One Thing To Do Before Putting Your Home on the Market That Can Help Sell Your Home Faster!

You’ve lived in your home for years and haven’t exactly been on top of regular maintenance tasks. Now, your ceiling seems to be leaking, and those shrubs you planted to conceal a few small cracks in the foundation just aren’t cutting it anymore.

Hey, we’re not judging! But if you’re ready to put your home up for sale, know this: Buyers and their agents are going to zero in on all those things that need doing—as well as some things you hadn’t even noticed yourself.

So why not get ahead of the curve by hiring a licensed home inspector who can pinpoint what needs fixing?

Of course, most sellers don’t get their homes inspected before listing them, because the buyer usually orders an inspection during escrow. And who wants to pay for something they don’t have to?

So what are the some of the reasons why a pre-listing inspection makes sense? Let’s take a look.

It can save you if you’ve neglected home maintenance

If you have a busy life—or maybe even if you don’t—chances are that obsessing over regular home maintenance might not be your No. 1 priority during downtime. Trouble is, letting painting, roof repairs, and other routine chores slide can lead to bigger issues down the road.

In a lot of cases, people think, ‘I’ve been here for 30 years; the house is fine. There’s nothing wrong with it. But they’re looking at it with rose-colored glasses.

Instead of worrying what a buyer’s inspector will uncover—and which could potentially kill the sale—be proactive with a pre-listing inspection. This way, rather than being blindsided, you can then decide whether to make the necessary repairs or to account for that deferred maintenance by reducing the list price. Which leads us to…

You can make a bigger profit on your sale

Sure, a home inspection that you don’t have to do is going to cost money. (An inspection for a 1,200- to 1,500-square-foot house in an average market, for instance, will cost between $350 and $600.) But as the saying goes: Sometimes you have to spend money to make money.

After all, if you invest a little more to repair and spruce up anything the pre-inspection reveals, you can justify listing your home at a higher price. Plus, in most states, home improvement repairs you carry out before selling your house are deductible from the profit you make from the sale.

Sometimes, just knowing that a pro has given the house a proper once-over can persuade a buyer to make a bid (assuming that you actually follow the inspector’s recommendations).

It minimizes surprises for a buyer, and can give a buyer more confidence in the property.

You won’t have to scramble to fix things at the last minute

Once a buyer’s inspector submits a report, sellers are usually faced with two choices: If problems are found with the house, they can then either slash money from the sale price, or opt to carry out repairs before the closing date. That often leaves sellers in the lurch, having to get work done pronto—and sometimes paying a premium for the rush work.

After a pre-listing inspection, sellers can research contractors and make the necessary repairs within a time frame of their choosing, so that everything is ready before potential buyers even visit the property.

It’ll minimize back-and-forth negotiation

Buyers often use their home inspection as leverage, asking the seller (that’s you!) for steep discounts based on what their inspector’s report reveals. Not surprisingly, the buyer’s inspection is often where the deal falls apart.

If you’ve already uncovered the issues and addressed them, you can raise the price of your home accordingly. That gives the buyer less leverage in the request for repair process.

Also, in red-hot markets where multiple bids come fast and furious, there’s always a chance that buyers might accept your pre-listing inspection without insisting on doing their own. This can make for a quicker sale.

But make sure a pre-inspection doesn’t work against you

As advantageous as a pre-inspection can be, don’t forget that the inspector’s report could be a double-edged sword: Once you know about a problem, you can’t ignore it.

Sellers are legally obligated to disclose any problems that a home inspection unearths.

For sellers unwilling to do repairs, their own inspection could be used as leverage to negotiate on price and in the request-for-repair process.

Before committing to a pre-inspection, find out what other sellers in your area are doing. Your agent can help guide you on whether it’s necessary to sell for more, or if there’s a better—and more affordable—strategy for getting your home sold.

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Should I Sell My House? 6 Signs It’s Time to Move On

Ten years. That’s the average amount of time a homeowner stays in a house before a sale.

