Buyer's Guide

Should I Buy?

Wondering if you should rent or buy? The infographics below spell out the benefits of buying in clear numbers. Buying has always been a more economical option in the long-term, and the numbers below show this is even more true now than it has been in the past.

Source: Keeping Current Matters

So what about timing? Should I buy now or wait untl next year? Predictions on rising interest rates and rising home values indicate that it is best to buy now. The graphic below provides an example of the savings of buying a $250,000 home now vs. next year.

Source: Keeping Current Matters

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Steps in Purchasing

1. PRE-QUALIFICATION: Before looking at homes, you should find out from a lender what you can afford. This helps focus your home search and, when seeing homes, lets the seller know that you are a real buyer prospect, not just viewing homes without intent to buy.
2. FIND A REALTOR®: You might already have a REALTOR®, or you may choose to interview one or more. In Virginia you must also sign a Buyer-Brokerage Agreement when you begin working with a REALTOR®.
3. EXPECTATIONS: Meet with your REALTOR® and discuss what you expect in the homefinding experience. The REALTOR® should let you know what he/she will do for you as well.
4. REQUIREMENTS: Determine your required criteria for a home and share it with your REALTOR® to begin looking online.
5. HOME SEARCH: Decide on homes to view and your REALTOR® will make appointments for you to see them.
6. OFFER: Once you have found your desired home, have your REALTOR® draw up and submit a sales contract to the seller along with an earnest money deposit. This money is deposited into an escrow account by the broker until closing. Your earnest money deposit will be applied toward your down payment at closing.
7. NEGOTIATION: At this point the seller may make a counter-offer, in which case you have a chance to negotiate terms, or they may turn down the offer.
8. ACCEPTANCE: If the seller accepts and signs the offer within the specified time on the contract, you have a ratified contract!
9. LOAN APPLICATION: Next you will need to make application to a lending institution for a mortgage, generally within 2 weeks of the contract (unless you are paying cash, in which case you would provide proof of funds with the contract above). Be prepared to submit complete financial statements of your assets and liabilities, bank statements, verification of employment and income information. The lender will have the property appraised (usually $450 or so).
10. INSPECTIONS: Your purchase contract provides for inspections of the property within a stated time frame. We generally recommend a whole house inspection, and by property may recommend others such as roof, chimney, and radon - all of these are at your expense. Termite and sewer inspections, if applicable, are the responsibility of the seller.
11. ADDENDA NEGOTIATION: After reviewing inspections with you, your REALTOR® will submit any requests for repairs or a credit in lieu of repairs to the sellers within the time period shown on the contract for inspections. Another period of negotiation may occur at this time.
12. CLOSING ATTORNEY: A real estate attorney, or title company, will need to be engaged to examine the title, order title insurance, and a property survey (if required), coordinate closing documents with your lender and perform the closing.
13. UTILITIES: Notify utility companies servicing the new home to have them transferred to your name effective the day of closing.
14. WALK THROUGH: Plan to "walk through" the property with your REALTOR® prior to closing (usually the day before or the morning of closing) to inspect it before gaining title.
15. CLOSING & POSSESSION: The closing is usually held at your attorney's office and possession of your new home is typically at time of settlement, unless otherwise provided for in the purchase contract.

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Notice to Purchasers

BEFORE ENTERING INTO AN OFFER TO PURCHASE, YOU SHOULD KNOW:

LEGAL REQUIREMENTS: Virginia Law requires that in order to be enforceable, all contracts for real property must be in writing. There is a contract form that can be shown to you. The form a REALTOR® recommends you to use can be modified in any way to accommodate the needs of the parties. You have the right to legal counsel and may seek such at any point.

FINANCING AND INSURANCE: Mortgage rates and associated charges vary with financial institutions in the marketplace. You have the right to select a lender and the right to negotiate terms and conditions of the loan. Such terms may be subject to the lender's requirements. Once the seller and you have agreed on the terms of the contract, you may not change the loan terms without the written consent of the seller. The lender will require you, the purchaser, to buy hazard insurance on the property from the insurance company of your choice, subject to the lender's approval, and may possibly require that you purchase private mortgage insurance (PMI). You will also be required to purchase lender's title insurance, and you may wish to purchase owner's title insurance.

MASTER PLANS: In your purchase offer, you can include the right to review the applicable master plan for the location in which you intend to make your purchase, including maps showing planned land uses, roadways and highways, and the location and nature of proposed parks and other public facilities. This can be viewed at the various jurisdiction-planning offices and at some local libraries.

HAZARDOUS MATERIALS: Hazardous materials could affect properties you may inspect as a potential purchaser. Realtors generally do not have the technical expertise to advise you as to whether or not such materials are present. Information pertaining to hazardous substances is available from the United States Environmental Protection Agency (EPA), or the Virginia Department of Health. For further information, you can contact local health departments, the Virginia State Department of Health, and the U.S. Environmental Protection Agency (example: Radon Hotline @ 1-800-SOS-RADON). As a condition of a purchase offer, and at your expense, you may include the right to employ experts to inspect the property for various conditions and to provide an analysis of possible hazardous materials within that property, if such an inspection clause so specifies.

CONDITION OF THE PROPERTY: As a purchaser, you have the right to include in your purchase offer a provision to employ, at your expense, an expert or experts of your choice to inspect all components of the property including the soil and provide you an analysis of its condition. If you desire to have a pre-settlement or pre-occupancy final "walk through" inspection of the property, it is advisable to include such a statement in your purchase offer.

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Mortgage (Loan) Process

• For both borrower and co-borrower.

ASSETS

• Name and address of banks and/or credit unions for checking and savings.
• Checking and savings account numbers and balance.
• If stocks and bonds are to be cashed and used for down payment or closing, verification of such will require (copy of stock certificates, bond serial numbers or copy of transfer).
• Value of household furnishings.
• Make and model of automobiles and their value.
• If you are using equity form sale of previous property, a copy of the settlement statement is required.
• Amount of life insurance, monthly premiums and cash value, if any.
• "Gift Letter" if relative is providing gift of funds.

EMPLOYMENT

• Names and address of employers for past two years.
• Amount of base pay, commissions (if on a commission basis, copies of W-2 forms or tax returns for past 3 years* is required), auto allowance, expenses and/or bonuses.
• If self-employed, tax returns for the past 2 years and/or current audited profit and loss financial statement.

*Some lenders may require 7 years verification of employment and mortgage/rental payments.

LIABILITIES

• If applicant presently owns property, name and address of present mortgage company, loan number, approximate balance of loan and amount of monthly payment.
• Name of any firm, credit cards, etc., with outstanding balances and the account number and/or credit references with account number.
• Estimated cost of cars owned, the year and model. Name and address of lending company, loan number and balance.
• If child support or alimony is applicable to the purchaser, it will be requested that separation papers or divorce decree be shown.

VA LOANS

• A copy of Veterans DD-214 or Certificate of Eligibility is required

ON FHA LOANS

• Documented cost of child care is required.

Of paramount importance are the contractual requirements that you obtain financing within a specific period of time. When making loan application, in addition to the items mentioned before, you will also need:

• A check for the credit report, approximately $50.
• A check for the appraisal of the property, approximately $350.
• A copy of the purchase contract.
• Description of the house (number of rooms, number of baths, etc.), current real estate taxes for the property.

At the time of loan application or shortly thereafter, the lender will provide to you a "good faith" estimate of your closing costs. The lender will perform a credit check to verify all the statements on your loan application and order an appraisal on the property. While this is taking place, he will await prompt return of the employment and savings verification forms. When all of the above is complete, your application will go to the loan committee.

The length of time it takes to process your loan depends upon the type of financing you are seeking, therefore, prompt loan application and providing all information requested by lender in a timely fashion is essential. Additionally, you must make loan application within the time frame specified in the purchase contract.

You will be notified when your loan has been approved. The commitment and loan disclosure will be prepared by the lender and sent to you for your signatures. It is extremely important that you examine the contents of the commitment letter and make certain that all conditions, predications, and lender requirements are complied with. If the commitment is correct and satisfactory, sign and return it as soon as possible so that the attorney handling the closing can prepare for closing. Some lenders may require the payment of 1% loan origination fee upon acceptance of loan commitment.

Are you ready to speak with a lender now? Laura Stevens with Movement Mortgage is our in-house lender. She will be happy to discuss your financing needs.

Laura Stevens
(804) 967-2450
laura.stevens@movement.com

Source: Keeping Current Matters

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Real Estate Taxes

State Taxes

State taxes include a 4.5% sales tax, 1% of which is local tax, and a state income tax that varies from 2% - 5.75%.

City And County Taxes

Personal and real property are taxed by the City or County in which you reside. State law requires that they be assessed at 100% of the fair market value. The tax rate is set each year by the City Council or the County Board of Supervisors. The tax rates are as follows:

*Rate is per $100 of assessed value.

Real Estate Taxes are reported to the best of our knowledge and are subject to change by each city and county (as in, we can't guarantee these tax rates). Links and phone numbers are provided to help you find the most up-to-date information.

