Frequently Asked Questions
- I've never purchased a home before. Where should I begin?
- With all the bad news about mortgage products and home foreclosures, how do I avoid making a big mistake when deciding which type of loan to select?
- Why should I buy, instead of rent?
- Can I become a homebuyer even if I have bad credit and don't have much for a down payment?
- What price home can I afford?
- What is title insurance?
- What steps should I take when looking for a home loan?
- Is it possible to negotiate interest rates?
- Is it better to buy a new home or a resale?
- When buying a home how much does my real estate REALTOR need to know?
- Need a lender?
- Can I build a home and still use my VA loan as permanent financing?
- How much can I borrow? How much down payment do I need?
Thank you for starting with Lawrence Land Company as you begin the process. Articles and fact finding will both contribute to becoming a smart consumer. Some priorities to focus on before you begin searching for specific areas, neighborhoods or homes in the New Bern area would be to:
- Familiarize yourself with your personal finances.
- Learn about the Craven/Carteret County real estate markets.
- Carefully review your budget and begin to eliminate as much debt as possible.
- Have a down payment and earnest money ready when the time comes to act and make your offer.
Your next step is to contact our office. We will present some options and manage the details of the real estate transaction on your behalf and to your complete satisfaction.
For more experienced buyers, a review on the current real estate process will ensure you are prepared as well.
Once we meet and review your finances along with your home buying needs, you should select a lending consultant. We can recommend several trusted lending professionals or you can choose your own.
It is important to have complete confidence in your lender, so be sure you feel completely comfortable in this relationship. Ask the lender to review the options and the materials in easy to understand terms.
Ask lots of questions and NEVER sign any documents until you know what you are signing and feel completely at ease signing them. Lending professionals often recommend fixed interest rate loans and the current interest rates are still very attractive. However, the type of loan best for you depends on several factors:
- How much money do you have for a down payment?
- How long do you plan to live in the home?
- Do you qualify for a FHA, VA or USDA loan?
A home is an investment and as a homeowner you may deduct the cost of your mortgage loan interest from your federal income taxes and usually from your state taxes. This may SAVE you money each year because the interest you pay may make up most of your monthly payment for the term period of your mortgage and the value of your home may increase over the years. Ultimately, you will enjoy having something that is all your own.
Credit does play a role in your eligibility however several different options are available for loans. First research and obtain a pre-approval. A mortgage broker may assist with which approach would be best for your family. There are FHA, Conventional, USDA and VA loan opportunities available.
Consider these factors when determining how much you can afford:
- Your income
- The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender.
- Your outstanding debts
- Your credit history
- The type of mortgage you select
- Current interest rates
Lenders will analyze your income in relation to the projected cost of the home and your outstanding debts. This analysis will be used to determine the size of the loan available. The housing expense-to-income ratio is determined by calculating your projected monthly housing expense, which includes the principal and interest payment on your loan, property taxes and hazard insurance. The sum of these costs is referred to as "PITI."
Title insurance is a form of insurance in favor of an owner, lessee, mortgage or other holder of an estate lien, or other interest in real property. It indemnifies against loss up to the face amount of the policy, suffered by reason of title being vested otherwise than as stated, or because of defects in the title, liens and encumbrances not set forth or otherwise specifically excluded in the policy, whether or not in the public land records, and other matters included within the policy form, such as lack of access to the property, loss due to un-marketability of title, etc. The title policy form sets forth the specific risks insured against. Additional coverage of related risks may also be added by endorsements to the policy or by the inclusion of additional affirmation insurance to modify or supersede the impact of certain exceptions, exclusions or printed policy "conditions." The policy also protects the insured for liability on various warranties of title.
In addition, the policy provides protection in an unlimited amount against costs and expenses incurred in defending the insured estate or interest.
Before it issues a title policy, the title insurance company performs, or has performed for it, an extensive search, examination and interpretation of the legal effect of all relevant public records to determine the existence of possible rights, claims, liens or encumbrance that affect the property.
