Home Buyer's

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					Home Buyer’s
         Guide
                           North Bay Title




                          “An Important Member of the Real Estate Team”

                          North Bay Title has a proven track record for high quality service and financial
                          stability to give peace of mind to the homebuyer.

                          Today, the traditional title company is an integral part of the real estate
                          closing process. The realtor and consumer need real estate information
                          to make an informed decision. Therefore, it is the challenge of the title
                          insurance company to help its customers by providing accurate information
                          and quick closings, whether they are lenders, real estate professionals or
                          homebuyers.




the tools you need | the service you trust

                                                           www.northbaytitle.com
                                                           Main Office:
                                                           431 E Street, Santa Rosa, CA 95404
                                                           (707) 526-2000                                   1
                           Thank You




                          Dear Home Buyer:

                          Thank you for giving me the opportunity to help guide you through your home
                          buying process, which can be very confusing and sometimes complicated.
                          Please be assured that I am committed to guide you through the process,
                          so it is completely understandable and hassle-free. So let’s get started.

                          The information in this handbook will educate and assist you
                          with the following:

                          • help determine your wants and needs
                          • steps of the buying process
                          • loan information
                          • explaining the escrow and title process
                          • home warranties

                          I look forward to working with you during the entire home buying process.
                          I welcome any questions you may have after reading this information.
                          Please feel free to contact me at anytime.

                          Sincerely,



                          Your North Bay Title Representative




the tools you need | the service you trust

                                                           www.northbaytitle.com
                                                           Main Office:
                                                           431 E Street, Santa Rosa, CA 95404
                                                           (707) 526-2000                               2
                                      3
B U Y I N G   P R O C E S S
                     Buying Process
4
                             Focus On The Features




                             It’s very easy to become charmed and infatuated with a house and see only
                             the things you like, especially if you’re a first-time homebuyer. So, have a
                             good idea of what you’re looking for before you go looking. It will be the
                             best insurance you have to make sure you “find the right one.” It should be a
                             house that fits your personality, your everyday living needs, and your future
                             goals.


    What Kind Of House Is    Start pinpointing the specifics in your new home by taking an inventory of
           Right For You?    your basic day-to-day needs. For example, if you entertain frequently, you
                             might need a party/recreation room – maybe extra baths.

                             Next, think about the future. Will you start or add to your family? Will an
                             elder family member come to live with you? Your new house should be
                             able to accommodate such possibilities.

                             Last, think about the personality you want for your new home. Should it
                             be open, airy and casual, or formal and classic? Ideally, it should reflect you.

                             As you think over the above considerations, remember that your financial
                             resources will determine which cutbacks or extras you might consider.

                             The sections that follow are designed to help you consider other important
                             issues as well.


  Old House? New House?      Older houses have great charm. Older homes in established communities
            Fixer-Upper?     may provide greater convenience for shopping, entertainment, and business.

                             Most new homes offer the latest design features. If you buy a house before
                             construction is complete, you may be able to select the color and design for
                             any tile, carpet, wallpaper or paint.

                             A fixer-upper can dramatically increase in worth. Even small improvements
                             can make a difference. Make sure you understand the extent of fixing that
                             needs to be done before you commit to it.

                             Cosmetic improvements, such as new windows or floor treatments, can in-
                             crease your home’s appeal now and later for resale. Make sure your proposed
                             improvements match the neighborhood environment; don’t go overboard and
                             overspend.

The Location Consideration   Find the right neighborhood by consulting your real estate broker and driving
                             through new areas. Talk to neighbors if you get the opportunity. While driving
                             around new or different areas, stop and walk around as well.




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                                                               www.northbaytitle.com
                                                               Main Office:
                                                               431 E Street, Santa Rosa, CA 95404
                                                               (707) 526-2000                                  5
                             Home Information




     What Style Of Home      Single Family         Townhouse/PUD            Condo
         Do You Prefer?      Duplex                Frame Ranch              Colonial
                             Victorian             Contemporary             Bungalow
                             Brick Ranch           Cape Cod                 Tudor

 Condition Of Your Home?     Move-in
                             Some Cosmetics
                             Total Rehab

      How Many Stories?      One Story
                             Two Stories
                             Three Stories
                             Split Level

        What Size Garage     One Car
          Interests You?     Two Car
                             Three Car


Will You Need A Workshop     _____________________________________________________________________
  Area Or Storage Space?

     Are You Interested In   _____________________________________________________________________
     Having A Pool? Spa?

                      Age    _____________ to _____________

                    Price    _____________ to _____________

               Bedrooms      _____________ to _____________

              Bathrooms      _____________ to _____________

                   Sq. Ft.   _____________ to _____________

                 Lot Size    _____________ to _____________




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                                                          www.northbaytitle.com
                                                          Main Office:
                                                          431 E Street, Santa Rosa, CA 95404
                                                          (707) 526-2000                             6
                            Home Information                          (continued)




                            Review the following property features and check each box by importance
                            to you, with 1- Important Need, 2-Desirable and 3-Not Important.

                             1     2      3

           Large Kitchen

            Family Room

            Dining Room

   Large Master Bedroom

          Walk-In Closets

         Air Conditioning

                Fireplace

           Laundry Room

                    View

               Level Yard

           Breakfast Area

            Office Space

            Bonus Room

           Storage Space


    Other Necessities And   _____________________________________________________________________
               Amenities
                            _____________________________________________________________________

                            _____________________________________________________________________

                            _____________________________________________________________________




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                                                           www.northbaytitle.com
                                                          Main Office:
                                                          431 E Street, Santa Rosa, CA 95404
                                                          (707) 526-2000                              7
                             Buyer Worksheet




                    Name     ______________________________________________________________________

                  Address    ______________________________________________________________________

             Home Phone      ______________________________________________________________________

              Work Phone     ______________________________________________________________________

            Spouse Phone     ______________________________________________________________________

              Other Phone    ______________________________________________________________________

  How Many Will Be Living    ______________________________________________________________________
         In Your Home?

          How Many Kids?     ______________________________________________________________________

   Do You Have Any Pets?     ______________________________________________________________________

               What Kind?    ______________________________________________________________________

Where Are You Employed?      ______________________________________________________________________

           Where Is Your
       Spouse Employed?      ______________________________________________________________________

 Are You Currently Working   ______________________________________________________________________
      With Another Broker?

     If Yes, Which Broker?   ______________________________________________________________________

        Currently Are You:   Home Owner    First-Time Buyer               (circle one)

     How Soon Would You      ______________________________________________________________________
          Like To Move?

Have You Started Looking?    ______________________________________________________________________

     If So, How Long Have    ______________________________________________________________________
        You Been Looking?

    What Did You See That    ______________________________________________________________________
               You Liked?
                             ______________________________________________________________________

                             ______________________________________________________________________




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                                                              www.northbaytitle.com
                                                              Main Office:
                                                              431 E Street, Santa Rosa, CA 95404
                                                              (707) 526-2000                          8
                             Area Information




   What Area(s) Would You    _____________________________________________________________________
           Prefer to Live?

Are Public/Private Schools   _____________________________________________________________________
                 An Issue?

Is Access To Your Place Of   _____________________________________________________________________
    Employment An Issue?

   Do You Work At Home?      _____________________________________________________________________

     Is Access To Schools    _____________________________________________________________________
                An Issue?

           Which School?     _____________________________________________________________________

    Is Access To Shopping    _____________________________________________________________________
                 An Issue?

  Which Shopping Center?     _____________________________________________________________________

       Is Access To Public   _____________________________________________________________________
  Transportation An Issue?

