So, You Think You are Prepared to Buy A Home

Michael Roberts — Mon, 08 Nov 2010 17:24:28 +0000

Closing costs are overlooked by most buyers until the final phases of the purchase contract are being executed. Buying a home is not quite as simple as just applying for a loan and writing an offer and moving in.

Home Buyer closing costs are arguably more important than the loan approval. You should consider them first. While consulting with your Realtor ask them to describe all the different ways these costs can affect your offer, the price you pay and how you may be able to use them to help you afford a more expensive home or reduce you payment.

I have used these costs to make the best offer in multiple offers situations. Call it creative offer structuring. Remember, only a few of these are commonly packaged in your mortgage and if they are not negotiated in, you should be prepared to pay them at closing.

Lender fees:

Loan origination points – depends on your lender and type of loan
Prepaid interest – depends on which day of the month you close
Property tax impounds – depends on the type of loan and time of the year you close
Insurance impounds – plan on 6 months of insurance, if required
Processing/Underwriting fees – depends on your lender and type of loan
Document prep fees – approximately $150.00
Appraisal fees – approximately $450.00
Funding fees – depends on your lender and type of loan
Tax service, flood cert, etc. – approximately $150.00

Title fees

Owner’s title policy – determined by purchase price
Lender’s title policy – determined by the loan amount
Document prep, notary, recording, courier, etc. – $200.00
Escrow fee – also determined by purchase price

Other fees associated with the Buyer Side:

Prorated property taxes – depends on the type of loan and when in the year you close
Homeowner’s dues – varies depending on the development
Transfer tax – $1.10 per $1,000 of purchase price
Annual homeowner’s insurance policy – depends on the type of home being purchased
HOA transfer fee – varies depending on the development
Inspections – Property (est. $450), Termite (est $250) & Roof (est $175)- other inspections may be recommended i.e. Chimney, Septic, Foundation the list can be long in some cases.

What are buyer contingencies? click here for a review

The 88 Real Estate Perils and Pitfalls Contest!

Michael Roberts — Thu, 14 Jan 2010 07:09:37 +0000

Prize: $100 Haitian Victim Relief Donation.

Create a Quip Contest! Choose One of the Perils and Create a Quip Contest.

Pick a Peril from the list below, create a quip and post it as a comment below. We will take a community vote at the end of the month.

The winner will have a $100.00 donation made, in their name, to their favorite charity helping the Haitian earthquake victims!

David Letterman announced where donations can be made directly.

You can text to 90999 and enter Haiti to make a $10 donationtoo.

2 silly Contest Examples:

Why do transactions fail?

8. Applicant makes large purchase on credit before closing.

Quip: At least the store was still open.

9. Illness, injury, divorce or other financial setback during escrow.

Quip: You should know better! Mom warned you about escrowing!

Help others! Choose one of the 88 snags -below the video – and create a quip then post it in the comment section below. It’s Easy and will help someone in need. Do It Now! Please.

Pick Your comment to create a quip…

Things That Might Go Wrong During Your Transaction

The Buyer/Borrower:

1. Does not tell the truth on loan application.

2. Has recent late payments on credit report.

3. Finds out about additional debt after loan application.

4. Borrower loses job.

5. Coborrower loses job.

6. Income verification lower than what was stated on loan application.

7. Overtime income not allowed by underwriter for qualifying.

8. Applicant makes large purchase on credit before closing.

9. Illness, injury, divorce or other financial setback during escrow.

10. Lacks motivation.

11. Gift donor changes mind.

12. Cannot locate divorce decree.

13. Cannot locate petition or discharge of bankruptcy.

14. Cannot locate tax returns.

15. Cannot locate bank statements.

16. Difficulty in obtaining verification of rent.

17. Interest rate increases and borrower no longer qualifies.

18. Loan program changes with higher rates, points and fees.

19. Child support not disclosed on application.

20. Bankruptcy within the last two years.

21. Mortgage payment is double the previous housing payment.

22. Borrower/coborrower does not have steady two-year employment history.

23. Borrower brings in handwritten pay stubs.

24. Borrower switches to job with a probation period.

25. Borrower switches from job with salary to 100% commission income.

26. Borrower/coborrower/seller dies.

27. Buyer is too picky about property in price range they can afford.

28. Buyer feels the house is misrepresented.

29. Veterans DD214 form not available.

30. Buyer comes up short of money at closing.

31. Buyer does not properly “paper trail” additional money that comes from gifts, loans, etc.

32. Buyer does not bring cashier’s check to title company for closing costs and down payment.

The Seller:

33. Loses motivation to sell (job transfer does not go through, reconciles marriage, etc.).

34. Cannot find a suitable replacement property.35. Will not allow appraiser inside home.

36. Will not allow inspectors inside home in a timely manner.

37. Removes property from the premises the buyer believed was included.

38. Cannot clear up liens – is short on cash to close.

39. Did not own 100% of property as previously disclosed.

40. Encounters problems getting partners’ signatures.

41. Leaves town without giving anyone Power of Attorney.

42. Delays the projected move-out date.

43. Did not complete the repairs agreed to in contract.

44. Seller’s home goes into foreclosure during escrow.

45. Misrepresents information about home and neighborhood.

46. Does not disclose all hidden or unknown defects and they are subsequently discovered.

The Realtor(s):

47. Has no client control over buyers or sellers.

48. Delays access to property for inspection and appraisals.

49. Does not get completed paperwork to the Lender in time.

50. Inexperienced in this type of property transaction.

51. Takes unexpected time off during transaction and can’t be reached.

52. Misleads other parties to the transaction – has huge ego.

53. Does not do sufficient homework on their clients or the property and wastes everyone’s time.

The Lender(s):

54. Does not properly pre-qualify the borrower.

55. Wants property repaired prior to closing.

56. The market raises rates, points or costs.

57. Borrower does not qualify because of a late addition of information.

58. Lender requires a last-minute second appraisal or other documents.

59. Lender loses a form or misplaces entire file.

60. Lender doesn’t simultaneously ask for all needed information.

61. Lender doesn’t fund loan in time for close.

The Property:

62. County will not approve septic system or well.

63. Termite report reveals substantial damage and seller is not willing to fix.

64. Home was misrepresented as to size and condition.

65. Home is destroyed prior to closing. my favorite.

66. Home is not structurally sound.

67. Home is uninsurable for homeowner’s insurance.

68. Property incorrectly zoned.

69. Portion of home sits on neighbor’s property.

70. Unique home and comparable properties for appraisal difficult to find.

The Escrow/Title Company:

71. Fails to notify lender/agents of unsigned or unreturned documents.

72. Fails to obtain information from beneficiaries, lien holders, insurance companies or Lenders in a timely manner.

73. Lets principals leave town without getting all necessary signatures.

74. Loses or incorrectly prepares paperwork.

75. Does not pass on valuable information quickly enough.

76. Does not coordinate well, so that many items can be done simultaneously.

77. Does not bend the rules on small problems.

78. Finds liens or other title problems at the last minute.

The Appraiser:

79. Is not local and misunderstands the market.

80. Is too busy to complete the appraisal on schedule.

81. No comparable sales are available.

82. Is not on the Lender’s “approved list.”

83. Makes important mistakes on appraisal and brings in value too low.

84. Lender requires a second or “review” appraisal.

Inspectors:

85. Pest inspector not available when needed.

86. Pest inspector too picky about condition of property.

87. Home inspector not available when needed.

88. Inspection reports

Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale » escrow

So, You Think You are Prepared to Buy A Home

The 88 Real Estate Perils and Pitfalls Contest!

Prize: $100 Haitian Victim Relief Donation.

Create a Quip Contest! Choose One of the Perils and Create a Quip Contest.

2 silly Contest Examples: