Posts Tagged 'buying real estate'

What a Buyer Should Expect During the Closing

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By Keith Reilly

 The last step in the home buying process is what real estate professionals commonly refer to as “the closing.” The closing, or settlement or close of escrow, is when all the progressive steps in buying a home from the acceptance of the offer, title search, home inspection, mortgage approval, and so on, come together in a final transaction. The documents are ready to sign, the buyer is ready to hand over the purchase price and the seller is ready to transfer title—and most importantly the keys!

 Usually held in an office setting, most require about an hour and may be attended by some or all of the various parties in the process: the buyer, seller, real estate sales professionals or attorney, and title-company representative.

 What goes on during the closing? The buyer reviews and signs loan and real estate documents, as well as pays for the property, closing and other costs. One such loan document is the federal Truth-in-Lending disclosure form which describes the annual rate of financing (APR), finance charges, amount financed, total of payments and the payment schedule. There will also be a form itemizing what your monthly payment consists of including the principal, interest, taxes, insurance and other monthly charges. If everything is in order, the buyer signs the loan papers.

 Real estate documents are just as important. There’s the HUD-1 form, which you have the right to inspect at least one day before the closing. This statement itemizes services provided and the fees charged for the entire real estate transactions. There will be a breakdown of the seller’s and buyer’s (borrower) financial obligations. Some of the charges include appraisal fee, credit report fee, loan origination fee, loan discount (points), title insurance fee, government recording fees, PMI Premium, inspections and attorney fee.

 Other real estate documents that may be reviewed and/or signed include title documents, warranty deed (which transfers the title of the property) and other acknowledgment of reports.

 Assuming that the funds are in order, the deed is correct and the title is clear, the final step is the disbursement of funds to the seller for the purchase price of the home. The title company should already have the loan funds in its possession, but the buyer will need to bring a cashier’s or certified check for the down payment and the closing costs if it was not included in the mortgage loan. If the buyer’s annual real estate taxes and homeowner’s insurance will be paid through the lender, an escrow account will also be established.

 Once all the papers are signed and funds are disbursed, the buyer will receive the keys and is now a homeowner.

30-year rates are low. Really low. Are you going to take advantage of it?

If you just can’t decide whether or not now is a good time to buy, these rates should convince you. They are historically low and there is just no way to predict what rate they will be in the future. I had a client apply for his mortgage when it was at 6%, it jumped to 7% while it was getting approved and he locked in at 6.5% a few weeks later. This was only last month. The point I’m trying to make is that if you are thinking about buying, locking in at these rates now will give you a much better return on your investment. If you wait, there is a good chance these rates won’t be around. Don’t say I didn’t warn ya!

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.47 percent during the week ended Dec. 11 from 5.53 percent last week and 6.11 percent a year ago.

Some lenders are locking in even lower rates as they build on momentum started when the Federal Reserve announced plans last month to purchase a substantial number of mortgage-backed securities. HSH Associates and Inside Mortgage Finance are reporting interest on 30-year fixed loans at 5.33 percent and 5.09 percent, respectively.

Freddie Mac chief economist Frank Nothaft says mortgage rates also were driven downward by the recession and rising unemployment.

Source: The Washington Post, Dina ElBoghdady (12/12/08)

Tips for First Time Home Buyers

Home-price adjustments in markets around the country have opened doors of opportunity for many renters. If you are transitioning from renter to homeowner, the prospect of making such a large investment may be exciting, while at the same time overwhelming. But it doesn’t have to be. Here are six common mistakes to avoid.

1. Not understanding the home buying process. Educate yourself. Find a homebuyer seminar that you can attend or research online. The U.S. Department of Housing and Urban Development Web site (www.hud.gov) has an entire section devoted to homebuyers with common questions of first-time homebuyers, mortgage and home-buying programs information, downloadable tools such as a wish list and home-shopping checklist, tips on selecting a real estate professional, etc. Likewise, Prudential Real Estate’s popular Web site, prudential.com/real estate, offers consumers brand-new tools for the home buying process, such as free home environmental reports, Value Range Estimates and Property Profiles, among other resources.

2. Not asking questions. There are many facets and intricacies to the home buying process, so although you may gain a basic knowledge, you will still have questions. Don’t hesitate to let your real estate professional know that you are new to the process. Make sure you choose a sales professional who is willing to spend time with you and walk you through the entire process. He or she will expect you to have questions at each step—from house hunting, to making an offer to the closing. Remember, this is one of the largest financial transactions of your life, so you want to have a clear understanding of what’s going on.

3. Buying on impulse. Don’t feel pressured into making an offer on the first home you see. Buyers, especially first-timers, may be impressed by the first two or three homes they view. Look at a good selection. List the positives and negatives about each home. Narrow the prospects to three or four and then return for a closer look. When you decide to make a bid on a property, work with your real estate professional to get all of your questions answered before making an offer. But don’t wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.

4. Looking outside your price range. Before beginning your home search, consider getting pre-qualified to so get an idea of how much you may be able to borrow. Use this information as a starting point in determining your price range. Then take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, homeowners insurance, utilities, private mortgage insurance (PMI) and maintenance.

5. Not planning ahead. Think about personal changes you are planning in the next five to seven years. For instance, are you starting a family, and if so, is the home large enough and will it continue to be? If this will be a starter home or if you think you’ll be relocating in a few years, you’ll probably want to pay closer attention to appreciation and resale value. If a double-income is necessary to qualify for financing and to make your payments, do your plans foresee an income sufficient to continue making payments?

6. Failure to focus on location. Don’t just focus on the house. Examine the community. Does it suit your lifestyle? Is the area safe, well-maintained, close to work, stores and schools? Find out about zoning and what new construction is planned on vacant land in the immediate area. Also consider the property marketability when it’s time to sell.

Above all, remember knowledge is key. No question is a silly question. Your real estate professional can be an invaluable asset throughout the process. Making smart home buying decisions will make the home-buying process less scary and your first home purchase a rewarding experience.