However, even the most comprehensive title examination, made by the most highly skilled attorney or lay expert, cannot protect against all title defects and claims. These are commonly referred to as the "hidden risks." The most common examples of these hidden risks are fraud, forgery, alteration of documents, impersonation, secret marital status, incapacity of parties (whether they be individuals, corporations, trusts or any other type), and inadequate or lack of powers of REALTORS® or fiduciaries. Some other hidden risks include various laws and regulations that create or permit interests, claims and liens without requiring that they first be filed or recorded in some form so that the potential buyers and lenders can find them before parting with their money.
Since the cost for homeowner's title insurance is usually sharply reduced when taken simultaneously with the issuance of a purchase money mortgage, the risk is one that a well-informed buyer should not take. In fact, several states have adopted statutory requirements which require a notice to home buyers as to the availability of title insurance similar to that being obtained by their purchase money mortgages.
It is strongly recommended that home buyers are prequalified or pre-approved for a loan as their first step in the process. By being prequalified, a buyer knows exactly how much house they can afford, allowing for more informed decisions in the market place. This does not mean they will definitely get the loan because their credit reports, wages and bank statements still need to be verified before you can receive a commitment from the lender for the loan.
Almost all mortgage lenders prequalify people at no charge. Many of them will even do it on-line. In order to be pre-approved, an application will be taken. For a fee, your credit report will be pulled, your employment and income will be verified, your checking and savings accounts will also be verified. Once a home is selected you will obtain an appraisal to prove its value to the bank and perform whatever inspections you may want on the property. This process considerably shortens the time frame to closing.
Compare the mortgage charts published in most newspapers.
Occasionally some lenders are willing to negotiate on both the loan rate and the number of points. This isn't typical among many of the established lenders who set their rates. However, research and review the market and try to get the best deal. Always look at the combination of interest rate and points to find the best deal. This is reflected in what is called the APR or Actual Percentage Rate.
The interest rate is much more open to negotiation on purchases that involve seller financing. Generally, these are based on market rates but some flexibility exists when negotiating such a deal.
Sales price increases in either type of housing are strongly tied to location, growth in the local housing market and the state of the overall economy.
Some people feel that buying into a new-home community is a bit riskier than purchasing a house in an established neighborhood. Future appreciation in value in either case depends upon many of the same factors. Others believe that a new home is less risky because things won't "wear out" and need replacement.
"Existing homes have been appreciating a little more than new homes but every once in awhile they're at the same level and sometimes the new home prices go up a little quicker" according to the National Association of REALTORS® (NAR).
Be sure to find out who your real estate REALTOR® is representing before you tell them too much. The degree of trust you have in a REALTOR® may depend upon their legal obligation of representation. An agency working with a buyer has three possible choices of representation. The REALTOR® can represent the buyer exclusively, called buyer agency, or represent the seller exclusively, called seller agency, or represent both the buyer and seller in a dual agency situation. Some states require REALTORS® to disclose all possible agency relationships before they enter into a residential real estate transaction. Here is a summary of the three basic types:
- In a traditional relationship, real estate REALTORS® and brokers have a fiduciary relationship to the seller. Be aware that the seller pays the commission of both brokers, not just the one who lists and shows the property, but also to the sub-broker, who brings the ready, willing and able buyer to the table.
- Dual agency exists if two REALTORS® working for the same broker represent the buyer and seller in the same transaction. A potential conflict of interest is created if the listing REALTOR® has advance knowledge of another buyer's offer. Therefore, the law states that a dual REALTOR® shall not disclose to the buyer that the seller will accept less than the list price, or disclose to the seller that the buyer will pay more than the offer price, without express written permission.
- A buyer can hire a REALTOR® who will represent their interests exclusively. A buyer's REALTOR® usually requires a retainer which is refunded once the buyer purchases a house. The amount of the retainer differs from REALTOR® to REALTOR®. A buyer's REALTOR® can perform enhanced services for the buyer, such as preparing a market analysis on the home they are buying. All information provided to the buyer's REALTOR® shall remain confidential and will not be relayed to the Seller's REALTOR®.
We have established many professional working relationships with local lenders. Contact us for more information and we will be happy to help.
Yes, you can still use your VA loan and save tens of thousands of dollars by building your own home with us. Contact us for more information.
We have lenders that can loan up to 95% LTV (loan to value) of the home and sometimes 100% financing is available. Just contact us to find out if and what you qualify for.