How can I save on closing costs?
Experience shows that closing costs, average 2 to 3 percent of the home purchase price. Ways to save include:
* Negotiate with the seller to pay all or part of the closing costs.
* Obtain a no-point loan. The trade-off is a higher interest rate on the loan and many of these loans have prepayment penalties.
* Get a no-fee loan. Typically these fees are wrapped into a higher interest rate though it will save you on the amount of cash you need upfront.
And most importantly,
* Shop around for the best loan deal. Each direct lender and each mortgage brokerage has his or her own fee structure. Call around before submitting your final loan application.
What are closing costs?
They are the fees for services, property taxes or special interest charges that surround the purchase of a home. They include upfront loan points, title insurance, escrow, document fees, prepaid interest and property taxes.
Who pays the closing costs?
Closing costs can are either paid by the seller or buyer depending on what the buyer or seller negotiates.
What is important about a title report?
A clear title report ensures there are no liens placed against the prior owners or any documents that will restrict your use of the property.
A preliminary title report provides you with an opportunity to review any impediment that would prevent clear title from passing to the buyer. When reading a preliminary report, it is important to check the extent of your ownership rights or interest; fee simple is the highest type of interest an owner can have in land.
Liens, restrictions and interests of others excluded from title coverage will be listed numerically as exceptions in the report. You also may have to consider interests of any third parties, such as easements granted by prior owners that limit use of the property. Some buyers attempt to clear these unwanted items prior to purchase.
A list of standard exceptions and exclusions not covered by the title insurance policy may be attached. This section includes items the buyer may want to investigate further, such as any laws governing building and zoning.
How do I choose between buying and renting?
A benefit of renting is that the maintenance and other financial obligations associated with owning property are the responsibility of the owner, not the tenant. When a homeowner you will have tax benefits as well as the freedom to make decisions about your home. There also are a number of economic considerations. Unlike renters, homeowners who secure a fixed-rate loan can lock in their monthly housing costs.
Your real estate professional and/or lender can produce a rent vs. own scenario specific to your circumstances.
How do I get the real scoop on homes I am looking at?
Home inspections, seller disclosure requirements and the agent’s experience will help. Disclosure laws in California require the seller to complete a real estate transfer disclosure statement.
Here is a summary of the things you could expect to see in a disclosure form:
* The kitchen — a range, oven, microwave, dishwasher, garbage disposal, and trash compactor.
* Safety features such as burglar and fire alarms, smoke detectors, carbon monoxide detectors, sprinklers, security gate, window screens.
* The presence of a carport or garage, automatic garage door opener, rain gutters.
* Amenities such as a pool or spa, patio or deck, built-in barbeque and fireplaces.
* Type of heating and presence of any external power source, such as solar panels.
* The type of water heater, water supply, sewer system or septic tank.
Sellers are to indicate any defects or malfunctions existing in the home’s major systems. And in the case of a condominium the seller should disclose covenants, codes and restrictions or other deed restrictions.
What's a home inspection?
A home inspection is when a buyer hires a professional inspector for their knowledge and expertise to inspect the home for defects or other problems. The inspection typically occurs after a purchase contract between buyer and seller has been signed. The fee of $400 or more is a buyer expense and the inspection can last from 2-4 hours.
Why do I need a home inspection?
Buying a home without an inspection is risky and I strongly recommend paying for the expertise of a licensed inspector. The investment of around $400 can avert the surprise of repairs that can amount to thousands of dollars.
How do I find a home inspector?
It is recommended that you hire an inspector who belongs to one of the home inspection trade organizations.”
Such as the California Real Estate Inspection (CREIA) or Association American Society of Home Inspectors (ASHI). One can usually find an inspector online or by asking your real estate agent. Many inspectors charge about $400, but costs go up with the scope of the inspection.
Is a less than listed price offer a good idea?
Experience shows that the seller may reject low offers in a seller’s or a normal market. On the other hand when it is a buyer’s market a motivated seller will either accept the offer or make a counteroffer to your offer.
Offers at the seller’s asking price or above are more likely to be accepted. You may wish to consider the following:
Are considering asking the seller to make any repairs or are you willing to purchase the house completely as-is? A low offer typically does not leave any room for negotiating fixes.
If your offer is contingent upon the sale of your current house, a low offer or even at full price, will not be as attractive as an offer without that condition.
Is your offer cash? A cash offer without a financing contingency and a quick close of escrow may be more attractive to the seller.
What should I know about low-ball offers?
When offering substantially less than the seller’s asking price, it is considered a low ball. Of course, you can make this type of offer and your agent will present it, but you take the chance of the seller rejecting your offer completely.
You should educate yourself as to the true value of a property before making your offer. Knowing the fair market value in the present condition and marketplace, as well as the seller’s motivation, can help to determine if a low offer is advisable.
If you are able to meet the seller’s need, such as a quick close because they are purchasing another house, the seller may consider any offer.
How do I determine the value of a distressed property?
First step is to get as much information as possible about the property. If the property is an REO (Real Estate Owned by the Bank), because they have never occupied the property, disclosures regarding condition will be limited. This is why it is so important to hire a licensed inspector.
If you are unable to gain access to the interior of an REO property, see if the neighbors know anything about the property’s condition.
What should I know about list price, sales price and appraised value?
The list price is the price that the property is being offered for purchase. It is the advertised price, the price the seller would like to obtain and in many cases close to fair market price.
There are cases where the seller and his agent price the property high, hoping to find a buyer willing to pay above market price. On the other hand, some agents advise their clients to price the property low; the below market value may create an auction environment with buyers bidding against each other. This can cause the property to sell for higher than anticipated.
Your agent can help you to determine the fair market value of any property. Sales price is the negotiated purchase price between a buyer and a seller. And, the appraised value is the worth of a property as determined by a certified appraiser in the current marketplace. The appraiser will consider comparable property sales, the amenities of the properties and other factors.
I want to buy a home, what is my first step?
#1 is to get qualified for a home loan. Once you know what type and amount of loan, the information will help you and your agent to determine the neighborhood and type of home (single family residence or an attached home, such as a condo or townhouse).
The main factors considered for your qualification are your income, FICO score, and available funds for a down payment and employment status. Based on this information your lender will provide you with a pre-approval letter. This letter will be submitted with your offer to show that you are ready, willing and able to make the purchase.
Will It Hurt My Credit to Shop Lenders?
It doesn’t hurt you to have a conversation with several San Diego mortgage lenders. You can gain a lot of information through simple conversation about relevant topics, such as current interest rates and approximate fees charged for a San Diego loan. However, when you choose to give the mortgage lender permission to run your credit, your FICO score is lowered by approximately 5 points; that’s not a lot. And the great news is that having your credit checked by multiple mortgage lenders does not hurt your credit if done within a short period of time, typically 14 -45 days. The scoring “model” sees these multiple inquiries as normal activity to shop for a mortgage. So yes, you can shop your loan within a short window of time and your credit will not be harmed more than a few points.