       If So, What Kind Of   Train   Trolley   Bus   Airport     Other      (circle one)
            Transportation
       Would Benefit You?

    Other Necessities And    _____________________________________________________________________
               Amenities
                             _____________________________________________________________________

                             _____________________________________________________________________

                             _____________________________________________________________________




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                                                          www.northbaytitle.com
                                                          Main Office:
                                                          431 E Street, Santa Rosa, CA 95404
                                                          (707) 526-2000                             9
                            What Price Range Is
                            Right For You?




   How Much Do You Have     Many new homebuyers put down 20 percent or more toward the purchase
    For A Down Payment?     of their new home, but there are many programs which allow for very small
                            or even zero down payments. Some lenders may accept a lower payment;
                            however, you may be asked to purchase Private Mortgage Insurance called
                            “PMI”. This however, will add to your closing costs and monthly payments.
                            Whether your lender requires borrowers to purchase PMI or not, there will
                            be other costs associated with purchasing your home in addition to the
                            down payment. Some of the money you have available will need to
                            be earmarked for these secondary or closing costs. What’s left over is
                            what you will be able to use toward a down payment.


           What Are Those   Those secondary costs usually include closing costs. These costs are the
             Other Costs?   expenses associated with the transfer of property ownership. As a rule of
                            thumb, these costs can range from about 3 percent to 4 percent or more of
                            the cost of the home, depending on your lender and area of the county. They
                            can include attorney fees, lender fees (or points), escrow fees and recording
                            charges. Your broker or agent can explain any of these costs in greater detail.
                            You may also want to hire a building inspector to evaluate the home. You may
                            want to make a few immediate repairs prior to moving day. Do not hesitate to
                            discuss any of these costs with your broker. The sooner you know how much
                            you’ll need, the sooner you’ll be able to determine a more accurate down
                            payment and purchase price.

                            The answer will depend on how much you require for other living expenses.
How High Should You Go On   One thing you certainly do not want to do is to make yourself so “payment
   Your Monthly Payment?    poor” that you cannot afford the quality of life you have envisioned in your
                            new home. You can begin to get an idea now of what your monthly mort-
                            gage payment might be by listing some of those expenses, and estimating
                            what you think you’ll be paying for them in future years. Living expenses can
                            include food, clothing, transportation, utilities, medical and dental care and
                            installment payments. Understandably, you may not have all of this
                            information at hand, let alone the time to compile it. For a quick check
                            to see that your monthly income will cover your monthly expenses, see the
                            next page.




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                                                             www.northbaytitle.com
                                                             Main Office:
                                                             431 E Street, Santa Rosa, CA 95404
                                                             (707) 526-2000                                  10
                            What Price Range Is
                            Right For You? (continued)




What Should You Be Paying   Starting with your down payment, you’ve begun to get an idea of what
  Monthly For A Mortgage    maximum amount you may want to pay for a house. Will your payments be
                            affordable? A good rule of thumb is that your monthly housing expense,
                            including taxes and home insurance payments, should not be more than
                            approximately 1/3 of your monthly income. (See chart at below).

      The Adjustable Rate   There is generally a margin above the index of between 2-3 percentage
                Mortgage    point. So if your index is 5 percent and your margin is 25 percent, your
                            interest rate should be 7.5 percent. Many people, especially first-time home
                            buyers, see the adjustable rate mortgage as a way to get a larger home than
                            they could with a fixed rate loan. Adjustable mortgage interest rates usually
                            start out lower than a fixed rate loan. Points and fees added to the loan up
                            front are usually lower and the likelihood of qualifying for a larger loan amount
                            becomes an attractive alternative. This affords the buyer opportunity to
                            purchase more home for their dollar. Adjustable rate mortgages are based
                            on any one of several indexes used to set the interest rate. Movement of the
                            index causes movement of the rate. Some indexes are more volatile than
                            others. One of the most stable indexes is the Eleventh District Cost of Funds
                            Index. Responsible lenders also build in lifetime rate caps and annual
                            payment caps to their adjustable rate mortgage for your protection.

  How A New Home Brings     When you own a home, you may be able to deduct part of your ownership
         You Tax Savings?   costs when filing your income tax return. The amounts you spend for
                            interest and taxes may be deductible items on federal, state and local
                            income tax returns. How much you save will depend on your income and
                            other expenses you itemize. Consult your tax advisor for specifics on your
                            personal situation.
                               Figuring your estimated monthly housing expenses.
                               Your monthly gross income $___________
                               Now…divide that figure by 3
                               The result is $ _________________
                               This second figure represents your estimated affordable monthly housing
                               expense, and includes your monthly real estate tax and home insurance
                               payments and homeowners association dues, in addition to your own
                               monthly loan payments (both principal and interest). This formula is the
                               one used by many financial analysis and lending institutions.
                               How to figure if your monthly income will meet your total monthly
                               expenses.
                               1. Your monthly net income is (include take-home pay, dividends,
                                  alimony, etc.)
                               2. Your estimated monthly housing expense is (refer to chart above.)
                                  $___________
                               Line 2 subtracted from Line 1 is $_____________
                               This is how much you will need to meet your other monthly expenses.



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                                                              www.northbaytitle.com
                                                              Main Office:
                                                              431 E Street, Santa Rosa, CA 95404
                                                              (707) 526-2000                                    11
                           Nine Major Steps In
                           Buying A Home




                    1     Decide that buying vs. renting is best for you.

                    2     Determine how much you can afford.

                    3     Given your price range, decide what kind of home you want/need: size,
                          location, and special features, such as a fireplace or garage, etc.

                    4     It is in your best interest to get “pre-qualified” for a loan early on. Your
                          Lender will perform a preliminary review of your finances and credit history
                          to determine how much loan you will be able to qualify for.

                    5     Begin looking for your new home. Allow yourself enough time to see a
                          number of houses, so that you have a solid basis for making a final decision.
                          It is usually helpful to narrow down the area where you would like to live,
                          before concentrating on specific houses. Contact a real estate agent to
                          help you with your search.
                    6
                          When you find a home that you like, carefully make your own personal
                          inspection. If you’re comfortable with the home, your agent will help you
                          make an offer to purchase, a request a deposit, which will be part of the
                          down payment. Make sure the offer allows you to get your deposit back,
                          if a professional inspection reveals problems with the house, or if you are
                          unable to get financing. Deposits of funds are placed in escrow.

                    7     Formally apply for a mortgage loan.

                    8     Get a professional inspection of the home. Your lender also will require
                          a professional appraisal of the home to determine its market value.

                    9     Escrow proceeds with all necessary coordination and administration duties.
                          You complete your down payment, pay loan fees, sign all necessary legal
                          documents and get the keys to your new home.

                          Note: The order of these steps may vary for individual home-buying
                          situations.

                          *After these duties have been completed and your loan has been reviewed
                          and approved, it is time to close the loan. The escrow company will need to
                          set-up a meeting to have you pay loan fees, sign all necessary legal
                          documents, and receive the keys to your new home.




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                                                           www.northbaytitle.com
                                                           Main Office:
                                                           431 E Street, Santa Rosa, CA 95404
                                                           (707) 526-2000                                12
                            Make The Most Of
                            Each Excursion




                           At this point, you and your broker or agent know how much you can spend
                           on a house and what you expect that house to have. Now, it’s time to start
                           looking at houses, but what should you take with you? What should you do
                           once you are there?

