WHAT IS AN "AS IS" SALE?

An "as is" property is sold without a warranty as to condition, repairs, or struction. With an "as is" sale, the buyer is on notice that the seller makes no promises regarding the property's physical status. With an "as is" sale, it is extremely difficult to make a claim against a seller if something is found to be wrong with the property after closing. "As is" clauses should be seen as a requirement to make the transaction contingent on a professional inspection satisfactory to the buyer. With a properly written sales agreement contingency, if you are not satisfied, then the deal is dead and you can get back your deposit in full.

WHAT IS A SELLER CONTRIBUTION?

A sales agreement typically includes both a purchase prior for the property as well as terms and conditions. It sometimes happens that a buyer will make an offer subject to certain terms. For example, "I'll buy your house, but I want to keep the water and dryer."

One possible condition involves seller contributions. For example, "I'll buy your house if you will pay $xxx of my closing costs." Lenders will generally accept seller contributions as part of a transaction providing they are written into the sales agreement, fully disclosed, and represent only a small fraction of the sales price. Different loan programs have different contribution caps. Lenders can provide specific advice.

HOW LONG MUST I LIVE IN A HOUSE ONCE I BUY?

When you apply for a loan, a lender will ask if you intend to use the property as a prime residence. If the answer is yes, then it is expected that you will physically move into the property and live there for some time. There does not seem to be a set definition for "some time," but what lenders are getting at is this: They do not want to make residential loans with low rates and little down to investors.

Thus, if someone gets a residential mortgage, instantly moves out, and quickly rents the place, lenders will be more than unhappy -- they may call the loan. They may also review the loan application to see if fraud was involved. Lenders do not want borrowers to move in and then rapidly move out, but they will look at the facts and circumstances if such an event occurs. For instance, a sudden job change not known in advance mnight be a valid reason for a move after several months of occupancy. What lenders do not want are situations where a residential borrower is actually a disguised investor. Give that most homes are occupied for 5-7 years, a move after several months or a year is likely to set off bells.

WHAT IS A LENDER'S ESCROW ACCOUNT?

When homes are bought with 80% or more financing from a single lender, the lender generally requires the borrower to make monthly payments to a lender escrow account. The purpose of the lender escrow account is to accumulate money to assure that the borrower's property taxes and property insurance are paid (and thus reduce the lender's risk).

Lenders collect money -- usually 3 months' worth -- at closing to establish the escrow account. However, if taxes and/or insurance payments are due soon, more will be collected. Lenders then typically collect 1/12th of the annual costs for property insurance and taxes each month.

Lenders must account to borrowers annually with a statement showing how much is in the account, whether monthly payments will rise or fall in the coming year, and whether any surplus or shorage appears in the account.

WHAT IS A BROKER'S ESCROW ACCOUNT?

In terms of a real estate sales agreement, an escrow account is typically an account operated by a real estate broker that is used to hold buyer deposits until closing.

Example: Buyer Smith makes an offer to purchase a home. With the offer is a $10,000 earnest money deposit. That deposit is held by Broker Jones in an escrow account. The money in a broker's escrow account is typically a credit to the buyer at closing.

If the sale does not close, however, then several alternatives are possible. First, buyer and seller may agree to return the earnest money deposit to the purchaser. Second, buyer and eller may agree to give the money to the seller to resolve claims that the buyer did not perform as agreed under the sales contract. Third, buyer and seller may dispute how the funds should be distributed. In this situation, the money is usually turned over to a court.

WHAT IS A "DUE-ON-SALE" CLAUSE?

When a home is financed, the borrower agrees to make regular monthly payments. However, if those payments are not made, if they are late, or if the lender's security is reduced (by not making payments, damaging the property, not maintaining insurance, not paying property taxes, selling the property, selling a part of the property by placing someone else on the title, etc.), then the lender has the right to call for the complete and immediate (say, within 30 days) repayment of the loan. The mortgage language outlining the lender's rights is generally called a "due-on-sale" or "acceleration" clause. One effect of a due-on-sale clause is that it effectively prevents a loan from being assumed.

Borrowers should note that state and federal law may limit the ability of lenders to enforce a due-on-sale clause. For instance, a title change in the event of an estate situation may be allowed.

WHAT IS THE DIFFERENCE BETWEEN A CO-OP AND A CONDO?

In general terms: A co-op is a corporation that owns real estate. If you belong to a co-op, you own stock in the corporation and the exclusive right to a given unit. There is usually an underlying mortgage on the property and your co-op fee includes some or all mortgage payments as well as other costs.

With a condo, you own real estate and you have access to certain common faciliites. The condo is typically responsible for exterior maintenance and you pay a monthly condo fee. You have your own title and mortgage, so mortgage costs are not part of the condo fee.