Purchasing a home is arguably one of the biggest financial decisions you will make in your lifetime. As you start your hunt, don't forget there will be other costs associated with your purchase then the price of the home. Here are 5 fees to keep in mind as you begin to budget.
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Inspections are an important part of the home-selling process. The home inspector will locate any potential problems with the property, making sure that all involved know what’s wrong and what needs to be fixed. What happens then, though? Whose responsibility is it to fix the issues that the home inspector discovered?
As with a lot of problems, the answer is a resounding “It depends.” Gauging Severity One big determining factor in how problems found in a home inspection are dealt with is how severe the issues are. A major problem with a property can be a deal breaker for many buyers. Depending on where you live, such a problem may even have to be addressed before the property can be sold. State-level restrictions vary, but most are rooted in making sure that sellers can’t avoid fixing potentially dangerous problems or leave them for the buyer to discover on their own. Even if a problem isn’t critical, most states require that any problems found by a home inspection be disclosed to potential buyers. This disclosure is a big deal, as it can significantly affect how much the buyers are willing to pay. Loan Program Requirements Beyond repair and disclosure requirements that vary from state to state, different loan programs (such as those offered by the Federal Housing Authority or Department of Housing and Urban Development) may have additional requirements when it comes to problems discovered during a home inspection. Many programs have very specific guidelines regarding the condition of the property that a buyer can purchase using those loans. If a loan program won’t allow a purchase while unsatisfactory conditions exist, the issues must either be repaired or have satisfactory arrangements made to facilitate the repair before the purchase can continue. Keep in mind that not all loan programs will make allowances for future repairs, either; in those cases, the repairs will either have to be made in full or the buyer will have to find a different lender that does not follow the same strict requirements. Negotiating Repairs In the event that there aren’t specific regulations at the state level or restrictions in the buyer’s loan program concerning problems with the property, it falls to the buyer and the seller to determine what repairs will be made. This is typically part of the price negotiation, as buyers are willing to pay more for a property that they don’t have to make extensive repairs to. In many cases, sellers may offer to cover the most pressing repairs and address any serious issues while the buyer assumes responsibility for any other issues found in the buyer’s home inspection disclosure. In many cases this will be agreed to in writing, either at the request of one of the parties or as a condition of the mortgage loan that the buyer is using for the purchase. By formalizing the agreement in writing, it ensures that both parties understand their responsibility and protects the seller from potential legal action regarding issues that weren’t addressed (provided that the seller completed all of the repairs that they agreed to.) Market Strength The strength of the housing market can have a big effect on who does the bulk of repairs on a property. If similar properties are plentiful and interest rates are low, it creates what’s referred to as a “buyer’s market”; buyers have a lot of options and can easily walk away from the purchase if they don’t get what they want. In this situation, the buyer has a lot of leverage and can usually get the seller to agree to either a lower price or a higher percentage of the repairs. When the opposite occurs and there are few choices and higher interest rates, a “seller’s market” is created. Buyers can’t walk away as easily and be guaranteed a good deal elsewhere, so sellers can often hold their ground more and get buyers to agree to higher prices or a greater percentage of repairs. Need Some Help? I can help, 📞 now! Iveth Caruso, your REALTOR in the North Atlanta Area A mortgage is one of the biggest single debts you’re likely to willingly take on. As such, being able to properly manage your mortgage is very important. With so many options when it comes to loans, repayment and refinancing, it can all get a bit confusing. One point in particular that you might hear a lot of talk about is prepaying your mortgage. Should you prepay your mortgage? Should you focus on other things first? Before rushing into prepayment, make sure you have all of the information first. We’ll start by looking at exactly what mortgage prepayment is and how it works. What Is Mortgage Prepayment? As the name suggests, mortgage prepayment is the act of paying some or all of your mortgage principal before it’s actually due. This can take a number of forms, from paying a higher amount than the actual payment that’s due each month to making additional payments in months where you have money to spare. Some homeowners even make a single large additional payment every year after getting a tax return. Regardless of the specific form that prepayment takes, the end result is the same: More of your outstanding mortgage balance gets paid off, resulting in a decrease in both the amount that you still owe and the amount that interest can be applied to. What Are the Benefits of Prepaying? There are several benefits to prepaying your mortgage, regardless of how often the payments are made. Consider the following and how they might apply to your mortgage situation:
Are There Any Downsides? While there are definitely benefits to prepaying your mortgage, there are potential downsides as well. Some mortgages, especially those with adjustable rates, are designed to not allow prepayments; if you attempt to prepay on the mortgage, this can trigger a penalty fee. Additionally, some lenders only accept prepayments in certain forms and will apply any other money received as simply an early payment against the next month (which means that the money will go toward interest and principal and not just your principal loan balance.) Attempting to prepay when you have significant debt elsewhere or don’t have a safety net built up for yourself isn’t a good idea, either; your mortgage likely has a lower interest rate than most if not all of your other debts, so you may be better off paying them off and building up savings and retirement funds first before you start worrying about prepaying a mortgage. Should You Prepay Your Mortgage? Whether or not you should prepay your mortgage depends on a number of factors. You should consider the type of mortgage you have, how much your monthly mortgage payments are and what your interest rate looks like. You should also take a look at your overall finances and how well prepared you are for emergencies and retirement; it’s possible that your money would be better off going elsewhere at the moment. Even if prepayments seem feasible and affordable, make sure that your lender accepts prepayments without penalty and that you know how they prefer to receive prepayments. Those extra payments won’t do much good if your lender simply applies them against interest or charges you a penalty fee because prepayments aren’t allowed by your loan. Do you have any questions? I can help!
Iveth Caruso, your REALTOR in the North Atlanta Area
Do you have any questions? I can help!
Iveth Caruso, your REALTOR in the North Atlanta Area It’s not always about the money (except when it is). The day will come — and it will be a wonderful, joyous, do-a-happy-dance day — when you receive an offer, or multiple offers, for your home. And on that day, you’re going to face a question you may not have previously considered: How do you know if an offer is the best one for you? Your listing agent will be a big help here. They will understand and help you suss out the merits and faults of an offer because — believe it or not — it’s not always about price. One buyer’s beautifully high offer might not look so good anymore, for example, if you discover that it’s contingent upon you moving out a month earlier than planned. Or, conversely, you may prefer speed over price, particularly if you’re moving to a new city. Your listing agent will have a sense of what you want financially and personally — and can help you determine whether the offer at hand satisfies those goals. Before the first offer rolls in, here’s what you need to know about the offer evaluation process, including the main factors that should go into making a decision — accept or reject? — with your agent. 5 Important Things — Other Than Price — to Consider When Evaluating an Offer Want to fetch top dollar for your home and walk away with as much money in your pocket as possible? Of course you do. You’ve gone through the time-consuming process of setting your asking price, staging your home, promoting your listing, and preparing for open houses — and should be rewarded for your efforts. Your first instinct may be to just pick the highest bid on the table. But the offer price isn’t the only thing worth considering. When vetting offers, evaluate these five areas in addition to price: 1. The earnest money deposit. One important consideration when weighing an offer is the size of the earnest money deposit. The EMD is the sum of cash the buyer is offering to fork over when the sales agreement is signed to show the person is serious (i.e., “earnest”) about buying your home. This money, which is typically held by a title company, will go toward the buyer’s down payment at closing. A standard EMD is 1% to 3% of the cost of the home (so, that would be $2,000 to $6,000 on a $200,000 house). If a buyer tries to back out of an offer for no good reason, the seller typically keeps the EMD. Therefore, the higher the earnest money, the stronger the offer. 2. The contingencies. Most offers have contingencies — provisions that must be met for the transaction to go through, or the buyer is entitled to walk away from the deal with their earnest money. Contracts with fewer contingencies are more likely to reach closing, and in a timely fashion. Here are five of the most common contingencies:
That being said, contingencies are always negotiable. (The caveat: Mortgage lenders require borrowers to have appraisal financing contingencies, or they won’t approve the loan.) It’s up to you to decide what you’re comfortable agreeing to, and your agent can help you make that decision. 3. The down payment. Depending on the type of mortgage, the buyer must make a down payment on the house — and the size of that down payment can affect the strength of the offer. In most cases, a buyer’s down payment amount is related to the home loan they’re taking out. Your chief concern as a seller, of course, is for the transaction to close — and for that to happen, the buyer’s mortgage has be approved. Generally, a larger down payment signals the buyer’s financial wherewithal to complete the sale. The average down payment, according to the NATIONAL ASSOCIATION OF REALTORS®, is 10%. Some mortgage products, such as FHA and VA loans, allow for even lower down payments. If, by chance, the appraisal comes in higher than your contract’s sale price, the buyer with a higher down payment would more likely be able to cover the difference with the large amount of cash they have available. 4. The all-cash offer. The more cash the buyer plunks down, the more likely the lender is to approve their loan. That’s why an all-cash offer is ideal for both parties. The buyer doesn’t have to fulfill an appraisal contingency — whereby their lender has the home appraised to make sure the property value is large enough to cover the mortgage — or a financing contingency, which requires buyers to obtain mortgage approval within a certain number of days. As always, having a sales contract with fewer contingencies means there are fewer ways for the deal to fall through. 5. The closing date. Settlement, or “closing,” is the day when both parties sign the final paperwork and make the sale official. Typically, the whole process — from accepting an offer to closing — takes between 30 and 60 days; however, the average closing time is 42 days, according to a report from mortgage software company Ellie Mae. Three days before closing, the buyer receives a closing disclosure from the lender, which he compares with the loan estimate he received when he applied for the loan. If there are material differences between the buyer’s loan estimate and closing disclosure, the closing can’t happen until those amounts are reviewed and approved. But this is rare. Some transactions can take more time, depending on the buyer’s financing. For example, the average closing time for a Federal Housing Administration (FHA) loan is 43 days, according to Ellie Mae. Whether you want a slow or quick settlement will depend on your circumstances. If you’ve already purchased your next home, for instance, you probably want to close as soon as possible. On the other hand, you may want a longer closing period — say, 60 days — if you need the proceeds from the sale to purchase your new home. When Should You Make a Counteroffer?Depending on the circumstances, you may be in the position to make a counteroffer. But every transaction is different, based on the particular market conditions and your home. In some circumstances, you can be gutsy with your counteroffer. In others, it might serve your goals better to give in to the buyer’s demands. Your agent can provide helpful insight about when and why a counteroffer will be the right thing for you.
For instance: If you’re in a seller’s market — meaning that homes are selling quickly and for more than the asking prices — and you received multiple offers, your agent may recommend you counteroffer with an amount higher than you would have in a buyer’s market. If you choose to write a counteroffer, your agent will negotiate on your behalf to make sure you get the best deal for you. A caveat: In many states sellers can’t legally make a counteroffer to more than one buyer at the same time, since they’re obligated to sign a purchase agreement if a buyer accepts the new offer. When Does an Offer Become a Contract? In a nutshell, a deal is under contract when the buyer’s offer (or seller’s counteroffer) is agreed upon and signed by both parties. At that point, the clock starts ticking for the home buyer’s contingencies — and for the sweet moment when the cash — and home — is yours. Do you have any questions? I can help! Have a Great week! Iveth Caruso 706.974.4577 Home inspection is a crucial step in the home-buying process. After finding the perfect house, you will want to ensure that there are no hidden faults that may require lengthy and expensive repairs or renovations down the line. To prepare you for this process, here are the top four things you need to know.
Do you have any questions? I can help!
Have a Great week! Iveth Caruso 706.974.4577 Adjustable rate mortgage, counteroffer, principle... the list goes on and on. Many sellers and buyers may struggle to remember the meaning of these, and other commonly used real estate terms. Get ahead of the confusion by equipping yourself with this helpful Real Estate Terminology guide. Don't forget to download it! Click on the link below to download the PDF version of the file. ![]()
Have a great week!
Iveth Caruso Here are six reasons you should own your home instead of renting one:
Happiness - The feeling of owning your own home is unmatched. You can fix it up, make it your own, get a dog, or plant a tree if you want. Doesn't that sound exciting! Tax Savings - The government rewards homeowners by providing excellent tax benefits. The interest paid on your mortgage and other home-related expenses can generally be deducted from your income. Appreciation - Home values have a well-documented history of going up over time. This increase becomes equity you can benefit from when you refinance or sell. Equity - Renting has often been compared to paying 100% interest, but when you own a home and a mortgage is in place, a portion of your payment goes toward the principal balance on your loan. This builds your equity and acts as a savings account. Roots - People who own rather than rent stay in their homes 4 times longer. This provides an opportunity to get to know your neighbors and connect with your local community. Education - Research shows children of homeowners earn higher test scores and graduate at a higher percentage than those of renters. If you are looking to buy or sell your home, call me. Iveth Caruso Providing the most professional, dedicated, informative and loyal service you can find in Real Estate! Dreaming of buying your first home? The Georgia Dream Home-ownership Program fulfills home-ownership dreams by providing affordable mortgage financing for eligible home buyers. Are you a first time home buyer? You may be eligible for $15,000 for down-payment, closing costs and prepaid costs to purchase your home. If you are interested in purchasing a home through the Georgia Dream Program, contact me and I will get you started! Iveth Caruso
Providing the most professional, dedicated, informative and loyal service you can find in Real Estate! The term due diligence generally refers to any period of time where an asset for sale is examined. In real estate it usually refers to a period of time where a buyer can examine or otherwise consider a property for which they're under contract - and pull out of the transaction if they find something unsatisfactory or undisclosed. In Georgia, when you enter the due diligence period, in which, the buyer, does all relevant inspections and decide whether or not you would like to proceed with the sale. The seller is bound to the buyer and cannot enter into other contracts for the sale of the home (except as backup)– but the buyer is free to terminate the contract with no penalty and get the earnest money back. During this period the buyer should independently verify any information provided by the current owners with a third party source because many owners, even if well-intended, are unaware of certain factors that may affect your decision. Remember, it is the buyer's responsibility to conduct their own research during this period and to verify all information. During this period, the buyer should schedule the home and termite inspections, order the survey and research information about flood plains, power lines, and zoning. If you are buying a home with an HOA or a condo, make sure that understand the bylaws of the homeowner's or community associations and that you know what the annual or monthly required fees are and what services are included in those fees. Equally important is to inspect the neighborhood, some things to research during the due diligence period include proximity to any places or facilities that you might find troublesome such as a landfill, prison, cemetery, etc. It’s important to research local schools, crime rates. Additionally, you might also want to find out more information about your potential neighbors, including a violent sex offender search at the Georgia Bureau of Investigation website.
Generally speaking, the most common reason that a buyers terminates a contract during due diligence is that the inspection uncovers an issue that the seller is not willing to fix. But remember, the buyer can terminate the contract for any reason and they get the earnest money returned. Don’t be afraid to make an offer in a home, you could be the backup contract but remember, there is a lot of competition in the market right now for homes in the lower price points (especially those purchasing below $150,000) Because simply there are not enough homes listed. So if you want to beat the competition, it’s highly recommended to present your best offer as quickly as possible, with proof of funds or pre-qualification letter and use the due diligence period to fully investigate it and ensure you want to go forward with the purchase of the property. Please do not hesitate to contact me if you have any questions or for a free consultation. Iveth Caruso Providing the most professional, dedicated, informative and loyal service you can find in Real Estate! |
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