“So, we decided to buy a new house this year… ” sound familiar?
People don’t know that they just opened a gusher of tips from everyone in their circle who has ever bought a house. Everyone has an opinion on where to live, what type of home to buy, and a horror story or two.
And then while surfing the Internet they will come across all sorts of advice that is often associated with a sales pitch ~ use us and not them for free bathrooms towels!
I promise, I won’t give you bathroom towels.
It’s what they don’t tell you that’s really important
There are many important home buyer tips that I typically cover in much greater detail when I meet buyers interested in Northern Virginia real estate, but let’s cover one. No obligation… just read on.
It is essential for you grasp typical real estate expenses so you know how much you will need to bring to the table on Settlement day.
- Prepaid interest
- Appraisal fee
- Tax service fee
- Discount Points
- Homeowner’s Insurance
- Tax and insurance escrows
- transfer taxes
- deed and deed of trust recording charges
- title insurance and settlement fees
- approximate home inspection and radon testing costs
- Flood Certification Fee
- and a few others that first time home buyers need to know about.
Now is the time to look at your cash reserve and add those expenses on top of your down payment.
Unless you are paying cash, you must be planning to get a mortgage. In a conversation with Kerry over at SunTrust the other day, he explained to me that new mortgage requirements for 2014 require them to verify that you have sufficient cash reserves beyond the down payment and expenses. These new rules were imposed on all lenders by the Consumer Financial Protection Bureau in Washington D.C.
Okay, here is my tip: Often home buyers ask the seller to pay some of the buyer’s closing costs in their offer. It is a common strategy in real estate negotiation that sometimes works and sometimes can work against you ~ it’s complex but understand there is a lot more to residential real estate negotiation.
Know your strategy before you start negotiating
One essential thing to know is that any closing credit requires approval from the lender. Yes, it has to be in writing and approved by the underwriter and, if not allowed, approved or used then balance is returned to the seller.
For example, if you agree with the seller for a $10,000 credit but the allowable costs are $9,259.27 then the remaining $740.73 is returned to the seller at settlement.
If some of those lender fees are too high, then you might want to ask your lender about a lender paid closing credit.
It is important to get a handle on the numbers early on in the process, and to have a few strategies on how you can keep them under control. After all, especially if you are a first time home buyer, I’m sure you will want some furniture.