House Closing

Many people want to buy a home but between the down payment and the house closing costs many people just cannot afford to buy a home. It is something that has plagued the home loan industry for years, but when you have an FHA loan you will find that you can pay very little to get into your dream home. With a loan that is insured by the Federal Housing Administration you have several things on your side that make the process of getting into a new home more affordable. When you look into this type of loan you may find that you can spend as little as a month or two of rent to get into your new home, or less!

Step into Your New Home Affordably with an FHA Loan

With an FHA loan you will find that you don’t have to pay as much in house closing costs as you would if you were closing with a conventional loan. Why is this? It’s simple, actually. With an FHA loan there are restrictions and limits on what sort of costs can be added into the house closing costs. What this means is that the lender, the broker, and the realtor do not have carte blanch to charge you for anything and everything that they can think of so they can make more money off of your purchase. Instead, they have to keep things honest and legit and the restrictions and limitations ensure that you are only paying what you are obligated to pay, and nothing more. These limitations can help you reduce house closing costs from the tens of thousands of dollars to just two or three thousand dollars!

In addition to the limitations on house closing costs, the FHA also allows for the seller to contribute as much as six percent to the borrowers house closing costs. What this means is that if you are working with a seller who really wants to sell their home and they want to make it as quick and painless as possible, they can kick in some of their profits and help you pay for the house closing costs. So, if you had house closing costs of $6,500 and the seller wanted to contribute six percent of the costs on a $100,000 home they would be paying $6,000 of your house closing costs so you would only need to pay $500 in house closing costs. Many buyers will not contribute this much but they will offer four or four and a half percent or something like that.

What is different about this is that when you are working with a conventional loan the seller is limited to contributing 3% to the borrowers house closing costs. You would be surprised how many sellers are willing to contribute more than the 3% to the buyer when they are able because they just want to get the home sold and they want to be done with the whole process of selling their home. Being able to accept these contributions of more than 3% from the seller can help to make the purchase of a new home much more affordable for the average home buyer. The difference between the three and six percent is $3,000 and at the end of the day that is a lot of money when you are trying to keep the costs of your FHA loan to a minimum.



house closing costs

When it comes time for you to acquire a home mortgage for your first home or for a second home, or perhaps you are just looking to refinance. Whatever the case may be, it is important to shop around for a home mortgage.

When it comes to a home mortgage, mortgage companies are very competitive, they want and compete for your business, so let them.

There are many places these days to track down a home mortgage, the easiest being the internet.

If you are a person with a good salary and excellent credit looking for a standard home mortgage, you shouldn’t have much trouble tracking one down. It would be as easy as walking into your local bank branch and asking the branch manager to set up an appointment with someone in their mortgage department.

On the other hand, if you are a person whose credit is a little bit challenged, tracking down a home mortgage may prove to be a little bit more challenging.

This is where the internet comes into play. There is a wealth of information to be found and people to help you achieve your dream of obtaining a home mortgage.

The people that are capable of helping you if your credit is damaged or challenged are called mortgage brokers.

Mortgage brokers are not actual lenders. Their job is to shop around for a mortgage for you.

Mortgage brokers easily have access to hundreds of wholesale lenders who lend to people with credit issues and unique situations. So, if your situation is unique, or you have credit issues, a broker may be ideal for you.

If your situation is unique, or your credit is challenged, it is still important to shop around for a home mortgage. By shopping around you will be doing yourself a huge favor, and you could possibly save yourself a bundle of money in house closing costs and interest fees’.

Allow for up to four brokers or loan officers to assess your situation, than wait for them to come back at you with an offer. The one that offers you the best deal within reason, should be the one you give most of your consideration to. Good luck.

house closing costs

For those trying to sell a home this summer, the real estate climate can feel unseasonably chilly. Truth be told, this is one of the most difficult selling environments in recent history, so if you are feeling a bit frustrated and anxious, you are far from alone. All across the USA homeowners are pulling out the stops to try and encourage sales, but successful transactions are getting as scarce as hen’s teeth.

But before you despair, follow these tips offered by those with lots of experience marketing homes in bear markets:

• Calculate your heating costs going forward:

Especially if you live in a cold climate, consider the financial impact of keeping your house warm through the coming winter months. Fuel oil prices are likely to rise, and the expense of heating a home across a severe winter can add thousands of dollars to your overhead. If that is the case, you might want rebate a portion of that projected cost to your buyer, as an incentive to take the property off your hands while the weather is still warm. Don’t tell them that’s what you’re doing; just discount the price or add extra money to their side of the transaction by offering to pay some of their house closing costs.

• Sweat the small stuff, but make sure you first take care of any “deal killers” that might be scaring away potential buyers:

Broken doorbells and doorknobs, cracked window panes, and dingy carpet or countertops can make a property look worn out, so consider fixing these relatively small items to dress up your home and make it more appealing. But first evaluate your property with the help of a Realtor or building contractor, to find out if you have any “deal killers”. If the house needs a new roof and has stains on the ceiling from rain leaks, for instance, it could be driving away all potential buyers. The same goes for obvious problems like the presence of potentially hazardous mold or a defunct heating and air conditioning system. Unless you address these problems – either by taking care of them or by lowering your asking price to account for them – buyers will not want to get involved.

• Add curb appeal:

If your home looks great from the curb, buyers will want to have a closer look. If it looks a bit shabby, they will just keep driving. Start with the entryway, which is what first attracts the eye, and make it look spectacular. Don’t invest a lot of money; just buy a new door or paint the one you already have and add some nice looking but inexpensive flowerbeds, potted plants, or border fencing to create a beautiful focal point leading into the home. Do-it-yourself landscaping involving some rich-looking mulch and colorful flowers can make a drab property pop like eye candy, and it doesn’t have to cost much to get dramatic results.

• Paint is the best makeup in the world for cosmetic enhancement of a home:

Paint is the most cost-effective tool for adding value to your home. Avoid expensive paints and designer hues in favor of contractor grade paint in neutral colors. Avoid dead white, because creamy shades are warmer and more inviting, and use complimentary semi-gloss colors to highlight window and door frames. A primer coat will help to cover stains and blemishes, and caulk is cheap so use it liberally to get your money’s worth from the project. For a really top-notch look, three coats of paint works miracles, and in small spaces like bathrooms this can be done without going overboard on your budget.

• Take an aggressive approach to showcasing your property:

Although it can be difficult and inconvenient, strategically redecorating your home could lure buyers and close a sale, making it well worth the effort. Don’t do a huge makeover; just concentrate on tactical “staging” of each room. Study the way that builders decorate their model homes for professional insight into how the process works to help market property. Remove all excess furniture and clutter – storing it off premises if possible – to make the rooms look larger and more spacious. You can hire professional real estate staging companies to do this, or consult an experienced Realtor for tips on how to make each room like its very best. Empty closets to show off their storage capacity, keep the property immaculately clean and neat for each and every showing to buyers, and use flattering lighting to highlight each room.

You might find that implementation of a simple and cost effective idea or two from this list might give you the advantage necessary to turn a lifeless listing into a successful sale. And that could be cause to celebrate before the last “hoorah” of summer arrives and qualified buyers begin to hibernate for winter.

house closing costs

We all agree, purchasing a home will be, for most of us, the largest purchase you will make in our life. You have found your future home, arranged for financing and are now waiting for the house closing date. But to many people’s surprise, there are other monies that will need to be disbursed before or on the closing date.

Some of the upfront costs you should plan on paying when purchasing a home include appraisals, inspections, earnest money, lenders fees, title company fees, and house closing lawyer fees. It is vital that you plan for these fees – speak to your real estate professional or your lender who will be able to outline and estimate all of these costs for you. The total cost of these various expenses and fees can run into the thousands and even the tens of thousands of dollars. It pays to be prepared.

You must also be careful of the 100% mortgages or no-money down loans. A no-money down loan does not mean that there aren’t any costs associated with the loan. In reality, these types of loans allow the buyer to borrow 100% of the purchase price of the home however the buyer is still responsible for the numerous other costs mentioned above.

You should also keep in mind that you will have to pay a portion if not all of that year’s property taxes. Typically, property taxes are called on and required to be paid in full as the home closes. A buyer, upon closing the home, will be called to pay his/her share of the annual bill as it is pro-rated. You may want to enquire about the property taxes of a specific house, or neighborhood, before signing the purchasing contract. Some neighborhoods are taxed more heavily than others.

There is however a way of “avoiding” having to pay some or all of house closing costs. As a borrower, you do have the right to ask a seller concession to cover your house closing costs and pre-paid items. This makes it so you do not have to come up with any money at all for house closing costs.

A seller concession is worked into the purchase agreement and the seller will end up paying for some or all of the house closing costs. The seller concession is either a flat fee or a percentage of the loan amount. This is a fairly common practice, particularly in depressed real estate markets.

As for pre-paid items, they generally consist of pre-paid interest and escrows. Many people run into difficulty reading and understanding the multiple costs that are involved with purchasing a home. Because of this, do not take any chances and talk to a loan consultant or mortgage broker. This will help clarify your financial obligations.

Purchasing a home is an exciting adventure. Don’t let your fear of the unknown spoil this joyous event. Being prepared and well informed will avoid you being shell-shocked when the time comes to paying the bills. The more informed you are, the better prepared you will be for the many upfront costs associated with buying a home.

house closing costs

I have to hand it to the Big 800 Pound Gorilla (aka BOFA) for making it seem as if they reinvented the wheel with their No Closing Cost Refinances. The Gorilla has a mighty big Public Relations and marketing budget, because they had every newspaper in town acting like they had come out with something new. Truth is, no closing cost refinances have been done by savvy Lenders for years. It is possible to get better advice, service, and price from the right Mortgage Broker or Banker than you will from the Gorilla – and still not pay house closing costs.

A majority of the public is under the impression that you can get a better deal by going straight to a Bank, than by dealing with a Mortgage Broker or Banker. The reality is that it completely depends on the person you are dealing with. If you have the right Mortgage Broker you can get an excellent deal….even a better deal from the same bank! How could you possibly get a better deal even though you are dealing with a “Middle Man”?? Let me explain….

Until recently the Gorilla, like most every other bank, or mortgage company had two divisions that you can get a mortgage from. One division is their Retail side, which is who you work with when you contact the Bank Directly. The other side is their Wholesale division, which can do as much as 3 times the amount of business as the Retail division, with tremendously less overhead. Think about it – the Retail division has to pay for lots of prime commercial office space, national advertising campaigns, public relations – huge money to keep in the public eye – a huge expense per loan. The Wholesale division, on the other hand only has to let a very small target market know about their services – Mortgage Brokers and Bankers. They can have one office that covers several states or the whole country, so their cost to make loans wholesale vs. retail is substantially less! This is how you can go to a broker and get a better deal than going straight to the Gorilla – but you better make sure you got the RIGHT broker. You know as well as I do, the wrong person (even at the right bank!) can lead you down that frustrating road to pulling your hair out and not getting what you signed up for!

Back for a moment to the issue of no house closing costs. How is this possible? Most of the time people pay house closing costs when they get a mortgage right? Most of the time they do indeed, there are costs that must be paid in order to have a new mortgage close. Appraisals, State Taxes, Title Insurance, etc. Many borrowers do not realize they have a choice in this matter. Most lenders (whether their representatives are aware of it or not) can deliver a no closing cost refinance to a quality borrower. When lenders and banks deliver a long term loan to a borrower and the rate is fixed, the lender earns money depending on what rate is delivered to the borrower at closing.

Lenders and banks typically have the option to raise the interest rate charged in order to receive higher compensation from the end investor in the loan – this money can be used to pay the house closing costs on the borrowers behalf. In Florida, on a typical loan, you could probably accept about .5% higher in your interest rate for the option of having the lender pay all of your house closing costs (even less in other states). This is an excellent strategy for people who do not plan on staying in a property for a long period of time. The other time that it can be good to take advantage of this is when interest rates are declining. If rates decline and you have not paid house closing costs, then there is no reason not to refinance again for no costs (assuming you have no pre-payment penalty). People have done this multiple times over a period of months or years under the right circumstances. Amazingly, not all lenders or mortgage professionals are aware of how to do this.

We have a shoppers guide to selecting the right Mortgage Professional that every consumer should have in their hands before shopping for a loan. Most people make some crucial mistakes in the process that they could well avoid with this information.

house closing costs

The question many of us are asking these days is whether to refinance our mortgage, or wait for better terms or a better rate. While no one can accurately forecast where rates are headed, there are some steps you can take that will help you decide whether to refinance your mortgage now:

First: How much lower are the rates than what you are paying on your existing mortgage? Keeping in mind, especially if you are writing off some mortgage interest on your taxes, that a slight drop in rates may not make it worthwhile to refinance.

Second: If the rate is significantly lower, you may want to check what your monthly savings will be. When doing this, make sure you calculate the new mortgage payment after your refinance without factoring in any years you are adding on to the end. For example, if you owe 27 more years on your current mortgage, calculate your new payment using the new rate and the amount you are refinancing only over 27 years. Otherwise you might think you are lowering your payment more than you actually are, when you are really just adding years onto the end.

Third: So now you know how much you’d save each month on a refinance, but how much are the house closing costs going to be for your refinance? You need to be sure that paying any house closing costs (including points) are worthwhile. Here’s some simple math: If you are paying $2500 in house closing costs, and the reduced rate saves you $500 each year, you’ll need to stay where you are for five years to reap the benefits. For many, house closing costs are worthwhile, but for others who know they will need to upgrade, or have a job situation that can mean having to move, house closing costs may eliminate any benefit of the refinanced mortgage.

Fourth: If you’ve arrived here, you have probably figured that you are saving enough over time to make your new rate and the house closing costs worth moving forward. One last consideration: Do you think you will refinance again? This one may be close to impossible to answer easily, because who knows where rates are going. But, if you think they might go down, make sure you know what your lender’s terms are as far as refinancing. Some lenders will not refinance a mortgage for 90 days after the close of the one you are doing now. Make sure you are getting enough savings to not worry about that.

Fifth, and finally: One last word of caution: Once you lock you may have to pay fees (e.g. for an appraisal) that might not be recoverable if the loan does not go through. One of the biggest issues you could run into is that your appraisal is not high enough to qualify you for the mortgage. You may want to carefully look at comparable sales in your neighborhood, or, even better, talk to someone who is aware of the real estate market in your area, to be sure that your home will be appraised at a high enough value to meet the criteria of your loan.

If you’ve made it this far, you may be inclined to go forward and refinance. Best of luck! Information in this article should not take the place of a conversation with a finance and possible tax professional who is aware of your unique situation.

house closing costs

Is it safe to buy a house right now?
If you’re like a lot of potential home owners, you may be wondering this too. Here’s how to time the market.

I recently received a newsletter from one of my favorite stock gurus. His name is Alexander Green, Chairman and Investment Director for the Oxford Club, a private investment club. In the newsletter “Real Estate: Why Greenspan Is Right This Time”, Alexander Green comments on remarks made by Alan Greenspan regarding falling home prices. Mr. Greenspan had explained that real estate values might drop even further.

I don’t have credentials like Greenspan and Green whom I greatly respect. I am a mortgage broker by profession. Prior to that, I sold real estate. Before that my husband was a real estate agent. Together we have more than 30 consecutive years in the real estate business and more than 50 years total.

I mention this because I have experienced every type of market and lived to tell about it.

When we first became involved with real estate, we were living in Long Beach, California. It was 1979 and we were in the middle of the Savings and Loan Crisis, a crisis that was just as devastating to the real estate market as the Credit Crunch we are experiencing today.

Here is what I learned. Timing the market can be frustrating and discouraging. But this is a fact. When the media noise is the loudest and fear is the strongest, it probably means we are near the bottom of the housing crisis. I have seen many people try to determine the exact time to buy a house, believing that they could pick the perfect low point in the market. It rarely worked and most of the time they were disappointed.

Here is what I think. In spite of what some professionals claim, the home you live in is not an investment. I tend to follow Robert Kiyosaki’s view in this regard, the author of “Rich Dad Poor Dad”. When he explains in his book that a house is not an asset, he is saying an investment is something that puts money in your pocket. For the most part a home is something that takes money out of your pocket.

However over time, home ownership brings financial stability to a family as long as the mortgage payments are affordable. In addition, if you look at home ownership statistics over a 20 year period instead of a 2 year period, it is almost impossible to lose.

So, here is my recommendation. First stop waiting for the media to tell you it’s okay to buy a house. They don’t know how to time the real estate bottom or the direction of mortgage rates. Truthfully, no one else does either. Even the so-called financial gurus received a surprise by the magnitude of this present crisis.

Second, begin a closer look into your market today. Begin looking for neighborhoods that you would like to live in. Study the prices. Use real estate websites to request notification every time a new listing comes on the market. Many realties now offer this service.

Third, on weekends take a little time to relax by visiting open houses. This can be fun. Talk to real estate agents. Get the lay of the land, so to speak. Familiarize yourself with your market.

Fourth, get pre approved by a mortgage lender. The most important part of buying a home is knowing how much you are qualified to borrow. Don’t wait until you find the house of your dreams to consider what you can afford.

Fifth, save, save, save. One of the most important reasons for mortgage pre approval is to determine how much money you are going to need for down payment and house closing costs. These are important numbers to know before shopping for a home, not after you make an offer. The safest way to eliminate surprises and remain realistic while searching for your new home is mortgage pre approval.

When the housing market is going to turn around is anyone’s guess. No one knows.

However you can count on this. This housing downturn will end. But don’t wait to prepare. The buyers who do their homework now by following these 5 steps will be ready to strike.

Good luck.

House Closing Costs

Buyer’s remorse, in real estate, occurs when your buyer tells you he has changed his mind and no longer wants to purchase your home. Often, the buyer will simply stop returning your calls and refuse to speak to you. Even worse, he may act as if all is well, string you along for weeks, and finally just not show up for the closing.

Usually this issue occurs when the buyer realizes he can not afford your property. Or after signing a contract with you, he may also have continued shopping and found another property he prefers.

Frequent excuses for not closing usually include a job transfer that fell through, unexpected spousal separation, illness of a family member, didn’t like the neighbors when he spoke to them, and a myriad of other things that have gone wrong since he signed your sales contract. Even if his excuse is true, you now face the dilemma of having to resell your home and incur the additional expenses of carrying the property for several months or longer. Even if you are able to rapidly resell your home again, you will have been delayed by at least thirty days and have the loss of carrying your home longer.

Here are some ways to protect yourself from your closing being cancelled:

You should have your mortgage broker pre-qualify the prospective buyer to be certain they can actually afford to buy your home and if they have enough money for closing. The closing cost issue can be overcome by increasing the selling price and giving back the same amount as a seller concession at the closing.

You should make certain that the buyer gets a Good Faith Estimate. Too often, the buyer’s mortgage broker has the buyer sign a blank Good Faith Estimate. The buyer may get a huge surprise, often the day before or the day of closing, when he finds out how much he has to bring to the closing. You have an option, in this case, of reducing your sales price to accommodate the buyer or, even better, you can take back a small second mortgage at the closing to defer a portion of his house closing costs.

The best way to guard against these surprises is to be inquisitive about the buyer’s funding status initially and insert a clause in your sales contract that allows you to get information from the buyer’s mortgage broker regarding the Good Faith Estimate and the status of the loan. You have a lot at stake when you sell your home and this is not too much to ask.

Make certain that your sales contract has a non-refundable escrow deposit clause that encompasses any reason including the buyer’s inability to get financing. Most real estate contracts have a provision for the buyer to get a full refund of their deposit if they are unable to get financing. The second most important part of this sales contract clause should include that any extension of the closing will cost the buyer a given rate per day and for a maximum of fifteen days.

A frequent reason for a cancelled closing is a dramatic change in the buyer’s FICO score. Usually this results from large purchases of furniture or an automobile just prior to closing. Inform the buyer of this possible issue by explaining to him that the lender will re-pull his credit report the day of closing and stop the closing if the buyer’s debt ratio has changed too much. Ways to overcome this problem are credit re-scoring by the lender and quick fixes for your credit report, such as increasing the limits on your existing credit cards to adjust your debt ratios.

Your best protection from surprises is to put appropriate penalty clauses in your contract; have alternative lenders available from your mortgage broker; be open-minded about doing a seller concession at closing; and be willing to consider a small second mortgage to assist with last minute financing shortfalls.

In summary, your best prevention is to proactively keep in touch with all the parties involved in your closing. Of particular importance, and on the front line of issues that “pop up” is your closing agent’s file processor. Make friends with this person so you can call and find out about the progress of the lender, mortgage broker, the buyer and any issues they may be having with the title work. As always, keep yourself informed by keeping open communication with all parties involved in the sale of your home.

house closing costs

Don’t just assume that the price of a home that you agree on with a seller is the end of the road as far as costs! Like so many other purchases, buying a home will mean that there are additional costs associated outside of the actual retail price. These are usually due at the end of the buying process, before a deal is struck with the lending company, and are known as “house closing costs”. Here are a few of the most typical.

Points

Points are equal to one percent of the total amount of a loan. If you buy a home worth $300,000, then one point would be $3,000. The decision to buy points is made right before the mortgage is closed, as the number of points you opt for will directly affect the amount of money you pay each month for the mortgage.

There are two types of points, discount and origination fees. Origination fees are charged by the lender in order to cover the cost of the loan. Discount points are prepaid interest amounts and will reduce the dollar amount you pay each month on the interest on your loan, and therefore your total payment amount.

Home Insurance

If a house is destroyed by fire or act of God, the mortgage company stands to lose the most; after all, the money is still owed to them and with no way to recover the loan through the sale of the home they will take the hit. For that reason, lenders will insist that you purchase home insurance before they approve the mortgage. This insurance must be renewed each year according to almost all contracts.

Title Insurance

Every once in a while a home owner and their mortgage lender will get a nasty surprise in the form of another person with a lien on the property. In effect this person claims that the property is theirs, and that the person who sold it to the buyer had no right to do so. Title insurance, like home insurance, will mean that both the lender and the buyer are protected against undisclosed liens.

Surveys and Inspections

Lenders will also typically request an inspection of the home and/or a survey of the property in order to ensure that everything is still within the original boundaries. Appraisal fees, to determine if the property has been valued appropriately (directly related to recovery in the event of a resale) are also an added cost.

So as you can see, when looking to purchase a new home, you must also consider the additional costs associated with the purchase.

house closing costs