                           Take along a pencil, a checklist, and maybe a camera. It is difficult to
                           remember everything you like and dislike about all the homes you see.
                           So make it easy on yourself and bring the following:

                           • A pencil to write down observations.

                           • The copy of House Hunt. It is full of information you might want to refer to
                             while touring a house.

                           • House Hunt Field Reports. These checklists will help you remember what
                             you see. Your Field Reports, combined with photographs, will make it easier
                             for you to review and compare houses before your final purchase decision
      Don’t Be Shy About
       Asking Questions    The more questions you ask, the more you’ll learn about a house and what to
                           ask when you tour future houses.

                           Remember: there is no such thing as a bad question. Don’t worry if your
                           broker doesn’t know an answer right away. He or she will get you all the
                           information that you will need to make an informed decision.




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                                                            www.northbaytitle.com
                                                            Main Office:
                                                            431 E Street, Santa Rosa, CA 95404
                                                            (707) 526-2000                                  13
                             Property Critique




                 Address    _____________________________________________________________________
               Bedrooms     # _______ sq. ft. ______________________________________________________
                   Baths    # _______ full/ partial _________________________________________________
 Living Room/Family Room    _____________________________________________________________________
     Kitchen/Dining Room    _____________________________________________________________________
                  Garage    _____________________________________________________________________
                    Yard    _____________________________________________________________________
                            Pros                               Cons
               Bedrooms     ______________________________      _____________________________________
                   Baths    ______________________________      _____________________________________
 LivingRoom/Family Room     ______________________________      _____________________________________
           Kitchen/Dining   ______________________________      _____________________________________
                  Garage    ______________________________      _____________________________________
                    Yard    ______________________________      _____________________________________
               —————

                 Address    _____________________________________________________________________
               Bedrooms     # _______ sq. ft. ______________
                   Baths    # _______ full/ partial ______________
 Living Room/Family Room    _____________________________________________________________________
     Kitchen/Dining Room    _____________________________________________________________________
                  Garage    _____________________________________________________________________
                    Yard    _____________________________________________________________________
                            Pros                               Cons
               Bedrooms     ______________________________      _____________________________________
                   Baths    ______________________________      _____________________________________
 LivingRoom/Family Room     ______________________________      _____________________________________
           Kitchen/Dining   ______________________________      _____________________________________
                  Garage    ______________________________      _____________________________________
                    Yard    ______________________________      _____________________________________



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                                                            www.northbaytitle.com
                                                            Main Office:
                                                            431 E Street, Santa Rosa, CA 95404
                                                            (707) 526-2000                              14
                             Property Critique




                 Address    ______________________________________________________________________
               Bedrooms     # _______ sq. ft. ______________________________________________________
                   Baths    # _______ full/ partial _________________________________________________
 Living Room/Family Room    ______________________________________________________________________
     Kitchen/Dining Room    ______________________________________________________________________
                  Garage    ______________________________________________________________________
                    Yard    ______________________________________________________________________
                            Pros                                Cons
               Bedrooms     ______________________________      _____________________________________
                   Baths    ______________________________      _____________________________________
 LivingRoom/Family Room     ______________________________      _____________________________________
           Kitchen/Dining   ______________________________      _____________________________________
                  Garage    ______________________________      _____________________________________
                    Yard    ______________________________      _____________________________________
               —————

                 Address    ______________________________________________________________________
               Bedrooms     # _______ sq. ft. ______________
                   Baths    # _______ full/ partial ______________
 Living Room/Family Room    ______________________________________________________________________
     Kitchen/Dining Room    ______________________________________________________________________
                  Garage    ______________________________________________________________________
                    Yard    ______________________________________________________________________
                            Pros                                Cons
               Bedrooms     ______________________________      _____________________________________
                   Baths    ______________________________      _____________________________________
 LivingRoom/Family Room     ______________________________      _____________________________________
           Kitchen/Dining   ______________________________      _____________________________________
                  Garage    ______________________________      _____________________________________
                    Yard    ______________________________      _____________________________________



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                                                               www.northbaytitle.com
                                                            Main Office:
                                                            431 E Street, Santa Rosa, CA 95404
                                                            (707) 526-2000                              15
16
                                                17
S E L E C T I N G   A N             A G E N T
                     Selecting An Agent
18
                                 Selecting An Agent




                                Most people do not venture out into the real estate market without the
                                support of an agent. The few who decide to look for a house on their own put
                                themselves at a real disadvantage. So before you start your home shopping,
                                you should first start shopping for a real estate professional.

Your Real Estate Professional   • a major factor in finding your “special home” that meets your personal
                   Should Be      life style yet stays within your budget.

                                • able to access the multiple listing service system, locating properties for
                                  sale in your specified area of interest.

                                • knowledgeable about the marketplace.

                                • respectful of your desires. An agent should let you make your own
                                 decisions, not force you into buying something that is not right for you.

                                • aware of the complicated local and state requirements affecting property
                                  that may affect your rights of ownership.

                                • successful in multi-party, face-to-face negotiating. Your realtor should
                                  write up your offer and present it to the seller for you.

                                • willing to cooperate with all brokers to get the best price.




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                                                                  www.northbaytitle.com
                                                                  Main Office:
                                                                  431 E Street, Santa Rosa, CA 95404
                                                                  (707) 526-2000                                19
                                Your Real Estate Agent Is The
                                Best Guide To A New Home




Working With A Real Estate     A good real estate agent knows the housing market inside and out and will
Professional Can Save You      help you avoid countless dead-ends, when searching for a new home. They
Endless Amounts Of Time,       can help you by showing you their listings, other agent’s listings, or properties
    Money And Frustration      that are being sold by the owner.

                               Your real estate agent may be aware of homes that are available through
                               sources that you would not be able to find on your own. These professionals
                               also know home values and can advise you on the value of specific homes.

                               Most important, a real estate professional will guide you through the complex
                               process of buying a home. The maze of financial options, legal documents,
                               disclosure requirements, inspections, and a host of other details are simplified
                               by the use of an experienced specialist.

                               In addition, agents are often your best source for general information about a
                               community. Specific information about schools, entertainment, and shopping,
                               plus tips on housing inspections, are usually available.

                               Real estate agents receive payment by a commission that the seller pays.
                               However, that does not affect the dedication or the spirit of teamwork that
                               your real estate agent will put into helping you find and buy the home of
                               your dreams. After all, their success depends on your success.

Here Are A Few Things Your
     Real Estate Agent Will
                Do For You

                 Pre-Qualify   To help determine wants, needs, and affordability, your broker should
                               understand your price range and type of houses you are interested in finding
                               before he or she starts showing you houses. This will make it easier to view
                               homes that meet your criteria.

   Explain The Steps Of The    Your real estate agent can provide you with the facts you need to make your
            Buying Process     own purchase decisions. Your agent can provide you with loan information,
                               as well as explain the escrow and title process, the physical inspections
                               required and home warranties.
     Writing, Presenting And
      Negotiating The Offer    Your agent can act as a knowledgeable representative when you make an
                               offer and negotiate the price.




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                                                                Main Office:
                                                                431 E Street, Santa Rosa, CA 95404
                                                                (707) 526-2000                                  20
                                         21
E S C R O W   A N D      T I T L E
                      Escrow And Title
22
                                 What Is An Escrow?




                               Escrow is the depositing of funds and documents by the parties with an
                               impartial third party for delivery upon completion of the terms of the escrow
                               instructions.

                               The escrow holder impartially carries out the written instructions given by the
                               principals (the seller, buyer and lender). This includes receiving funds and
                               documents necessary to comply with those instructions, completing or ob-
                               taining required forms, and handling final delivery of all items to the proper
                               parties upon the successful completion.

