The purchase of a home involves many considerations.  In addition to deciding the neighborhood you want to live in and picking the house of your dreams, there are numerous steps to get to the passing of keys.  This webpage is designed to answer some of the frequently asked questions of first time homebuyers. In picking my house, what are some things I should consider? Distance of the home from work, school, house of worship, friends and relatives, parks, and convenient shopping; The neighborhood reputation; Street lights and neighborhood safety; Access to public water or sewer; Average electric, heating, and water bills; Amount of property taxes; and Age of house; Should I keep score? Yes.  You may forget what you liked or disliked about a home after looking at many similar homes.  It is best to take notes so that you can compare the homes in an effort to pick the best choice for your family.  This is especially true since some purchases involve some level of compromise. Who are the key players in the process? Realtor – helps you find the house and make an offer on a house. Broker – helps you obtain a loan with a lender to buy the house or you can go directly to a lender for a loan. Attorney – closes the transaction.  Meaning, the Attorney’s role is to bring the seller and buyer together to consummate the transaction.  The seller signs the deed conveying the property to the buyer and the buyer signs the loan documents promising to pay the lender back.  The lender sends the Attorney the loan proceeds so that I can pay the seller the sales price. Why are so many people involved? Because the home buying process can be a complex, the Attorney’s job is to make the process easy for you so that you can enjoy the experience. Why is an attorney required to close my loan? An attorney is required to close transaction to protect you and to ensure you understand the legal documents you are signing. Who does the attorney represent? The attorney represents the buyer.   The attorney should explain the purpose and importance of each document that you are required to sign at Closing.  Because of the nature of real estate transactions, the attorney also represents the lender because he or she will have to prepare and/or review the loan documents, issue any requested or required title opinion or title insurance, order any required survey, record documents necessary to complete the transaction and insure that all requirements of the closing instructions are met.  If the seller requests the Attorney to prepare the deed conveying the property to your name or other documents such as powers of attorney, mortgage satisfactions or releases necessary to complete the transaction, the Attorney also represents the seller. What does the attorney do? Attorneys are responsible for numerous tasks with regard to a real estate closing.  A list of all the tasks would be quit lengthy and can vary depending on the specifics of the particular real estate transaction.  Below is a list of basic tasks Attorneys perform in every real estate transaction in South Carolina. Title Examination: Title = legal ownership of the home.  The seller has to provide title that is free from claims by others against your new house.  Claims are liens, judgments, or other encumbrances.  In other words, if there is anything that could attach and cloud your title when you take possession, we have to find it and fix it.  That’s what it means when you hear people talk about title that is clean or marketable.  We search the property back 40 years so that we make sure you legally want to buy this house. Gather all information needed to consummate the sale: This step involves reviewing the contract to determine the agreements between the parties such as sales price, the amount of your closing costs the seller has agreed to pay, and who’s paying for the termite inspection and the HVAC letter.  We also obtain the property tax information from the city and county.  If the seller has a mortgage on the property, we gather the information to pay it off because a mortgage is a lien on the property that must be satisfied prior to the transfer of ownership. We coordinate with lender in preparing the documents for closing. We explain and supervise the signing of all papers. We disperse the funds so the seller gets paid and so does anyone expecting payment for services rendered in connection with the closing; e.g. the appraiser, the attorney, the broker, the inspectors, and the lender. We record the necessary documents including the deed the seller signs conveying the property to you and the mortgage you signed as security to make your monthly mortgage payments.   The Contract After you have found a home you want to buy, the real estate agent asks you to make an offer by signing a “contract.” When both you and the seller sign this document, you create a Contract of Sale. Any verbal agreements concerning the sale of real estate are generally not legally enforceable, so make sure all the terms you agreed upon to are written in the contract.                         Suggestions:  If personal property is being sold with the house, it needs to be written in the contract. If your purchase of the house is dependant on any other factors, it needs to be written in the contract as a CONTINGENCY.  Otherwise, you may lose your security deposit if you are unable or unwilling to purchase the house.  Hazard Insurance All lenders require fire insurance.  It is never optional, so price your coverage.  Your lender is going to require that you pay for the 1st year in advance at closing.  If the house you are buying is located in a flood zone, the lender is also going to require flood insurance.   What will my monthly payment include? Your monthly mortgage payment will include principal and interest on the amount you borrowed.  If your lender requires you to pay taxes and insurance into an escrow account, your monthly payment will also include 1/12 of your property taxes and hazard insurance.  Depending on the amount of your down payment, your lender may also require monthly Private Mortgage Insurance (PMI).  In essence, PMI is insurance that you will make your monthly payment.  There maybe ways of avoiding the requirement for PMI, but you would need to discuss them with your lender or mortgage broker.   Should I obtain a survey or home inspection? Lenders typically don’t require a survey if one exists of record.  That doesn’t mean you shouldn’t have one.  The survey gives a complete and precise description of the property you are purchasing. It shows the boundaries of the property along with the location of the house on the property. I encourage everyone to have a survey done and a home inspection of the property.  They are small costs to insure the 30 year investment is what you intend it to be. What is a termite letter? Most lenders require proof that the property has been inspected for termites and that there is no damage resulting from termites or other causes.  I recommend that everyone purchase a termite bond so that each year the house can be inspected.  Termites are very common in South Carolina and without the proper protection, there is a chance that termites will damage your home. What is title insurance? Most lenders require title insurance coverage.  This one-time premium is paid at the closing and protects the lender if someone ever makes a claim against your new home. You may obtain an owner’s title insurance policy to protect you in the same manner. “Owning your property free and clear is not merely established by having a deed in your hands. A deed does not cancel certain prior ‘rights’ or ‘claims’ other people may have to your property As such, you need protection and that is why you should obtain title insurance.” In the event that a flaw in title is discovered or your rights of ownership are challenged, title insurance defends your title at the expense of the title insurance company, corrects or clears the title when possible, or pays you for your loss in the event of an unsuccessful defense of your title. The Lenders Policy protects the lender and does not cover the owner. Contrary to popular belief, the owner is not a third party beneficiary on a loan policy. The Owners Policy insures the owner while he owns the property and after s/he sells the property against any claims based on deed warranties or in the event he accepts a purchase money mortgage.  Through the years, your new property may have changed hands many times through sale, inheritance, foreclosure, or bankruptcy. Each transfer was an opportunity for an error in title to be discovered. If an error has occurred, and has never come to light, it puts your title in jeopardy. You could lose your property and the money you paid for it. And, even if you successfully defend your rights of ownership, the cost in time and legal fees could be tremendous. Among the many risks against which title insurance protects you are forged documents; mistakes in recording legal documents, undisclosed or missing heirs;, fraud, invalid divorces, clerical errors in public records, etc. Title insurance is a one-time premium and is different from homeowners insurance or car insurance, because it insures against loss or damage for matters that have occurred in the past, whereas homeowners insurance or car insurance insure against loss resulting from future events.  It typically does not insure against defects first arising after the effective date of the policy, however, there is some expanded coverage available under certain types of policies. *direct quotes taken from First American Title Insurance Company. When should I find out whether there is a homeowners association? A buyer should determine whether there is a homeowner’s association before signing a contract to purchase a home. Once you purchase a house in a neighborhood, you are agreeing to be bound by the rules and regulations of that subdivision.  In addition, most homeowners associations have dues or regime fees that can add additional costs to the purchase and maintenance of the house. Thus, it is important to review the restrictions before you enter a contract for the purchase of a house.  For example, the restrictions may prohibit the parking of an 18 wheeler in your yard.  It may also prohibit conducting any kind of home business or it may prohibit certain animals.  If these things are important to you, you may want to consider a different subdivision.      If we are married, does that automatically mean that when I die my spouse gets the property outright? Not unless title is held by the parties as joint tenants with rights of survivorship.  If this is the parties’ desire, it should be in the contract.  Otherwise, each party will own a ½ interest in the property. Is there anything I should know about water and sewer bills? The water and sewer are not always on the same bill.  You should determine whether there is a public sewer or septic tank and whether there is public water or a well. Is the trash included with the property taxes? The trash won’t always be public.  In some subdivisions, you have to pay the trash company to pick up your trash.  It is not an expensive fee, but you want to know this before choosing a home. How are property taxes determined? Taxes are paid in arrears.  For example the 2007 property taxes are due by January 15, 2008.  Because most sales take during the tax year, we prorate the taxes so each party pays their prorated share of the taxes for the tax year. What are typical closing costs? Typical closing costs include lender fees, attorney fees, title insurance, hazard insurance, and recording fees.  These fees are disclosed to you in advance. You should get what is called a good faith estimate of your closing costs within 3 days of applying for the loan.  After the contract of sale is finalized, the HUD-1 is one of the most important documents as it tells you all about the money.  It documents who gets what and how much.  The good faith is just an estimate, but the HUD-1 contains the final numbers.  Your agent typically gets the HUD-1 one or two days before closing.