A home is probably the biggest purchase you'll ever make. You want to make sure it's a positive experience.
When you're buying a home, a Realtor is your representative in the process. You want to find the right person to make the partnership work for both of you. Allen Tate has more than 1,400 agents throughout the Carolinas. To find an Allen Tate Realtor, click here.
Below are few tips for ensuring a good fit.
Ask friends and family for recommendations. What did they like about their agent? Knowing you, do they think you'd match up well?
Drive around the area you'd like to live in. Is there a name you're seeing more than once? Chances are that Realtor does a lot of business in the area and would be a great resource for you.
Interview more than one person. Simply call and say, "I'm starting to look for a home and I need a Realtor. I'd like to meet with you and ask a few questions." It's important that you and your Realtor are working together toward a common goal and that your expectations are being met. Ask these questions to help find your perfect fit:
- How long have you been in the business?
- What is your website? Can you give me a few referrals from past clients?
- Do you have a staff? How do they help you? How will they help me?
- Do you have obligations that may hinder your availability to look at homes at certain times of the day?
- How often can I expect to hear from you?
- How do you like to communicate? What's the best way to reach you?
- Can you provide me with a list of homes that meet my criteria a few days prior to touring? I want to check them out online and do a drive-by to make sure I'm not wasting my time.
- What types of homes/neighborhoods do you specialize in?
- After we have written a contract on a home, what can I expect from you?
- If we run into a bump during the appraisal or inspection process, how will you help me?
- What can you offer me that a Realtor from another company cannot?
After you've carefully chosen your Realtor based on experience, reputation and your personal comfort level, you'll sign what's called a "Buyer's Agreement" with the Realtor. Simply put, this agreement spells out that you have chosen this agent to work for you and your interests.
Now, what happens if you work together awhile and you find that you just don't click? Don't worry; it happens from time to time. Talk with the Realtor about your concerns or speak to the Broker-in-Charge of your Realtor's office. Explain the situation. The Broker-in-Charge will help you find a more compatible agent. Simple as that!
Here are some real estate terms and definitions that can help you understand the process of first-home buying.
Annual Percentage Rate (APR) : The total yearly cost of a mortgage as expressed by the actual rate of interest paid. The APR includes the base interest rate, points and any other add-on loan fees and costs. So the APR is higher than the rate of interest that the lender quotes for the mortgage.
Appraisal: Mortgage lenders require an appraiser to give an opinion of the market value of a house a homeowner wants to sell or refinance. This professional opinion helps to protect the lender from lending money on a house that is worth less than the amount the buyers have agreed to pay for it or that the seller wishes to obtain when refinancing the existing loan.
Assessed value: The value of a property for the purpose of determining property taxes. This figure depends on the methodology used by local tax assessor and may differ from appraised or market value of the property.
Buydown: The builder or seller agrees to pay part of the home buyer's mortgage for the first few years. The term also refers to the practice of a seller paying a mortgage lender a predetermined amount of money to reduce his or her mortgage interest rate, thereby creating more attractive financing for a potential buyer. Veterans with low or modest incomes may be able to get buydowns through a Veterans Administration loan plan that is available in some new housing developments. You can also buy down your own rate - check with your mortgage professional to understand the process.
Cash Reserve: Most mortgage lenders require that homebuyers have sufficient cash left over after closing on their home purchase in order to make the first two mortgage payments or to cover a financial emergency.
Closing Costs: These costs generally total from 2 to 5 percent of the home's purchase price and are in addition to the down payment. Closing costs include such things as points (that is, loan origination fee to cover lender's administrative costs), an appraisal fee, a credit report fee, mortgage interest for the period between the closing date and the first mortgage payment, homeowners insurance premium, title insurance, pro-rated property taxes and recording and transferring charges. So when you are finally ready to buy, you need to have enough cash to pay all these costs in order to buy your home.
Comparable Market Analysis (CMA) : In order to determine the price you want to offer, you need to know current sales prices and recent sold prices of houses like the one you are considering. Identify houses "comparable" to yours that sold within the last six months, are in the immediate vicinity of your house, and are as similar as possible to your house in terms of size, age, and condition. By analyzing the sale prices of houses comparable to yours that are currently on the market, you can see whether prices are rising, flat, or declining. A written analysis of this information is called a comparable market analysis (CMA).
Contingency: Conditions contained in almost all home purchase offers. The seller or buyer must meet or waive all contingencies before the deal can be closed. These conditions relate to such factors as the buyer's review and approval of property inspections or the buyer's ability to get the mortgage financing that is specified in the contract. Sellers may include contingencies as well, such as making the sale of their house contingent upon their successful purchase of another home. If a contingency cannot be met, the party for whom it was established may legitimately withdraw from a contract.
Corporate Home: A previously owned by an employee whose corporation transferred him/her. In the process, he/she was unable to sell the home and the corporation purchased the house in order to allow the employee to move to a new location.
Co-signer: Past credit issues may require you to have help securing a mortgage, even though you are financially stable. A friend or relative can come to your rescue by cosigning (which literally means being indebted for) a mortgage. A cosigner cannot improve your credit report, but can improve your chances of getting a mortgage. Cosigners should be aware; however, that cosigning for your loan will adversely affect their future creditworthiness since your loan becomes what is known as a contingent liability against their borrowing power.
Credit Report: A report that a lender uses to determine an applicant's credit worthiness. Applicants must pay for a lender to obtain this report, which the lender uses to determine the applicant's ability to handle all forms of credit and to pay off loans in a timely fashion.
Debt-to-Income Ratio: Before you begin looking for a new home, you should determine your price range. Lenders generally figure that you shouldn't spend more than about 33 to 45 percent of your monthly income for your housing costs. The debt-to-income ratio measures your future monthly housing expenses, which include your proposed mortgage payment (debt), property tax, and insurance, in relation to your monthly income.
Delinquency: Delinquency occurs when a monthly mortgage payment is not received by the due date. The first time, missed payment is delinquent. The next time, missed payment puts you in default.
Down Payment: The part of the purchase price that the buyer pays in cash, up front, and does not finance with a mortgage. Generally, the larger the down payment, the better terms you can get on a mortgage.
Earnest Money: A home buyer's "good faith" deposit that accompanies a written purchase offer.
Fixed-Rate Mortgage: Loan terms that include a stable, unchanging interest rate (for example, 8.5 percent) for the life (term) of your 15- or 30-year mortgage. Your mortgage payment will be the same amount each and every month. Compare fixed-rate mortgages with adjustable-rate mortgages.
Foreclosure: A legal process whereby property pledged as security for a debt is sold to satisfy a debt in the event of a default in payments or terms.
FSBO: A property that is For Sale By Owner and is not listed through a real estate broker.
Home Warranty Plan: A type of insurance that covers repairs to specific parts of the home for a predetermined time period.
Homeowners Insurance: This is required and necessary. You must have "dwelling coverage" that can cover the cost to rebuild your house. The liability insurance portion of this policy protects you against accidents that occur on your property. Another essential piece is the personal property coverage that pays to replace your lost worldly possessions and usually totals 50 to 75 percent of the dwelling coverage. Finally, get flood or earthquake insurance if you're in an area susceptible to these natural disasters. As with other types of insurance, get the highest deductibles with which you are comfortable.
House Inspection: A house inspection is a necessity. The following should be inspected: overall condition of the property, inside and out; electrical, heating, and plumbing systems; foundation; roof; pest control and dry rot. A good house inspection can save you money by locating problems. With the inspection report in hand, your Realtor can ask the seller to either do repairs or reduce the purchase price.
Interest: Lenders usually require borrowers to pay the interest that accrues from the date of settlement to the first monthly payment.
Interest Rate: Interest is what lenders charge you to use their money. Lenders generally charge higher rates of interest on higher-risk loans. For fixed-rate mortgages, remember that the interest rate has a seesaw relationship with the points. A high number of points is usually associated with a lower interest rate, and vice versa. For an adjustable-rate mortgage, make sure that you understand the formula (the index plus the margin) that determines how the interest rate is calculated after the teaser rate expires.
Legal Fees/Attorney Fees: Costs relating to having an attorney or law firm review and prepare the needed documents for your closing. These costs may include deed preparation (this cost is paid for by the seller), title search and closing packet preparation.
Lock-In: A lock-in is a mortgage lender's commitment and written agreement to guarantee a specified interest rate to the homebuyer, provided that the loan is closed within a set period of time.
Loan Origination: This fee is sometimes called a "point" or "points." It covers the lender's administrative costs in processing the loan. Often expressed as a percentage of the loan, the fee will vary among lenders. Generally, the buyer pays the fee, unless otherwise negotiated.
Multiple Listing Service: (MLS) is a real estate agents' cooperative service that contains descriptions of most of the houses that are for sale. Real estate agents use this computer-based service to keep up with properties listed for sale by members of the Multiple Listing Service in their area.
Notary Fee: This fee is charged for the cost of having a person who is licensed as a notary public swear to the fact that the persons named in the documents did, in fact, sign them.
Points: Also known as a loan's origination fee, points are interest charges paid upfront when you close on your loan. Points are actually a percentage of your total loan amount (one point is equal to 1 percent of the loan amount). For a $100,000 loan, one point costs you $1,000.
Pre-paids/Escrow Account Deposits: These costs are for the payment of taxes and/or insurance and other items that must be made at settlement to set up an escrow account. The lender is not allowed to collect more than a certain amount.
Principal: The principal is the amount that you borrow for a loan. If you borrow $100,000, your principal is $100,000. Each monthly mortgage payment consists of a portion of principal that must be repaid plus the interest that the lender is charging you for the use of the money. During the early years of your mortgage, your loan payment is primarily interest.
Private Mortgage Insurance (PMI:) If the down payment is less than 20 percent of a home's purchase price, the borrower will probably need to purchase private mortgage insurance (also known as "mortgage default insurance"). Lenders feel that homeowners who can only come up with small down payments are more likely to default on their loans. Therefore, lenders make these homeowners buy PMI, which reimburses them the loan amount in case the borrower does default. Private mortgage insurance can add hundreds of dollars per year to loan costs.
After the equity in the property increases to 20 percent, borrowers no longer need the insurance. Do not confuse this insurance with mortgage life insurance.
Property Disclosure Statement: Some states require that sellers give prospective buyers a written disclosure regarding all known property defects and all known material facts that may affect the property's value or desirability.
Pro-rations: Certain items such as property taxes and homeowners association dues are continuing expenses that must be prorated (distributed) between the buyers and sellers at closing. If the buyers, for example, owe the sellers money for property taxes that the sellers paid in advance, the prorated amount of money due the sellers at closing is shown as a debit (charge) to the buyers and a credit to the sellers.
Recording Fee: The cost for having the new deed recorded. This will put your name in the public records as the owner of the home.
REO: An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction, i.e. property owned by a bank, such as foreclosures, deed in lieu, etc.
Settlement or Closing Fee: This fee is paid to the settlement agent or escrow holder. The cost of the fee needs to be negotiated between the buyer and the seller.
Short Sale: This occurs when the proceeds of a real estate sale fall short of the balance owed on the property. The bank forgives the shortfall.
Survey: The lender may require that a surveyor conduct a property survey. This is a protection to the buyer as well. Usually the buyer pays for the surveyor's fee, but sometimes this may be paid by the seller.
Tax Deductible: Refers to payments that you may deduct against your federal and state taxable income. The interest portion of your mortgage payments, loan points, and property taxes are tax deductible.
Title Insurance: Covers the legal fees and expenses necessary to defend your title against claims that may be made against your ownership of the property. The extent of your coverage depends upon whether you have an owner's standard coverage or extended coverage title insurance policy. To get a mortgage, you also have to buy a lender's title insurance policy to protect your lender against title risks.
Zoning: Certain city and county government bodies have the power to regulate the use of land and buildings. For example, the neighborhood where your house is located is probably zoned for residential use. It most likely also has zoning codes or ordinances to regulate building heights, yard sizes and the percentage of lot coverage by buildings.