16 Apr 2024
By divfundposts

Understanding Closing Costs When Buying a Home

Mortgage

Buying a home is an exciting journey, but it’s not without its twists and turns. One specific daunting aspect for many homebuyers is understanding the sphere of closing costs. These additional expenses can catch even the most prepared buyers off guard if they’re not properly understood. So, let’s discuss the world of closing costs and shed some light on what to expect when purchasing your dream home.

Appraisal Fees: Before finalizing a mortgage, lenders typically require an appraisal to ensure the property’s value aligns with the loan amount. Appraisal fees can vary depending on the size and location of the property but generally range from a few hundred to a thousand dollars. It’s crucial to budget for this expense as it’s a non-negotiable part of the home-buying process.

Title Insurance: Protecting your ownership rights is paramount when purchasing a home. Title insurance safeguards against any issues with the property’s title, such as liens or disputes, that may arise after the purchase. While it might seem like an added expense, the peace of mind it provides is invaluable. Title insurance costs vary but typically amount to around 0.5% to 1% of the home’s purchase price.

Home Inspection Fees: Hiring a qualified home inspector is essential for uncovering any potential issues with the property before closing the deal. While not always mandatory, a home inspection can save you from costly surprises down the road. Inspection fees can range from $300 to $500 on average, depending on the size and complexity of the home.

Closing Agent Fees: A closing agent, often an attorney or a title company representative, facilitates the closing process and ensures all necessary documents are properly executed. Their fees cover administrative tasks, document preparation, and overseeing the closing proceedings. Closing agent fees vary but typically amount to around 1% to 2% of the home’s purchase price.

Property Taxes and Insurance: Depending on when you close on your new home, you may be required to prepay property taxes and homeowners insurance for the upcoming year. These expenses are typically prorated based on the closing date and can add a significant amount to your closing costs.

Origination Fees: Charged by the lender, origination fees cover the cost of processing your mortgage application and underwriting the loan. These fees can vary widely but generally range from 0.5% to 1% of the loan amount. It’s essential to shop around and compare origination fees when selecting a lender to ensure you’re getting the best deal.

Escrow Fees: If you opt to use an escrow service to hold funds and coordinate the closing process, you’ll likely incur escrow fees. These fees cover the cost of managing the escrow account and ensuring all parties fulfill their obligations. Escrow fees typically amount to around 1% of the purchase price but can vary depending on the complexity of the transaction.

Navigating the realm of closing costs can feel overwhelming, but understanding what to expect can help alleviate some of the stress associated with buying a home. By budgeting for these expenses and working closely with your real estate agent and lender, you can approach the closing table with confidence and excitement as you take the next step toward homeownership.

13 Dec 2023
By divfundposts

4 Ways to Help Your Mortgage Transaction Close On Time

Home Mortgage Tips

When you’ve finally found the home you’re looking for at the right price, it’s easy to think that the hard part is over; however, there’s still a lot to do in order to ensure your purchase goes through without a hitch. If you’re tying up the loose ends on your home purchase, here are some things you should do to avoid any unnecessary delays.

Hire A Legal Professional

However much research you may have done in regards to buying a home, there’s still a lot of legal jargon in the closing documents that can be difficult for most people to understand. Instead of doing guesswork, you may want to use an attorney who will take the difficulty out of the documents for you so there will be no holdups with the paperwork.

Arrange A Home Inspection

A home inspection is a necessary step before the sale of a home, but this is an important one to get out of the way because it can seriously impact your home purchase. Because major problems can often be discovered during inspection, getting this out of the way and deciding if an item should be fixed or the total price knocked down will ensure there are no delays at the last minute.

Acquire Title Insurance

In order to make sure your property really belongs to you, it’s a good idea to have a title search completed to see if there are any claims to your future property that could invalidate your purchase. As this is a legal safeguard for your claim to your home, it will help you avoid unnecessary issues in the event of an unknown property claim.

Determine The Closing Costs

An escrow company is responsible for holding the funds until all aspects of a home sale are complete, but there are fees that go along with this service. Before you get to the end of the process, determine what exactly the company will be charging so that you can be prepared for the final total. While fees are legitimate, if you see a higher tally than expected, you may want to negotiate for a reduced cost.

Purchasing a home is a significant investment full of hurdles you might not be aware of, but by acquiring title insurance and having a legal professional look through your documents, you can make your home purchase go a little smoother. 

30 Aug 2023
By Kevin Gahagan

How to Save The Most Money When Buying a House

Mortgage

How to Save The Most Money When Buying a HouseBuying a house is one of the most significant financial decisions in one’s life, and it’s essential to make smart choices to save money during the process. While purchasing a home can be expensive, there are several strategies you can implement to maximize your savings and make the most of your investment.

Here are some valuable tips on how to save as much money as possible when buying a house:

Research and Compare Mortgage Options:

When considering a mortgage, do thorough research to find the best interest rates and terms available. Compare offers from multiple lenders and don’t be afraid to negotiate. Even a small reduction in interest rates can lead to significant savings over the life of the loan.

Save for a Higher Down Payment:

Saving for a higher down payment can reduce the overall cost of your mortgage and decrease the amount of interest paid in the long run. Aim to save at least 20% of the property’s value to avoid private mortgage insurance (PMI) costs, which can add thousands of dollars to your expenses.

Shop Around for a Home:

Don’t rush into buying the first house you see. Take your time and explore different neighborhoods and properties. Being patient and persistent may lead to finding a better deal or a motivated seller willing to negotiate a lower price.

Consider Fixer-Uppers:

Homes in need of renovation often come with a lower price tag. If you’re willing to invest some time and effort, buying a fixer-upper can save you money upfront and provide an opportunity to increase the home’s value over time.

Work with a Skilled Realtor:

Enlisting the help of a skilled real estate agent can save you both time and money. Realtors have extensive knowledge of the local market and can negotiate on your behalf, potentially leading to a better deal.

Get a Home Inspection:

Never skip a home inspection. Hiring a professional to assess the property’s condition can identify potential issues and prevent costly surprises down the road. It gives you the leverage to negotiate repairs or a lower price if problems are found.

Shop for Homeowner’s Insurance:

When purchasing a house, you’ll need homeowner’s insurance. Shop around and compare rates from different insurers to secure the best coverage at the most affordable price.

Be Mindful of Closing Costs:

Closing costs can add up quickly, so be sure to ask for a detailed breakdown of all fees involved. Some lenders might be willing to negotiate or offer incentives to reduce these expenses.

Consider Energy-Efficient Homes:

Opt for an energy-efficient home or make energy-saving upgrades if possible. Lower utility bills will save you money in the long run and contribute to a more environmentally friendly lifestyle.

Evaluate Tax Benefits:

Educate yourself on potential tax benefits related to homeownership, such as mortgage interest deductions and property tax deductions. Consult with a tax professional to understand how these benefits apply to your specific situation.

In conclusion, buying a house is a significant investment, and careful planning and research can save you a substantial amount of money. From finding the best mortgage terms and negotiating the purchase price to exploring fixer-uppers and taking advantage of tax benefits, there are numerous opportunities to maximize your savings. With the right approach, you can make the dream of homeownership more affordable and financially rewarding in the long term.

10 May 2023
By Kevin Gahagan

What is Cash to Close?

Mortgage

What is Cash To Close“Cash to Close” refers to the total amount of money that a homebuyer needs to bring to the closing table to complete the purchase of a property. It includes the down payment, closing costs, and other fees associated with the home purchase.

How is it Calculated?

The cash to close amount is calculated by subtracting any applicable credits, such as earnest money or seller contributions, from the total amount of funds needed to complete the transaction. The resulting figure represents the final amount of cash that the buyer needs to bring to the closing.

It’s important for homebuyers to carefully review their “Cash to Close” statement before closing to ensure that they have enough funds available to cover the required amount. The statement will typically be provided by the lender or title company several days before the closing date.

The Difference Between Cash to Close and Closing Costs

Cash to close and closing costs are both important concepts in the home buying process, but they refer to different things.

Cash to close refers to the total amount of cash that a homebuyer needs to bring to the closing table to complete the purchase of a property. This includes the down payment, closing costs, prepaid expenses (such as property taxes and homeowners insurance), and any other fees associated with the home purchase.

Closing costs are the fees and expenses associated with obtaining a mortgage loan and closing the real estate transaction. They can include loan origination fees, appraisal fees, title search and insurance fees, attorney fees, and other charges. Closing costs are typically paid at the closing table, but they can sometimes be included in the mortgage loan amount.

Do I Need Actual Cash to Close?

While the term “Cash to Close” may suggest that you need to bring actual physical cash to the closing table, in reality, you typically do not need to bring cash. Most real estate transactions are settled using wire transfers, certified or cashier’s checks, or electronic transfers, rather than physical cash.

When you receive the “Cash to Close” statement, it will provide you with the total amount of funds needed to complete the transaction. You will then typically work with your lender and/or closing agent to arrange for the transfer of these funds to the appropriate parties.

It’s important to note that the exact payment methods and requirements may vary depending on the specific transaction and location. You should work closely with your lender and/or closing agent to ensure that you understand the payment process and have the necessary funds available in the appropriate form.

18 Jan 2023
By Kevin Gahagan

How Do You Actually Write The Check To Buy A House?

Mortgage

How Do You Actually Write The Check To Buy A House?After you have found the right house to meet your needs, you need to make the down payment to complete the transaction. Can you show up at the closing table with a suitcase full of cash? Of course, that would be a bit suspect, so that is not actually how it happens. What do you need to do to actually hand over the funds to buy the house? 

The Down Payment Is Verified Beforehand

First, understand that the down payment is usually verified before you agree to the deal. Your real estate agent will work with you and the seller’s agent to ensure that you actually have the funds needed to buy the house. For example, you might need to send screenshots of your bank balance or investment portfolio as proof that you have the money. Your agent will work with you to ensure your confidential information remains so.

The Funds Are Typically Given Using A Wire Transfer

When it is time for you to complete the actual transaction, the real estate attorney will handle just about everything. The attorney will be responsible for collecting the money from the sale and ensuring that everyone gets the money they are owed. The attorney will provide you with the account information for where you need to wire the money. Prior to the closing date, you need to go to the bank and work with one of their experts to ensure the money is in your account and wired to the correct account destination.

The Real Estate Agent Will Confirm The Process Is Done

It is best not to wait until the last minute to wire the money into the account. Try to do this process ahead of time, and make sure either the attorney or your real estate agent says that the process has been completed. You do not want to run the risk of missing your closing date. If you have questions about the process, make sure you give the attorney’s office plenty of time to respond to you.

Determine Your Budget With The Help Of Your Real Estate Agent

This process is important for making sure you can afford the house you want. Work with your real estate agent to ensure you have the necessary funds for the down payment.