Buying a home is an important investment and your primary focus should be to solve a housing need.  Investing in your home for financial gain is a secondary benefit of owning real estate.   The tax benefits of home ownership offer added incentives to determine if owning rather than renting is the better alternative. 

 The process can be very complicated if you do not work with industry professionals who can provide accurate information, advice and counsel.   These professionals should include mortgage lenders, Realtors, Attorneys, Home Inspectors and Accountants.  If you are a first-time home buyer, you may qualify for a tax credit ($8000 in 2009) and could be eligible for special financing programs.

Mortgage Financing

Most home buyers obtain a mortgage or finance the purchase of the property.  The lender may be a bank, mortgage banker, credit union or a private investor. Qualifying for a mortgage is based on your “ability to repay” the loan.  Lenders review your credit report, job history, assets and liabilities in order to determine the monthly payment you may qualify for.  Qualifying standards are dependent upon your down payment, credit score and the type of mortgage you are looking to obtain.  The most common types of loans are conventional and government insured (FHA and VA) and USDA Rural Home program for 100% financing.  It is advisable to obtain a “credit approval” from a lender prior to actively looking at property so that you understand the price range you can afford. 

Mortgage interest rates are historically low and reduce the monthly payments or increases affordability.  An interest rate change of 1%, up or down, in a 30 year fixed rate mortgage will change the payment $200/month on a $250,000 mortgage.  In recent history, many homeowners have re-financed their mortgages to take advantages of the downward trend in rates.  In 1981, 3o year fixed rates peaked at a rate of 15.75%.  The rates (2009) of 4.75% dramatically affect the borrowing power of all consumers.  Consult with a mortgage professional to determine your specific qualifications and options. 

Agency – The Real Estate Agent’s Role in the Process in Rhode Island

Rhode Island real estate law allows a real estate broker or salesperson to provide real estate services to you whether you are a buyer, seller, tenant, or landlord. The minimum level of service required by law will depend on the type of relationship that you wish to have with a real estate licensee.   Although it is not legally required, you may also choose to sign a written contract to further define your relationship. The principal broker of the real estate brokerage or a person designated by him or her must also agree to the type of relationship that you choose to have with the licensee.   A real estate license is required to present a consumer with a mandatory disclosure form at the first meeting so that you are properly informed.

 Types of Real Estate Relationships with a Rhode Island Real Estate Licensee

A Neutral Transaction Facilitator is a real estate licensee who provides assistance to a buyer, seller, tenant, or landlord, or both, in a real estate transaction as a neutral facilitator who does not represent you. A Neutral Transaction Facilitator owes the following duties to you as a customer: to perform agreed upon ministerial acts timely and competently; to perform these acts with honesty, good faith, reasonable skill and care; and properly account for money or property placed in the care and responsibility of the principal broker. A licensee acting as a neutral transaction facilitator does not owe confidentiality or any other fiduciary duties to a customer. A Neutral Transaction Facilitator does not represent you and cannot negotiate on your behalf.

A Designated Client Representative is a real estate licensee who represents a buyer, seller, tenant, or landlord in a real estate transaction and advocates on your behalf.  A Designated Client Representative owes the following duties to you as a client: to perform the terms of the client representation contract, if any, with reasonable skill and care; promote the client’s best interest in good faith and honesty; protect the client’s confidential information during the relationship and after its termination; perform agreed upon ministerial acts timely and competently; perform these acts with honesty, good faith, reasonable care and skill; and to properly account for money or property placed in the care and responsibility of the principal broker. Only the real estate licensee(s) who have been specifically appointed by the principal broker or the principal broker’s designee may represent you as a client. The other real estate licensees who are affiliated with the brokerage owe no duty to you except for confidentiality. If another licensee who is affiliated with the same brokerage becomes a Designated Client Representative for another party in a transaction with you, then that other affiliated licensee has no duty to protect any confidential information about you learned after he or she begins to represent the other party. In order for a real estate licensee to represent you as a Designated Client Representative, the licensee must obtain your informed written consent and provide you with a written notice.

A neutral Dual Facilitator is an individual real estate licensee who assists a buyer and seller or tenant and landlord in the same transaction and must be neutral as to any conflicting interests between the parties to the transaction.  A neutral Dual Facilitator relationship exists solely for a specific transaction between the parties. A Dual Facilitator must be neutral as to any conflicting interests between the parties to the transaction. A Dual Facilitator owes the following duties to all parties: protecting the confidential information of you and the other party except where disclosure is required or permitted by state law; and accounting for funds. A neutral Dual Facilitator cannot satisfy fully the following duties to one or both parties: loyalty, full disclosure, reasonable care, and obedience to lawful instructions

Property Search – Finding the Property

Visit Rhode Island real estate to view the “virtual communities” and review demographic, school, home buying and selling information and take virtual tours.   Please visit RI MLS for access to all listings in the Rhode Island Multiple Listing service.   The Rhode Island Home Search service provides daily alerts of new listings and pending sales of property meeting your search criteria.

For properties in Massachusetts, the Virtual Homes MLS  Map Search provides all MLS listings plotted in Massachusetts towns on a map.   RE/MAX Innovations real estate agents can assist you in your search for the perfect home.

Home Inspection – In-depth View of the Property

A home inspection gives the buyer more detailed information about the overall condition of the home prior to purchase. In a home inspection, a qualified inspector takes an in-depth, unbiased look at your potential new home to:

• Evaluate the physical condition: structure, construction, and mechanical systems;
• Identify items that need to be repaired or replaced; and
• Estimate the remaining useful life of the major systems, equipment, structure, and finishes

The Closing – Obtaining Title and Possession

As a buyer your contract will stipulate that you obtain “clear title” to the property you are purchasing.  The lender will co-ordinate the hiring of a title company or closing attorney that will be responsible for protecting the lender and the buyer’s interests in the property.  They will research the title, prepare the settlement statement, schedule the closing, record the documents and distribute the funds.

Occupancy is typically given after the transfer of title or the recording of the transaction in the Registry of Deeds.

Virtual Homes Real Estate provides access to real estate and community information in other surrounding states.