Think that sounds shockingly short? Or way too long? The fact is, people’s reasons for selling their homes are different, as are their time frames.

Still, there are some common reasons—financial and emotional—that lead us to sell our current home and move on to the next one. And you don’t always see the reasons coming.

Read on for some telltale signs it’s time to start looking for the next home and packing your bags (and when you should settle in for the long haul).

1. You know the seller’s market is booming and you want in

Let’s start with one of the most obvious reasons to sell: You’re eager to make a profit on your property.

You need to gauge the key indicators of a strong real estate market.

A few signals: The price per square foot for real estate in your area is increasing, the amount of time properties stay on the market is decreasing, and you’ve noticed an uptick in brokerage activity in your neighborhood. (If you’re situated in an especially hot neighborhood, you might even get a letter or a knock on the door from a listing agent who wants to help you get in on the action.)

If any of these are true in your area, think about selling up.

2. Because your neighbors just got what for their house?

Check online real estate listings in your neighborhood, and pay attention to the “recently sold” flyers in your mailbox to keep track of comparable home prices in your area.

If other houses on your street with the same bedroom/bathroom count [as yours] are selling for a price that you’d be more than satisfied with, it might be time to move on.

Another sign of a hot home sales market is the relationship of asking prices to sale prices. If home buyers are making offers fast—for as much or more than sellers are asking—it’s a seller’s market. A buyer may offer you a sales price you can’t refuse, too.

3. You’re sick of feeling financially stressed

Not everyone sells their real estate in order to pad their bank account. Some homeowners underestimated their ongoing housing costs and simply sell to ease their mortgage burden, or to cash in their equity and use it for other purposes.

If your property taxes or mortgage payments have become unmanageable, the best recourse may be to sell and find another home that’s more affordable. Selling your home is better than struggling with a big mortgage loan, and possibly risking foreclosure.

To breathe easy, your monthly housing costs, including your mortgage interest, principal, property taxes, homeowners insurance, and HOA or condo fees if applicable, shouldn’t exceed 28% of your gross monthly income.

Before you sell your home to reduce your monthly living expenses, make sure you can find another home to rent or buy in your price range, and that you can qualify for a loan at current interest rates when you do.

4. You’ve grown—but your home hasn’t

The starter home you moved into when you were expecting your first child isn’t necessarily the house you need now that you have three preteens and a capybara. It’s bittersweet to give up the memories you’ve made in your home, but if your living quarters are causing you stress rather than comfort, take the leap and sell up.

Death, serious illness, divorce—these are all emotionally wrought experiences that may warrant a need for change. Relocation is another factor. But let’s not overthink things.

Maybe you’re just tired of the same old, same old, and it’s time for a change of scenery.

5. You’re over ‘high maintenance’

The average homeowner shells out $2,000 a year for maintenance services, according to a recent report. Not repairs, mind you, but scheduled services such as landscaping, snow removal, septic service, private trash and recycling, and housecleaning.

Sick of watching these payments steadily drip out of your bank account? You could sell, and buy some lower-maintenance real estate such as a condo or a new-build property. You might even want to try renting, and let a landlord worry about leaky pipes and other property hassles.

6. You’ve put at least 5 years into the relationship

If you sell too soon—assuming you have a mortgage—you haven’t really built up any equity in the home beyond the down payment. In the beginning, your mortgage payments are almost completely interest payments.

In fact, unless the housing market is seriously booming (see above), you might lose money when you sell. You might even owe more than you can get from your house after closing costs.

Remember: Selling isn’t free: You’ll have to shell out to cover all of the costs associated with hiring a real estate agent, closing, and, of course, purchasing another home.

That’s why we recommend staying put for at least five years, unless you have an urgent need to move. In addition to everything else, moving too quickly sends potential buyers a bad message.

Buyers don’t feel good when it appears you are selling too soon. What was wrong with the house? Why are you leaving so fast? Are the basement walls about to collapse? Are the neighbors selling drugs and shooting fireworks at your house? Buyers can dream up all kinds of negative scenarios when a seller hasn’t owned the home for very long.

Another reason you may not want to sell is if you don’t meet the qualifications to avoid paying capital gains tax on your profit from a home sale. Generally, you can exclude the gain from the sale of your home if you owned and lived in the home for two of the past five years. A sale before the two-year mark, if you don’t meet any of the exceptions, could be a costly mistake. By the time you pay capital gains tax, you won’t have as much equity left as you’d planned.

But beware of snap decisions

Of course, there are no promises that selling will be better for you in the long run. Take your time deciding if you should sell, and then study the local home sales market, with the help of your real estate agent, before you price your home. If you underprice your home, a buyer may snatch it up too cheaply. If you overprice it, the right buyer may pass it by.

Selling your home is, above all, a personal decision. Do what will help you live—if not happily ever after—happily for now.

Why Do You Need Title Insurance?

 

Title Insurance.

It’s a term we hear and see frequently – we see reference to it in the Sunday real estate section, in advertisements and in conversations with real estate brokers. If you’ve purchased a home before, you’re probably familiar with the benefits and procedures of title insurance. But if this is your first home, you may wonder, “Why do I need another insurance policy? It’s just one more bill to pay.”

The answer is simple:Image result for title insurance The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and your mortgage lender, want to make sure that the property is indeed yours – lock, stock and barrel – and that no individual or government entity has any right, lien, claim to your property.

Title insurance companies are in business to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly and that your interests as a homebuyer are protected to the maximum degree.

Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders and others who have an interest in a real estate transfer. Title companies routinely issue two types of policies – “owner’s”, which cover you, the homebuyer; and “lender’s”, which covers the bank, savings and loan or other lending institution over the life of the loan. Both are issued at the time of purchase for a modest, one-time premium.

Before issuing a policy, however, the title company performs an extensive search of relevant public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using either public records or more likely, information gathered, reorganized and indexed in the company’s title plant.

With such a thorough examination of records, any title problems usually can be found and cleared up prior to your purchase of the property. Once a title policy is issued, if for some reason any claim which is covered under your title policy is ever filed against your property, the title company will pay the legal fee involved in defense of your rights, as well as any covered loss arising from a valid claim. That protection, which is in effect as long as you or your heirs own the property, is yours for a one-time premium paid at the time of purchase.

The fact that title companies work to eliminate risks before they develop makes the title insurance decidedly different from other types of insurance you may have purchased. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen event, say a fire, theft or accident. The purpose of title insurance, on the other hand, is to eliminate risks and prevent losses caused by defects in title that happened in the past. Risks are examined and mitigated before property changes hands.

This risk elimination has benefits to both you, the homebuyer, and the title company: it minimizes the chances adverse claims might be raised, and by so doing reduces the number of claims that have to be defended or satisfied. This keeps costs down for the title company and your title premiums low.

Buying a home is a big step emotionally and financially. With title insurance you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed.

Isn’t sleeping well at night, knowing your home is yours, reason enough for title insurance?

Article by CLTA

What Does ‘Days on Market’ Mean? How Buyers Can Take Advantage

In the real estate game, many buyers understand that knowing a home’s days on market (DOM) is absolutely critical intel. Why? Because the number of days a home spends on the market directly affects the price of a home. Plus, this information can be used to the buyer’s benefit to negotiate a lower price. Here’s how!

What does ‘days on market’ mean?

‘Days on market’ is the number of days that a property has been listed on the local multiple listing services (MLS) until a seller has accepted an offer and signed a contract. It can also be referred to as “time on market” or “market time.”

When browsing home listings, buyers should always take a look at the number of days on market to determine how other buyers are reacting to the property.

