“The last thing you need are unexpected financial obligations cropping up hours before you take possession of your new home.” ....
Whether you're looking to buy your first home, or trading up to a larger one, there are many costs - on top of the purchase price - that you must figure into your calculation of affordability. These extra fees, such as taxes and other additional costs, could surprise you with an unwanted financial nightmare on closing day if you're not informed and prepared.
Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all of these costs will apply in every situation, however it's better to know about them ahead of time so you can budget properly.
Remember, buying a home is a major milestone. Whether it's your first, second or tenth home, there are many important details to address, during the process. The last thing you need are unexpected financial obligations cropping up hours before you take possession of your new home.
Read through the following checklist to make sure you're budgeting properly for your next move.
1. Appraisal Fee
Your lending institution may request an appraisal of the property which would be your responsibility to pay for. Appraisals can vary in price from approximately $250 -$ 450. This may be requested from you as an upfront cost.
2. Property Taxes
Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid.
3. Survey Fee
When the home you purchase is a resale (vs. a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary between $1000- $1,500.
4. Property Insurance
Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan.
5. Service Charges
Any new utility that services your hook up, such as telephone or cable, may require an installation fee.
6. Legal Fees
Even the simplest of home purchases should have a lawyer involved to review all paperwork. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer.
7. Mortgage Loan Insurance Fee
Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% -3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment.
8. Mortgage Brokers Fee
A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost.
9. Moving Costs
The cost for a professional mover can cost you in the range of:
$50-$100/hour for a van and 3 movers, and
10-20% higher during peak demand seasons.
10. HOA Fees/Working Capital
Condos charge monthly fees for common area maintenance such as grounds keeping and carpet cleaning in hallways. It is not uncommon for Condo Associations and HOA's to collect several months of these fees upfront. Costs will vary depending on the building.
11. Water Quality and Quality Certification
If the home you purchased is serviced by a well, you should consider having your water checked by your local experts. Where you live determines whether or not a fee is charged to certify the quantity and quality of the water.
12. Local Improvements
If the town you live in has made local improvements (such as the addition of sewers or sidewalks), it could impact a property’s taxes by thousands of dollars.
13. Land Transfer Tax
This tax is applied whenever property changes hands and the amount that is applied can vary. (Not applicable in all jurisdictions).
Friday, October 23, 2009
Friday, October 9, 2009
Why NOW is the best time to buy a home?
Everywhere you turn today, you hear news about the housing market. Homes are taking longer to sell, new home builders are packing it in and leaving town, foreclosures are up in most markets nationwide, and lending guidelines are changing daily.
So, what does this mean for you? Well, if you’re in the market to buy a home, or even think you may be, now is THE BEST time to buy.
Well, lets start with the first best reason to buy:
LOW INTEREST RATES
Yes, interest rates are still very low. The Federal Reserve, once again, cut rates. So it will cost you less to borrow money, which means you keep more of what you make or can get more a larger. Interest rates, however, change constantly. The indexes that banks and lenders use to calculate their rates, are always changing and will continue to change. When I get my crystal ball out of the repair shop, I’ll be able to tell you what is to happen to our rates in the next 6 to 12 months. Interest rates could stay the same or even decrease once again. However, it is widely believed that rates will increase. And for those buyers that were priced out of the market just 3 years ago, low interest rates mean a real opportunity at home ownership.
LOTS OF INVENTORY
Take a look around. Have you noticed how many FOR SALE signs you see in people’s yards? There is such an abundance of homes for sale that many neighborhoods appear to have sign after sign, on block after block. So, how is this of benefit to the buyer? Simple, the buyer gets to see more homes that fit his/her criteria. They don’t have to feel as if it’s one or the other and they get more time to find the home that’s right for them instead of settling because they may lose their chance at home ownership.
AFFORDABILTY
The more houses on the market, the more competition for those wishing to sell. Particularly in neighborhoods where there are track homes (2 to 3 basic designs with a few higher priced options) many of the homes have some of the same features. So how will these sellers compete? Well, on price of course. So many sellers will reduce their asking price to get more buyers looking, or with a good Real Estate Broker, may be negotiated down to the price the buyer is willing to pay. This means big discounts for buyers. Some buyers are walking away from the closing table with tens of thousands in equity in their new home.
