Know Your Rights When Buying a Home

If searching for a home sounds like a daunting prospect, you are not alone. From inspecting houses and making offers to looking for a loan and applying for homeowners insurance, buying a home can be stressful for even the most competent homebuyers. For first time buyers, the struggle to master the ins and outs of property purchasing can be overwhelming.

Confusion is the biggest hurdle facing first-time homebuyers. Fortunately, with a little discipline and the right resources, educating yourself on home purchases and mortgages is simple. And the more you understand about the homebuying process and what rights you have, the better decisions you will make – it’s that easy. And yes, as a homebuyer you certainly have rights, no matter stage of the purchasing process you are in.

Here is a list of facts about buying a home you should keep in mind before going house shopping. With these points well in mind you will be able to ask better questions and know what answers you are entitled to receive.

Key Points to Keep in Mind

1. No discriminatory practices are allowed: The Fair Housing Act guarantees that you cannot be refused housing because of characteristics like age, race, sex, or religion. You are not limited to any particular neighborhood, price, or style, ever.

2. You don’t need to sign everything a realtor hands you: Some realtors will try to get you to sign a contract or agreement with them so you will not be able to use another agent while working with them. You do not have to sign this document to look at houses. You can work directly with selling agents if you like, or simply find a buyer’s agent that does not require a contract.

3. Sellers must usually disclose: Many state laws require that sellers let buyers know key points about the condition of the house. The specifics vary a little from state to state, but it generally means that if the house has hidden problems like rot, mold, termite damage, or water leaks, the seller must tell you about them. Find out your state’s particular laws on the subject.

4. Legal issues must be revealed: When you go through the process of buying a house, you must be notified regarding any legal issues attached to the property, such as easements that were made in the past but may still have an effect in the future.

5. No one else can make the decision for you: Refuse any pressure from realtors, lenders, sellers, investors, title companies, and others involved in the selling process. They cannot force you to buy anything until you sign the contract.

6. You can and should shop for loans: No bank or lender can prevent you from comparing rates and prices with other organizations.

7. You have the right to know all the costs of your loan: The Truth in Lending Act, among others, requires that lenders make you aware of all the costs of your mortgage, especially any financial charges that are nonrefundable, before you pay them. You have the right to know all the terms of your loan.

8. If you are refused a mortgage, you have the right to know the reason: Do not let any bank or lender give you a blanket refusal without explaining themselves. Banks are in the midst of complex mortgage reforms following the housing crash, and many are struggling to learn new processes. Bad information and poor service are sometimes the result, so always be ready to ask “Why?”

9. You have the right to information about the closing process: In addition to information about the loan itself, lenders must also disclose additional information such as costs associated with settlement, escrow and title practices, and business relationships between lenders and third parties.

10. Your personal information is private: Part of the privacy laws of the United States guarantee that financial institutions must disclose how they use your private information, and you have the right to opt out of any sharing of personal information between third parties.

Filing a Complaint

If you have a complaint against a realtor, you can typically file a grievance with the proper institution, such as the local board of realtors in your area or the statewide realtor association your realtor belongs to. The National Association of Realtors will also take complaints against member agents.

If you have been mistreated by a lender, you should first try filing a complaint with the lender itself (the HUD website has a general example). If this has no effect, consider filing a complaint with an official body, such as the Office of the Comptroller of the Currency, the Federal Reserve Board, state business or economy departments, and others.

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