Real Estate & Home Ownership Information Center

Home Ownership - An Overview

Buying a home is often a consumer's biggest investment. Residential real estate transactions are covered by a complex web of federal and state laws. The requirements established by state law often differ significantly from one state to the next. A residential real estate lawyer from Babb & Brown, P.C. in Greenville, South Carolina, can assist a buyer or seller through the complexities of these transactions. If you are considering buying or selling property, call Babb & Brown, P.C. today.

Contracts

Several different contracts are involved in a typical residential real estate transaction. A listing agreement is the contract between the seller and the listing broker. It sets out listing terms, the seller's preferred sales price, and the commission rate. Most of these conditions are negotiable, including the commission. The listing agreement is critical to the seller, and he or she should review it carefully and have it reviewed by a lawyer. Once a broker produces a willing and able buyer and all conditions are met, the seller owes the broker his or her full commission, even if the seller decides not to sell.

The agreement to sell between a buyer and seller of real estate must be in writing. The terms of the purchase contract are typically negotiated through a series of offers and counteroffers. Other possible contracts include property insurance, title insurance, easements, sales of personal property, and more. The terms of all of these contracts are negotiable and can significantly affect the buyer's financial well-being and the success of the transaction. Contact the experienced real estate lawyers at Babb & Brown, P.C. in Greenville, South Carolina to protect your rights and to ensure you achieve the terms that are the best for you.

Title

Purchase agreements commonly require that the title to property must be marketable. Therefore, the seller must have proof of title to the property and proof that third parties have no undisclosed interests in the title. A buyer may use a title insurance company or an attorney to determine whether a title is marketable. In order to pass title, a deed with an accurate property description must be signed and delivered.

Mortgages

The most common method of financing real estate transactions is through a loan secured with a mortgage on the property purchased. Many different mortgage loan programs exist. The loan structure, term, and source of funding can affect the loan's interest rate and the size of the monthly payments. The source of funding can also affect the amount of the down payment and closing costs.

The most common type of loan, a conventional loan, typically requires a down payment of 10 percent or more of the loan amount. Conventional loans include loans secured by government-sponsored entities such as Fannie Mae (FNMA) and Freddie Mac (FHLMC), and loans that are funded by private investors for higher loan amounts, which typically carry a higher interest rate.

The federal government and other state, local, and private entities have developed programs to provide mortgage loans with a lower down payment. A first-time homebuyer or a buyer with a low to moderate income may be eligible for a mortgage insured by the Department of Housing and Urban Development (HUD) through the Federal Housing Administration (FHA), which insures the loans. Although a qualified borrower may be able to obtain an FHA loan with a down payment of 3 percent of the loan amount or less, the maximum size of an FHA loan is limited.

Veterans may qualify for a loan guaranteed by the Veteran's Administration (VA). VA mortgage loans offer a low or no down payment with many of the same benefits of an FHA loan.

A borrower with bad credit, who may not qualify for a conventional loan, may consider a subprime loan or seller financing. A borrower with a poor credit history can expect to pay a higher interest rate for a mortgage.

Conclusion

Real estate is the economy's backbone and the major investment for most households. However, the real estate market is volatile, the transactions can be complicated, and the market cycles require proper preparation for opportunities and challenges. The experienced real estate lawyers at Babb & Brown, P.C. in Greenville, South Carolina give clients the guidance they need to succeed in these competitive and complicated residential real estate transactions.

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