Budget For Closing Costs – Loan Origination Fees And PMI

Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for closing costs. 

Budget for Closing Costs – Loan Origination Fees and PMI

Closing costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections. Even if you are purchasing a home for the first time, you are probably aware there are closing costs that have to be paid. Rarely, however, are you aware of just home much and how fast the can accumulate. If you have not budgeted for them, they can put a kink in the closing or even cause you to lose the home. 

A couple of closing costs to keep in mind are origination fees for home loans and private mortgage insurance. The mortgage related costs are only a small part of the overall closing costs you can face, but deserve a closer look.

Origination fees for home loans can be a shock to first time buyers. Few realize they are going to have to pay such things. Origination fees are costs charged by a lender for services used to determine if the lender should give you a loan in the first place. For example, a lender will charge you fees for obtaining a copy of your credit report, having an appraisal done for the property. Infuriatingly, the lender will also charge you fees for processing the loan and preparing the loan documents. You may also have to pay points, which represent a percentage of the total loan, often one or two percent. On a $300,000 loan, the origination fees can quickly add up to thousands of dollars. 

Private mortgage insurance, often called PMI, can also be a nasty little surprise. The magic number when considering PMI is 20 percent. If you make a down payment on the home that is less than this amount, you are almost certainly going to have to pay PMI. PMI is simply insurance that protects the lender should you default on the loan. The cost can add up to hundreds of dollars, so make sure you know what is expected of you. 

Closing costs are aggravating, particularly when you feel like you are being nickel and dimed to death. Budget for them up front, and you will feel less aggravation.

Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.

 

 

 

 

 

Budget For Closing Costs – Home Inspection And Title Fees

Purchasing a home is a euphoric event. Once escrow begins, the euphoria can change to frustration, particularly if you are not ready for the closing costs that quickly accumulate. 

Budget for Closing Costs – Home Inspection and Title Fees

Closing costs simply refer to the fees associated with various things associated with the escrow process in a real estate transaction. In the excitement of having an offer accepted for your dream home, you can easily lose track of the fact you are going to need to have some serious cash on hand to pay them. Many people make the mistake of only assuming they need the down payment money, and have to rush around town trying to come up with money for the closing fees. 

If you are buying a home, you need to get a professional home inspection. Doing so can reveal potential problems with the home that you wouldn’t otherwise notice. Problems can include things such as rot, termites, water leaks and a bevy of other issues. The time to do this is during escrow. Of course, that means you are also going to have to pay for the inspection. Depending on the size of the property, home inspections can run a few hundred dollars up to a few thousand. Make sure you have money set aside for the fees. 

Title insurance is something you absolutely must purchase when you buy any real property, a home, building, land or whatever. Title insurance protects both you and your lender. Title insurance is just what it sounds like. A title company will research the title of the home and essentially guarantee that the title is good. This means the seller actually owns the title and has the right to sell it to you. The title company will also make sure there aren’t any liens on the homes or other things that will cause you problems. Depending on the price of the home, title insurance can run you a couple of hundred dollars or up into the thousands. Again, it is important to find out the cost and budget for it.

Title insurance and a home inspection are two things you should absolutely have when purchasing a home. Just make sure you budget for them.

Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.

 

 

 

 

Being Comfortable With Your Home Purchase

Let's get down to brass tacks with the home buying process. You as a buyer are spending a lot of money and have the right to be comfortable and happy with your purchase right? Of course you do. So essentially the question is what needs to be done in order to ensure that this is so? Well, probably the most important things is communication. It's a good idea to remember that your realtor is there for more than simply helping with some contracts. Your realtor is your info source of information on anything that you might not know or be familiar with. The more you communicate with your realtor the smoother this process will be. 

Another way to ensure that you are completely happy with the home that you have bought is to never settle for anything less than what you need. This happens a lot when buyers are too eager to purchase quickly and in that quickness, things get overlooked. Remember that this is going to be your home, take the time to learn everything you can about the home in question. Does it have enough room for you and your family? Is there some extra room in case your family grows? Forward planning is an essential part of buying a home, and should never be overlooked. 

When everything is said and done you should be left feeling like you have made the most intelligent purchase of your life. You should also have a financial arrangement that fits your lifestyle and payment abilities. In order to make this happen you need to be in complete control of your financial life, you should have your credit completely sorted out and dealt with so that there are no bridges that have to be crossed in order to secure the necessary funds for the purchase. Follow the advice of your realtor and the process should be a lot more fun than it is stressful.

Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.

 

Before You Buy Your Apartment Complex…

Purchasing an apartment complex as an investment is a fantastic way to watch an asset single handedly generate thousands, even hundreds of thousands of dollars in a very short amount of time!

A popular investment strategy, especially for new investors, is to purchase a more run down, mismanaged apartment complex at high cap rates. The cap rate, or capitalization rate, is found by dividing the Net Operating Income by the Purchase Price. Properties that are low performing often sell their apartments at a higher cap rate because there is more of a risk associated with them.

These properties are in need of many changes in order to become a commercial property that is working at its maximum potential.

Before you purchase a large commercial apartment complex, you need to get certain information. This information is crucial to your assessment and evaluation of the property.

There are two states you need to understand regarding the property, the state it is in currently, and the state it will be in after you fix all the major problems.

When you first find or are introduced to a property, be sure to ask for the income and expense statements. A lot can be told from analyzing the numbers that are reported on a monthy, quarterly or yearly basis. You can even use them to see how the property has performed over time. You will be able to see gross rents, expenses, net operating income, and all the items in which income and expense fall under such as refrigerator rentals and pool maintenance, respectively. Use this tool as a way to project future income after raising rents, filling the vacancies, transferring all costs to the tenants, and making the community an overall enjoyable place to live.

You must know how many units are in the complex, and what condition they are in. You can see what condition they are in by checking a certain percentage of the total units and assume that most are in that condition. However, it is always better to check all the units so you know exactly what condition the apartments are in. This could be a basis for lowering the asking price if the units are in far worse condition than you originally thought.

The vacancy factor is an important one. When a property has many vacancies, like 20% and above, it is not performing well. If you can fill these vacancies, then your ability to turn the property around is much greater! You must view all working leases, and ask the current tenants to sign a paper to verify the leases that you were given by the owner or working manager. You would be surprised how many owners may try to decrease their vacancy factor by false leases, just to make their property more enticing. However, if you are fixing the property up, then the larger the vacancy, the more opportunity you have to increase value and find a profit!

In order to evaluate this property, you must divide the asking price by the number of units and see what the price is per unit. You can use this to compare other similar complexes in the area. You also want to know what they are charging as rent, and what type of leases the tenants have. If the rents are below market rents, then you have the ability to increase value there. If your tenants have a full service, or net-net lease, then you have an opportunity to change it to a triple net lease, where the tenants pay taxes, insurance and utilities. You can literally pass all the costs of running the apartment to the tenants. After all, they are the ones using the facilities. 

I am sure you can see the themes here. You want to identify areas where you can either increase or create value that was not there before. Be sure to get all the facts and numbers verified before you purchase your great investment. Be prepared to do some work to turn the place around. However, it will definitely pay off shortly when you use some simple tool, like increasing the rent and painting the exterior, making it a community where people want to live!

 Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.

 

Avoid Legal Battles Over Broker Commissions

Commissione agreements that spell out how brokers are paid typically use form documents.  The commission formula sometimes changes, but the terms and conditions usually stay the same.  Consequently standard terms and conditions of commission agreements are often ignored by brokers and owners once the agreement is signed.  Since the broker’s income is tied to the terms of those agreements, close attention to details are vital to all parties involved.
Recent lawsuits stemming from disputes over broker commissions reveal tough lessons about the importance of paying close attention to commission agreements.
A building owner in Detroit was forced to pay a commission because the original agreement did not contain an expiration or termination date.  The building owner argued that there are a number of key terms understood and agreed to prior to signing the agreement that were not contained in the final written agreement.  The judge overruled this argument stating that the contract was clear as written.
Judges and juries are not real estate professionals.  The term “procuring cause” may have a standard definition in the real estate business, but mean nothing to a juror.  All parties involved must make sure the language is clear.  A judge or jury will not rewrite a contract to save either party from a bad business decision.
Even after a favorable commission contract is successfully negotiated and written, it’s not OK to simply file it away.  Either party cannot claim they forgot about the agreement.
The lesson here is to carefully note important terms and conditions, especially those that relate to performance, compensation, and termination.
Legal disputes are not unique to any location.  Judges and juries nationwide are showing resistance to insert terms into commission contracts or allow parties to ignore the terms of a contract.  Recently there’s been an increase in the number of disputes.  Some have settled out of court, yet a fair number have gone to litigation.  This can be reversed through the efforts of brokers and owners who invest more time and effort putting together agreements and abiding by them. This is the best method of prevention.

Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.

Real Estate Scams - Conditioning

The conditioning process adopted by some agents is one reason for the bad reputation that real estate agents have in Australia. Conditioning has become part of the real estate market because many agents lie to property owners about the value of their property.
The Process
When valuing a property some real estate agents will quote a value in excess of the property’s true value in the belief that the owners will list their property with the agent that gives them the highest valuation.
A typical Australian real estate agent’s selling agreement will tie the property owner to that agent for 90-120 days. If the property is sold during this period the agent will earn their commission whatever the sale price.
Having secured the listing by over quoting the property’s value the agent knows that they must get the owner to accept a lower price for a sale to occur.
The conditioning process begins. The agent will ensure that plenty of "buyers" come to view the property; this activity is often interpreted by property owners as the agents earning their commission. However many of these buyers will have budgets below the asking price of the property, some may not even be buyers at all but friends of the agent!
The agent will start pointing out all the negative aspects of the home, talk of the market not being as strong as it was and giving feedback that the market feels that the property is over priced.
If the property owner elects to sell via auction the conditioning pressures are massively increased on auction day. Often the owner will be pressured into putting the property "on the market" despite the bidding being below the reserve price previously advised. Agents will claim that by putting the property on the market interested parties will raise their bids or even start bidding if they have not previously shown any interest. The logic for this argument is difficult to follow but one thing is certain, by putting the property on the market the real estate agent will get their commission
It is far easier for a real estate agent to persuade a vendor to accept a lower price than to extract a higher price from a buyer. The agent only has one party to focus on in the vendor but may have many buyers to try and convince. Through the listing agreement the vendor is tied to the real estate agent. Agents can treat vendors appallingly and the vendor has no option but to stay with that agent until the selling agreement expires. A buyer on the other hand can walk away at anytime.
The agent is typically entitled to their commission if the property is sold during the period of the sales agreement even if they have never met the purchaser. If the owner finds a buyer through their personal network the agent will still get their commission.
Unfortunately many agents who should be working for the vendor are in fact working for themselves.
 Conditioning damages the value of your property
The conditioning process is not just stressful but can damage the value of your property.
Initially many vendors are reluctant to lower their asking price from the valuation that the agent provided to secure the listing. If after a period of time the property has not sold the owner may agree to lower the asking price.
But by now the property will have become stale. Buyers will know that the property has been around for a while without selling and will wonder what might be wrong. The property will have earned the reputation of being a lemon and the vendors may need to accept a price lower than the property’s true value in order to make a sale.
Commission does not guarantee agents will work to achieve higher prices
Many real estate agents will claim that the commission system means that the agent’s goal and the vendor’s goal are aligned as a higher sale price results in more commission for the agent. Simple mathematics and common sense show that this is often not the case.
Assuming a typical commission rate of 3% an agent who works hard to achieve and extra $10,000 for the vendor will earn an extra $300 commission. Yes this is an incentive for the agent to get a higher price but there is a risk that by pushing for the higher price they may lose the sale altogether and no sale means no commission.
It is better for the agent to sell the property at a lower price and move on to the next property than to invest the time in trying to achieve a higher price for the vendor.
For the vendor however the extra $10,000 is well worth the effort! The rate of return that the vendor receives for this extra effort is even more apparent when we consider the amount as an increase on equity rather than as an increase on the value of the property. Given that many homeowners do not own their home outright but with the assistance of a mortgage the repayment of the mortgage will reduce their proceeds from the sale.
For example a couple may be looking to sell their $300,000 property on which they owe $250,000 to their mortgage company. The equity that the couple have in the property is $50,000. If the property is sold for $10,000 less than it’s true value the couple’s equity has been reduced by 20%.
Poor performance from a financial adviser that reduced your investment return by 20% would be seen as unacceptable, but all too often real estate agents are able to get away with this kind of activity.
How to avoid being conditioned
By choosing to sell your home privately and having your property valued by a professional valuer you avoid the stress of conditioning.
Professional valuers have no incentive to inflate the value of your property as they earn an agreed fee irrespective of the valuation that they place on the property.

1.       Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.

Real Estate Sales – Should You Fix Up Your Home Before Listing It?

Yes, you should fix all of the obvious things you can.  When buyers visit homes, they look for the things they see that obviously need some fixing.  Most buyers would rather not see the repairs in front of them.  They want to buy a house that is in ‘perfect’ repair.
You should put yourself in the buyer’s shoes.  Think like a buyer.  Would you want to repair or fix up anything in your new home?  No, you would not.   While you are still in the buyer’s frame of mind, tour your house.  Make a list of all the things you see that need repair.
Here are eleven obvious things to look for and correction any defects:
1. Do your walls need a fresh coat of paint?
2. How about the trim?
3. Are all of your floors and carpets in good shape?  Do they need cleaning?
4. Are your windows and shades okay? Are the screens in good condition?
5. Do your appliances work properly?
6. Eliminate squeaks and cracks of all kinds.
7. Is your basement clean and organized?
8. Is your roof in good condition and non-leaking?
9. Check all faucets, fixtures and knobs.
10. Make your lights as bright as you can.
11. Clean the fireplace.
The time and effort you put into this list will save you money and aggravation in the sales process.  You can do these repairs yourself or hire someone else to do them for you.  The money you spend doing this will come back to you in savings.  Your house will show better and sell faster in tip-top shape.

   Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.

Real Estate Research By Talking

Real estate research might start with a look at the U.S. Census information about a town. It can include inspections of specific properties, too. There are many statical tools and information that can help, but don't forget one of the easiest and most useful research tools: talking. Let me explain with a true story.
My wife and I were on vacation, and stopped in Farmington, New Mexico for a few days. We were about to buy a house for a winter project. The plan was to fix it up and sell it in the spring for a profit.
Just prior to making an offer, we took a last walk-through. As the owner showed me around, my wife started to talk to the woman who was renting the home. She told Ana that half of the outlets in the home didn't work, as well as other useful information.
This got me thinking, and I went down to the basement for a second look at the wiring. Not only did the house likely need all new wiring, but I found a garden hose attached to a natural gas line. The owner shrugged and said, "You can just cut that off."
To this day, I don't know what that was about, but for these and other reasons, we didn't buy the house. It helps to talk to anyone you can when looking at a house or other real estate investment. Neighbors and renters are especially helpful.
Real Estate Research - Choosing a City
Talking to a lot of people isn't just useful for information on individual properties. It is also a great way to research a town. I once called the  Chamber of Commerce of Deming, New Mexico. The chairman's casually commented that the city was using up the water faster than the aquifer was being replenished. They had no back-up plan. This was enough for us to cross Deming off our list.
If you want to know about a town, use the phone first. Find any excuse to call anyone from a real estate agent to a random resident. Ask about crime, whether the local government welcomes new businesses, what the climate is like. Have houses been sitting for sale for a long time, or do they go fast? What are the good and bad things about the town?
Before we moved to Tucson, Arizona, part of our real estate research was to call people in potential towns to see if they owned a snow shovel. If so, we crossed the town off the list. Two places can both get 45 inches of snow per year, but in some it stays all winter, and in others it melts before noon. The snow shovel question told us the truth behind the statistics.
Once you're in a town, a good local bar can be a great place to do your research. After a beer, patrons will tell you what big employers are about to move in or out of the town, how fast homes are selling, whether there are gangs, and much more. Talking to people is a good way to do real estate research, but verify what you hear. People do sometimes exaggerate.

1.       Sarah Miller offers real estate services in Bryan-College Station Real Estate. She is one of the RE/MAX Bryan-College Station realtors that has a long list of the finest real properties bryan tx, that any intending settler or buyer can choose from.