Home buyers legally have the right to know important details about the mortgage loan process and the home they plan to purchase. These important details are often collectively referred to as the “buyers’ right to know.”
The Buyers’ Right to Know Mortgage Loan Information
The mortgage industry is heavily regulated, particularly since the collapse of the housing market in 2008 was partially attributed to mortgage lending practices.
Today’s buyers have the right to know the important details of their loan before signing the loan docs. These details include:
- The interest rate
- All fees associated with the loan, including the fees charged by the mortgage lender
- The total cost of your mortgage over the life of the loan
- Which fees are non-refundable
If your loan application is rejected, the right to know why is part of a buyer’s right to know. A low credit score, a low monthly income (compared to the monthly mortgage payment), or excessive debts (perhaps because of student loans, credit cards, or other mortgages) are all valid reasons for denying a mortgage loan application. You cannot be denied a mortgage loan because of:
- National origin
- Marital status
- Age (so long as you are of legal age to enter into the loan contract)
- Or any income coming from public assistance
Buyers also have the right to ask questions about any charges or loan terms. So don’t hesitate to ask us questions. And if you don’t understand the answer, ask for clarification. We want to make sure you understand the details of your loan so you can sign your loan docs with confidence.
The Buyers’ Right to Know About the Home
In addition to knowing about the details of the loan, buyers also have the right to know about the home they plan to purchase. The details of the home are typically disclosed by the seller on a disclosure form required by the state. The sellers are responsible for completing required disclosures accurately, and the buyers’ real estate agent is responsible for making sure the buyer receives a copy of the sellers’ disclosure.
But the buyers’ right to know isn’t standardized across the country. Each state has its own laws and rules about what the buyers have a right to know.
Examples of State-Specific Rights to Know
Since the buyer’s right to know varies from state to state, let’s consider a couple of examples.
In Virginia, sellers are not required to disclose many details to the buyers. Instead, the burden is on the buyers to thoroughly investigate the property. Virginia sellers are required to provide a “Residential Property Disclosure Statement,” but the statement is actually more of a warning to buyers that the sellers “make no representation” about potential issues with the property.
Virginia buyers do, however, have a right to know about any:
- Problems with the septic system
- Military air installations in the vicinity
- Methamphetamine manufactured on the property
- Building code or zoning violations or
- Nearby stormwater management facilities
In North Carolina, on the other hand, buyers have the right to know about any defects the sellers are aware of. These defects could be physical (like leaks or mechanical issues with the HVAC system), environmental (like noise hazards or drug manufacturing on the property), or legal (like liens against the property or lawsuits involving the property).
Buyers often wonder if a death in the home is included as a buyers’ right to know. Most states do not require sellers to disclose a death unless the buyers specifically ask, in which case the sellers should answer honestly. The few exceptions are:
- Alaska: buyers have the right to know if a murder or suicide took place on the property in the past year
- California: buyers have the right to know if any death occurred in the home in the last three years
- South Dakota: buyers have the right to know if a murder or suicide took place on the property in the past year
One Home Issue Buyers in Every State Have the Right to Know
Only one disclosure is required in all 50 states, and it relates to lead-based paint. If the home was built before 1978, the sellers must disclose any knowledge they have of lead-based paint on the property (as per 42 U.S.C.A. § § 4851-56).
Work With a Lender You Can Trust
When you’re ready to buy a home, contact OVM Financial. We’re always happy to answer your questions and help you navigate the mortgage loan process. Give us a call at 757-296-2148 or start your application today at ovmfinancial.com/QuickStart.
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