q. Why is the Annual Percentage Rate different from the interest rate for which I applied? A. The A.P.R. is computed from the Amount Financed and based on what your proposed payments will be on the actual loan amount credited to you at settlement. In a $50,000 loan with $2,000 Prepaid Finance Charges, a 30-year term, and a fixed interest rate of 12%, the payments would be $ (principal and interest). Since the A.P.R. is based on the Amount Financed ($48,000), while the payment is based on the actual loan amount given ($50,000), the A.P.R. (12.553%) is higher than the interest rate. Q. What is the finance charge? (Box B.) A. The Finance Charge is the cost of credit expressed in dollars. It is the total amount of interest calculated at the interest rate over the life of the loan, plus Prepaid Finance Charges and the total amount of any required mortgage insurance charged over the life of the loan. Q. What is the Amount Financed? (Box C.) A. The Amount Financed is the loan amount applied for, minus the Prepaid Finance Charges. Prepaid Finance Charges include items paid at or before settlement, such as loan origination, commitment or discount fees ( points ), adjusted interest, and initial mortgage insurance premium. The Amount Financed is lower than the amount you applied for because it represents a NET figure. If you applied for $50,000 and the Prepaid Financed Charges total $2,000, the Amount Financed would be $48,000.

54 Page 52 A Homebuyer s Guide from RGS TITLE A. Settlement Statement (HUD-1) OMB No B. Type of Loan 1. FHA 2. RHS 3. Conv Unins 4. VA 5. Conv Ins. 6. Seller Fin 7. Cash Sale. 6. File Number QTSHomeBuyer 7. Loan Number 8. Mortgage Ins Case Number C. Note: This form is furnished to give you a statement of actual settlement costs. Amounts paid to and by the settlement agent are shown. Items marked "(p.o.c.)" were paid outside the closing; they are shown here for informational purposes and are not included in the totals. D. Name & Address of Borrower Paul PURCHASER 123 Happy Trails Fairfax, VA E. Name & Address of Seller Sue SELLER 548 Forwarding Lane Lansing, MI F. Name & Address of Lender Mortgage Lender, Sales price per contract These charges are itemized on the second sheet. Gross amount due (before credits) The amount of the deposit you submitted with your original contract offer Your loan amount Credit for your costs as agreed to be paid by Seller in your contract. You or your lender will pay the tax bill when it is due. Here the seller is giving you a credit for the time he/she owned the house. G. Property Location Subdivision of Anywhere Estates, Lot 1, Block A, Fairfax, VA 123 Happy Trails Fairfax, VA H. Settlement Agent Name RGS Title, LLC Underwritten By: Stewart - VA - RGS Title, LLC Place of Settlement RGS Title, LLC 1801 Old Reston Avenue, Suite 100 Reston, VA J. Summary of Borrower's Transaction K. Summary of Seller's Transaction 100. Gross Amount Due from Borrower 400. Gross Amount Due to Seller I. Settlement Date 1/21/2011 Fund: 101. Contract sales price $200, Contract sales price $200, Personal property 402. Personal property 103. Settlement charges to borrower $8, Adjustments for items paid by seller in advance Adjustments for items paid by seller in advance 106. City property taxes 406. City property taxes 107. County property taxes 407. County property taxes 108. Assessment Taxes 408. Assessment Taxes 109. School property taxes 409. School property taxes 110. HOA Dues 410. HOA Dues 111. Other taxes 411. Other taxes Gross Amount Due From Borrower $208, Gross Amount Due to Seller $200, Amounts Paid By Or in Behalf Of Borrower 500. Reductions in Amount Due to Seller 201. Deposit or earnest money $5, Excess deposit (see instructions) 202. Principal amount of new loan(s) $160, Settlement charges to seller (line 1400) $7, Existing loan(s) taken subject to 503. Existing loan(s) taken subject to Payoff of first mortgage loan $86, Payoff of second mortgage loan Earnest Money Retained by Realtor $5, Closing Cost Credit $2, Closing Cost Credit $2, Adjustments for items unpaid by seller Adjustments for items unpaid by seller 210. City property taxes 510. City property taxes 211. County property taxes 01/01/11 to 01/21/11 $ County property taxes 01/01/11 to 01/21/11 $ Assessment Taxes 512. Assessment Taxes 213. School property taxes 513. School property taxes 214. HOA Dues 514. HOA Dues 215. Other taxes 515. Other taxes Total Paid By/For Borrower $167, Total Reduction Amount Due Seller $101, Cash At Settlement From/To Borrower 600. Cash At Settlement To/From Seller 301. Gross Amount due from borrower (line 120) $208, Gross Amount due to seller (line 420) $200, Less amounts paid by/for borrower (line 220) $167, Less reductions in amt. due seller (line 520) $101, Cash From Borrower $41, Cash To Seller $98, Contract sales price Gross amount due to seller. These charges are itemized on the second sheet. This is the principal balance of the loan plus all accrued, unpaid interest. Amount of earnest money deposit retained by agent as part of commission paid. Credit for your costs as agreed to be paid by Seller in your contract. Credit to the purchaser for real estate taxes accrued during that portion of the year when the seller owned the property. This amount will be due at settlement. Please bring a certified or cashier s check or initiate a bank wire prior to settlement. Cash amount to seller U.S. Department of Housing and Urban Development Page 1 of 3 HUD-1

55 A Homebuyer s Guide from RGS TITLE Page 53 See lines 201/506 Balance of commission paid outside closing from deposit held by broker. Total lender/mortgage broker fees for processing and underwriting to originate your loan. May be a credit or a charge for Points and any mortgage broker credits each point is 1% of the loan amount* and may appear here or as part of line 801.* Net adjusted Loan Origination Charge (sum of Lines 801 and 802). Fees charged for other services required to prepare your loan. Includes all charges required to issue title insurance (e.g., title search and examination, binder fee, courier fees for documents to and from your lender and for recording), cost of the lender s title insurance, and fee for preparing closing documents and conducting settlement. In addition to your principal and interest payment, each month you will pay these amounts into your lender s escrow account. Cost of Owner s coverage title insurance premium. Unlike most insurance, you only pay for title insurance once.* L. Settlement Charges 700. Total Real Estate Broker Fees $12, Paid From Paid From Division of Commission (line 700) as follows: Borrower's Seller's 701. $6, to Listing Agent's Company Funds at Funds at 702. $6, to Selling Agent's Company Settlement Settlement 703. Commission Paid at Settlement $0.00 $7, (EMD $5,000 to Selling Agent's Company 704. to P.O.C.) 800. Items Payable in Connection with Loan 801. Our origination charge (includes orgination point $1600) $3, (from GFE #1) 802. Your credit or charge (points) for the specific interest rate chosen $0.00 (from GFE #2) 803. Your adjusted origination charges to Mortgage Lender (from GFE A) $3, Appraisal Fee to Appraisal Professionals (from GFE #3) $ Credit report to Credit plus POC (B) $55.00 (from GFE #3) 806. Tax service to First American (from GFE #3) $ Flood certification to FDSI (from GFE #3) $ Items Required by Lender To Be Paid in Advance 901. Daily interest charges from 1/21/2011 to $17.54/day (from GFE #10) $ Mortgage Insurance Premium for months to (from GFE #3) 903. Homeowner's insurance for years to POC (B) $ (from GFE #11) Reserves Deposited With Lender Initial Deposit for your escrow account (from GFE #9) $1, Homeowner's insurance 3 $46.67 per month $ Mortgage insurance per month $ City property taxes per month $ County property taxes 5 $ per month $1, Assessment Taxes per month $ School property taxes per month $ HOA Dues per month $ Other taxes Other taxes Aggregate Adjustment $ Title Charges Title services and lender's title insurance to RGS Title, LLC (from GFE #4) $1, Settlement or closing fee to RGS Title, LLC $ Owner's title insurance to RGS Title, LLC (from GFE #5) $ Lender's title insurance to RGS Title, LLC $ Lender's title policy limit $160,000.00/$ Owner's title policy limit $200,000.00/$ VA - Enh Own/Basic Loan Agent's portion of the total title insurance premium to RGS Title, LLC $ Underwriter's portion of the total title insurance premium to Stewart Title Guaranty $ Document preparation to Shreves,Schudel, Saunders, Jackson, Clarke $ & Parello, PLLC Delivery/Handling Service to RGS Title, LLC $ Prepare/Obtain Release Fee to RGS Title, LLC $ R-5 Compliance Fee to RGS Title, LLC $ File Archive Fee to RGS Title, LLC $ Government Recording and Transfer Charges Government recording charges (from GFE #7) $ Deed $33.00 ; Mortgage $46.00, Release $0.00 to Clerk of the Court Transfer taxes (from GFE #8) $1, City/County tax/stamps Deed $ ; Mortgage $ to Clerk of the Court State tax/stamps Deed $ ; Mortgage $ to Clerk of the Court Grantor's Tax to Clerk of the Court $ Additional Settlement Charges Total real estate commission paid Required services you can shop for (from GFE #6) Survey Fee to Surveyor $ Pest Inspection to Termite and Pest Company $ Verify/Record Release Fee to RGS Title, LLC $ Total Settlement Charges (enter on lines 103, Section J and 502, Section K) $8, $7, Real estate commis - sion disbursed by settlement agent. Prepaid interest in this case the first mort gage payment will be due 3/1/11. The 3/1/11 payment pays for February interest. January s interest is paid at closing.* Initial deposit to escrow total of all section 1000 escrow items, including any aggregate adjustment credit, line Seller charge for pre paring closing documents and conducting settlement+. You may use the attorneys at Shreves Schudel Saunders Jackson Clarke & Parello PLLC or you may choose your own attorney. This is the fee to prepare the legal documents re quired for closing+. Fee to deliver papers to and from your lender+ and to the court for re cording. We send the payoff by over night de livery or wire. This way interest stops on the loan as soon as possible. Fee for obtaining the release of any note secured by the property+. Permanent digital record of all your closing documents+. This amount is $1.00 per every thousand dollars of the sales price. Fee for having the property inspected for termites. County and state recording fees and tax stamps. Total county and state recording taxes. A survey is recommended and may be required by the lender or title insurance company. RGS Title will order the survey for you. This amount is shown on Line 103 of Page 1. This amount is shown on Line 502 of Page 1. Fee for recording the release of existing liens on the property.* Page 2 of 3 HUD-1 +These fees are estimates only and are subject to change. Please call RGS TITLE for our current fees. *These items may be tax deductible. Check with your accountant or tax attorney.