  The Purpose Of An Escrow     The common use of an escrow is to enable the parties in a real estate
                               transaction to deal with each other with less risk since the escrow
                               holder acts as:

                               1. custodian for funds and documents.
                               2. a clearinghouse for payment of all demands.
                               3. an agency to perform the clerical details for the settlement of the account
                                  between the parties.

A Typical Escrow Transaction   An escrow begins with the customer giving the necessary information
                               regarding the transaction and requesting that we order a preliminary
                               title report.

                               A preliminary title report provides the customer with an analysis of the present
                               status of the property as revealed by the public records filed or recorded in
                               the county in which the property is located.

                               Upon receipt of the preliminary title report, an analysis is made to determine
                               the steps to be taken to close any and all outstanding debts and liens. At that
                               time, the escrow holder shall order any required demands. Upon receipt of
                               loan documents, further analysis is done to make sure the escrow holder can
                               comply with the said instructions.

                               When all the title and financial instruction requirements are deemed to be in
                               order, the escrow officer will then draw the required instructions and
                               statements.

                               You may be asked to complete a Statement of Identity as part of the escrow
                               process. Due to the fact that many people have the same name, the
                               Statement of Identity is used to identify the specific person in the transaction
                               through such information as date of birth, social security number, etc. This
                               information is considered confidential.

                               During the escrow process, you are required to make your payments on
                               existing loans so that you do no incur any late fees or damages to your
                               credit rating.




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                                                                www.northbaytitle.com
                                                                Main Office:
                                                                431 E Street, Santa Rosa, CA 95404
                                                                (707) 526-2000                                   23
                               What Is An Escrow?                               (continued)




                              The following items represent a typical list of what an escrow holder does and
                              does not do:

         The Escrow Holder:   • serves as the neutral “stakeholder” and the communication link to all
                                parties in the transaction.
                              • requests a preliminary title search to determine the present condition
                                of title to the property and in turn orders any required demands.
                              • prepares escrow instructions and statements to include prorated taxes,
                                interest, insurance and rents according to instructions.
                              • complies with lender’s requirements per their instructions.
                              • receives required funds to close from buyer and seller and funding by the
                                lender.
                              • records all required documents i.e., grant deeds and deeds of trust to
                                successfully transfer title.
                              • prepares final statements for the parties accounting for the
                                disposition of all funds deposited and disbursed from escrow.

The Escrow Holder Does Not:   • offer legal advice.
                              • negotiate the transaction.
                              • offer investment advice.




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                                                              Main Office:
                                                              431 E Street, Santa Rosa, CA 95404
                                                              (707) 526-2000                                24
                              How Does The Escrow
                              Process Work?




                            The escrow officer takes instructions based on the terms of your purchase
                            agreement and the lender’s requirements. The escrow officer can hold
                            inspection reports and bills for work performed as required by the purchase
                            agreement. Other elements of the escrow include hazard insurance, and the
                            grant deed from the seller. Escrow cannot be completed until these items
                            have been satisfied and all parties have signed escrow documents.

How Do I Open An Escrow?    Either your real estate agent or the buyer’s agent may open escrow. As soon
                            as you execute the purchase agreement, your agent will place your initial
                            deposit into an escrow account at the title company.

  Where Does The Buyer’s    Written evidence of the deposit is generally included in your copy of the
             Money Go?      sales contract. The funds will then be deposited in a separate escrow
                            or trust account.

     What Information Do    You may be asked to complete a Statement of Information as part of the
      I Need To Provide?    paperwork. Because many people have the same name, the statement of
                            Identity is used to identify the specific person in the transaction through such
                            information as date of birth, social security number, etc. This information is
                            considered confidential and will be treated as such.

 How Long Will This Take?   The amount of time necessary to complete the escrow is determined by the
                            terms of the purchase agreement. It is normally 45 to 60 days, but can range
                            from a few days to several months.

     What Happens Next?     Unless he/she is paying cash, the next step will be for the buyer to apply for a
                            mortgage loan. Your real estate agent will be able to keep you informed about
                            the progress of the loan application. During the escrow process, you are still
                            required to make your payments on existing loans so that you do not incur
                            late fees or damage your credit rating.

      Escrow Instructions   Escrow instructions define the events that must take place prior to an escrow
                            closing. The escrow instructions are your written instructions to the escrow
                            holder acknowledging the terms and condition of the sale. An itemized
                            statement is included with your instructions, reflecting all agreed upon debits
                            and credits.

                            A grant deed is the document that legally transfers title to the property
                            of the new owner. The seller will sign the grant deed as part of the escrow
                            instructions and the escrow officer or another notary public will notarize your
                            signatures. Proper identification is needed for this procedure, (which must be
                            a picture I.D.) The grant deed is recorded at the time escrow closes, and thus
                            transfers title.

                            Typically you will sign your escrow instructions at a branch office of the title
                            company. However, on occasion you may go to your real estate agent’s office
                            or some other location agreed upon by all parties.



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                           How Does The Escrow
                           Process Work? (continued)




       Your Appointment   An appointment is required for the sign-off. Please call your escrow officer to
                          arrange a convenient time. Please expect the process to take approximately
                          one hour.

                          There are several acceptable forms of identification which may be used dur-
                          ing the escrow process. These include:

                          • a current driver’s license
                          • passport
                          • State of California Department of Motor Vehicles ID Card

                          One of these forms of identification must be presented at the signing of
                          escrow in order for the signature to be notarized.

                          Any funds required to close escrow by either buyer or seller will need to be
                          in the form of a cashier’s check made payable to the title company or by
                          wire transfer. A personal check will delay the closing, as the title company
                          is required by law to have “good funds” prior to disbursing. Similarly, an
                          out-of-state check could cause a delay in check clearance.




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                               How Does The Escrow
                               Process Work? (continued)




         After The Sign-off

       What Next After The    After all parties have signed the necessary instructions and documents,
Completion Of The Sign-off?   the escrow officer will return them to the new lender for a final review.
                              Following the review, which usually occurs within a few days, the lender
                              is ready to fund the buyer’s loan, and advises the escrow officer. At this
                              time, the escrow holder compiles all the documents required to record and
                              successfully close the transaction.


  What Is “Close Of Escrow?   It signifies the legal transfer and recording of title to the property from the
                              seller to the buyer and is the culmination of the transaction.



When Do I Receive the Keys?   A final settlement statement and any refund check for the proceeds will be
                              available to you the day of recording. Your real estate agent will be able to
                              give you the keys at this time.




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                             The Preliminary Title Report




                            The preliminary title report indicates the type of title insurance offered by that
                            title company. It also indicates the exclusions and exceptions from coverage
                            under which the policy will be issued…

Reviewing The Preliminary   The preliminary title report should be reviewed immediately with special
             Title Report   attention to the following areas…

                            • verify the property address. The plat map and legal description must
                              match the address.

                            • verify the vesting. Make sure the names on the report are the same as
                              the names on the purchase contract.

                            • read the informational notes for important facts.

                            • carefully review the exceptions: bonds, deeds of trust, current taxes,
                              additional assessments, CC & R’s and easements.

                            • look for surprises. If you can’t locate an easement, if an unexpected
                              deed of trust appears, etc., call your escrow officer right away. Let
                              your title company be the problem solver. Top notch escrow officers
                              go out of their way to resolve problems quickly and accurately.




