Ten Things to Take the Trauma Out of Home Buying
- Find a Real Estate agent that’s simpatico. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the agent you chose is both skilled and a good fit with your personality.
- Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price, and a good home won’t stay on the market long.
- Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
- Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
- Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.
- Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself - room size, kitchen - that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in our new home.
- Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
- Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
- Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
- Choose a home first because you love it; then think about appreciation. While U.S. home have appreciated an average of 5.4 percent annually over 1998 to 2002, a home’s most important role is as a comfortable, safe place to live.
Reprinted from REALTOR Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS.
Copyright 2003. All rights reserved.
EXPLANATION OF CLOSING COSTS
Line Number – Item
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Typical Cost
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Explanation
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808 – Loan Origination Fee
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Typically from zero to 1% of the loan amount
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Fee paid to us for placing the loan. Borrower can choose to pay no origination fee by agreeing to accept a slightly higher interest rate.
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803 – Appraisal Fee
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$350 - $450
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Fee paid to the certified real estate appraiser to establish the value of the subject property. Borrower may choose appraiser.
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804 – Credit Report
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$25.00
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Fee we pay to research the credit of the borrower(s).
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809 – Tax Related Service Fee
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$75.00
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One time fee charged by the lender to monitor the payment of taxes on the subject property.
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812 – Commitment Fee
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$400 – $500
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Fee paid to lender for underwriting the loan.
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812 – Application Fee
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$50.00 – $200.00
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Fee paid to us to cover the cost of developing the loan package and shipping it to underwriter, and the shipment of other documents for closing.
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812 – Flood Certification
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$22.00+/-
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Fee paid to national flood certification service to determine location of subject property in/out of flood area. Helps determine requirement for flood insurance.
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1107 – Attorney Fees
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$500-$600
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Fees paid to attorney to prepare for and conduct closing. Borrower may choose attorney.
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1108 – Title Insurance
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$2 per thousand for first $100K; $1 per thousand after that
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Fee paid to title insurance company to ensure that title search was correct and that the title to the subject property is free and clear.
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1201 – Recording Fee
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$65.00
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Fee paid to county and attorney to record note and deed of trust following closing.
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1302 – Pest Inspection
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$85.00
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Fee paid to pest control company to ensure the subject property is free from damaging insects and animals.
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Several other items usually appearing on the GFE are not closing costs per se but are required by the lender to fund the loan.
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901 – Interest
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Amount varies. Daily interest rate on old loan times the number of days since last day of previous month
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Applies primarily refinance purchases or for borrowers who are selling one property and purchasing another
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902 – Mortgage Insurance
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Amount varies.
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Paid to mortgage insurance company for premiums to ensure lender in case of borrower default on loan.
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903 – Hazard Insurance
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Amount varies.
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Purchaser requires borrower to pay a full year of hazard insurance in advance.
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1001 – Hazard Insurance Premium Reserves
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Amount varies. Must be equal to 2 months of premiums.
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Required by lender to ‘load’ the escrow account in order that the full amount due is available when insurance premiums are due.
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1004 – Taxes and Assessment Reserves
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Amount varies.
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Required by lender to ‘load’ the escrow account in order that the full amount due is available when taxes are due.
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10 Tips for First-Time Homebuyers
- Be picky, but don’t be unrealistic. There is no perfect home.
- Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
- Get your finances in order. Review your credit report and be sure you have enough money to cover your downpayment and your closing costs.
- Don’t wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.
- Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
- Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area
- Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
- Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
- Don’t be naïve. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.
- Get help. Consider hiring a REALTORÒ as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.