56 Page 54 A Homebuyer s Guide from RGS TITLE Comparison of Good Faith Estimate (GFE) and HUD-1 Charges Good Faith Estimate HUD-1 Charges That Cannot Increase HUD-1 Line Number Our origination charge # 801 $3, $3, Your credit or charge (points) for the specific interest rate chosen # 802 $0.00 $0.00 Your adjusted origination charges # 803 $3, $3, Transfer taxes # 1203 $1, $1, Charges That in Total Cannot Increase More Than 10% Good Faith Estimate HUD-1 Government recording charges # 1201 $80.00 $79.00 Appraisal Fee # 804 $ $ Credit report # 805 $30.00 $55.00 Tax service # 806 $70.00 $78.00 Flood certification # 807 $15.00 $14.00 Total $ $ Increase between GFE and HUD-1 Charges $31.00 or 6.26% Charges That Can Change Good Faith Estimate HUD-1 Initial deposit for your escrow account # 1001 $1, $1, Daily interest charges # 901 $17.54/day $ $ Homeowner's insurance # 903 $ $ Title services and lender's title insurance # 1101 $ $1, Owner's title insurance # 1103 $ $ Loan Terms Your initial loan amount is $160, Your loan term is 0 years Your initial interest rate is 5.5% Your initial monthly amount owed for principal, interest, and any mortgage insurance is Can your interest rate rise? $ includes x Principal x Interest o Mortgage Insurance x No. Yes, it can rise to a maximum of 0%. The first change will be on and can change again every after. Every change date, your interest rate can increase or decrease by 0%. Over the life of the loan, your interest rate is guaranteed to never be lower than 0% or higher than 0%. Even if you make payments on time, can your loan balance rise? x No. Yes, it can rise to a maximum of $0.00 Even if you make payments on time, can your monthly amount owed for principal, interest, and mortgage insurance rise? x No. Yes, the first increase can be on and the monthly amount owed can rise to $0.00 The maximum it can ever rise to is $0.00 Does your loan have a prepayment penalty? x No. Yes, your maximum prepayment penalty is $0.00 Does your loan have a balloon payment? x No. Yes, you have a balloon payment of $0.00 due in 0 years on Total monthly amount owed including escrow account payments You do not have a monthly escrow payment for items, such as property taxes and homeowner s insurance. You must pay these items directly yourself. x You have an additional monthly escrow payment of $ that results in a total initial monthly amount owed of $1, This includes principal, interest, any mortgage insurance and any items checked below: x Property taxes x Homeowner's Insurance o Flood insurance o o o Note: If you have any questions about the Settlement Charges and Loan Terms listed on this form, please contact your lender. INFORMATION ON THIS PAGE IS PROVIDED BY YOUR LENDER. It allows you to compare actual HUD-1 settlement charges to the GFE provided by your lender and verify that they did not exceed allowed tolerances. In addition it provides a summary of the basic terms of your loan and monthly payment. Page 3 of 3 HUD-1

57 A Homebuyer s Guide from RGS TITLE Page 55 At settlement, you will be required to have a certified or cashier s check or bank-wired funds for your settlement costs. These costs will include the balance of your down payment, charges from your lender, the title company and government recording fees. Every mortgage lender structures charges to the borrower differently, and the allocation of specific charges between the Buyer and Seller will depend upon the type of loan and the allocation agreed to in your sales contract. When you apply for your loan, your lender will give you a good faith estimate of closing costs (GFE), on a standardized form, which will include both the lender s and title company s charges as well as recording fees and other charges for services required to close your transaction. Keep in mind this is just an estimate, and, while the lender is required to disclose these charges and to be accurate within certain tolerances, it may not reflect the total amount of money you need to bring to closing. Please call RGS TITLE immediately prior to settlement to verify this amount. We have provided a worksheet on the next page to help you calculate the amount of your settlement costs. We will be happy to help you with any of these calculations just call us. Below is an explanation of some of the more common charges. LENDER S FEES Points each point is one percent of the loan amount. For an FHA loan, the origination fee is a percentage of the base loan amount and the discount points are based on the base loan amount plus the mortgage insurance premium. Document Preparation Fee the fee the lender charges to prepare the documents that you will sign at settlement. Tax Service Fee the fee charged by the lender for setting up a computerized tax paying service. PMI (Private Mortgage Insurance) generally charged by lenders on conventional loans when you are making a down payment of less than 20% of the purchase price of the property. MIP (Mortgage Insurance Premium) for FHA loans. This is paid in a one-time premium up front, plus monthly payments for the term of the loan. Origination Charge this term includes all lender and mortgage broker fees for application, processing, underwriting, document preparation, and other fees required to originate the loan. PLEASE NOTE not all lenders charge all these fees on every loan and some lenders have other fees in certain cases. YOU WILL WANT TO CONTACT YOUR LENDER FOR THEIR FEES. ESCROWS An escrow is money that the lender will hold until bills are received. Usually the lender holds funds in escrow to pay the hazard insurance and property taxes. To determine the monthly amount, take the annual amount of each bill and divide by twelve. The estimate sheet tells you how many months of each kind of escrow the lender is likely to require at settlement. TITLE CHARGES AND SETTLE- MENT FEES The following services are included under the term Title Charges : Settlement one of the many services RGS TITLE provides. We have documents prepared, conduct the settlement, coordinate with the lender and all other parties, disburse funds, record documents, procure and record releases of existing liens, issue title insurance policies and more. Title Search and Examination a search and review of the public land records to verify ownership of property. This also establishes the loans and other liens that must be satisfied from the Seller s proceeds at settlement. Title Binder a binder or commitment to issue title insurance is required by your lender to be provided to them prior to closing. Title Insurance Premium The amount paid for title insurance coverage based upon loan amount and purchase price. HUD requires that the premium for the lender coverage be included with the Title Charges. The premium for your coverage as owner is shown separately. Delivery Lender and scheduling deadlines require documents that are part of the process to be hand-carried to and from the lender and to the courthouse. BUYER S ESTIMATE OF SETTLEMENT CHARGES

58 Page 56 A Homebuyer s Guide from RGS TITLE GOVERNMENT RECORDING CHARGES County and State Tax Stamps The various counties and the State of Virginia each charge a transfer tax on the recording of documents for the purchase of a home. The District of Columbia and the various counties in Maryland charge varying fees for each transfer of real property. In the District of Columbia, the transfer and recordation taxes total 2.9% of the sales price with 1.45% being charged to each party.* In Montgomery County, Maryland, there is a transfer tax calculated at $6.90/$1,000 of the purchase price up to $500,000, after which it is $10.00 per $1,000. The state of Maryland charges 1/2 of 1% for state stamps. These charges are almost always split evenly by the parties. *If the sales price is $400,000 or less and the purchaser will make the property his/her primary residence, then the total tax is 2.2%. MARYLAND TRANSFER AND RECORDATION TAXES BY COUNTY (AS OF 4/28/10) BUYER S ESTIMATE OF SETTLEMENT CHARGES COUNTY COUNTY TRANSFER STATE TRANSFER STATE RECORDATION TAX TAX TAX* Allegheny 0.500% $6.50 per $1, % Anne Arundel 1.000% $7.00 per $1, % Baltimore 1.500% $5.00 per $1, % Baltimore City 1.500% $10.00 per $1, % Calvert none $10.00 per $1, % Caroline 0.50% $10.00 per $1, % Carroll none $10.00 per $1, % Cecil none $8.20 per $1, % Charles none $10.00 per $1, % Dorchester 0.75% $10.00 per $1, % Frederick none $12.00 per $1, % Garrett 1.00% $7.00 per $1, % Harford 1.00% $6.60 per $1, % Howard 1.00% $5.00 per $1, % Kent 0.50% $6.60 per $1, % Montgomery 1.00% $6.90 per $1,000** 0.500% Prince George s 1.40% $5.00 per $1, % Queen Anne s 0.50% $9.90 per $1, % St. Mary s 1.00% $8.00 per $1, % Somerset none $6.60 per $1, % Talbot 1.00% $6.60 per $1, % Washington 0.50% $7.60 per $1, % Wicomico none $7.00 per $1, % Worcester 0.50% $6.60 per $1, % *Reduced to 0.25% for First Time MD Homebuyers. (Seller will pay) **Montgomery County; if over $500,000: $10.00 per $1, PLEASE NOTE: Individual Counties and the City of Baltimore may have various Credits and Exemptions that reduce the amounts reflected herein. Contact your local RGS Office for an explanation of those Credit and Exemptions.