Size Matters: Tracking the Economy Through New-Home Square Footage

The U.S. housing market may not be synonymous with the business cycle, as a famous 2007 paper proclaimed, but the ups and downs in housing, which represents a big part of the economy, usually do offer hints about what’s going on more broadly.

That’s why economists closely watch housing market indicators like sales volumes and home prices — as well as how Americans are accessing the market and managing their obligations to mortgages, rental costs, taxes, and so on.

But small details about the housing market can say just as much about how well Americans, and the broader economy, are doing.

Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.

The bigger question, as always, is about the specifics of what we’re seeing right now. The median size perked up at the beginning of this year, as the housing market shook off a difficult 2018.

But overall, sizes have been on a downward path since mid-2015.

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Current declines in size indicate that this part of the cycle has ended, and size will trend lower as builders add more entry-level homes into inventory and the custom market levels off.

Existing-home sales, which have only eked out a gain in two of the last 12 months, would say we’re past cycle peak but new construction should continue to trend up, which would suggest it still has legs left.

In the post-recession economy, entry-level buyers were unable to break in to the market. But now their pent-up demand could help elongate the housing cycle.

It may even help cushion the overall economy from a near-term downturn. We have no recession in our forecast for the foreseeable future.

4 Reasons Why Applying for a Mortgage Online Might Not Be The Smartest Decision!

Applying for a mortgage these days can be accomplished entirely online—no need to schlep to a bank and suffer hand cramps filling out paperwork.

Instead, you can punch some basic info into an online mortgage site, and up pops a bunch of loan choices. An industry renowned for being slow and cumbersome is now wooing customers with the promise of ease, speed, and transparency. Rocket Mortgage, Quicken Loan’s online platform, for example, promises qualified customers approval in as little as eight minutes.

But taking out a six-figure loan is one of the most complicated and substantial financial transactions most people will ever make. Does it really make sense to handle it by pushing a few buttons on your smartphone?

Maybe for those with a typical 9-to-5 job and good credit.

If you are a salaried employee with no overtime, no bonus—no funky income, if you will—just a plain-vanilla borrower, then sometimes the online mortgage does work. You know: You have a five-year work history, you’re putting 20% down, and have an 800 FICO score.

But then there’s everybody else.

Here are some of the many reasons why those borrowers might consider taking more time with the process, including consulting with an experienced loan officer or mortgage broker.

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1. You want to shop around for the best loan

First and foremost, it’s always in a borrower’s best interest to comparison shop on rates and fees on a mortgage information website. Speed and convenience alone do not always translate into a better price for borrowers.

You should invest some time in it, do your research. Also, do your diligence on your credit. And think about how long you’re going to be in your home. The reason? The length of time you estimate you are likely to be staying in the home can be a factor in whether you apply for a fixed or adjustable rate loan.

Gaining an understanding of different loan programs is a smarter approach than just going online and filling out things. A lot of people really don’t know if they’re getting the right loan program, the right interest rate, the right down payment.

The research process may ultimately lead you straight to the speedy online mortgage site as the best option anyway. But you won’t know that unless you go out and take a look around.

2. You’re a first-time home buyer

Researching all your options is especially important if you’ve never purchased a home before. First-time buyers should always talk through important details like rates, points, and closing costs with an expert. After you’ve been through the process once, you have a better idea of what to expect and what information you’ll need to provide to make the process go smoothly.

Even those who have borrowed before may want to consult with someone if there is anything about their circumstances that might make qualifying more difficult. For example, a real person could be a helpful advocate for borrowers who are buying a second home or rental property, have spotty credit, or have inconsistent income.

3. You’re self-employed

About 15 million Americans are classified as self-employed, according to the Pew Research Center. While salaried workers generally only have to show the lender their W-2 tax forms to prove their income, self-employed workers should expect that they will have to provide the lender with more income documentation, such as tax returns from the last few years.

