Buying a home in Maryland requires that the buyer make a percentage cash or check deposit known as Earnest Money Deposit (EMD) when they make an offer to purchase a home. It signifies real intent to purchase the property and to complete the transaction. When a buyer’s offer is accepted, the Earnest Money Deposit into an account and is held in escrow by either the Title Company or the real estate brokerage representing the buyer or the seller. The EMD is not accessible to the buyer nor the seller during the course of the sale process. At closing, the EMD becomes part of the buyer’s closing cost/down payment. If the buyer defaults or fails to complete the transaction without reasons spelled out in the contract, the EMD can be released to the seller and becomes payment for damages suffered by the seller.

The timeline for closing on a home can vary, but typically takes between 30 and 45 days. This can depend on factors such as the type of loan, the complexity of the transaction, and any contingencies or issues that arise during the process.

A conventional loan is a type of mortgage that is not guaranteed or insured by the government, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, conventional loans are backed by private lenders and follow guidelines set by Fannie Mae and Freddie Mac, which are government-sponsored enterprises that purchase mortgages from lenders. Conventional loans typically have stricter credit and income requirements compared to government-backed loans and may require a larger down payment.

An FHA loan is a type of mortgage insured by the Federal Housing Administration (FHA), a government agency. It’s designed to help low-to-moderate-income borrowers, first-time homebuyers, and those with less-than-perfect credit to purchase a home with a smaller down payment and lower credit score requirements than conventional loans. The FHA insures the loan, which allows lenders to offer more favorable terms to borrowers. However, FHA loans also require mortgage insurance premiums (MIP) that increase the overall cost of the loan.

A pre-qualification is an initial assessment that lenders use to estimate the amount of money a borrower could potentially be approved for a mortgage. It involves a review of the borrower’s self-reported income, assets, and debts, without verifying the information with documentation. Based on this information, the lender may provide a pre-qualification letter that outlines an estimated loan amount, which can give the borrower an idea of their home-buying budget. However, a pre-qualification is not a guarantee of a loan, and it does not involve a thorough review of the borrower’s creditworthiness or financial ability to obtain a mortgage. To obtain a pre-approval, which carries more weight with sellers, borrowers need to complete a formal loan application and provide documentation to verify their financial information.

Pre-approval is a process that lenders use to evaluate a borrower’s creditworthiness and financial ability to obtain a mortgage. It involves a thorough review of the borrower’s credit history, income, assets, and other financial information. Based on this information, the lender will provide the borrower with a pre-approval letter, which specifies the maximum amount of money the borrower can borrow for a home purchase. Having a pre-approval letter in hand when shopping for a home shows sellers that the buyer is serious and financially capable of making the purchase, which can help strengthen their negotiating position. However, it’s important to note that pre-approval is not a guarantee of a loan, and the final loan approval will depend on the lender’s verification of the borrower’s financial information and the appraisal of the property.

A VA loan is a type of mortgage that’s guaranteed by the Department of Veterans Affairs (VA) and designed to help active-duty military members, veterans, and eligible surviving spouses to buy, refinance, or improve a home. VA loans offer several benefits, including no down payment requirement, no private mortgage insurance (PMI), and more flexible credit and income requirements than conventional loans. To be eligible for a VA loan, the borrower must have served in the military for a certain period of time, depending on their service status and the era in which they served. The VA doesn’t actually lend money, but instead provides a guarantee to lenders, which allows them to offer more favorable terms to eligible borrowers.

A USDA loan is a type of mortgage backed by the US Department of Agriculture’s (USDA) Rural Development program. It’s designed to help low-to-moderate-income borrowers in rural areas to buy or improve a home. USDA loans offer several benefits, including no down payment requirement, lower mortgage insurance premiums than FHA loans, and more flexible credit and income requirements than conventional loans. To be eligible for a USDA loan, the borrower must meet certain income and property location requirements. The property must be located in a USDA-approved rural area, and the borrower’s household income must not exceed the USDA’s income limits for the area. The USDA doesn’t actually lend money, but instead provides a guarantee to approved lenders, which allows them to offer more favorable terms to eligible borrowers.

Title insurance is a type of insurance that protects homeowners and lenders against financial loss resulting from defects in a property’s title or ownership. When a property is sold, a title search is conducted to ensure that the seller has a clear title and the legal right to sell the property. However, there can be hidden issues or errors in the title that may go unnoticed during the title search, such as undisclosed liens, errors in public records, or fraudulent claims to ownership. Title insurance provides protection in case such issues arise, and can cover legal fees, settlement costs, and other related expenses. In short, title insurance provides peace of mind to both the homeowner and lender by protecting against financial loss resulting from unknown defects in a property’s title.

A title search is an examination of public records to determine who owns a property and whether there are any liens, encumbrances, or other issues that may affect ownership.

Home equity refers to the difference between the current market value of a home and the outstanding balance on any mortgages or loans secured by the property. In other words, it’s the portion of the home’s value that the owner actually owns, free and clear. As homeowners make mortgage payments over time and the value of the home increases, their equity in the property grows. Home equity can be used to secure loans or lines of credit, and can also be accessed through home equity loans or home equity lines of credit (HELOCs) to fund home improvements, pay for education, consolidate debt, or cover other expenses.