Category Archives: Housing

5 Essential Real Estate Closing Tips & Process Checklist

Buying a home is a lot of work, but it’s a lot of fun too. Amid all of the excitement of the buying process, most buyers manage to stay organized. But it’s tough to keep track of everything from searching for the right home to getting an inspection and finally closing the deal. Despite the best planning, many people lose sight of their needs and priorities during the closing process.

When you sit down at the closing table you are close to finishing things up. But it’s no time to get lazy. If you don’t keep your focus the whole way through, you may end up making a big mistake that could cost you thousands of dollars. Keep these five tips in mind and you’ll make your way through closing error-free.

Real Estate Closing Process

1. Double-check Your Loan Type
It may sound crazy, but it’s easy to miss a major mistake when you’re so focused on the fine details of closing. Even a simple clerical error can accidentally stick you with a variable rate loan when you thought you were getting a fixed rate mortgage. How bad would that be?

What I did: Rather than hope for the best and trust everyone behind the scenes, I called my lender, closing company, and agent to discuss this point. After hearing the horror stories of buyers getting “duped” into a bad loan, I wanted to avoid trouble at all costs. By involving three separate parties I was confident about getting the type of loan I wanted.

2. Consider Your Financial Situation
How much is your down payment? Do you have enough cash for closing costs? Your lender and closing company should provide you with your numbers several days in advance, so you can review the details on your own time. Make sure you keep your real estate agent in the loop, and be sure that you’re comfortable with how much you need to pay up front and the long-term implications of your mortgage. It’s not too late to make some adjustments, and your agent will be able to guide you in the right direction. Your mortgage company will help you make the wisest money decisions.

What I did: I put 20% down on my home. While it was my goal to put 20% down, it wasn’t my only option. My lender laid out the numbers for other down payments. For example, I could have put 10% down to save some liquid cash, but doing so would have raised my monthly payment and forced me to bring private mortgage insurance into the equation. If you’re fortunate enough to be able to afford putting at least 20% down, do it, and you’ll be happier in the long run.

3. Get What You Need from the Seller
Hopefully you made a checklist of improvements you required when you first walked through the house, and on subsequent visits too. Make sure that the seller has completed everything you expected. For example, you may have requested certain repairs. On your final walk through, make absolutely sure that the seller has taken care of everything you need.

If for any reason you’re not going to have a last look at the property before closing, make sure your agent is aware of the situation so he or she can guarantee that all changes are complete.

What I did: I took two steps to make sure I got what I needed:

  1. I made sure that everything was in writing and signed off on by both parties. You should never take the word of the seller. If you don’t have promises in writing, then you don’t have the legal right to be sure they’re fulfilled.
  2. I scheduled a final walk through, with my agent, for the day of closing. Fortunately, I found that everything was in order, but you might find yourself in a different situation. Had something been wrong, the walk through would given me a chance to raise the issue with the sellers at closing.

4. Psych Your Self Up
Closing costs are expensive. And while it’s technically not too late to make changes or back out, it’s certainly too late for you to experience sticker shock. Take responsibility for knowing your closing costs and what you’re paying for. Some of the most common fees include:

  • Credit check
  • Escrow fees
  • Document preparation fees
  • Title insurance

There are plenty more fees, and while the rates may seem high, you can’t avoid them. They add up. Review all the fees at least one day before closing, so you can ask questions and make sure you’re not double-paying or buying things you don’t need.

What I did: A couple of days before closing, I got an itemized list of costs from my lender. It showed me my down payment and information on each and every expense that goes into the closing process. From a $25 credit report fee to several hundred dollars for title insurance, I understood where all of my money was going. Though the total amount was high, I knew I didn’t have to seek a third party for title insurance and other items.

5. Don’t Leave Empty-handed
You might feel anxious about your final signature, but once you finish with the paperwork, you’re going to feel relieved. Don’t get caught in the emotion and excitement and rush out of the building. You must take your copies of every document, and immediately store them in a safe place. You never know when you will need this information in the future. Make sure you get your keys, garage door opener, and other crucial items for your new home.