Tax rates are as of January 2016.

**Ashland residents pay town real estate and personal property taxes in addition to Hanover County taxes.

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Closing Process

Preparation and processing of all necessary documents for the transfer of ownership are prepared by the attorney/settlement agent and completed at closing. Be sure to select an attorney/settlement agent EXPERIENCED in title work and real estate settlements.

The attorney/settlement agent will examine the title and report upon its condition, conduct settlement in accordance with terms of the purchase contract and, if applicable, the letter of instruction from the lending institution. The attorney/settlement agent will also apply for mortgage title insurance for the lending institution if such insurance is required as part of the transaction and obtain an owner's policy of title insurance for you. If required, a survey of the property will be ordered.

The attorney/settlement agent will account for all funds, including pay-off of any prior liens, and will disburse funds in accordance with the terms of the purchase contract and the loan instructions.

• The attorney/settlement agent will have received instructions from the lender as to the specific escrow expenses and will be able to provide you with the amount of the total cash needed to complete your purchase. Since may be necessary for you to bring a CERTIFIED OR CASHIERS CHECK, (generally made payable to the attorney/settlement agent) to closing, please contact your attorney/settlement agent at least two days prior to the actual closing date for the amount due.
• The lender will require hazard insurance on the property. Arrange for hazard insurance on your new property and provide your attorney/settlement agent or title company with the name of your insurance company/agent several weeks prior to closing.
• You must make arrangements for the utilities to be transferred to your name. We suggest that you contact them at least a week prior to settlement so that service will be assured on moving day. Utility information can be found here.
• The Real Estate Settlement Procedures Act (RESPA), which applies to most residential real estate sales, requires that closing costs and all other costs associated with the sale, transfer and financing of the property be disclosed to the parties involved. The various line items on the settlement statement are assigned to the purchasers or the sellers in accordance with provisions of the contract being settled. 

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Closing Costs

Settlement costs will vary, depending on the financing arrangement and on selling price of the home, and these are approximations. Typically, closing costs paid by the buyer include:

LOAN ORIGINATION FEE: 1% of the loan amount.

DISCOUNT POINTS: 1% to 2% of the loan amount, depending on the mortgage interest rate.

APPRAISAL FEE: $475

CREDIT REPORT FEE: $50

PREPAID MORTGAGE INTEREST: The interest prepaid by the purchaser for the period between the closing date and the end of the current month.

HAZARD INSURANCE PREMIUM: Lenders require that the hazard insurance be prepaid for one year and that two additional months' premium be held in escrow to cover the first two months of the following year. The first year's premium is approximately .3% of the selling price.

CITY/COUNTY PROPERTY TAXES: A reimbursement to the seller for prepaid property taxes covering the period between the closing and the end of the tax period.

TITLE EXAM/CLOSING FEE: The attorney's fee is generally $350 to $500.

TITLE INSURANCE: A one-time premium, approximately .4% of the selling price.

PRIVATE MORTGAGE INSURANCE: Insurance required by lenders, paid for by purchasers, for loans with loan to value ratio greater than 80%.

RECORDING FEES AND TAXES: These fees cover recording of the deed and the mortgage with the City or County and the State. They are approximately .4% of the selling price.

SURVEY: The fee for the survey, if required, will be in the range of $200 - $250. The figure will be higher if acreage is involved.

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Taking Title

Please consult your real estate attorney with any questions about taking title.

TENANTS IN COMMON: Ownership by two or more persons who hold undivided interests, not necessarily equal, without any right of survivorship. The interests of each may be conveyed, mortgaged, devised by will, or passed to heirs if no will is left, and is subject to judgments at law or in equity.

JOINT TENANTS: Joint tenancy exists when two or more persons obtain an interest in property by one instrument. In joint tenancy, a deceased party's interest in the property goes to the surviving owner or owners, and not to the deceased person's heirs or next of kin. Each interest may be conveyed to a third party, and such conveyance would sever the right of survivorship, creating a tenancy in common. Each interest is subject to judgments.

TENANTS BY THE ENTIRETIES: This is a joint tenancy between husband and wife. Ownership to the whole property is taken by the survivor and is not subject to partition or to a judgment against either individual co-tenant.

FEE SIMPLE:: (In the name of an individual.) Ownership can be by one person, regardless of marital status, such interest is subject to the existing laws of the Commonwealth. Currently, there are no dower or courtesy rights.