59 A Homebuyer s Guide from RGS TITLE Page 57 OTHER COSTS Survey the fee for a house location survey showing the location of the improvements within the boundaries of the property. Homeowners Association or Condo - minium Fees if applicable, this fee will usually be the next month s fee; in addition you will reimburse the Seller for the portion of the month which follows settlement. BUYER S SETTLEMENT COSTS WORKSHEET 1. Balance of Down Payment (Purchase price less loan amount less earnest money deposit) 2. Lender s Fees (Call your lender for an estimate) 1) Origination Fee and Discount Points to be paid by Buyer (One point is one percentage point of the loan amount) 2) Document Preparation Fee 3) Tax Service Fee 4) First-year PMI Premium or FHA MIP, if any 5) Other Fees 3. Escrows (Annual Rate divided by 12 equals the monthly escrow) 1) Homeowner s Insurance (2 months) 2) PMI (2 months) 3) Real Estate Tax (Includes reimbursement to Seller of prepaid taxes, up to 8 months in counties that require payment of taxes twice a year, up to 14 months in counties that require payment of taxes once a year) 4. Settlement Fees (Call RGS TITLE for an estimate) 1) Settlement Services 2) Title Examination 3) Title Insurance Premium 4) Miscellaneous Fees (messenger, copies) 5. Governmental Recording Charges A) Virginia Recording Fees 1) Recordation of Deed and Deed of Trust (Estimated at $79.00) 2) County Transfer Tax (.08333% of the Sales Price plus loan amount) 3) State Transfer Tax (.25% of the Sales Price plus loan amount) B) Montgomery County, MD Recording Fees (Payment allocation for these taxes is negotiable and will be determined by Contract Terms) 1) Recordation of Deed and Deed of Trust (Estimated at $80.00) 2) County Recordation Tax ( per $1,000 of the Sales Price) (See chart on page 56.) 3) State Transfer Tax ( of 1% of the Sales Price) (See chart on page 56.) 4) County Transfer Tax ( of 1% of Sales Price) (See chart on page 56.) C) Washington, DC Recording Fees 1) Recordation of Deed and Deed of Trust (Estimate at $175.00) 2) DC Transfer & Recordation Taxes (1.45% of purchase price if over $400,000; if under: 1%) 6. Other Costs 1) Survey 2) Homeowners or Condo Fees 3) Miscellaneous BUYER S ESTIMATE OF SETTLEMENT CHARGES TOTAL ESTIMATED CHARGES This is simply an estimate. Please call us to verify this amount and then bring to settlement a cashier s or certified check made payable to RGS TITLE in the appropriate amount.

60 Page 58 A Homebuyer s Guide from RGS TITLE AMOUNTS DUE TO SELLER: SELLER S SETTLEMENT COSTS WORKSHEET Contract Sales Price $ Property tax and other escrow funds held by your mortgage lender (usually refunded by the Lender one month after settlement) $ Prorated portion of paid-up property taxes $ Prorated portion of paid-up homeowner s dues $ Other $ GROSS AMOUNT DUE TO SELLER $ AMOUNTS DUE FROM SELLER: Brokerage commission (Generally 6% of the sales price) $ Fee to Title Company $ Attorney s Fees (For document preparation) $ Recording Fees (Usually $31.00 to release each existing lien) $ State Grantor s Tax (Indicates $1.00 per thousand of sales price for all Virginia jurisdictions) $ Maryland BUYER S ESTIMATE OF SETTLEMENT CHARGES County Recordation Tax ( per $1,000 of the Sales Price) $ See chart on page 56. State Transfer Tax ( of 1% of the Sales Price) $ See chart on page 56. County Transfer Tax ( of 1% of the Sales Price) $ See chart on page 56. ( Contract terms will stipulate what portion/percentage of these fees/taxes seller will pay.) Washington, DC DC Transfer Tax (1.45% of Sales Price over $400,000; if under: 1.1%) $ Special inspections you ve agreed to pay for $ Closing Cost Credit if you ve agreed to pay them in the contract $ Balance of any indebtedness secured by the property $ Other charges $ TOTAL PAID BY SELLER $ Net Amount Due to Seller: Gross Amount Due (from above) $ Less: Total Paid (from above) $ Net Amount Due $ Under Virginia Law, the Seller cannot receive any proceeds from the sale of the property until the Deed and Security Instruments have been recorded. This will be done within fortyeight hours after settlement. If you wish to have your funds wired to you, be sure to bring to settlement a voided check from the account to which you would like your proceeds wired. If you are required to bring money to settlement, make sure it is in the form of a Certified or Cashier s check or that you initiate a bank wire prior to settlement.

61 A Homebuyer s Guide from RGS TITLE Page 59 WHAT IS TITLE INSURANCE? Before answering what is title insurance it might be best to first answer what is title? Title is the ownership in real property. Among other things, it means that you have the legal right to possess, occupy, peacefully enjoy and sell your property without interference from others, subject only to restrictions imposed by governmental authorities or previous owners. In most cases, title is transferred by deed which is recorded in the land records of the county in which the property is located. Generally, when property is sold, an attorney for the Buyer or title examiner goes to the record room and searches the land records for any title defects. A title defect is anything in the entire history of ownership of a piece of real estate which may encumber the owner s rights under the title. A title defect may cause the owner of real property to lose all or part of his land to a superior ownership interest or claim of another. This is the type of loss which title insurance protects against. In short, if you own a title insurance policy, the title insurance company will defend you, without cost, against an attack or claim upon your ownership interest in your property as insured and you will be protected against financial loss caused by a title defect. If my title has been examined, why isn t that enough? There are many defects which even the most meticulous search of the land records will not uncover. For instance, it is impossible for an examiner to know whether the marital rights of all previous owners have been relinquished; whether all deeds, mortgages and judgments affecting the property have been properly indexed in the land records; whether all signatures are valid; or whether an unknown heir of a previous owner has a valid claim against the property. Without owner s title insurance you may have no avenue of recovery for these types of problems. If I am required to purchase lender s insurance, why do I need owner s coverage as well? In almost every instance, a lender will require you to purchase lender s title insurance protecting it up to the value of its loan on the property. This coverage only protects the lender, not you, and the coverage diminishes as the loan is paid off. As you build more equity in the property, you expose yourself to a higher risk of loss occasioned by a title defect. In this situation the pro tected lender will suffer no loss while you bear the substantial risk of the damage. Owner s title insurance will protect you against any covered loss from failure of title up to the full amount of the policy. IMPORTANT REASONS WHY YOU SHOULD HAVE IT Owner s Title Insurance will protect you against those hidden risks which would not be disclosed by even the most meticulous search of public records. 1. Forgery. 2. Fraud in connection with execution of documents. 3. Undue influence on a grantor or executor. 4. False personation by those purporting to be owners of property. 5. Incorrect representation of marital status of grantors. 6. Undisclosed or missing heirs. 7. Wills not properly probated. 8. Mistaken interpretation of wills and trusts. 9. Mental incompetence of grantors. 10. Conveyance by a minor. 11. Birth of heirs subsequent to date of will. 12. Inadequate surveys. 13. Incorrect legal descriptions. 14. Non-delivery of deeds. 15. Unsatisfied claims not shown on record. 16. Deeds executed under expired or false powers of attorney. 17. Confusion due to similar or identical names. 18. Dower or curtesy rights of ex-spouses of former owners. 19. Incorrect indexing. 20. Clerical errors in recording legal documents. 21. Delivery of deeds after death of grantor. OWNER S TITLE INSURANCE

62 Page 60 A Homebuyer s Guide from RGS TITLE Buying a new home could be the single most important investment you will make. It is critical that you understand the process and your options so that you can make an informed and well reasoned decision on every aspect of the home buying process. That is why we have provided you with this Guide. Your choice of real estate agent, loan officer and title company is as important as your choice of which home to buy. Finding the right professionals who understand your needs, preferences and resources can make the difference in whether your experience is smooth and efficient or lengthy and plagued with problems. Do your research it will be worth the effort. Talk to your friends and business associates for referrals. Your real estate agent can also make you aware of a lender and title company who have done a good job for them in the past and who will meet your needs and give you the excellent service you deserve. At RGS TITLE, we welcome your questions. Not only are we happy to answer questions regarding our fees, or the services we perform, but we can also help you understand or solve most of the problems which can occur during the home buying process. YOUR SEARCH FOR A SETTLEMENT COMPANY any potential title or survey problems? Will the title company work with you to answer questions you have about the closing documents or the settlement process and provide you with your final settlement charges as soon as possible before settlement? How experienced is the company? Will they be available in the future long after your settlement has taken place? Finally, you should ask, is the title company represented by legal counsel who is available to you and your real estate agent to help avoid or resolve the many legal problems which occur during the home buying process? The attorneys who conduct settlements at RGS TITLE are not employed by RGS TITLE. They are employed by the law firm of Shreves Schudel Saunders Jackson Clarke & Parello, PLLC, our general counsel. They are experienced in real estate law and have dealt with the issues that arise in the home buying process. For that reason, many of the areas top real estate agents have come to rely on RGS TITLE and our general counsel. At RGS TITLE, we draw on the experience of our professional staff to make sure we offer you the services you need to ensure a smooth and efficient settlement. In each and every aspect of the closing process, we are committed to excellent service. We believe that is essential for an investment as important as your new home. IN CLOSING... When choosing a title/settlement com - pany, don t just compare prices compare services. Most title companies will offer a basic range of services. These basics include preparation and recordation of the closing documents and disbursement of funds. Title companies who only offer these basic services may be cheaper or they may not be but you need to ask yourself whether your best interest will be served by cutting corners. So ask questions: Will the title company work with your lender to avoid scheduling problems, to make sure all title and survey requirements are met, and to resolve any unexpected loan charges at settlement? Will the title company work with your real estate agent to ensure compliance with the sales contract and to alert them to

63 A Homebuyer s Guide from RGS TITLE Page 61 RGS TITLE BETHESDA...(301) (301) FAX BOWIE...(301) (301)???-???? FAX ROCKVILLE...(301) (301) FAX SILVER SPRING...(301) (301) FAX WASHINGTON, DC...(202) (202) FAX ALEXANDRIA...(703) (703) FAX ANNANDALE...(703) (703) FAX ARLINGTON...(703) (703) FAX ASHBURN...(703) (703) FAX BURKE...(703) (703) FAX CENTREVILLE...(703) (703) FAX FAIR OAKS...(703) (703) FAX FREDERICKSBURG...(540) (540) FAX GAINESVILLE...(571) (571) FAX LAKE RIDGE...(703) (703) FAX LEESBURG...(703) (703) FAX LORTON...(703) (703) FAX MANASSAS...(703) (703) FAX MCLEAN...(703) (703) FAX OAKTON...(703) (703) FAX STERLING...(703) (703) FAX RESTON...(703) (703) FAX SPRINGFIELD...(703) (703) FAX STAFFORD...(540) (540) FAX WARRENTON...(540) (540) FAX WINCHESTER...(540) (540) FAX OTHER IMPORTANT PHONE NUMBERS Lender: Loan Officer: Telephone Number: FAX Number: Processor: Telephone Number: Realtor : Listing Agent: Telephone Number: FAX Number: Selling Agent: Telephone Number: FAX Number: Settlement Company: RGS TITLE Attorney: Processor: Telephone Number: FAX Number: Insurance Agent: Telephone Number: FAX Number: Home Inspector: Telephone Number: FAX Number: IMPORTANT TELEPHONE NUMBERS Or, visit us on the web at

64 Page 62 A Homebuyer s Guide from RGS TITLE IMPORTANT TELEPHONE NUMBERS Utilities and Schools Northern Virginia Telephone Verizon (toll-free) Verizon Comcast Cox Communications Utilities AmeriGas...(540) City of Fredericksburg...(540) Culpeper County...(540) Madison County...(540) City of Manassas Dominion Virginia Power Northern Neck Electric Northern Virginia Electric PEPCO-DC Rappanhannock Electric Columbia Gas Washington Gas Spotsylvania County...(540) Stafford County...(540) Water Alexandria Arlington Town of Culpeper Fairfax County City of Fairfax Town of Vienna Fauquier Town of Warrenton Falls Church Herndon Town of Leesburg Loudoun City of Manassas Prince William Dale City Water (VA American Water Co.) Dale City Sewer (Dale Service Corp) Town of Hamilton Town of Purcellville Town of Round Hill City of Fredericksburg King George County Public Schools Websites Fairfax County... Loudoun County... Arlington County... Fauquier... Spotsylvania... Fredericksburg... Warren... King George County... Orange County... index.htm Madison County... k12.va.us Prince William... Stafford County... Div/Stafford Special Education Office

65 A Homebuyer s Guide from RGS TITLE Page 63 Utilities Fredericksburg/Stafford Electric... Dominion Virginia Power NOVEC or Rappahannock Electric Verizon of Virginia Adelphia Cable Cox Cable of Fredericksburg Columbia Gas of VA Water/Sewer Bowling Green (Town limits) Caroline County Culpeper (Town limits) Fauquier County Fredericksburg (City) Lake Caroline (Ladysmith Water Co.) Lake of the Woods & Orange County Spotsylvania County Stafford County Natural Gas Columbia Gas Washington Gas Propane/Bottled Gas AmeriGas or Anderson Propane Blossman Propane Ferrell Gas Quarles Divisions: Central Caroline, King George, Louisa, Orange, Spotsylvania, Stafford Culpeper Culpeper, Fauquier, Louisa, Orange Suburban Propane Southern States Miss Utility of Virginia...(800) Maryland & DC Utilities WSSC Washington Gas PEPCO DC Water Rockville Water Frederick Gas Company Frederick Water Comcast... Direct TV... District of Columbia... Montgomery County... countymd.gov IMPORTANT TELEPHONE NUMBERS

66 Page 64 A Homebuyer s Guide from RGS TITLE GLOSSARY Adjustable Rate Mortgage (ARM) interest rates on this type of mortgage are periodically adjusted up or down, depending on a specified financial index. Agent acts on behalf of another, representing that person s interests and serving as an intermediary. Amortization a method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan, principal repayment is very small and interest repayment very high; at the end of the loan, that relationship is reversed. Annual Percentage Rate (APR) the actual finance charge for a loan, including points and loan fees in addition to the stated interest rate. Appraisal an expert judgment of the value or worth of a property. ARM see Adjustable Rate Mortgage Assessed Value the value placed on property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value. Assignment of Funds a direction to a third party to transfer funds from the sale or mortgage of one property directly to the Settlement Agent for the specified contract property. Assumption of Mortgage Buyer assumes liability for an existing mortgage note held by the Seller. This is subject to approval by the lender, who must be willing to approve the Buyer and release the Seller. Balloon Payment a large principal payment due all at once at the end of some loan terms. Broker a real estate professional who has a higher level of training than an agent. Generally, this is one who is the legal representative or proprietor of the office. Cap limit on how much the interest rate can change in an ARM. Closing see Settlement. Commission fee (usually a percentage of total transaction) paid to an agent or broker for services performed. Condominium (Condo) type of real estate ownership where the owner has title to a specific unit and shared interest in common areas. Contingency a condition in a contract that must be met for the contract to be binding. Contract binding legal agreement between two or more parties that delineates the conditions for the exchange of value (for example: money exchanged for title to property). Conversion Clause a provision that allows converting an ARM to a fixed-rate loan after a specified interval. Deed legal document that formally conveys ownership of property from Seller to Buyer. Down Payment percentage of the purchase price that the Buyer must pay in cash and may not borrow from the lender. Earnest Money a large deposit paid when the sales contract is signed before the closing. Equity the value of the property actually owned by the homeowner: purchase price plus appreciation plus improvements, less mortgages and liens. Escrow a fund or account held by a third-party custodian until conditions of a contract are met. Fannie Mae see Federal National Mortgage Association. Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (FNMA, called Fannie Mae ) privately owned corporations created by Congress that buy mortgage notes from local lenders and are responsible for the guidelines a majority of lenders use to qualify borrowers. Finance Charge the total cost, including all fees, points and interest payments a borrower pays to obtain credit. Fixed Rate Mortgage interest rates on this type of mortgage remain the same over the life of the loan term. Compare to Adjustable Rate Mortgage. Fixture a recognizable entity (such as a toilet bowl, kitchen cabinet, or light unit) that is permanently attached to property and belongs to the property when it is sold. GFE Good Faith Estimate provided by the lender on a federally mandated form to disclose to borrower the estimated charges for closing. Hazard Insurance compensates for property damage from specified hazards such as fire and wind. More complete coverage is given by all-risk homeowner s insurance.

67 Home Inspection Report prepared by a qualified inspector, it evaluates a property s structure and mechanical systems. HUD-1 A precise breakdown of closing costs for both Sellers and Buyers (Also known as HUD-1 Settlement Statement) required by the Real Estate Settlement Procedures Act. Impounds Another term sometimes used for Escrows collected and held by a lender to pay taxes and insurance on the mortgaged property. Interest The cost of borrowing money, usually expressed as a percentage over time. Lien a security claim on property until a debt is satisfied. Listing Contract agreement whereby an owner engages a real estate agent for a specified period to sell property, for which sale the agent receives a commission. Market Value the price that is established by present economic conditions, locations, and general trends. Market Price the actual price at which a property sold. Mortgage security claim by a lender against property until the debt is paid. Metropolitan Regional Information System (MRIS) a system that provides to its members detailed information about properties for sale. Negative Amortization A method of calculating fixed monthly payments in combination with a variable interest rate. When monthly payments are not enough to cover interest costs, unpaid interest is added to the principal balance. Origination Fee application fee(s) for processing a proposed mortgage loan. PITI principal, interest, taxes, and insurance, forming the basis for monthly mortgage payments. Point one percent of the loan principal. It s charged in addition to interest and fees. Prepayment Penalty a fee paid by a borrower who pays off the loan before it is due. Prequalification informal estimate of how much financing a potential borrower might expect to obtain, done before paying substantial loan application fees. Principal one of the parties to a contract; or the amount of money borrowed, for which interest is charged , RGS TITLE LLC All rights reserved. Prorate divide or assess proportionately. Realtor a member of the National Association of Realtors. RESPA Statement (see HUD-1) Real Estate Settlement Procedures Act, a precise breakdown of closing costs for both Sellers and buyers. (Also known as HUD-1 Settlement Statement.) RGS TITLE The Washington, D.C. Metropolitan area s leading residential settlement company for over 20 years. Settlement all financial transactions required to complete contract performance/obligations. Title document that indicates ownership of a specific property. Title Insurance protects against loss from defects in the title. Title Search detailed examination of the entire document history of a property title to make sure there are no encumbrances. Types of Ownership There are four types of ownership: They are: a. Sole Ownership Only one person owns the property. b. Tenants in Common Two or more persons have an undivided ownership in the property. The percentage of ownership need not be equal; each party has a right to sell his interest, and upon the death of any of the owners that owner s interest in the property goes to the deceased s heirs. c. Joint Tenants Ownership taken by two or more persons at the same time in equal percentages with an undivided right to possession. If one owner dies, his or her interest automatically goes to the remaining owner(s). d. Tenants by the Entireties Owners are husband and wife and together they hold title to the property with a right of survivorship. Upon the death of either, the survivor takes sole ownership to the exclusion of the deceased spouse s heirs. Unreleased Trust A mortgage or lien recorded in the Court records that appears to be outstanding (where no Certificate of Satisfaction/release has been recorded).

68 Wherever Your Business May Take You WE RE ALREADY THERE! Convenient locations throughout Virginia, Maryland, and Washington, D.C. More than 300,000 residential settlements performed! More than 20 years of service to metropolitan area Realtors! Free Homebuyers Guide available! 24-hour Realtor Hotline: (877) ! Visit our unique Web site at for compre hensive explanations of procedures, office directions and online fee quotes 24 hours a day, seven days a week! More awards for outstanding customer service than any other local title company! Find us on Facebook. The most trusted name in residential settlements for more than twenty years. VIRGINIA OFFICES Alexandria (703) (703) FAX Annandale* (703) (703) FAX Arlington* (703) (703) FAX Ashburn (703) (703) FAX Burke (703) (703) FAX Centreville* (703) (703) FAX Fair Oaks (703) (703) FAX Fredericksburg (540) (540) FAX Gainesville (571) (571) FAX Lake Ridge (703) (703) FAX Leesburg (703) (703) FAX Lorton (703) (703) FAX Manassas (703) (703) FAX McLean (703) (703) FAX Oakton (703) (703) FAX Sterling (703) (703) FAX Reston* (703) (703) FAX Springfield (703) (703) FAX Stafford (540) (540) FAX Warrenton (540) (540) FAX Winchester (540) (540) FAX Realtor Hotline (877) MARYLAND & WASHINGTON, D.C. OFFICES Bethesda (301) (301) FAX Bowie (301) (301) FAX Rockville (301) (301) FAX Silver Spring* (301) (301) FAX Washington, DC (202) (202) FAX *English & Spanish