The fact is, some online lenders are more strict about documentation requirements than federal guidelines require, because they want to reduce their risk. That can make qualifying even tougher for a borrower who is already perceived as a higher risk—for example, applicants who have only been in their current job for a few months, or those who want to include overtime pay as evidence of their buying power. The lender will want to see proof that the overtime pay is consistent. Certain guidelines say you have to show you have it for 12 months or 24 months—it depends on the loan.

4. You want some extra handholding

Working with someone one on one may also help prevent last-minute problems when it comes time to buy that house. We can’t tell you how many clients who have come to me after they’d gone online and gotten a pre-approval from a lender. Then they go to purchase a house, and halfway through the transaction, the online lender says all of a sudden, ‘You can’t get approved.’ The client freaks out. And that’s when they get a hold of someone like myself.

Finally, there is the matter of personal preference. Not everyone likes the impersonal approach. Before applying for a loan, borrowers might consider whether they are the kind of person who appreciates a lot of help and attention in other shopping experiences. If you like a hands-on environment, like a Macy’s, you’re a different kind of shopper than someone who enjoys going to a warehouse club. Your expectations going in will influence how satisfied you are with the process.

Closing Costs: Buying or Refinancing a Home

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This is a detailed summary of costs you may have to pay when you buy or refinance your home. They are listed in the order that they should appear on a Good Faith Estimate you obtain from a mortgage lender. There are two broad categories of closing costs. Non-recurring closing costs are items that are paid once and you never pay again. Recurring closing costs are items you pay time and again over the course of home ownership, such as property taxes and homeowner’s insurance. Some of the items that appear here do not traditionally appear on a lender’s Good Faith Estimate and lenders are not required to show all of these items.

Non-Recurring Closing Costs Associated with the Lender.

Loan Origination Fee – The loan origination fee is often referred to as points. One point is equal to one percent of the mortgage loan. As a rule, if you are willing to pay more in points, you will get a lower interest rate. On a VA or FHA loan, the loan origination fee is one point. Any additional points are called discount points.

Loan Discount – On a government loan, the loan origination fee is normally listed as one point or one percent of the loan. Any points in addition to the loan origination fee are called discount points. On a conventional loan, discount points are usually lumped in with the loan origination fee.

Appraisal Fee – Since your property serves as collateral for the mortgage, lenders want to be reasonably certain of the value and they require an appraisal. The appraisal looks to determine if the price you are paying for the home is justified by recent sales of comparable properties. The appraisal fee varies, depending on the value of the home and the difficulty involved in justifying value. Unique and more expensive homes usually have a higher appraisal fee. Appraisal fees on VA loans are higher than on conventional loans.

Credit Report – As part of the underwriting review, your mortgage lender will want to review your credit history. The cost of running the credit report can vary and is included in closing costs.

Lender’s Inspection Fee – You normally find this fee on new construction and is associated with what is called a 442 Inspection. Since the property is not finished when the initial appraisal is done, the 442 Inspection is done when the building is completed and verifies that construction is complete with carpeting and flooring installed.

Mortgage Broker Fee – About seventy percent of loans are originated through mortgage brokers and they will sometimes list your points in this area instead of the Loan Origination Fee category. They may also add any broker processing fees in this area so you clearly understand how much is being charged by the wholesale lender and how much is being charged by the broker. Wholesale lenders offer lower costs/rates to mortgage brokers than you can obtain directly, so you are not paying extra by going through a mortgage broker.

Tax Service Fee – During the life of your loan you will be making property tax payments, either on your own or through your impound account with the lender. Since property tax liens can sometimes take precedence over a first mortgage, it is in your lender’s interest to pay an independent service to monitor property tax payments.

Flood Certification Fee – Your lender must determine whether or not your property is located in a federally designated flood zone. This is a fee usually charged by an independent service to make that determination.

Flood Monitoring – From time to time flood zones are re-mapped. Some lenders charge this fee to maintain monitoring on whether this re-mapping affects your property.