What I did: I always double-check everything, and on closing day, this habit paid off. The closing company forgot to give me my copy of the HUD settlement statement. Right before I walked out the door, I realized I didn’t have it. Sure, I probably could have asked for this at a later date. But I could have easily forgotten, wasted a lot of time with red tape, or been without it in an urgent situation. I made sure I got what was mine.

Final Word

Throughout the whole process of buying a home, you’ll often feel overwhelmed by stress and tough decisions. You may even feel like everyone’s trying to take advantage of you, the buyer. Don’t forget that you’re the one spending the money, and you deserve the royal treatment. Don’t let the little mistakes ruin what should be a great day. Before you give your final signature, you’re still in a powerful position. Make sure you check all of the details and get what you need. Take your time. Keep your head clear. And enjoy the moment. By following these tips you’re on your way to a smooth closing and a great start to life in your new home!

What troubles did you face in your last home purchase, or what are you biggest concerns about your upcoming closing date?

Cash For Caulkers: New Program Could Net You Up To $12,000

Well, it looks like our Government is gearing up to spend more money (that we don’t have by the way). President Obama has proposed a new program that has been dubbed “Cash For Caulkers” that could send some serious cash your way.

What Is Cash For Caulkers?

First and foremost let me say that this program has not been enacted as of today. It is currently being drafted up in Congress and could change (as most bills do) before the final product is passed. It is also only a small part of a much larger plan to help stimulate the economy.

Basically, this proposed program will reimburse homeowners for energy-efficient appliances and insulation purchases. Big-ticket items such as washers, dryers, air conditioners, refrigerators, windows, and insulation would likely be covered. The bill may allow for a 50% rebate on energy-efficient purchases up to $12,000. That means you can buy $24,000 worth of products for only $12,000. Not a bad deal if you want to redesign your kitchen/laundry room!

According to a CNN Money article, homes that take advantage of this offer could see their home energy bill decline by 20%.

Should You Take Advantage of It?

Since my wife and I don’t own a home, we probably won’t be taking advantage of this program. However, we know several people who could use some new appliances.

One thing to consider is the cost to taxpayers. After helping bail out banks, buying clunkers, becoming an owner in General Motors and helping first-time home buyers, I’m not sure if I want to help you buy a new refrigerator. Estimates put the total cost of the program around $12 billion.

How do you feel about this program? Would you take advantage if given the chance? Do you want your congressman to vote “no” on the bill?

How to Get Out of an Apartment Lease

In a past post, I talked about my inability to negotiate with an apartment complex. In that circumstance, my lease expired and I was trying to stay there at the same price for the remaining 3 months I was going to be there. Unfortunately, they said that there was nothing they could do and I paid the 17% increase for those 3 months. But what if you need to terminate your lease BEFORE it expires? Resonably priced apartments can become very unaffordable when you lose a job. If you break a lease, many times you lose your deposit, you must pay next months rent, or you may have to pay a percentage of the amount remaining on your lease. Sometimes this can be a substaintial amount. In our personal situation, we would have to pay 25% of the remaining rent on our lease if we were to move out. Given that we have 6 months left, we would owe them over $1500 just to move out. That’s quite a wallet emptier! Here are some ways to work around some of these leases. Many may not be applicable to you, so it’s best that you check your lease document or talk to the apartment manager.

Do you find yourself searching for topics such as this every day? By subscribing to this site, you can get FREE updates in your inbox daily. Why not give it a try? You can unsubscribe at any time and it’s FREE. You can subscribe via RSS or you can subscribe via email.

Negotiate Your Remaining Lease

Although I have had lots of bad luck with negotiation, you may fair better. Speak to your landlord and tell them your unique situation. Let them know that you have every intention on staying but since your circumstances have changed, you may not be able to make the whole payment. You may be surprised to see that the landlord will be willing to agree on a slight reduction in your rent. Sometimes it’s more cost efficient for them to reduce your rent rather than pay to evict you and search for a new tenant. This may be easier in an area that has slow growth rather than rapid growth. If the landlord has 10 people in line waiting to get your apartment for a higher rent, they will evict you in no time. If they do decide to negotiate with you, make sure you get it in writing!

Find Someone to Take Over the Apartment

There are two ways for this to happen: you can either sublease or have the new tenant assume the lease. A sublease allows you to rent the apartment to another person. They basically replace you in the apartment and begin making the required rent payments. With a sublease, you are still obligated to pay the rent if your subtenant fails to pay. These types of agreements are hard to come by. In the two complexes I have lived in, neither have this clause in the lease. If allowed, the landlord will more than likely have to approve the new tenant.

When a new tenant assumes your old lease, you are free from it for good. They basically just sign a new lease from the landlord for the remaining time that was on your lease. If the neglect to pay, the landlord will not look to you to pay. In my opinion, this seems like the more logical choice, especially for the landlord. They will be able to get a new tenant to replace you and they have the opportunity to choose the person.

If All Else Fails

If none of those options worked, you may just have to break the lease. You should first evaluate the financial consequences for such a move. For example, let’s say you have 6 months left on your lease and you are having trouble paying the $600 rent (you can only afford $500). In order to move out of this apartment and into a more affordable one, you must pay $1000 in additional rent to break the lease. That does not make financial sense because you are paying $1000 to get out of $600 in additional rent ($100 x 6 months). You should stay in the apartment and just find additional ways to pay the rent, even if it means putting the additional $100 a month on a credit card (just the $100!).

Also, be sure to give the landlord an appropriate amount of time to find a new tenant or they may slap more fees on you. You also want to make sure the landlord is trying to rent the property. If you told them that you need to move out and they are not actively searching for a new tenant or allowing you to sublease, you may a defense if the landlord tries to collect additional rent (fees) from you.

Buying New Windows, Insulation or Central Air? Use the New Home Energy Tax Credit

Thinking of buying new windows or installing central air? The new economic stimulus plan offers some financial help in terms of affordability.

30% Tax Credit on Eligible Energy Saving Materials

This credit has been around for a few years but it has typically been limited to a maximum credit of $500. The new stimulus plan has increased the maximum credit to 30% of the cost of installing certain energy saving materials or $1500, whichever is smaller. Here is a list of things that qualify for the 30% credit:

  1. Insulation
  2. Storm Windows
  3. Central Air Conditioners
  4. Water Heaters
  5. Furnaces
  6. Other Energy Improvements

Of course the IRS and the Government had to put ‘other energy improvements’ into the bill. Don’t ask me what that means because I have no idea.

So, if you were holding back on purchasing new windows or that much needed central air, this new credit may help speed up your decision. I know my mother has been holding off on purchasing windows and this new credit may just encourage her to go ahead and purchase them. The credit will be for purchases in 2009 and 2010.

If the cost of the windows are $5000 for the whole house, you can get a credit of $750 on your 2009 tax return. That’s like getting a 30% discount on your window purchase. Combine the 30% tax credit with your ability to get a good deal and you can turn this purchase into a GREAT deal!

Will this new credit encourage you to purchase any of these items?

The Age of No Negotiation: Apartment Edition

In my recent post, The Age of No Negotiation, I talked about my experience dealing with a big box department store. Of course, they were out of stock of the advertised item that I wanted. Being the person that I am, I asked them to extend the sale discount on another more expensive model. They said NO very fast and I left the store without giving them my money. The same sort of thing happened to me today at my apartment complex.

After returning to Texas from my trip home to Pennsylvania, I had a note hanging on my apartment door. The note stated that my lease will expire on October 31, 2008. They offered me to extend my lease for 12-14 months for the same price that I pay now ($495). However, I graduate in December of this year so that is not possible. If I do not extend my lease, they ‘allow’ me to remain on a month-to-month lease for $580 a month, an increase of 17%.

Once again, being the person that I am, I went over to the office to explain my situation. I told them that I wanted to stay until December for the same price that I am paying now. They immediately stated that they could not do that. I even reminded them that I have always paid on time, never had a check bounce, have no complaints against me, and I would continue to live there until December. They said that none of that matters because that it is their policy. I even reminded them that the apartment would be empty and at least with me, they would receive some sort of money. Once again, they said there is nothing that they can do as it is in their policy. I was even talking to the manager! I really do not understand what some people/companies are thinking! WHY DON’T THEY WANT MY MONEY!?!

I’m not really sure what I am going to do. I could bite my tongue and pay the increase but it would reduce the amount that I use to pay down debt. I also have some friends that would probably let me live with them on the cheap for the two months. What do you do if you were in my position?