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                               What A Title Company Does




                              Requests A Preliminary Title Report And Policy

      Primary Title Report    The preliminary report is based on a search of the public records of the
                              county, such as the tax collector, county recorder, and assessor’s office. The
                              report may list any liens, encumbrances taxes, easements, or title defects on
                              the property found in the search. These matters may be listed as exceptions
                              from the coverage of the title insurance policy and will remain exceptions
                              unless they can be released or eliminated prior to the transfer of ownership.

               Title Policy   Besides describing the property and spelling out any exceptions to the
                              coverage, the title insurance policy sets forth what the title company will do
                              in the event that a flaw in title is discovered or rights of ownership are chal-
                              lenged. This may include correcting the title when possible, defending the title
                              in court, or paying a loss in the event of an unsuccessful defense.


   Pays Off Existing Loans    The title company pays off existing loans when so ordered.

     Taxes And Insurance      The title company prorates the taxes and insurance for the buyer and the
                              seller, computes interest on loans, and acuqires hazard insurance.

    Signing Of Documents      Assists the buyer and seller when signing documents.

    Recording Documents       The title company records the appropriate documents with the county office,
                              giving public notice.

            Disbursement      The title company disburses the documents and money to each
                              party involved.




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                                                      Concurrent Co-Ownership
                                                      Interests




              Tenancy in                            Joint Tenancy                         Community Property                           *Community
              Common                                                                                                                   Property with Right
                                                                                                                                       Of Survivorship
                                                                                                                                       (Effective 7/1/2001)

PARTIES       Any number of persons (can be         Any number of persons (can be         Only husband and wife. Registered            Only husband and wife. Registered
              husband and wife or registered        husband and wife or registered        domestic partners have community             domestic partners have community
              domestic partners).                   domestic partners).                   property rights.                             property rights.


DIVISION      Ownership can be divided into         Owner interests must be equal.        Ownership and managerial                     Ownership and managerial interests
              any number of interests, equal                                              interests are equal.                         are equal.
              or unequal.

TITLE         Each co-owner has a separate          There must be unity of title and      Title is in the “community.” Each interest   Title is in the “community.” Each interest
              legal title to his or her undivided   time (created in one document).       is separate but management is unified.       is separate but management is unified.
              interest.                                                                                                                Title must expressly state community
                                                                                                                                       property with right to survivorship.



POSSESSION    Equal rights of possession.           Equal rights of possession.           Both co-owners have equal manage-            Both co-owners have equal
                                                                                          ment and control.                            management and control.


CONVEYANCE    Each co-owner’s interest may          Conveyance by one co-owner            Real property requires written consent       Real property requires written consent
              be conveyed separately by its         without the others will sever         of other spouse or registered domestic       of other spouse or registered domestic
              individual owner.                     (terminate) that individual’s joint   partner, and separate interest cannot        partner, and separate interest cannot
                                                    tenancy.                              be conveyed except upon death.               be conveyed except upon death.


PURCHASER’S   Purchaser will become a tenant in     Purchaser will become a tenant        Purchaser can acquire title from the         Purchaser can acquire title from the
              common with the other property        in common with the other prop-        community with written consent or            community with written consent or
STATUS        co-owners.                            erty co-owners.                       joinder of both spouses or registered        joinder of both spouses or registered
                                                                                          domestic partners.                           domestic partners.


DEATH         On co-owner’s death, his or her       On co-owner’s death, his or           Upon death of one spouse or regis-           Upon death of one spouse or registered
              interest passes by will to that       her interest ends and cannot be       tered domestic partner, 50% belongs          domestic partner, his or her interest ends
              person’s devisees or heirs. No        disposed of by will. Survivor(s)      to surviving spouse or registered            and cannot be disposed by will. Survivor
              survivorship rights.                  own(s) the property. An affidavit     domestic partner, 50% goes by will to        owns the property 100%. An affidavit of
                                                    of death of joint tenant              descendant’s devisees or by succession       death (community property with right of
                                                    establishes death.                    to surviving spouse or registered            survivorship) establishes death of a
                                                                                          domestic partner.                            spouse or registered domestic partner.


SUCCESSOR'S   Devisees of heirs become tenants      Last survivor owns property           If passing by will, tenancy in common        Purchaser can only acquire whole title of
              in common.                            100%.                                 between devisees and survivor results.       community; cannot acquire a part of it.
STATUS
CREDITOR’S    Co-owner’s interest may be sold       Co-owner’s interest may be            Property of community is liable for          Property of community is liable for
              on execution sale to satisfy his      sold on execution sale to satisfy     contracts of either spouse or registered     contracts of either spouse or registered
RIGHTS        or her creditor. The creditor         creditor. Joint tenancy is broken;    domestic partners which were made            domestic partner which were made after
              becomes a tenant in common.           creditor becomes tenant in            after marriage and prior to or after         marriage and prior to or after
                                                    common.                               January 1, 1975. Co-owner’s interest         January 1, 1975. Co-owner’s interest
                                                                                          cannot be sold separately; whole             cannot be sold separately; whole
                                                                                          property may be sold on execution            property may be sold on execution to
                                                                                          to satisfy creditor.                         satisfy creditor.


PRESUMPTION   Favored in doubtful cases except      Must be expressly stated.             The legal presumption is that property       After July 1, 2001 there is no
              husband and wife or registered        Not Favored.                          which has been acquired during the           presumption. The code reads that
              domestic partners case.                                                     course of the marriage or registered         deeds must state “community property
                                                                                          domestic partnership is community            with the right of survivorship.”
                                                                                          property or community property rights
                                                                                          apply.




                                                                                                                                                                                    30
                               Typical Closing Costs-Buyer




                              Listed below are some typical closing costs you, as the buyer, may incur as
                              part of your loan transaction. When you apply for a loan, you will receive a
                              good faith estimate of closing costs and settlement charges, along with a
                              booklet that will explain these costs.

             Appraisal Fee    This is a one-time fee. The appraisal is made by an independent fee appraisal.

         Credit Report Fee    A one-time fee that covers the cost of the credit report.

Documentation Preparation     There may be a separate fee that covers the preparation of the final
                     Fee      legal papers.

            Loan Discount     A one-time fee used to adjust the yield on the loan to what market conditions
                              demand. It is often called “points”.

      Loan Origination Fee    The lender’s administration costs in processing the loan are covered
                              by this fee.

             PMI Premium      You might be required to pay an upfront fee for mortgage insurance,
                              depending on the amount of your down payment. The lender may also
                              require monies be placed into a reserve account held by them.

           Prepaid Interest   Depending on the time of month your loan closes, this per diem charge may
                              vary from a full month’s interest to that of a few days. If your loan closes at
                              the end of the month, you may pay interest for only for a day or so.

Taxes And Hazard Insurance    You may be required to reimburse the seller for property taxes, prorated,
                              depending on the month in which you close. You will also need to pay a year’s
                              hazard insurance premium up front. Also, you might be required to
                              put a certain amount for taxes and insurance into a special reserve account
                              held by the lender.

          Title And Escrow    For your county, the buyer can expect to pay half of the fees charged for
                              processing the escrow, (escrow fee), the lender’s title premium, notary fees,
                              recording charges to record the grant deed, and deed of trust and special
                              delivery or courier fees, if required.




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32
                                    33
L O A N   P R O C E S S
                     Loan Process
34
                             The Loan Process




Pre-Qualification/Interview   • Application interview
                             • Lender obtains all pertinent documentation

        Order Documents      • The lender will order any documents he/she deems necessary such
                               as a credit report, preliminary title report, an appraisal on the property,
                               verifications of employment, mortgage, rent, and funds to close escrow.

         Loan Submission     • The loan package is assembled and submitted to the underwriter
                               for approval

           Documentation     • Supporting documents come in
                             • Lender checks on any problems
                             • Requests for any additional items are made

           Loan Approval     • Parties are notified of approval and prior to funding documentation
                               conditions

    Documents Are Drawn      • Loan documents are complete & sent to title. Borrowers come in for
                               final signatures

                  Funding    • Lender reviews the loan package
                             • Funds are transferred by wire or cashier check

 Recording Of Documents      • Title company records deed of trust at the county recorder’s office




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                               Types Of Loans




   Adjustable Rate Mortgage    Adjustable rate mortgages have an interest rate that is adjusted
                               at certain intervals based on a specific index during the life of the loan.

      Balloon Payment Loan     A fixed rate loan that is amortized over 30 years but becomes due
                               and payable at the end of a certain term. May be extended or may
                               roll-over into another type of loan.

            Buy-Down Loan      Buy-Down loans are fixed rate loans where the interest rate and the
                               payment are reduced for a specific period of time by paying the interest
                               up front to subsidize the lower payment. A fixed rate loan for first time
                               buyers with a low down payment, usually.

                   Program     3-5%, no cash reserve requirement, and easier qualifying ratios.
                               Subject to borrower meeting income limits and attendance of a
                               four hour training course on home ownership.

          Conventional Loan    Conventional loans are sometimes more lenient with the appraisal and
                               condition of the property. When you are buying a “fixer upper” you may
                               need to use a conventional loan. Homes purchased above the FHA loan
                               limit of $152,356 are usually financed with conventional loans.

                  FHA Loan     FHA loans are insured by the Federal Housing Administration under
                               H.U.D. they offer a low down payment and are easier to qualify for
                               than Conventional loans.

            Fixed Rate Loan    Fixed rate loans have one interest rate that remains constant
                               throughout the life of the loan.

Graduated Payment Mortgage     A fixed rate loan that has payments starting lower than a standard fixed
                               Mortgage rate loan, which then increases by a predetermined amount
                               each year for a set number of years.

  Mortgage Credit Certificate   A first time homebuyer program subject to purchase price and income
                               Certificate limits and limited to Alameda, Contra Costa, San Mateo and
                               Santa Clara counties. It is actually a special tax credit and assists the
                               buyer in qualifying for many loam programs.

        Non-Qualifying Loan    Non-Qualifying loans are pre-existing loans which can be assumed
              (Assumable)      by a buyer from the seller of a property without going through the
                               qualifying process. The buyer pays the seller for their equity and
                               then starts making payments.

                    VA Loan    VA loans are guaranteed by the Veterans Administration. A veteran
                               must have served 180 days active service. The maximum loan is
                               currently $203,000 with no down payment.




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                           Getting Pre-Qualified




                          To save valuable time most agents and lenders recommend that homebuyers
                          get pre-qualified with a lender. This way you will have the best information
                          about the right price range for your pocketbook.

         Reasons To Get   • You can determine which type of program best fit your needs.
           Pre-Qualified
                          • You will know what your monthly payment will be, which will allow you to
                            keep within your budget.

                          • You will know what your down payment and closing costs will be.

                          • If you are a first-time buyer, you may be able to qualify for a special
                            first-time buyer program. This may allow you to afford more home
                            for your money.

                          • If you feel you would like, and can afford a higher mortgage payment, but
                            are not able to meet qualifications, co-mortgagor financing may be made
                            available to you.




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                              Pre-Qualified Worksheet



                     Date     ______________________________________________________________________
         Requesting Agent     ______________________________________________________________________
             Borrower #1      __________________________Social Security # ____________________________
             Borrower #2      __________________________Social Security # ____________________________
                  Address     ______________________________________________________________________
                      City    ______________________________________________________________________

     Gross Monthly Income     Borrower #1 ___________________________
                              Borrower #2 ___________________________
                              Other _________________________________
                              Total Income __________________________

             Monthly Debt     Car Payments _________________________
                              Credit Cards __________________________
                              Alimony ______________________________
                              Child Support _________________________
                              Other ________________________________
                              Total Debt ____________________________

            Down Payment      Amount ______________________________
                              Source _______________________________

                     Credit   Bankruptcy ___________________________
                              Judgment ____________________________

             Loan Program     ______________________________________________________________________
                        LTV   ______________________________________________________________________
              Interest Rate   ______________________________________________________________________
                        P&I   ______________________________________________________________________
                    Margin    ______________________________________________________________________
                 Insurance    ______________________________________________________________________
                      Caps    ______________________________________________________________________
                       PITI   ______________________________________________________________________
             Housing Ratio    ______________________________________________________________________
           Total Debt Ratio   ______________________________________________________________________
                Comments      ______________________________________________________________________
 Home Owner’s Association     ___________________________Dues______________________________________
Private Mortgage Insurance    ______________________________________________________________________


                                 Sales/Purchase Price ____________________________
                                 Down Payment _________________________________
                                 Loan Amount ___________________________________




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M I S C E L L A N E O U S




                                     39
                     Miscellaneous
40
                             Inspections




                            Real Estate contracts often contain contingency clauses that allow buyers to
                            inspect the property physically (usually at their expense). This inspection
                            provides a comprehensive review of the infrastructure of the property.

                            Which inspections to order are usually a matter of observation and knowledge
                            of what is critical to a particular region or area. Below is a list of the three
                            most common types of inspection:

         Structural Pest    • To discover any active infestation by wood destroying organisms.
      Control Resources     • Section I on the report deals with active infestation and includes items that
                              need immediate attention. Lenders usually want the work performed prior
                              to funding the loan.
                            • Section II on the report will be items that could cause infestation and, if not
                              corrected, could cause damage.

      Physical Inspection   • This inspection encompasses roof, plumbing, electrical, heating and any
                              other accessible area of the structure.
                            • A detailed report will be written with recommendations for repair or for
                              further inspection by a specialist.

    Geological Inspection   • An inspection of the soil conditions and the stability of the ground beneath
                              the structure can be performed by a Geologist Engineer.

                            • You can elect to go to the city records and research the property and
                              its proximity to known fault lines.

    Some Other Common       Water Conservation                        Contractors Home Inspection
            Inspections     Well and Septic                           Chimney Inspection
                            Hazardous Material                        Heating and Air Condition
                            Zoning and Building Permit                Structural Engineering
                            Compliance                                Energy Audit




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                             Home Inspection




        What Is A “Home      A home inspection is an objective visual examination of the physical structure
           Inspection?”      and systems of a home, from the roof to the foundation. The standard home
                             inspector’s report will include an evaluation of the condition of the home’s
                             heating system, central air conditioning system, (temperature permitting),
                             interior plumbing and electrical systems; the roof, attic, and visible insulation;
                             walls, ceilings; floors, windows and doors; the foundation, basement, and
                             visible structure.

        Why Do I Need A      The purchase of a home is probably the largest single investment you will
        Home Inspector?      ever make. You should learn as much as you can about the condition of
                             the property and the need for any major repairs before you buy, so that you
                             can minimize unpleasant surprises and difficulties afterwards. Of course, a
                             home inspection will also point out the positive aspects of a home, as well
                             as the maintenance that will be necessary to keep it in good shape. After the
                             inspection, you will have a much clearer understanding of the property you
                             are about to purchase and will be able to make a confident buying decision.
                             If you have owned your home for a long time, a home inspection can identify
                             problems in the making and recommend preventative measures which can
                             prevent costly future repairs. In addition, home sellers may opt for having
                             a inspection prior to placing the home on the market to gain a better
                             understanding of conditions which the buyer’s inspector may point out.
                             This provides an opportunity to make repairs that will put the house in
                             better selling condition.