Other Lender Fees

We put these in a separate category because they vary so much from lender to lender and cannot be associated directly with a cost of the loan. These fees generate income for the lenders and are used to offset the fixed costs of loan origination. The Processing Fee mentioned above can also fall into this category, but since it is listed higher on the Good Faith Estimate Form we did not also include it here. You will normally find some combination of these fees on your Good Faith Estimate.

Document Preparation – Before computers made it fairly easy for lenders to draw their own loan documents, they used to hire specialized document preparation firms for this function. This was the fee charged by those companies. Nowadays, lenders draw their own documents but this fee is charged on almost all loans.

Underwriting Fee – Once again, it is difficult to determine the exact cost of underwriting a loan since the underwriter is usually a paid staff member.

Administration Fee – If an Administration Fee is charged, you will probably find there is no Underwriting Fee. This is not always the case.

Appraisal Review Fee – Even though you will probably not see this fee on your Good Faith Estimate, it is charged occasionally. Some lenders routinely review appraisals as a quality control procedure, especially on higher valued properties.

Warehousing Fee – This is rarely charged and begins to border on the ridiculous. However, some lenders have a warehouse line of credit and add this as a charge to the borrower.

Items Required to be Paid in Advance

Pre-paid Interest – Mortgage loans are usually due on the first of each month. Since loans can close on any day, a certain amount of interest must be paid at closing to get the interest paid up to the first. For example, if you close on the twentieth, you will pay ten days of pre-paid interest.

Homeowner’s Insurance – This is the insurance you pay to cover possible damages to your home and other items. If you buy a home, you will normally pay the first year’s insurance when you close the transaction. If you are buying a condominium, your Homeowners’ Association Fees normally cover this insurance.

VA Funding Fee – On VA loans, the Veterans Administration charges a fee for guaranteeing your loan. The fee will be a percentage of the loan balance but the exact percentage will vary depending on whether you have used your VA eligibility in the past. Instead of actually paying this as an out-of-pocket expense, most veterans choose to finance it, so it gets added to the loan balance. This is why the loan balance on VA loans can be higher than the actual purchase amount.

Up Front Mortgage Insurance Premium (UFMIP) – This is charged on FHA purchases of single-family residences (SFR’s) or Planned Unit Developments (PUDs). Like the VA Funding Fee it is normally added to the balance of the loan. Unlike a VA loan, the homebuyer must also pay a monthly mortgage insurance fee, too. This is why many lenders do not recommend FHA loans if the homebuyer can qualify for a conventional loan. Condominium purchases do not require the UFMIP.

Mortgage Insurance – Though it is rare nowadays, some first-time homebuyer programs still require the first year mortgage insurance premium to be paid in advance. Most mortgage insurance (when required) is simply paid monthly along with your mortgage payment. Mortgage insurance covers the lender and covers a portion of the losses in those cases where borrowers default on their loans.

Reserves Deposited with Lender

If you make a minimum down payment, you may be required to deposit funds into an impound account. Funds in this account are your funds, and the lender uses them to make the payments on your homeowner’s insurance, property taxes, and mortgage insurance (whichever is applicable). Each month, in addition to your mortgage payment, you provide additional funds which are deposited into your impound account.

The lender’s goal is to always have sufficient funds to pay your bills as they come due. Sometimes impound accounts are not required, but borrowers request one voluntarily. A few lenders even offer to reduce your loan origination fee if you obtain an impound account. However, if you are disciplined about paying your bills and an impound account is not required, you can probably earn a better rate of return by putting the funds into a savings account. Impound accounts are sometimes referred to as escrow accounts.

Homeowners Insurance Impounds – your lender will divide your annual premium by twelve to come up with an estimated monthly amount for you to pay into your impound account. Since a lender is allowed to keep two months of reserves in your account, you will have to deposit two months into the impound account to start it up.

Property Tax Impounds – How much you will have to deposit towards taxes to start up your impound account varies according to when you close your real estate transaction. For example, you may close in November and property taxes are due in December. Your deposit would be higher than for someone closing in May.

Mortgage Insurance Impounds – When required, most lenders allow this to simply be paid monthly. However, you may be required to put two months’ worth of mortgage insurance as an initial deposit into your impound account.

Non-Recurring Closing Costs not associated with the Lender

Closing/Escrow/Settlement Fee – Methods of closing a real estate transaction vary from state to state, as do the fees.

Title Insurance – Title Insurance assures the homeowner that they have clear title to the property. The lender also requires it to insure that their new mortgage loan will be in first position. The costs vary depending on whether you are purchasing a home or refinancing.

Notary Fees – Most sets of loan documents have two or three forms that must be notarized. Usually your settlement or escrow agent will arrange for you to sign these forms at their office and will charge a notary fee.

Recording Fees – Certain documents get recorded with your local county recorder. Fees vary regionally.

Pest Inspection – This is also referred to as a Termite Inspection. This inspection tests not only for pest infestations, but also other items such as wood rot and water damage. If repairs are required, the amount to cover those repairs can vary. The seller will usually pay for the most serious repairs, but this is a negotiable item. Usually (not always) the pest inspection fee is paid by the seller of the home and is not normally reflected on the Good Faith Estimate.

Home Inspection – Since it is the homebuyer’s choice to obtain a home inspection or not, this cost is not usually reflected on a Good Faith Estimate. However, it is recommended. Keep in mind that the home inspector has a certain set of standards he uses when inspecting a home, and those standards may be higher than required by local building codes. An example is that an inspector may note there is no spark arrestor on a chimney but the local building code may not require it. This sometimes leads to conflicts between buyer and seller.

Home Warranty – This is also an optional item and not normally included on the Good Faith Estimate. A Home Warranty usually covers such items as the major appliances, should they break down within a specific time. Often this is paid by the seller.

Refinancing Associated Costs (but not charged by the new Lender)

Interest – When you close the transaction on your refinance, there will most likely be some outstanding interest due on the old loan. For example, if you close on August twentieth (and you made your last payment), you will have twenty days interest due on the old loan and ten days prepaid interest on the new loan. Your first payment on the new loan would not be until October 1st since you have already paid all of August’s interest when you closed the refinance transaction (since interest is paid in arrears, a September payment would have paid August’s interest, which has already been paid in closing).

Reconveyance Fee – This fee is charged by your existing lender when they “reconvey” their collateral interest in your property back to you through recording of a Reconveyance.

Demand Fee – Your existing lender may charge a fee for calculating payoff figures.

Sub-Escrow fee – Though it sounds like an escrow fee, this fee is actually charged by the Title Company. Assume it is an income-generating fee similar to some of the lender fees mentioned above.

Loan Tie-in Fee – Though it sounds like a lender fee, this cost is actually charged by the Escrow Company.

Homeowner’s Association Transfer Fee – If you are buying a condominium or a home with a Homeowner’s Association, the association often charges a fee to transfer all of their ownership documents to you.

Asking the Seller to Pay Closing Costs – Rules and Advice.

It has become common to ask the seller to pay some or all of the closing costs when you purchase a home. Essentially, this is financing your closing costs since you will probably pay a little bit more for the property than you would if you were paying your own costs.

Keep in mind a few simple rules. On conventional loans you can only ask the seller to pay non-recurring costs, not prepaid fees or items to be paid in advance. If you are putting ten percent down or more, the most the seller can contribute is six percent of the purchase price. If you are putting less down, the most the seller can contribute is three percent.

On VA loans, you can ask the seller to pay everything. This is called a “VA No-No”, meaning the buyer is making no down payment and paying no closing costs.

On FHA loans, the seller can pay almost any cost, but the buyer has to have a minimum three percent investment in the home/closing costs.

Most refinances include the closing costs and prepaids in the new loan amount, requiring little or no out-of-pocket expenses to close the deal.

If you didn’t get bored as you read through this, now you know everything (almost) about closing costs.