SELLER CONCESSIONS, DOWN PAYMENT ASSISTANCE, ETC..
Sellers have other ways of attracting buyers as well. Many will advertise a seller carry situation which is when the seller holds the note or offers to carry a second loan for the buyer* (THIS SHOULD ONLY BE CONSIDERED WHEN ADVISED BY A LENDING AND REAL ESTATE PROFESSIONAL TO PREVENT FRAUD AND FINANCIAL REPERCUSSIONS). Some sellers are paying for a year of HOA dues, assisting with down payments (WHEN ALLOWED BY THE LENDER), paying the buyer’s closing cost (WHEN ALLOWED BY THE LENDER), or paying for new appliances, upgrades, and/or home warranty. In this tough market, sellers are willing to give as much help to the buyer as legally possible. This is an absolutely advantageous situation for buyers and probably will not happen again for many, many, years, once the market rebounds.
There are also special programs and grants available through the State and Local Governments which could enable a first-time homebuyer to buy with little to no money down. There also is the matter of the up to $ 8,000 in Federal Tax Credit (for those who qualify). This tax credit is expiring less than 60 days (go to: www.ladylister.com to see the counter). While there is much talk about extending this program, there have not been any concrete decided.
All of these reasons make NOW, the best time to look into home ownership or real estate investment. For more information or to discuss your particular situation, contact me.
Until next time……
Cynthia
Friday, October 2, 2009
What To Do If You Are Facing Foreclosure
First, you are not alone. There are many Americans facing the exact same situation you are. Many of them, don’t know just how close they are to foreclosure. Here are a few of the warning signs that you are nearing possible foreclosure, followed by some terms to review with your lender to see if any of these are options for you. Finally, a couple of helpful links are provided, as resources.
Signs you may be near foreclosure:
• Maxing out credit cards
• Using credit to pay for day-to-day expenses, such as groceries, utilities, etc.
• Being unable to pay your bills on time
• Paying only the minimum amount on credit cards
• Applying for new credit cards after maxing out on existing ones
• Having to choose which bills to pay
Understanding the terms:
If you are working with your lender to keep your home, known as retention, there are several options:
Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.
Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.
If you and your lender agree that you can not keep your home...
There are a number of liquidation terms you should understand:
Short Payoff (also referred to as a Short Sale): If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale. If this is an option for you, we have a network of experienced Real Estate Brokers to assist you.
Deed-in-lieu of foreclosure: A Deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.
Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.
While refinancing is not necessarily a good option when facing foreclosure and can sometimes even be a predatory practice, there are instances where it may help. Talk to your lender to see if refinancing is an option for you.
Loan Modification: A loan modification is very similar to a lower interest refinance where the lender lowers the interest rate on the existing loan to lower
the payments.
A list of DO's and DON'Ts to remember when going through this difficult time:
• DO answer the phone and read your mail. Avoiding your lender won't make the problem go away. In fact, it will only make the problem worse. Your lender may be able to help you, so be sure to answer the phone and read any mail they may have sent you.
• DO realistically assess your situation. Are your financial problems temporary? If you are temporarily out of work and will be fine once you find a new job, call your lender. Lenders may be able to offer a forbearance or repayment plan.
• DO consider your options. If you are not in a position to keep your home, consider selling it before you face a foreclosure. If you have already missed a mortgage payment, call your lender. There may be purchase options, like a short payoff or assumption (see links and resource section) that help avoid foreclosure. Talk to a lawyer or legal aid organization. Your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to the Legal Services Corporation, a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.
• DO be aware of certain financial responsibilities. Even if your lender sells your property, you may still be responsible for the difference in the sale price and what you owe. It is also important to realize that you may be responsible for certain taxes when a lender forecloses on your property. However, the IRS does provide tax relief in certain situations.
• DO protect your wealth. Recognize that you may have significant equity in your property that must be preserved.
• DON'T move out of your home. In order to qualify for assistance, homeowners are often required to be living in their home. Be sure to talk to your lender before you think about moving.
• DON'T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions.
• DON'T convince yourself you can afford a home if you can't. Most lenders will only lend what a borrower can afford, but some less scrupulous lenders will allow borrowers to get in over their heads. In some cases, a home that was affordable becomes unaffordable due to changes in your life circumstances. If your mortgage is truly beyond your means, consider selling your home and purchasing a less expensive home or renting for a period of time before the only option left is foreclosure. Call your mortgage company; they may be able to help you avoid foreclosure by agreeing to an assumption or a short payoff.
• DON'T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions. Talk to a lawyer or legal aid organization, since your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.
• DON'T fall victim to a scheme. Some people want to profit by your misfortune by offering to contact and conduct all work-outs and negotiations with your lender on your behalf – for a fee. ONLY talk to legitimate Realtors ®, Lawyers, Counselors, or your lender DIRECTLY!!!
Helpful links and hotlines: http://www.housinghelpnow.org/ , http://www.hopenow.com/
http://www.makinghomeaffordable.gov/
Foreclosure hotline: 1-888-995-HOPE
Signs you may be near foreclosure:
• Maxing out credit cards
• Using credit to pay for day-to-day expenses, such as groceries, utilities, etc.
• Being unable to pay your bills on time
• Paying only the minimum amount on credit cards
• Applying for new credit cards after maxing out on existing ones
• Having to choose which bills to pay
Understanding the terms:
If you are working with your lender to keep your home, known as retention, there are several options:
Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.
Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.
If you and your lender agree that you can not keep your home...
There are a number of liquidation terms you should understand:
Short Payoff (also referred to as a Short Sale): If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale. If this is an option for you, we have a network of experienced Real Estate Brokers to assist you.
Deed-in-lieu of foreclosure: A Deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.
Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.
While refinancing is not necessarily a good option when facing foreclosure and can sometimes even be a predatory practice, there are instances where it may help. Talk to your lender to see if refinancing is an option for you.
Loan Modification: A loan modification is very similar to a lower interest refinance where the lender lowers the interest rate on the existing loan to lower
the payments.
A list of DO's and DON'Ts to remember when going through this difficult time:
• DO answer the phone and read your mail. Avoiding your lender won't make the problem go away. In fact, it will only make the problem worse. Your lender may be able to help you, so be sure to answer the phone and read any mail they may have sent you.
• DO realistically assess your situation. Are your financial problems temporary? If you are temporarily out of work and will be fine once you find a new job, call your lender. Lenders may be able to offer a forbearance or repayment plan.
• DO consider your options. If you are not in a position to keep your home, consider selling it before you face a foreclosure. If you have already missed a mortgage payment, call your lender. There may be purchase options, like a short payoff or assumption (see links and resource section) that help avoid foreclosure. Talk to a lawyer or legal aid organization. Your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to the Legal Services Corporation, a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.
• DO be aware of certain financial responsibilities. Even if your lender sells your property, you may still be responsible for the difference in the sale price and what you owe. It is also important to realize that you may be responsible for certain taxes when a lender forecloses on your property. However, the IRS does provide tax relief in certain situations.
• DO protect your wealth. Recognize that you may have significant equity in your property that must be preserved.
• DON'T move out of your home. In order to qualify for assistance, homeowners are often required to be living in their home. Be sure to talk to your lender before you think about moving.
• DON'T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions.
• DON'T convince yourself you can afford a home if you can't. Most lenders will only lend what a borrower can afford, but some less scrupulous lenders will allow borrowers to get in over their heads. In some cases, a home that was affordable becomes unaffordable due to changes in your life circumstances. If your mortgage is truly beyond your means, consider selling your home and purchasing a less expensive home or renting for a period of time before the only option left is foreclosure. Call your mortgage company; they may be able to help you avoid foreclosure by agreeing to an assumption or a short payoff.
• DON'T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions. Talk to a lawyer or legal aid organization, since your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.
• DON'T fall victim to a scheme. Some people want to profit by your misfortune by offering to contact and conduct all work-outs and negotiations with your lender on your behalf – for a fee. ONLY talk to legitimate Realtors ®, Lawyers, Counselors, or your lender DIRECTLY!!!
Helpful links and hotlines: http://www.housinghelpnow.org/ , http://www.hopenow.com/
http://www.makinghomeaffordable.gov/
Foreclosure hotline: 1-888-995-HOPE
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