buyer

Closing Checklist … Items You’ll Need at Your Closing

Closing Checklist … Items You’ll Need at Your Closing

Okay, so now you’ve bought/sold a house and the closing is happening soon.

If it’s your first time or your first time in a long while here’s a quick primer.

If you bring the following, you should have everything you need.

  • New Deed drawn up by your attorney. (sellers)
  • Smoke Detector & Carbon Monoxide certificate of compliance (sellers)
  • Title V certificate of compliance (if serviced by private sewer) (sellers)
  • Final water/sewer bill, stamped paid in full (if municipal service not serviced by well) (sellers)
  • Keys and garage door openers ( leave duplicates in a drawer in the house) (sellers)
  • Copies of any paid bills or affidavits required for work done after home inspection issues were negotiated. (sellers)
  • Instruction booklets, receipts, builder drawings and anything else you have that the buyer could find very useful after moving in to your home (leave them in a drawer in the house). (sellers)
  • Copy of receipt or statement for fuel oil in the oil tank and/or propane in the propane tank (if applicable) (sellers)
  • Driver’s license or another form of personal identification. (sellers & buyers)
  • Your personal checkbook for miscellaneous items and/or adjustments. (sellers & buyers)
  • Certified check or cashier’s check drawn in Buyer’s name or whatever the conveying attorney specifies for the difference between the sale price of the property and the amount of the mortgage less any deposit already made. The final amount will be spelled-out in detail on the form known as the HUD1. (buyers)
  • At the closing, the bank may require 2-3 months tax payment (to be held in Escrow by the Bank); PMI when applicable will be collected for the first year. The exact amount can be obtained from the mortgaging bank prior to the closing; it will be spelled-out in detail on the  HUD1. (buyers)
  • Additional fees can be paid with cash or personal checks. The exact amount can be obtained from the bank’s attorney prior to or at the closing. (buyers)
  • Personal property of the sellers can be paid with cash or personal checks. (buyers)
  • Remaining fuel oil in the oil tank (if applicable) can be paid with cash or personal checks. (buyers)
  • Paid insurance policy or binder for the new property (whichever the conveying attorney specifies) in an amount equal to the amount of the mortgage. Ask your insurance agent for advice on this matter. (buyers)
Seller Credits Explained … Can You Pay for Buyer’s  Closing Costs?

Seller Credits Explained … Can You Pay for Buyer’s Closing Costs?

In general, most underwriting guidelines allow for the seller to pay a buyer’s closing costs. However, no matter what you negotiate, the amount of the credit at the closing table cannot exceed the buyer’s actual costs.

The following guidelines currently apply:

Conventional financing:

  • 90.01% + 3% credit
  • 90% or less 6% credit

FHA financing

  • 6% credit

VA financing

  • 4% credit

 

A seller should not give money back to the buyer at closing for repairs, decorating allowance, new carpet, etc. A closing cost credit is the only way for the seller to give money to the buyer without affecting the purchase price.

If a concession falls outside of these parameters, then the underwriter will subtract the dollar figure from the purchase price and run the loan to value ratio. If the ratio now exceeds the threshold for the loan program, the buyer may need PMI or not qualify for the loan program.

If you have a relocation customer whose company is paying their closing costs, then the amount of the seller concession will be limited. The buyer can not be reimbursed twice.

Closing costs are all of the buyer’s one-time fees associated with obtaining their mortgage. It does include escrows and pre-paids.

Allowable Costs:

Points Tax Service Fee

Appraisal Underwriting & Processing Fees

Credit Report Municipal Lien

Attorney’s Fee Plot Plan

Title search Recording & Courier Fees

Flood Certification First year’s insurance binder

Title Insurance Tax, Insurance & PMI escrows

For More Detailed Information feel free to call or email Tom Coburn, William Raveis Mortgage Broker, mobile: 508-380-7975  email: tom.coburn@raveis.com

Top 10 Home Buying Actions

Top 10 Home Buying Actions

There are a few things that you can do to help make the process go as smoothly as possible

Check your credit

Before you apply for a home loan, regardless of your credit, it’s a smart idea to obtain a copy of your credit report from the three major credit bureaus and review the information. If there are errors or things that need to be addressed, it’s easier to address them before you have found a house, than after you have found a house and are trying to close your loan. If you know that there are a few blemishes on your credit, let your lender know what they are, why they are there, and why you are a still good credit risk. Lenders look at your credit to determine how likely you will pay back the loan. If you had extenuating circumstances – like a loss of a job or medical bills – let them know so that they understand that it is not likely to happen again in the future.

Get approved before you buy

An approval means that a lender has reviewed your credit history, verified your assets and employment, and has approved your loan before you have found a home to purchase. As long as the home appraises for at least the purchase price, the loan should close. Getting approved also gives you an advantage over other buyers. Your firm approval makes it easier for you to negotiate on the price of a home, than a person who is not approved or is pre-qualified. While getting pre-qualified may sound official, it is really just getting an idea of what you can afford. Its having a person plug in a few numbers that you give them – your monthly income and your monthly debt – and getting an approximate payment calculated. From the payment, the calculator can approximate the house price range that you can afford. No information is verified. Because your assets, income or credit is not verified, a pre-qualification has little value when purchasing a home.

Sell first … then buy

If you have a house to sell, sell it before you select a house to buy.  I’ve rarely seen a contingent sale work in the last few years, unless it’s with a new home builder who has other houses to sell and can afford to put one on a contingency.  Imagine this scenario. We go house hunting, find the perfect house, and make an offer to the seller. You want the seller to reduce the price and wait until you sell your house.  The seller figures that’s a risky deal (if he’s willing to consider it even at all), since he might pass up a buyer who doesn’t have to sell a house while he’s waiting for you. So he says ok, he’ll do the contingency but it has to be a full price offer!  So you see, you paid more for the house than you could have because of the contingency. And to add insult to injury, you have to sell your existing house in a hurry and maybe take an offer that’s lower than you could get. Otherwise you lose your dream house.   Here’s the cold, cruel reality … buying before selling might cost you tens of thousands of dollars.

Find a great buyer’s agent

Traditionally real estate agents represented the sellers in a transaction. If you are not working with a buyer’s agent, the seller’s agent is less likely to negotiate the best price or contingencies for you. A buyer’s agent’s job and fiduciary responsibility (meaning legal duty) is to you, the buyer. Before working with an agent, establish if they are a buyer’s agent or a seller’s agent. After spending a lot of time with a Realtor, it’s natural to feel like you’re a team. But if they are not negotiating for or representing you (a buyer’s agent),  then they are not on your team. You want a skilled realtor, but you also have to feel some level of comfort and connection with them. If you’re not comfortable with your agent, seek out another.

Make a list and stick to it

Before house hunting, make a list of the several things you want in the new place. Then make a list of the several things you don’t want. I’ll be glad to make copies of the list and we can use this list as a scorecard to rate and evaluate each property that we see. The one with the biggest score wins!  Many buyers do this informally, but I like the scorecards because they help avoid confusion and keep things in perspective when you’re comparing dozens of homes.

Separate the “Skin” from the “Bones”

When house hunting, I want you to keep in mind the difference between “skin and bones”. The “bones” are things that cannot be changed such as the location, view, size of lot, noise in the area, school district, floor plan, etc. The “skin” represents easily changed surface finishes like carpet, wallpaper, color, counter tops, and window coverings. Buy the house with good bones, because the skin can always be changed to match your tastes.

Shop until you think you’ve seen enough

I will show you everything available that meets your requirements. In doing so, I highly recommend that you don’t make a decision on a house until you feel that you’ve seen enough to pick the best one. The average for my most recent sales has been about two dozen homes.  And before you ask, you can’t really effectively see more than seven homes in a day. Even if you take good notes and the listing agents provide detailed property sheets, your memory will play tricks on you if you try to get an encyclopedic overview of the entire local market in a day.  By the way, if you have kids under six to bring along, that number drops to about three homes before their distraction may cause you to miss key features.

Learn about the neighborhood

Often times the house you find may be in a neighborhood that you’re not familiar with, which is ok. It just means that you’ll have to do a little more research. If you find a house that you like, ask for a list of the neighborhood properties that sold in the last year. How does your home rank? Is it at the top of the price range? If so, it might be hard to resell. Is it average or on the low end? If so, great – as the other home prices go up in value, they will pull your home’s value up as well. Check out the schools – are they sought after? A good school district means your neighborhood will always be valued by families which is a great reassurance to purchase, not to mention the value-add if you have school-age children. Next, contact the police station and obtain crime statistics? Are they acceptable to you? Sometimes, if they won’t give them to you, it could be a cause for alarm. Talk to the neighbors. The more people you talk to, the better sense you will get of who makes up the neighborhood and how they will effect your time spent in it. Check out the location of the shopping, police and fire stations, schools, and air traffic overhead. These are all things that might affect your property value or quality of your life.

Don’t by a home that you’ll have trouble selling when you eventually move

Sometimes a house has some very unique features or a setting that many buyers might find undesirable, so the seller sets a “bargain” price. Although it may be a good deal now, that bargain may be your headache in a few years.

“Caveat Emptor”

Don’t be afraid to ask questions and investigate the neighborhood around the house you’re looking at. You want to know if there’s a kennel on the block behind your backyard that you can’t see, but you’ll surely hear all summer. Having a Buyer’s Agent helps tremendously with this, since our priority is to help you rather than working for the seller.

Don’t buy the most expensive home on the street

You want a house on a street where many of the houses are fairly comparable.

Protect Yourself

Ask your Realtor for a copy of the documents you will be asked to sign if you decide to buy the house. Read them ahead of time so that you’ll understand the questions that you will be asked, the things you need to know, and the decisions you will need to make.

Have reasonable expectations

There is a lot of money at stake. No house is perfect. Understanding and remembering these two statements will help diffuse the negotiation stage, the inspection stage and the closing stage. Emotions are high for both buyers and sellers. – The seller may have loving memories and years of sweat equity in the house. Maybe they are being relocated and don’t want to go. Understanding their motivations for selling will help you appreciate their situation and predicament during these emotional times.

There is a lot of money at stake for all the parties involved (and that includes the realtors) …

Just remember that market value (the value of a home) is the price that a willing buyer and a willing seller can agree to. If you can not agree on a price, ask yourself: Is there something you missed? Are there comparables that support the price that they want? Are there motivations that might factor into the price they are demanding? In the end, does it matter? What is the house worth to you today and what do you think you can reasonably sell it for based on the amount of time you plan to spend in it? Think about the answers to those questions before you make your move.

When you find a house you love, put in a reasonable first offer

In the late 1980’s, homes were selling quickly, usually a few days after listing. In that kind of market, we always advised our clients to make an offer on the spot if they liked the house. That was good advice at the time. Today, in spite of what the listing agent will tell you, there isn’t always this urgency, and unless a home is kissy perfect, under priced, rare or has extremely desirable “bones” you have some time to think things over and compare with your lists of “wants” and “don’t wants”. If it’s one of those truly rare offerings, you’ll know it (you know what I’m talking about) and I’ll tell you not to wait and you’ll believe me.

Don’t wait too long to make an offer when you find a house you love

While you don’t want to be impulsive, being overly cautious can cause you to miss out on the house you want. Also, remember that there’s no law saying that the right house for you can’t be one of the first ones you see.

No house is perfect – Always get an inspection

It might be a few hundred dollars, but it’s worth it. It’s the inspector’s job to find any problems with the house that could cost you thousands to repair down the road. This is your only opportunity to have an expert point out any structural, mechanical or environmental problems before you buy your house. Some inspectors have a tendency to over play the importance of their role and the items that they find. Get objective opinions that you trust before making a decision on an inspection report. Likewise, if an inspector says a foundation is cracked but its nothing to worry about – get a second opinion. Ask a handyman for an idea of how much repairs will cost and how complicated they are.

The home buying process is an emotional, complex and time-consuming process, but it is worth it. Nothing compares to owning your own home in a neighborhood you love.

 

%d bloggers like this: