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House Closing

You Can Sell Your Own Home


Are you willing to trade time and effort to save thousands of dollars? The average fee real estate agents charge to help you sell your house is 6% of the purchase price. That can be a lot of money on top of other preparation and house closing costs. If you are willing to spend time collecting some information, learning how to advertise your property for sale, conducting open houses, and escorting visitors, you can sell your own home without a real estate agent.

Numbers you need to know when you want to sell your own home

Selling your own home is a financial and legal enterprise. Four numbers will help you assess the financial side:

• What do you owe?

• What is your home worth?

• What can you sell your home for?

• What house closing costs should you expect?

To find out what you owe on your house, contact your mortgage company and request a payoff statement. This amount is the most current information on how much you owe on your home. The information on your monthly mortgage payment or your annual mortgage statement will be a close approximation of the amount owed. Your county records office will have information on any liens against your property which must be paid off before the deed can be transferred to the buyer.

The web is a great help in determining what your home is worth. For most houses in the U.S., you can go to Yahoo Real Estate and type in your address. You will get a brief description and an approximate value. Zillow also offers a free home value estimate calculator. The home values offered from these sites are approximate, but they give you an excellent starting point in setting an asking price when you want to sell your own home.

What you can sell your home for is a bit different from the value estimates. Remember that your home is worth what someone is willing to pay for it. In figuring out what you can sell your home for, you need to know what makes a house attractive to buyers, what discourages a potential buyer, what the current market conditions are, and you should decide how quickly you want to sell your home.

Closing costs are the final fees involved in transferring the title of your home to the buyer. Who pays these costs is negotiable, but you need to have a good idea of what they will be and factor that information into your decision on asking price. According to Bank Rate.com, average house closing costs are around $3,000. This total includes lender, title and settlement fees, but does not include county recording fees or other costs such as homeowners insurance, property taxes, homeowner association dues or prorated mortgage payments.

Getting your home ready to sell

Image of Home Staging For Dummies

Click on the image above to see book details.

The key requirements to get your home ready to sell are: clean, de-cluttered and fixed. Buyers make their decision based on first impressions. Real estate agents talk about curb appeal – what does your home feel like when someone drives up and walks-in. So making a small investment in landscaping can pay off in attracting buyers. Clean means everything – inside and outside of the house. To de-clutter your house, you may need to put some items into storage in order to have your rooms appear open and inviting. You should remove small items off tables such as photos and knickknacks, and keep the counters clear. You want the potential buyer to be able to see their family’s stuff in the house and that is easier for them to do when the space is de-cluttered of your stuff.

Unless you are planning to sell your home as a fixer-upper, you need to do the fixing first. Contracts for home sales give the buyer the right to inspect the property, so you are ahead of the game if you do the inspection first and make any necessary repairs. Before a sale for your house can be completed, a legally binding disclosure form is signed by both parties. Therefore, your inspection should include general condition and any items required by federal and state law to be formally disclosed. Be aware: Failure to disclose is the grist for law suits and damage awards.

Attracting buyers

You can inform potential buyers that you are selling your home through local classified advertising, word-of-mouth, and yard “For Sale by Owner” signs. But far and away the most effective way to advertise that your home is for sale is by listing it on the Multiple Listing Service (MLS). You can see examples of homes for sale in your area at the Realtor.com site. Once the purview of licensed realtors, individuals can now list their home for sale on MLS with the help of Iggyhouse.

To list your home for sale you need to collect basic information on size and features. You need good pictures of the outside of the house and each clean, de-cluttered room. You should write a brief description using keywords that buyers like such as: gourmet kitchen, granite counters, exceptional schools, professional landscaping, near lake or golf course, or ready to move-in. In the details of the listing, add information on room sizes and interior and exterior features. Print copies of the final write-up in color and make those available next to your yard sign and for handing out to visitors and open house attendees.

When a prospective buyer visits your home for sale either by appointment or attending an open house, be ready. Pickup and spot clean all surfaces. Even though you live there along with your children and pets, the house needs to appear empty. If you remain in the house during the visit, give the buyers plenty of privacy to look around. Your children and pets should be somewhere else. If you have time, add some fresh flowers or scented potpourri to create a nice ambience. If you host an open house, be sure to have a sign-in sheet for follow up contact and it is wise to remove your small valuables from sight.

When buyers are serious – finalizing the sale of your home

There may be offers and counter-offers and lots of discussion, but when it is time to actually make the sale, it is also time to get the professionals involved. You need a lawyer to construct the sale documents, you need to create and jointly sign disclosure agreements, and the buyer’s lender will want title searches, appraisals, surveys and verifications. Although you saved thousands of dollars in agent fees, the closing is not the time to save money. Having professionals involved in the document preparation and signing protects you and the buyer.

house closing costs

No Cost Mortgage – a Real Deal or Not?

In 2008 we saw mortgage interest rates begin to fall. When mortgage rates fall, misleading mortgage advertising schemes seem to show up in the media all around us. For example, I recently watched an advertisement on Television for “The Real No Cost Mortgage”. I shudder each time I see or hear advertising about this type of mortgage because it is misleading and deceptive. The sadness in this for me as a 12 year mortgage broker veteran is that this type of advertising is indicative the bad apples that contributed to a great degree to the mortgage industry meltdown in 2007. I am going to say it right off the bat: There Are No “No Cost Mortgages” on the Planet!” Is this clear? All mortgages have costs associated with them. This is the end of the story.

Most “no cost mortgage” loan programs are designed the same way: the interest rate of your loan is increased to cover the costs associated with your mortgage. There are a select few mortgages that have very little costs associated with them: these are home equity lines of credit – or HELOCS. Often you can get these little or no cost loans at your local credit union or small community bank. Additionally, these loans typically only allow you borrow up to about 90% of your home’s value. Credit Unions are small enough that they perhaps can offer to pay some of your costs as a courtesy to earn your business. The larger banks simply cannot pay or give you these costs for free or it would set them back a few dollars.

With these small second mortgages and HELOCS aside, the rest of the mortgage market is primarily made up of larger first mortgages. As I previously stated, these mortgages have costs associated with them such as: paying a processor to process your loan, the cost for an appraisal, the underwriter, the title insurance policy, your credit report, tax and insurance escrows, and of course the money that your loan officer makes in commission. All of these fees in one form or another get paid, and guess who pays them? That’s right, you do. You will pay these fees one way or another.

So what is the catch to this type of advertising? As I previous pointed out, the mortgage company charges you a higher interest rate. If you are paying a higher interest rate, then your monthly payment is higher. So your higher payment month after month pays your house closing costs over time. Now, this is not necessarily a bad thing if you know what you are getting into. Where I have a beef with this type of advertising is that it is not telling you the whole truth. You do have house closing costs and the mortgage company is charging you a higher interest rate to compensate for those fees – and they do not tell you this in the advertising. They lead you down some fantasy of a no cost mortgage, or a free mortgage, and ultimately charge you a higher interest rate than you would normally get if you paid your costs either with your loan proceeds in a refinance or out of your pocket in a purchase mortgage. The misleading advertising got you to call them.

Initially, this loan can be good if you are low on cash. Hey, it is not a bad loan in the short term. Let’s just say that the interest rate that they charge you increases your monthly payment $150 a month for a no cost mortgage. After 30 months, or 2.5 years you have paid $4,500 extra. What if that was the amount of your house closing costs when you first got the deal? Well, for the first 30 months you saved money and were better off. However, once you hit month 31, you are now paying more for your mortgage’s house closing costs than you would have if you had paid them up front when you got the mortgage.

Another thing to be careful about with this type of mortgage is that it is very easy for a mortgage company to charge you more than might have been able to charge you because their profit is made in the interest rate and in the slightly higher interest rates. With this said, it is hard to tell how much a mortgage company makes on your loan given your payment increases slightly over what you could have been paying if you had paid your own house closing costs.

So, the next time you hear of this kind of mortgage program, make sure you ask about the difference in your monthly payment between paying your own house closing costs, or for paying a higher interest rate. If you know you are only going to be in the home for a few years and then you are going to sell the home, then a no closing cost mortgage might good for you. If you are planning on staying longer and you know you are going to refinance in the near future, then this loan might be good for you too. But, if you do not want to refinance in the future, or be forced to have to refinance to get out of a no cost mortgage when it starts costing you money then the no cost mortgage probably is not right for you. Make sure you take a look at all your options. Do not let a slick mortgage person tell you that this loan saves you money – as this is not necessarily the case.

Mortgage Refinancing and Refinancing Risk

Introduction to Mortgage Refinancing:

A mortgage refinance is the process of taking out a new loan, and using the proceeds to pay off your old one. Generally, you’d do this to make a change in the structure of your debt in order to get more money, a lower monthly payment, or a shorter pay-off schedule.

Why refinance?
You’d trade-up your mortgage for the same reason that you’d trade-up your job, car, or living arrangement-because circumstances change. What you need out of a mortgage today may be different from what you needed five years ago. Refinancing can achieve one or more of the following objectives: 1. Lower your monthly payment. You can reduce your monthly payment by refinancing to a lower interest rate. Have market rates dropped since your old mortgage was funded? Has your credit improved? Has your home increased in value? Any one of these happenings could mean that you’d qualify for a lower rate. 2. Shorten your pay-off term. Paying off your mortgage loan in 15 years rather than in 25 can save you tens of thousands of dollars in interest over the life of the loan. If you can afford the higher monthly payment and plan to stay in the home indefinitely, it’s well worth it. 3. Optimize your loan structure. Your current loan structure may no longer be suitable for you in the future. Maybe you bought your home with an adjustable-rate mortgage (ARM) and your initial fixed-interest period is about to expire. Perhaps you have a fixed-rate mortgage, but you’d like to take advantage of the more flexible option ARM. Discuss your objectives with your lender to determine the most appropriate loan structure for you. 4. Consolidate your debt. If you’re carrying a lot of credit card debt, you can lower your monthly repayments through consolidation. To do this, you’d take out a mortgage loan large enough to pay off all the debts on your cards plus the balance on your old mortgage. 5. Fund large, one-time expenses. You can raise the funds you need by doing what’s called a cash-out refinance, where you’d take out a loan that’s larger than your current one. As soon as you pay off the old loan, the excess funds can be used to pay for home improvement projects, college tuition, your daughter’s wedding, long-term care expenses, etc. Essentially, your mortgage is a financial tool that might need occasional sharpening. As life throws you new circumstances, trading up that mortgage may be one way to manage change.

Tax Advantages of Refinancing:

Saving on taxes:
As an existing mortgage borrower, you already know that your mortgage interest is tax deductible. You may also know that you pay far more interest in the early years of a mortgage than you do later on. And the more interest you pay, the higher your deduction. Replacing your current mortgage loan with a refinance might lower your tax liability. And if you intend to use the refinance to consolidate credit card debt, the benefits would be even greater, because you’d be replacing non-deductible credit card interest with tax-deductible mortgage interest.

Tax deductions and refinancing:

The IRS designates two types of mortgage debt: home acquisition debt, and home equity debt. Home acquisition debt is what you paid to buy the house. When you refinance, the amount of the new loan used to pay off the old loan qualifies as home acquisition debt. Any amount over that would be home equity debt. The following example will help clarify the point: • Suppose Jenny owes $200,000 on her mortgage. She takes out a new mortgage for $225,000 and pays off her old mortgage. For tax purposes, $200,000 is home acquisition debt, and the remaining $25,000 is home equity debt.Interest paid on home acquisition debt is generally tax deductible in its entirety. You can also deduct interest paid on the first $100,000 of home equity debt.

Refinance or Second Mortgage?

Understanding your options:

1:Lower your monthly payment

2:Shorten your pay-off term

3:Optimize your loan structure

4:Consolidate your debt

5:Fund large, one-time expenses

The first three can only be accomplished with a refinance. The last two-consolidating debt and funding one-time expenses-can be accomplished with either a refinance or a second mortgage. To decide between a refinance and a second mortgage, compare your mortgage interest rate with current market rates. If you’re paying more than what’s available, a refinance will lower your overall interest costs. If you’re paying less, a second mortgage might be the better option. When the two rates are roughly comparable, many borrowers prefer the efficiency of a refinance-one loan, one monthly payment. It’s also worth noting that refinance loans generally carry lower interest rates than second mortgages. You cannot, unfortunately, take your new debt for a test drive before signing up. Therein lies the importance of making informed decisions; refinancing your mortgage every year, after all, can get expensive. That leads us to the next topic: house closing costs.

Closing Costs and Refinance Risks:

1:Application Fee

2:Loan Origination Fee

3:Discount Points

4:Appraisal Fee

5:Title Search Fee

6:Title Insurance Fee

7:Prepayment Penalty on Existing Mortgage

The first three listed above are within your lender’s control; the others are not. If you have great credit, you might be able to negotiate lower application fees, loan fees, and discount points. Be cautious if a lender offers to cover your house closing costs; this may mean you’ll be charged a higher interest rate. Closing costs have been known to change at the last possible moment. Your best protection against unpleasant surprises is to request a written estimate. Also find out what the lender’s policy is on closing cost changes; some lenders guarantee their estimated costs, and others don’t. If you’re refinancing just to save money, be sure to weigh the house closing costs against your monthly savings. If the new loan saves you $50 monthly, but you have to shell out $1,200 in house closing costs, it will be two years before you break even.

Risky business:

Are there risks involved with refinancing? The short answer is yes. But there are also risks involved in relocating, like noisy neighbors, a house that’s a potential money pit, and schools for the kids. Just like these examples, refinancing risks can be managed-if you’re prepared. Here are the most common to watch out for: 1. Taking on too much debt. Reputable lenders are trained to find you a mortgage loan program that you can afford. Trust that they know what they’re doing, and be honest about your financial situation. Over-burdening yourself with debt could put you on the fast track to bankruptcy. 2. Putting your home at risk of foreclosure. This should be a consideration if you want to consolidate credit card debt into your mortgage. When you consolidate such obligations with a mortgage refinance, your home becomes collateral for debt that was previously unsecured. 3. Increasing your total interest costs. If your old loan has 25 years left until its maturity and you replace it with a new 30-year loan, you’ll be incurring interest costs for an extra five years. In the end, you’ll have to evaluate the risks and advantages of refinancing relative to your situation. Since you already have the basic knowledge in your back pocket, that evaluation process should be pretty straightforward. Just stay focused on one goal.

house closing costs

Buying A Home Is Easier Than Your Kids Think

We encourage our kids to plan for their future, but we seldom include buying a first home sooner than average as a path to building that future. Let them know buying a home is easier than they think.

The fact of the matter is many of you that are first time homebuyers and reading this article are relatively mature individuals who are fighting off your commitment fears of being tied to a mortgage. But there is a huge segment of the population that could buy their first home, yet it doesn’t occur to them to do so. Who are these people? Well, it’s your 24 year old son or daughter, new to the work force, and is throwing away money on rent somewhere. Encouraging your children to buy a home when they are young is some of the soundest financial advice you can give them. Equity in a home is an easy way to grow one’s portfolio with very little investment. But the fact of the matter is it doesn’t occur to most of us to encourage the younger generation to buy early in their lives. And trust me, it rarely occurs to our kids themselves to consider buying a home in the early twenties. They are more concerned with buying a new Halo 3 for their Xbox.

Why do so many people miss the boat on this opportunity? It could be they plan to be in the area for only a short time because they will job hop to advance their career, thus viewing a mortgage as “too permanent.” I counter to simply sell the house when you move. Or maybe they expect their income to double or triple over the next three years. I say buy a home now, then upgrade to a new home; sell or rent the old house. Investing in real estate is a proven, safe and solid return on investment. And with the right combination of credit history (or a history of paying utilities, cable and your cell phone on time) and no money down, you or someone you care about can start investing in the future.

When Junior starts his new job at the company and 401(K) is available, he’s been informed by his folks, boss or peers to enroll and contribute at least a little something to it with every paycheck. Yet, he is rarely counseled quit renting that apartment for $750 a month and buy a $75,000 house. Where will he come up with the money to do it? There are multiple options for first time buyers that allow for 100% financing. Get the seller to kick in house closing costs (up to 6% of sales price with some products), and one can close on a loan and bring no funds to the table. If your home value appreciates 4% in the next year, that’s a nice return on a no cash investment.

For some time, I’ve considered writing this series for first time buyers to let them know buying a home is easier than they think. But, the more I thought about it, the more I realized the advice I would offer would most likely not reach my target audience. So parents, it is up to you to supply your kids with this last little bit of advice and help to set them free to further establish their independence in this world. Clip this article out and tape it to their iPOD or the steering wheel of their car – someplace it will get noticed.

I think for most of us who have been through the experience, our first home buy was a very daunting experience. There are so many choices and unknowns – it can be overwhelming. In this series, I will try to break it down the process into small logical steps and make it easier understand the steps involved in financing your first home. Where do you start? That is perhaps the easiest part. Our newly established worker should first make a list of all his or her debt obligations such as student loans (unless deferred), car payments, credit card debt, etc. Hopefully at this age, this will be a small list. Then add what you think amount you could afford for a mortgage. Take that amount and divide it by your gross monthly income. If you come in at 43% or less, you’re in business. If you have something in your savings or checking – great. If not, don’t let it deter you. You have options.

Contact a mortgage specialist to drill out the details and find a good realtor who knows your market for housing you can afford. What next? Get ready to tell your landlord “Adios!.”

house closing costs

Can I Change the House Closing Date?

Me and my wife are buying a new house. The house closing date is Oct 16. In the meantime we own a house that’s currently being sold to another couple and they have till Oct 30th to close which I am more than certain they will. We will be using the money we will get from selling our old house to put it down as 20% down to buy the new house. My question is, What can we do so the banks can maybe either push the closing date 2 weeks pass the scheduled time? or maybe show them the document that we will be selling our house in 15 days and to approve us a loan with 20% down. What can we DO? PLease help.

house closing

Closing on a new house in DC – do I need an attorney to review the docs?

My fiancee and I are closing on a house in Washington, DC on June 20th. We submitted our offer through our real estate agent and it was accepted. We have financing lined up as well as a title company. My real estate agent says you don’t really need an attorney to review the documents you will sign at closing, because the title company provides a “settlement attorney” who is neutral. But my parents say I should definitely have an attorney who represents us to review everything to ensure our interests are covered. According to our agents, most of the conditions of the sale are already governed by the contract we signed to make the offer – at closing we will just be moving money around, and signing papers that bind us to certain terms with our mortgage company. I’m guessing this varies by jurisdiction.

Closing On Your Home

Closing a Loan Without All of the Proper House Closing Documents

I was told the loan has funded and it is closed, but the broker I have told me they will not give me the money until I give them more paycheck stub to show I work enough hours to make my mortgage payments! How can they hold my money which I am paying interest on from me without all the house closing documents in then? or how could the loan even close without having received all of the house closing documents?

I am confused and mad about the money which I borrowed for a emergency here!  The broker said I signed something agreeing for them to close the deal and wait for the money until I can prove I work enough hours to pay the mortgage, I am confused on how it closed and was already funded a week ago but they still need another document from me to give me my money, please help,  is this legal?

house closing documents

House Closing Documents for Home Buyer’s Tax Credit

My wife and I just purchased a house and are filing an amended return to get our stimulus payment of $8,000 now rather than waiting until next year. Our question is do we need to send in any of the house closing documents with our amended return to show proof that we purchased a house?

House Closing Documents

How to Get House Closing Documents from Title Company?

My title company is not providing me post house closing documents. Should I get a house closing lawyer involved?

I sold my house and the title company closed well over a month ago. I’m still waiting for final copies of the paperwork from the Title company. What I want are copies which were signed by both parties. I believe it is my right to have copies of these documents in my possession. I have tried calling the Title company. The person who processed my closing does not return my calls. I also left messages with the Title Operations Manager, and he is not returning my calls either. My Realtor’s office has also been calling on my behalf and they say the Title company is not returning their calls either. I’ve since moved out-of-state so walking in the front door and getting in someone’s face is not an option. Should I get an attorney at this point or should I wait a little longer?

House Closing Documents

First Time Home Buyer?

Often, people have heard of THDA and are confused, thinking that THDA is a certain loan type. In fact, it’s lending agency. All THDA mortgages must be insured by private mortgage insurance, FHA, VA or RECD And as these loans are intended for low to moderate income families or individuals, there is a income limit and acquisition cost limit. Also, you must be a first time homebuyer unless your home is in a targeted area.

Why is THDA so fantastic for a first time homebuyer? Well, it comes down to money. THDA offers a below market rate and will allow up to 100% financing. Have you been reading the papers lately? It’s not so easy to find 100% financing these days. Unless, that is, you’re a first time homebuyer. It also has programs that allow for down payment assistance via grants from certain approved agencies (if your loan type requires a down payment). If you have satisfactory credit and the home you wish to buy meets THDA’s standards, then you’re in business.

All THDA mortgages are 30 year fixed rate loans, so you needn’t worry about finding yourself with an ARM loan (adjustable rate mortgage) and a new payment you can’t afford in 3 years. And THDA allows lenders to only charge customers a standard 1% origination and .25% discount fee. It also closely monitors fees associated with the loan. THDA really looks out for the best interest of the first time homebuyer. If you are eligible for a THDA loan, you can feel pretty certain that an unscrupulous lender can’t take advantage of you because THDA won’t let them. For so many people, buying a home is pretty intimidating. THDA takes away the uncertainties a buyer faces with its guidelines and lending practices.

If you do apply for a THDA loan, be prepared to document your credit worthiness. THDA loans require slightly more documentation than your average loans because of the uniqueness of its product. In order to offer more, THDA asks for more – ensuring you qualify for its pretty awesome program. Sounds like a fair trade, if you ask me.

What are the disadvantages of a THDA loan? Not many. They do have a federal recapture tax if you sell your home within the first nine years of owning it. But it sounds scarier than it really is. I’ve heard that only about 1% of THDA customers actually pay this tax. That’s because a bunch of really great things have to happen to you in order for it to actually apply to you. And if those great things happen to you, paying the recapture tax won’t matter much to you anyway. I’ve been in the business for 16 years and have only heard of one person actually having to pay one. He graduated from medical school and his income when through the roof. His property was sold above market value than for the area because it was adjacent to some property that a huge retailer wanted to purchase. Again, good things have to happen to pay the recapture tax. So, you shouldn’t be afraid of it.

More people need to hear about and take advantage of the THDA loan programs. It’s such a great product and really helps the community and the housing industry. If you’re a first time homebuyer or think you’re in a targeted area, make sure you ask about THDA to see if you would qualify for a loan. You won’t regret it!

House Closing

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