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Utilities

Electricity

MOST Localities - Dominion Virginia Power

Dominion Virginia Power
866-366-4357
www.dom.com

1. One full day's notice is required. Connections are not made on weekends.
2. Connection fee of $15.00 appears on your first bill.
3. A deposit of $90.00 - $180.00 will be waived if a credit check is satisfactory. The deposit will be returned after one year at current interest rate pending 12 months of continuous service and good credit.

Powhatan

Southside Electric Cooperative
2370 Emanuel Church Rd
Powhatan, VA 23139

804-598-7748
www.sec.coop

Northern Region (Western Hanover, Eastern Louisa, King William, Caroline)

Rappahannock Electric Cooperative
247 Industrial Court
Fredericksburg, VA 22408

800-552-3904
office@myrec.coop
www.myrec.coop

Western Region (Western Goochland, Western Louisa, Cumberland, and west)

Water

1. No deposit required for service if purchasing; $30 connection charge for Richmond.
2. *In Richmond, call 780-6350 to report water leaks.

Natural Gas

Richmond Gas Works
(City of Richmond, Henrico County and parts of Chesterfield)
804-646-4646
www.richmondgasworks.com

1. There is a $25.00 deposit (cooking only) to $100.00 (heated by gas) for new service if purchasing and a $25.00 - $100.00 deposit if renting. *
2. There is a $30.00 connection charge added to first bill.
   Letter of credit from major utility company can waive deposit.

Commonwealth Gas Services
(Chesterfield County, City of Colonial Heights, Dinwiddie, Goochland, City of Hopewell, New Kent, City of Petersburg, Powhatan, Prince George)
800-543-8911
www.columbiagasva.com

1. Forty-eight hour notice required for service.
2. A deposit will be waived with a satisfactory letter of credit from a major utility company.

Virginia Natural Gas
(Hanover County)
866-229-3578
www.virginianaturalgas.com

1. Twenty-four to forty-eight hour notice for service.
2. $180.00 deposit required for new service. A letter of satisfactory credit from a major utility company will waiver deposit.

Cable Television, Internet, Phone

Comcast Cable: 1-800-COMCAST, 1-800-XFINITY www.comcast.com
Verizon FIOS: 1-800-VERIZON fios.verizon.com/fios-internet.html
DISH Network: 888-975-0982 www.usdish.com/dishnetwork-virginia.html
DirectTV: 888-777-2454 www.directv.com

Garbage and Trash Collection

Richmond
804-646-7000
www.richmondgov.com
Trash is collected once a week, and one large rolling can is provided. The cost is $10.00 per month. The statement is sent with the water bill.

Chesterfield
804-340-0900 (recycling only)
www.chesterfield.gov
Private contractors perform this service. Look in the Yellow Pages for private garbage collection companies that serve these areas.

Hanover (for yard rubbish and grass clippings only)
804-537-6181
There is public trash collection in limited areas, only. Private contractors perform this service. Look in the Yellow Pages for private garbage collection companies that serve these areas.

Henrico (most areas)
804-501-4275
www.co.henrico.va.us
Trash is collected once a week, and one large rolling can is provided. The cost is $15.00 per month. The statement is sent with the water bill. Private contractors are also available in Henrico.

City of Colonial Heights
804-425-0500
www.colonial-heights.com
Trash is collected once a week, and one large rolling can is provided.

Dinwiddie
804-469-4545
www.dinwiddieva.us
The county provides Convenience Centers for trash disposal free of charge for residents.

Goochland
804-556-5860
www.co.goochland.va.us
The county provides Convenience Centers for trash disposal free of charge for residents.

City of Hopewell
804-425-0500
www.cvwma.com
Trash is collected once a week, and one large rolling can is provided.

New Kent
804-966-2686
www.co.new-kent.va.us
The county provides Convenience Centers for trash and recycling free of charge for residents.

City of Petersburg
804-425-0500
www.cvwma.com
Trash is collected once a week, and one large rolling can is provided.

Powhatan
804-598-5673
www.powhatanva.gov
The county provides Convenience Centers for trash and recycling free of charge for residents.

Prince George
Private contractors perform this service. Look in the Yellow Pages for private garbage collection companies that serve these areas.
 

Newspapers

Richmond Times-Dispatch: 748-6389, subscribe.timesdispatch.com
Style Weekly: 358-0825, www.styleweekly.com
The Richmond Free Press (Weekly): 644-0496, www.richmondfreepress.com

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Moving Checklist

BEFORE YOU LEAVE

Address Change

Bank

Insurance

Utility Companies

Delivery Service

Medical, Dental, Prescription Histories

Schools

Pets

AND DON'T FORGET TO:

AND ON MOVING DAY:

AND AT YOUR NEW ADDRESS: