Avoid Hidden Buyer's Fees

Expect the unexpected. Anticipate the hidden costs by researching the real estate and mortgage markets.

Keep in mind that there are hidden costs and that you have different options to deal with them. The best way to avoid Hidden Fees is to ask and receive a complete breakdown of costs from both the lender and the escrow company at the time you open escrow and begin securing finances. Lenders are required to immediately send you a document called "good faith estimate". Take the time to review each charge carefully. Challenge the ones you don't find appropriate or that you don't understand. Don't wait until it is too late. Do your research ahead of time.

Hidden Extra Fees

1. Application Fee: Many mortgage applications do not require an application fee. Although you need to fill out the mortgage application to get the mortgage, you do not need to pay the application fee to get one.

2. Assumption Fee: If you are taking over an existing mortgage, the lender will probably charge a fee for handling the paperwork. Find out what different lenders are charging and compare their fees. Know how much is too much.

3. Commission: Know who is paying the agent's commission fee: is it the buyer or the seller? Unless you have a written agreement to pay part of the seller's agent's fee or your buyer's fee, the commission should not appear on the buyer's estimate of cost sheet.

4. Appraisal Fee: A lender wants to know that the property on which a loan will be made is worth more than the loan. Your lending institution may request an appraisal of the property, which would be your responsibility to pay for. Appraisals can vary in price from approximately $175-$300. However, if you have are refinancing a loan which you applied for last year, the lender should not need to have the home appraised again.

5. Closing Review Fee: Sometimes the lender will charge you for going over the closing documents. The Closing Review Fee is unnecessary.

6. Courier Fee: Be wary of unnecessary delivery fees. Some companies will charge you for courier fees even when they haven't used a courier.

7. Credit Report Fee: The Credit Report Fee is required, but be wary of charges that are above $100. Again, find out what the normal and customary fees are for credit reports.

8. Discount Points: Points are used to adjust the yield of the mortgage to correspond to market conditions. Make sure that you aren't paying for more points than you agreed to when you first signed up for the loan. If there are discrepancies between what you thought and what the lender has put into writing, discuss them with your lender before signing the agreement.

9. Document drawing/signing Fee: Sometimes the escrow company will charge a fee for writing out the documents and having you sign them. Question your escrow company if you come across it.

10. Document Preparation Fee: Some lenders will try to charge you a fee for writing out the loan documents Also commonly referred to as the Processing Fee. This is part of their job and the fee is one of those "garbage" fees that you should just throw out.

11. Escrow Charges: The escrow company accepts all the monies, gets the deed prepared, and handles the actual closing of the transaction. An escrow fee is required but again, compare what different escrow companies are charging to get the best rate. Check to see if the title company and the escrow company are affiliated. They may have discounts available if you use both of their services.

12. Hazard Insurance: You will be required to provide fire and hazard insurance policies to protect the lender. Be sure to shop around for the best rates.

13. Impounds: If your mortgage was for more than 80% loan-to-value ratio, you will probably be required to impound taxes and insurance. The lender will collect a couple of months of taxes and insurance from you in advance in order to get the account started, and then pay them when due. Make sure that the right amount and not more is set aside.

14. Impound setup: Challenge any setup costs. Setting up the impound is part of the lender's job.

15. Lender's attorney fee: You are not required to pay the lender's attorney fee. It should be included in the lender's services.

16. Lender's title insurance: Most lenders require a separate policy of title insurance. Compare the different rates to find the best one.

17. Mortgage Insurance Premium: If you have an FHA loan or a loan for more than 80% LTV, you'll have to pay for insurance in case you default on the mortgage. If this charge does not apply to you, question your lender.

18. Origination Fee: This is like a start up cost. Many lenders will add this fee and not waiver it. However, you can find lenders who do not add this fee on top of their interest.

19. Underwriting Review Fee: Lenders usually hire underwriters to double check a buyer's employment and income to make sure that everything is in order. The lender should pick up any fee that the underwriter charges. Usually the underwriter fee varies from $200-$400. If you can avoid this fee, do so.

20. Warehousing Fee: Lenders sometimes charge for the interest on the mortgage between the time the lender makes it available to you and the time the deal actually closes. There's no need for you to pay interest on it until you receive the mortgage.

21. Administrative or Transaction Fee: Some real estate agents will charge a separate fee for writing and managing your documents. This is another example of an extra charge for a job that is routine for an agent.

The Fed, Stock Market & You

It was an interesting week on Wall Street. It is amazing how much interest that is placed in not just what the Federal Reserve says, but also what it doesn't say! Evidently, because the Fed didn't saying much about inflation and the interest rate, the investors on Wall Street saw that as a statement that the interest rates wouldn't be going up in the immediate future. What does that have to do with you? Good question.

As far as the housing market is concerned, in the views of professional investors on Wall Street, it means interest rates for home loans will continue to be at historic lows. That is great news! With the solid housing market we enjoy in the Greater Cincinnati Area, that means you can buy a home with good expectations that not only will the values continue to increase, but you can buy a home with mortgage payments that are very affordable. Let me give you an example.

A loan for $150,000 on a 30 year, fixed rate loan at 6.5% shows payments being $948.10. If the interest rate increase to only 8.5%, the payment jumps to $1,153.37! When the interest rate climbs to 10.5%, that same loan, or house will cost you $1,372.11 a month! That is $424.01 a month more for the same home that could be bought today.

One more little observation. In 1997 a local title company handed out pamphlets that contained mortgage payment tables. If you knew how much you were borrowing and what the interest rate would be, just look at the tables and you can see what your payment will be. What is rather amazing about this 10 year old pamphlet is that the LOWEST INTEREST RATE it shows is 8% and it goes up to 13.75%!!! Only 10 years ago, the interests rates we are enjoying today were totally unexpected.

When the market is good for buyers, it will also be good for sellers. My suggestion, don't wait for interest rates to return to what was considered normal only a few years ago!

Jim
RE/MAX Elite 513-826-1924

The Price Is Right

    How many years has Bob Barker or his announcer been saying, "And this showcase can be yours, if the price is right!"  As that statement has been true for that popular game show, it is all the more true when it comes to selling a home in today's market.

 

    As a Realtor, I can tell you that it was really nice when all I needed to do was put a sign in a yard to start my phone ringing.  Since the market has changed, I find myself occasionally picking up to phone just to make sure it still has a dial tone.  The market has changed and so have the rules in getting a home sold.

 

    The three big issues in getting a home sold revolve around the marketing being fine tuned for the type of buyers that would be attracted to a specific home, the over all condition of the home and the price.  Of these three, ultimately, the price is crucial.  If priced too aggressively, due to the larger number of homes on the market in contrast to buyers, the home will get few if any showings.  The home must be priced based on the condition of the home and the neighborhood it is in.

 

    Think of it like this, when buying a dress or a suit, you know the size you wear.  It is very unlikely that a size 44 suit will be bought or even seen if it is put on the size 48 rack.  Why would you, or any other buyer, waste their time looking in sizes that they cannot wear?  When applied to our current market, it is all the more true about a home.

 

    So, to win the prize, you will get your home sold,... if the price is right!

Automated Searches, What To Know

Many real estate web sites offer automated searches. In exchange for information on how to contact you, they will set you up to receive automated information about listings.

There are two things you should ask:

1. Is this search being done by a third party software or is it directly part of the Multiple Listing Service? Most companies have third party providers when it comes to searching for homes. This means that information is often filtered and can be delayed or old information by the time it gets to you. It is also possible for a company to deliberately choose not to show all available listings. Get a search that comes directly from the Multiple Listing Service.

2. Is the search only email based or will you be given a personalized site that will allow you to keep homes you are interested in and delete the others? Email notifications are great, however, how can you remember what homes you've already seen? Having a site that is exclusively yours allows you to keep track of all your favorite listings so that you can easily refresh your memory.

If you are looking for a home in the Cincinnati area and don't have an agent who can do this for you, please give me a call. The house you decide to buy will be your home and is too important not to know all you can about the market!

Jim
(513) 826-1924
RE/MAX Elite, Broker, A.B.R.

Is this a good time to buy?

That is a very common question in light of all the things being reported by the news media. In listening to them a person would think that the last thing to invest in is real estate!

Here are two important items to remember in buying or selling in todays market:

1. 2006 was the third best year in real estate since records have been kept. While it wasn't as good as the previous year, compared to almost every year prior to that, it was a tremendous year. However, positive news doesn't get people's attention as negative news does. That is why, even when things are great, we most often hear about some bad issue.

2. Mortgage rates are still at a tremendously low level. It wasn't too long ago that interest rates were between 12% to 18%! They are better than half that now. The person who doesn't buyer today will likely regret it tomorrow if the interest rates rise.

Jim

Welcome

Welcome to the blog designed to share ideas and insights into the world of buying or selling a home. With the changing market, strategies also change. Ideas will be generated here as well as sharing of experiences from people across the country. You are welcome to join us. There are simple rules that 98% of us follow in very day life. First, this is a site for sharing ideas, not debating. Second, there is no space for spamming or crude language.
It's great to have you on board!

Jim

P.S. I'm never too busy for any of your referrals!