       What Will It Cost?    The inspection fee for a typical one-family house varies geographically,
                             as does the cost of housing. Similarly, within a given area, the inspection
                             fee may vary depending upon the size of the house, particular features of
                             the house, its age, and possible additional services, such as septic, well, or
                             radon testing. It is a good idea to check local prices on your own. However,
                             do not let cost be a factor in deciding whether or not to have a home
                             inspection, or in the selection of your home inspector. The knowledge gained
                             from an inspection is well worth the cost, and the lowest-priced inspector is
                             not necessarily a bargain. The inspector’s qualifications, including his
                             experience, training, and professional affiliations, should be the most
                             important consideration.

     Can’t I Do It Myself?   Even the most experienced homeowner lacks the knowledge and expertise
                             of a professional home inspector who has inspected hundreds, perhaps
                             thousands, of homes in his or her career. An inspector is familiar with all the
                             elements of home construction, their proper installation, and maintenance.
                             He or she understands how the home’s systems and components are
                             intended to function together, as well as how and why they fail. Above all,
                             most buyers find it very difficult to remain completely objective and
                             unemotional about the house they really want, and this may affect their
                             judgment.




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                            Moving Expenses




                           When you meet the IRS’s definition of a qualifying move, the following
                           items may be tax deductible:

   Tax Deductible Moving   • The cost of trips to look for a home in the area of a new job. Your home
               Expenses:     shopping expedition does not have to be successful for the cost to be
                             deductible.

                           • The cost of having your furniture and other household items shipped,
                             including the cost of packing, insurance, and storage for up to 30 days.

                           • The cost of getting your family to the new hometown, including food
                             and lodging expenses on the trip.

                           • The cost of lodging and 80% of food expenses for up to 30 days in the
                             new hometown, if these temporary living expenses are necessary, due
                             to the fact that you have not yet found your ideal home or it is not ready
                             when you arrive.

                           • Certain costs associated with the sale of your former home and purchase of
                             the new one. These expenses, including real estate commissions, legal fees,
                             city, and/or county transfer taxes and appraisal and title fees, could be used
                             either to reduce the gain on the sale of the previous home or to boot the
                             basis of the new one. However, it’s usually beneficial to count them a
                             moving expense up to the allowable dollar limits, for that gives you an
                             immediate tax benefit.




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                             Moving Checklist




         What To Do First   ____   Make reservations with a moving company or truck rental company.
                            ____   Hold a garage sale and sort through your “treasures” hidden in the
                                   garage, closets, etc.
                            ____   Make any necessary repairs; arrange for any necessary cleaning services.

             Preparation    ____   Get a change of address kit from the post office.
                            ____   Open necessary bank accounts at your new location and transfer funds.
                            ____   Make arrangements to transfer your insurance coverage, Auto, Fire,
                                   Health & Life.
                            ____   Obtain copies of medical records from your doctor and dentist;
                                   transfer prescriptions.
                            ____   Contact Vital Records and get copies of birth certificates, marriage
                                   certificates, etc.
                            ____   Contact the utility companies (Gas, Electric, Water, Cable, Trash Disposal)
                                   and advise them of your moving date to arrange cancellation of service.
                            ____   Cancel or transfer your newspaper subscriptions.

    Just Before You Move    ____   Defrost and empty the freezer and refrigerator. Store food in cooler or
                                   give to family or neighbors, if necessary.
                            ____   Arrange to have cash or traveler’s checks until you can open a bank
                                   account at your location; store jewelry and other valuables in a safe
                                   place to take with you.
                            ____   Pack an overnight bag with your personal items and clothing.
                            ____   Take care of those last few loads of laundry and dry cleaning necessary.
                            ____   Pack your “First Day” box and include towels, personal items, dish
                                   soap/cleaning supplies; utility knife, paper products, coffee, and all
                                   those can’t live without items.
                            ____   Have appliances serviced for moving.
                            ____   Plan for special needs of infants.

         The Moving Day     ____   Do your final walk through.
                            ____   Let close friend or relative know the route and schedule you will travel,
                                   including overnight stops, and use them as message headquarters.
                            ____   Double check closets, drawers, shelves to be sure they are empty.
                            ____   Leave all old keys needed by new tenant or owner with the Realtor
                                   or neighbor.

     At Your New Address    ____   Check on service of telephone, gas, electricity, and water.
                            ____   Check pilot light on stove, hot water heater, incinerator and furnace.
                            ____   Have appliances checked.
                            ____   Contact your local post office to see if any mail is being held for your
                                   arrival.
                            ____   Have new address recorded on driver’s license.
                            ____   Visit city offices and register for voting.




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                           Ordering Utilities And Services




                          Be sure to call at least two weeks ahead to set up the basics for your home.
                          Keep yourself organized by recording important information below.


               Electric   Company Name_______________________________________________________
                          Phone #_______________________ Date Called____________________________
                          Contact person_______________________________________________________
                          Date new service to begin______________________________________________


                  Gas     Company Name_______________________________________________________
                          Phone #_______________________ Date Called____________________________
                          Contact person_______________________________________________________
                          Date new service to begin______________________________________________


                Water     Company Name_______________________________________________________
                          Phone #_______________________ Date Called____________________________
                          Contact person_______________________________________________________
                          Date new service to begin______________________________________________


              Cable TV    Company Name_______________________________________________________
                          Phone #_______________________ Date Called____________________________
                          Contact person_______________________________________________________
                          Date new service to begin______________________________________________


               School     School Name________________________________________________________
                          Phone #_____________________________________________________________
                          Contact person_______________________________________________________




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                                  Buyer’s Glossary




                       Agency     A legal relationship in which someone (principal) hires someone else (agent) to
                                  represent them to a third party.

              Application Fee     A fee to cover some of the charges of the loan process.

                Appraisal Fee     A fee charged by the lender for an appraisal.

              Assessed Value      The value placed on property by the County Assessor as a basis for taxation.

             Balloon Payment      An instance in which the final installment payment on a note is greater than the
                                  preceding payments, and pays the note in full.

                Chain Of Title    A history of conveyances and encumbrances affecting the title of real property.

      Conventional Mortgage       A mortgage securing a loan made by investors without government
                                  underwriting – that is, not FHA insured or VA guaranteed.

      Convey Or Conveyance        Process of transferring ownership of property from one party to another.

                  Courier Fee     Charges for delivery.

                Credit Report     Assessed by the lender for a required credit report from the credit bureau.

                         Deed     A document which, when properly executed and delivered, conveys title to real
                                  property.

                   Disclosure     To make known or public. When dealing with real property, disclosures should
                                  be in writing.

              Discount Points     A negotiable fee paid to the lender to secure financing for the buyer. Discount
                                  points are up-front interest charges to reduce the interest rate on the loan over
                                  the life, or a portion, of the loan’s term. One discount point equals one percent
                                  of the loan amount

               Earnest Money      Money deposited by a buyer as evidence of good faith.

                Encumbrance       Anything that affects or limits the ownership of real property such as mortgages,
                                  liens, easements, or restrictions of any kind.

                  Escrow Fee      Charged by the title company to service the transaction and to escrow money
                                  and documents.

                       Escrow     The deposit of documents and funds with instructions to a neutral third party
                                  to carry out the provisions of an agreement or contract.

Exclusive Right To Sell Listing   A written agreement between owner and agent giving agent the right to sell a
                                  property and collect a fee for a set term.



  the tools you need | the service you trust

                                                                   www.northbaytitle.com
                                                                   Main Office:
                                                                   431 E Street, Santa Rosa, CA 95404
                                                                   (707) 526-2000                                 46
                              Buyer’s Glossary                           (continued)




        Fair Market Value     The price at which a willing seller would sell and a willing buyer would buy, neither
                              being under an abnormal pressure.

     Loan Origination Fee     Normally 1% of the loan amount, charged by the lender to the buyer.

                Mortgage      A legal document that provides security for repayment of a promissory note.

  Mortgagee’s Title Policy    Required by lenders to ensure that the lender has a valid lien. It does not
                              protect the buyer. Also required for second mortgages.

                    Points    Paid by the buyer or seller. One point is equal to one percent of the loan amount.

                 Principal    The employer of an agent in an agency relationship.

           Recording Fee      Charged by the County to record documents in the public records. Charges are
                              based on number of pages recorded.

        Septic Inspection     The septic system must have a certificate by the city or county Health Department.

                   Survey     Survey of property if required, shows lot size, easement, any encroachment
                              locations of improvements, etc.

           Tax Certificate     Charged by taxing authorities to present a certification showing that the current
                              year’s taxes were paid.

          Tax Service Fee     The lender requirement of verification, by a tax servicing company, of tax payment.

       Termite Inspection     Required by lender to show property free and clear of active termites.

   Time Is Of The Essence     Demands punctual performance in a binding contract.

               Title Policy   Insurance policy on the ownership of real property, against defects in title.

                      Title   In dealing with real property, title means ownership.

        Underwriting Fee      Charged by a lender to underwrite the loan.

          VA Funding Fee      Veteran’s Administration charge for originating a VA loan.

          Warehouse Fee       Charged by the lender to hold the loan locally before selling it in the secondary
                              mortgage market to an investor.

                   Zoning     Act of city/county authorities specifying type if use for which property may be used.




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                                                                www.northbaytitle.com
                                                                Main Office:
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                             Real Estate Glossary




   Adjusted Mortgage Rate    A mortgage with an interest rate that changes over time with movements in the
                             consumer price index.

         Adjustment Period   The length of time between interest rate changes on an ARM for example,
                             a loan with an adjustment period of one year is called a one Year ARM which
                             means that the interest can change once a year.

              Amortization   Repayment of a loan in installments of principal and interest rather than
                             interest only payments.

    Annual Percentage Rate   The total finance charge including interest, loan fees, points expressed as a
                     (APR)   percentage of the loan amounts.

   Assumption Of Mortgage    A buyer’s agreement to assume the liability under an existing note that is
                             secured by a mortgage or deed of trust. Generally the lender must approve
                             the buyer in order to assume the loan.

             Cap Payment     The limit on how much an interest rate or monthly payment can change,
                             either at each adjustment or over the life of the mortgage.

                   CC&R’s    Covenants, Conditions and Restrictions. A document that imposes controls
                             on the use of property.

         Closing Statement   The financial disclosure statement that accounts for all the funds received
                             and expected at the closing of the escrow, including deposits for taxes,
                             hazard insurance and mortgage insurance.

       Due On Sale Clause    An acceleration clause that requires full payment of a mortgage or deed
                             of trust when the secured property changes ownership.

            Earnest Money    The portion of the down payment delivered to the realtor or escrow agent
                             by the purchaser with a written offer as evidence of good faith.

          Federal National   Popularly known as Fannie Mae. A privately owned corporation Mortgage
     Mortgage Association    Association created by Congress to support the secondary mortgage market.
                             It purchases and sells residential mortgages insured by FHA or guaranteed
                             by VA as well as conventional home mortgages.

           Finance Charge    The cost a borrower must pay, directly or indirectly, to obtain credit.

Graduate Payment Mortgage    A residential mortgage with monthly payments that start at a low mortgage
                             level and increase at a predetermined rate.




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                                                               www.northbaytitle.com
                                                               Main Office:
                                                               431 E Street, Santa Rosa, CA 95404
                                                               (707) 526-2000                               48
                              Real Estate Glossary                                 (continued)




   Home Inspection Report     A qualified inspector’s report on a property’s overall condition. The report usually
                              covers an evaluation of both the structural and mechanical systems.
      Home Warranty Plan      Protection against failure of mechanical systems within the property. Usually
                              includes plumbing, electrical, heating systems and installed appliances.
                     Index    The measure of interest rate changes and to determine adjustments in an
                              ARM’s interest rate over the term of the loan.
             Joint Tenancy    An equal undivided ownership of property by two or more persons. Upon
                              death of any owner the survivors take the decedent’s interest in the property.
                      Lien    A legal hold or claim on property as security for a debt or charge.
        Loan Commitment       A written promise to make a loan for a specified amount on specific terms.
       Loan To Value Ratio    The relationship between the amount of the appraised value of the property,
                              expressed as a percentage of the loan value.
                   Margin     The number of percentage points the lender adds to the index rate to
                              calculate the ARM interest rate at each adjustment.
     Negative Amortization    This occurs when monthly payments fail to cover the interest cost. The interest
                              not covered is added to the unpaid principal balance so that even after several
                              payments you could owe more than you did at the beginning of the loan.
           Origination Fee    A fee or charge for establishing a new loan.
                      PITI    Principal, interest, taxes and insurance.
                     Point    An amount equal to 1% of the principal amount of the investment or note.
                              The lender assesses loan discount points at closing to increase the yield on
                              the mortgage to a position competitive with other types of investments.
       Prepayment Penalty     A fee charged to the mortgagor, who pays a loan before it is due.
Private Mortgage Insurance    Insurance written by a private company protecting the Insurance
                              lender against loss if the borrower defaults on the mortgage.
      Purchase Agreement      A written document in which the purchaser agrees to buy certain real estate
                              and the seller agrees to sell under certain terms and conditions. Also called
                              a sales contract.
      Tenancy In Common       A type of joint ownership of property by two or more persons with no right
                              of survivorship.
     Title Insurance Policy   An insurance policy, which protects the purchaser or mortgagee from past
                              liens or encumbrances on the property.
                  VA Loan     A loan that is guaranteed up to a specified dollar amount by the Veterans
                              Administration where the loan is made by a private lender.



the tools you need | the service you trust

                                                                www.northbaytitle.com
                                                                Main Office:
                                                                431 E Street, Santa Rosa, CA 95404
                                                                (707) 526-2000                                 49
                             Buyer’s Contacts




        Real Estate Agent    ______________________________________________________________________

                             ______________________________________________________________________

                             ______________________________________________________________________


           Escrow Officer     ______________________________________________________________________

                             ______________________________________________________________________

                             ______________________________________________________________________


                   Lender    ______________________________________________________________________

                             ______________________________________________________________________

                             ______________________________________________________________________


   Pest Control Inspection   ______________________________________________________________________

                             ______________________________________________________________________

                             ______________________________________________________________________


       Physical Inspector    ______________________________________________________________________

                             ______________________________________________________________________

                             ______________________________________________________________________


         Insurance Agent     ______________________________________________________________________

                             ______________________________________________________________________

                             ______________________________________________________________________




the tools you need | the service you trust

                                                         www.northbaytitle.com
                                                         Main Office:
                                                         431 E Street, Santa Rosa, CA 95404
                                                         (707) 526-2000                          50
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