The business of real estate is one complicated circle and people can easily be confused, especially when it comes to fees. Hence, in this article we will tackle one its many subjects and that is Closing Costs.
A lot of consumers believe that estate transactions are simply a portion of the sales price in which the estate agent earns as commission, approximately five to six percent. However, selling properties costs much higher.
According to HUD.gov, closing costs are defined as fees for final property transfer not included in the price of the property. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayment of taxes and insurance, and real estate transfer taxes. A common estimate of a Buyer’s closing costs is 2 to 4 percent of the purchase price of the home. A common estimate for Seller’s closing costs is 3 to 9 percent.
In short, it is basically the fees associated with completing a loan transaction or purchase.
Here are some of the examples of those fees:
- Title Insurance – this is the up-front investment with rates based on the purchase price of your property, it covers the defects and certain unrecorded liens. It makes the insurance company liable for most claims against your ownership. Title Insurance cost will depend upon the owner’s policy, purchase price, lender’s policy or amount of loan. This can sometimes be around $600.
- Escrow – this is something of value such as documents or sales agreement that is given to a third party to hold until specific deals or conditions are met. Two to ten months of taxes may be required by the lender to be deposited at the closing time; these are paid by the borrower or buyer. For a $200,000 property, the escrow can amount to $1,000 upon sale.
- Inspection Fees – As soon as you begin a house offer, you may want a licensed home inspector to do the overall checking, this includes: electrical, plumbing, foundation, overall construction, roofing and septic. This can range from $200-$400.
- Appraisal Fee – this fee is given to the appraiser to have an estimate market value in which the lender shall base the amount of the loan. This is usually paid by the buyer and costs about $300-$400.
- Down payment – government loan programs requires less or no down payment, but most lenders have the borrower pay at least ten percent of the purchase price as DP.
- Deed Preparation – is usually paid by the seller that costs $60.
This just shows that real estate is a long term investment and needs to be planned carefully.
Millions of Americans are at-risk this year with their ARM or adjustable-rate mortgage interest which has set to adjust at much higher percentage; some with mounting expenses, company lay-offs, and many other factors that may somehow lead to their homes being foreclosed.
This can be a scary thought for many; however, there are new programs that the current administration has implemented in assisting homeowners with this risk.
But as they say, prevention is always better than cure. So, to avoid foreclosures, here are some useful tips:
• Tanked credits can cause you to lose negotiating powers, so you may need to contact your lender while the problem can still be remedied. As well, some of the major lenders suspended the foreclosure process for 30 days for those looking to keep their homes.
• You need to keep track of your budget. Always keep track on how much money you need to spend on your monthly payments. Set your priorities on which are more important such as: Utilities, Mortgage, Insurance, etc. Take time to write all the things you spend each day to create a good budget plan.
• Be aware of your state’s laws on foreclosure. It is always best to be knowledgeable of the important points to have better understanding in the process. You can research some general information or perhaps counsel with your attorney.
• Do not ignore your mails. Always open mails especially from the bank, as some of them are writing few months in advance before the reset in order to offer any assistance to customers.
• HUD-certified counselors can help you with options for unaffordable home loans. Some of these options may include: Modifying your loan, trying a short sale, refinancing, etc.
These are just some of the many things you need to look into to keep your home from being foreclosed, but it is recommended to contact a lawyer affiliated with the Legal Services Corp. to give you the right legal advice.
November through January is some of the busiest months for the holiday seasons. Some would consider these times as the worst in trying to list your home on the market. However, advantages can be seen in selling a home during the holidays. Once you’re all decided and up for it, here are some of the good things you could keep in mind.
The Advantages of Listing Your Home during the Holidays:
• You have low competition. You may not be the only one considering in listing your home on the market, but most of the sellers do not want the hassle and would prefer to wait a bit longer after the holiday season to put their properties up for sale. This is an advantage for your part as you will have lesser competition in getting attention from sellers. More buyers may check your listing either in person or online.
• The inviting home presentation during the holidays can entice potential buyers into your home, and create welcoming comfort during the walk-troughs and open houses. Be sure to decorate your home with the best ornaments or fine china during these times, although avoid going overboard or decorating more items with religious themes.
• Holiday seasons presents more serious buyers, as anyone looking for a house during the holiday season must have a good reason in doing so, such as: relocating for jobs, staff and college students, change in marital status, tax deadlines and more. Hence, work with your real estate agent in targeting the right buyers.
• The holidays usually have low interest rates for buyers, hence, they may be a bit more motivated to search and buy a home while it’s still affordable.
These are just some of the cited advantages in listing your home for the holidays; however, it would still depend upon your decision in making things happen.
There has been no denying that home prices are sky rocketing this year. And according to Clear Capital, real estate data analysis provider, the home prices are shifting in 276 metro areas in different states such as: Maryland, Georgia, California, Oregon, Michigan, Wisconsin and more.
In these competitive times, how can one make a home offer stand out?
Here are some smart tips in making your home offer market-irresistible:
• Be fair towards the seller and do not ask for special concessions or try to lowball them as it is in a buyer’s market. Some people may bid higher than the asking price without asking anything. So, make sure you make a competitive bid.
• If you know that you’re competing against other buyers, it is best to offer a 20% down payment as you need to show that you are capable and have the funds for a close. For non-cash buyers, you should provide a good pre-approval as well as a copy of your funds proof.
• Make your best offer in one shot. Show the sellers what you’re able and willing to pay, and base it on the recent sale prices of comparable properties.
• It is recommended that you should not talk to too many lenders and start looking at homes at the same time. It is best that you are done taking care of the finances before beginning the hunt. This way, you are more likely to win the bidding war.
• As a buyer, it is best if you talk to the listing agent in order for you to know what motivates the seller and what they need for them to give you the bid.
• You can offer to pay for the extras such as: a home warranty, community-enhancement funds,closing costs, etc.
You may have known these tips ages ago, however, it does not hurt to keep remembering the basics in bidding and making your offer the best there is in the seller’s market.
Do you remember the famous quote that says: “The only constant thing in this world is change”?
Well, that is one word to describe the real estate industry, it is ever changing. And with the recent news about home equity resets, proves the point.
Let us try to go back to the basics in understanding home equity. By definition, home equity is the difference between the value of your home and the mortgage balance. With a line of credit, this equity is used as collateral in getting a loan.
So, going back to topic, what do experts say about the recent news on the looming home equity line reset?
• Federal Financial Regulators informed that home equity lines from 2004 of about $30 billion are due to resets in 2018.
• Chief economist for Equifax, Amy Crew Cutts called the looming resets to be “waves of disaster” due to a huge number of borrowers will not be able to handle the increase in payments.
• Citigroup commented that the reset payment shocks could be a major challenge for borrowers.
• Fitch, the Rating agency has sounded the alarm and warned that banks are facing “increased credit rates” in the year 2014, as the borrowers confront tougher credit conditions and may default.
So, what does the reset means for boom-era credit line and unpaid balance? It could mean foreclosures and law suits. Hence, experts advised to begin planning your strategy in advanced!
Are you one of those people who are waiting for the perfect time to get a mortgage loan to buy or refinance a home?
There a lot of people have no idea about the things to consider in getting that mortgage loan. You may see real estate images online of families smiling in a grand living room, inside a gorgeous house, making you think that getting a mortgage is as easy as one, two, and three.
Well, it isn’t that easy. Lending Mortgage Loans is a difficult and risky business, and giving out cash is not just for anyone. However, there are useful tips you can try in getting that mortgage approved.
1. Find A Cosigner – by definition, it is a term referring to another person other than the main borrower, who signs for a loan. In case your income does not qualify you for a loan you need, you might consider getting a cosigner. And be sure that you both comprehend the obligations it takes in signing the documents.
2. Save Money – it’s a big disadvantage walking into a lender’s office without any cash in hand. Lenders are now cautious and require down payments. Every lender requires different criteria for the DPs. So, be sure that you are ready in coughing up the cash.
3. Good Credit Score – have a golden credit score doesn’t hurt in getting that application approved, as this is one of your most valuable assets. A huge percentage of lenders require a credit score of 680, anyone goes lower than that is denied a conventional loan.
4. Ask for an Exception – just like in court, it is possible to defend your case if your application is denied. In mortgage loans, it’s asking for an exception. You can ask a lender to forward your file to another in the company for a second opinion. As well, you need to write a letter to explain why your application was not approved and a good credit score to back it up.
5. Stay with Your Job – it is important to stay on your job and source of income while in the process of home buying. It can be a huge delay in the mortgage process when there is a slight change in employment and income status.
These may not be everything in helping you with the mortgage application, but it sure helps in giving you a fighting chance.