Everyone wants a good deal. But, good deals are few and far between in the many low-inventory markets around the country.
Recently a couple was trying to buy a starter home in El Cerrito, a hot housing market in the San Francisco Bay area. They lost out over and over again in multiple offer competitions. So they decided to try a new strategy. Rather than continue making offers on hot new listings in their price range, they made an offer on an over-priced listing that had been on the market awhile and hadn't sold.
The seller had lowered the list price just as the buyers made their offer. The buyers had no competition and were successful in buying the property. Their good fortune was that they were the first to hear that the seller was willing to accept less than his list price.
HOUSE HUNTING TIP: If you're having troubles finding a home to buy—or a home to buy at the right price—consider listings that aren't drawing a lot of attention from other buyers. Well-located listings at the best price and in the best condition are the ones that sell the fastest, and for the most money. To find a good deal, you have to be willing to go against the herd.
There is a certain comfort, however, in buying a property that everyone else wants. A listing that's in high demand is likely to be desirable when you want to sell it. Buying a prime listing can be a good investment, as long as you don't over-pay. But, in a multiple offer competition, you may have to pay a premium to be the successful bidder.
You don't want to buy just any listing that's not selling. If the property has defects that can't be fixed—like too many levels or a chopped up floor plan—you may have a difficult time selling it later. Also, if the sellers are unrealistic about the price or condition of their property, you may not want to waste your time.
Before you make an offer on an over-priced listing, have your agent talk with the listing agent and try to determine the seller's motivation. Find out if there have been any offers. If there have, why didn't the property sell? If the seller is obstinate about his price, go on to another property.
However, if the seller is considering a price reduction, give it a go. If the listing agent thinks the seller is not ready to negotiate, ask to be informed when the seller has a change of heart. The best time to make an offer on an over-priced listing is usually just before the seller drops the price. Otherwise, you could face competition.
Most buyers gravitate to the most attractive listings. Buyers who can see past a dowdy décor may pick up a property at a bargain price. The trick is to know a house with potential when you see it.
Looking at a lot of listings and analyzing what you see can help. Often it's the paint colors, updated finishes and attractive furnishings that make a listing desirable. With a little imagination, you could create an appealing ambience yourself, after you buy.
Listings that are back on the market because a deal fell apart present another opportunity. These listings often sell for less the second time around. Find out why the deal fell apart. But remember to buy a house with good bones, not one with serious problems.
THE CLOSING: Homes with good appreciation potential are always a good deal. Look in areas that are adjacent to neighborhoods that have already experienced a significant run-up in prices. These areas could be the next hot markets.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=136
Wednesday, June 13, 2007
Should I Buy Real Estate at the Top of the Market?
Buying a first home is a scary experience. It's easy to imagine the worst. How will I know a good house when I see it? What if I buy a house I can't sell? How can I make sure I'm making a good investment? What if I pay too much and home prices drop?
After years of hefty home-price appreciations, it's natural to wonder how long the good times will last. Real estate markets are cyclical: prices go up and they go down. However, over the long term in this country, prices have tended to move higher. At the end of the 1970s, after a big run up in home prices, real estate agents had a hard time believing that prices could go any higher. The market did cool in the early 1980s. But today home prices are three to four times higher than they were then in some parts of the country.
HOUSE HUNTING TIP: To protect yourself when you buy a home, adopt a long-range horizon. Don't buy unless you plan to hold the property for at least 5-10 years. This way you can ride out any downturns in the market and sell when the market improves. Try to avoid getting into a situation where you are forced to sell in a down market. If you have any questions about how long you'll be staying in the area, postpone your buying plans until there's more certainty in your life.
For the buy and hold strategy to work you need to make sure that the home you buy will suit your long-term needs. This usually means: don't buy a home that's too small. Many first-time buyers make the mistake of buying a tiny starter home because it's charming and it's in the right neighborhood. But, two bedrooms, one bath and a postage-stamp lot doesn't leave much room for growth.
A better strategy might be to buy on the outskirts of a prime neighborhood where you can buy a 3-bedroom, 2-bath home for the approximately the same price. You might not have the most prestigious address today, but you could experience good appreciation, which will finance your trade-up move. And, you'll be comfortable in the mean time.
One first-time buyer complained that in her price range, she could only afford to buy a 1,500-square-foot house. It's nice to have more square feet: to a certain extent, the bigger, the better. However, a well-designed, 1,500-square-foot home can be a very comfortable place to live.
Some floor plans are better than others. Ideally, there should be good flow between the rooms. A home with a central hall that leads to many rooms usually is easier to live in than one that's laid out like a train where you have to pass through rooms to reach other rooms. Good indoor-outdoor living makes a big difference. A deck or patio off the kitchen, family room or dining room provides additional usable space and makes the home feel larger.
Some buyers put off their home buying plans for fear that the real estate market will fall. This seemingly sane strategy can be risky if prices don't drop. You could be kicking yourself next year when you haven't bought and home prices are further out of reach.
THE CLOSING: On the other hand, there's usually no need to rush to buy in a market that's bloated with inventory, particularly if new housing developments are in the works. An over-supply of housing relative to buyer demand puts a downward pressure on home prices.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=153
Should You Buy A Home Through A Real Estate Agent?
One of the first things many people do when beginning their search for a new home is enlist the help of a real estate agent. It is the realtor's job, after all, to help you find the home that is perfect for you.
But is it always in the home shopper's best interest to use a real estate agent? If you are in the market for a resale home, then yes, a real estate agent may be of great assistance. However, if you are looking for a new-construction home, you are probably best served by going it alone.
First of all, it is easy to find new-home communities on your own. Just go to the Internet, where you'll find great resources, such as American Home Guides, that will provide you with tons of information on new homes in your area. You can also pick up the local newspaper or new-home magazine. Or just drive around. It's always easy to spot new-home communities with their signs and flags.
Once you get to a community, there are sales people on staff who can show you the models, floor plans, and site plans, and answer all of your questions. If you are using a real estate agent, his or her job is basically finished once you walk into the sales office. In fact, they often do not even have to be with you in order to receive a commission if you buy a home at that community.
And, believe it or not, the commission your realtor receives can make a difference in your pocket. While a realtor is certainly entitled to the 3 percent commission he or she typically makes on a new home sale (less than they make on resales), it represents a big chunk of the builder's profit margin. As a result, the builder is going to be much less likely to throw in some of the "extras" or closing costs incentives that you might have received if you had come in on your own.
So, if you're thinking about a new-home community, think twice about using a real estate agent. Often, the agents themselves will stay away from showing you new-home communities. If you purchase a new construction home, the agent makes a lesser commission than he would on a resale and does not get paid in full until you close on the home (sometimes six to eight months after the original purchase if the home has to be built).
That is not to say that realtors do not have a place in home shopping. For those seeking a resale, the real estate agent can be an invaluable helper in locating a one-of-a-kind home that meets your needs. Look for more on the benefits of using a real estate agent in our next issue.
The Perfect Escrow - Does it Exist?
Very simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event. The California Escrow Law – Section 17003 of the Financial Code – provides the legal definition.
Why Do I Need an Escrow?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
Escrow – How Does it Work?
The principals to the escrow – buyer, seller, lender, borrower – cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.
The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed." Each escrow, although following a similar pattern, will be different in some respects, as it deals with your property and the transaction at hand.
The duties of an escrow holder include; following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same – the Closing or Settlement Statement.
Who Chooses the Escrow?
The selection of the escrow holder is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend an escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees; this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.
What Do I have to do while in Escrow?
The key to any transaction as important as your sale, purchase or loan is to read and understand your escrow instructions. If you do not understand them, you should ask your escrow officer to explain the instructions.
Your escrow officer is not an attorney and cannot practice law; you should consult your lawyer for legal advice. Do not expect your escrow officer to advise you as to whether or not you have a "good deal" or are doing things the right way. The escrow officer is there to follow the instructions given by the principals in the escrow.
In order to expedite the closing of the escrow, you should check with your escrow officer as to what specific items you could do to assist. Ask the question – "What can I do to expedite the closing of this escrow?"
Respond quickly to correspondence. This will assist in the timely closing of the transaction.
If you are required to deliver funds into the escrow, make sure that you provide "good" funds in the form required by the escrow officer. Company procedures differ in this regard, and there are many ways you can help at the time of closing; check with your escrow officer. Do not give the escrow officer a personal check and expect the escrow to close immediately; the escrow can only close on cleared funds, and the processing of a personal check can take days, possibly even a week or more.
When the escrow officer closes the escrow, some of you may want the closing papers, checks, title policies, statements, etc. Made available immediately. There are many aspects to the closing of the escrow, and some of these cannot be processed on the day of the closing; they may take several days. If you have a special need, for example, a cashier’s check on the day of closing, you should communicate that need to the escrow officer early in the processing of the escrow.
Escrow and Your New Loan
If you are obtaining a new loan, your escrow officer will be in touch with the lender who will need copies of the escrow instructions, the preliminary title report and any other documents escrow could supply. In the processing and the closing of the escrow, the escrow holder is obligated to comply with the lender’s instructions.
It has become a practice of some lenders to forward their loan documents to escrow for signing. You should be aware that these papers are lender’s documents and cannot be explained or interpreted by the escrow officer. You have the option of requesting a representative from the lender’s office to be present for explanation, or arrange to meet with your lender to sign the documents in their office.
Escrow: What is a Closing Statement?
A closing statement is an accounting, in writing, prepared at the close of escrow which sets forth the charges and credits of your account. The items shown on the statement will reflect the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services and a determination of the funds you are entitled to at the close of the escrow. When you receive your closing papers, review the closing statement; it is extremely logical and reflects the financial aspects of your transaction. If anything does not make sense to you, you should ask your escrow officer for an explanation.
When going through your closing papers, examine all of them; there may even be a refund check hiding in there. Cash the check quickly, please. Be sure to have the check properly endorsed. All payees must endorse the check. This will eliminate the check being returned unpaid due to irregular or missing endorsements.
Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes.
Your accountant will need the information about the sale or purchase of the property. IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The closing statement will assist in this task.
Do not rely on your escrow holder retaining the escrow file so that you can "always call and get copies of the closing statement." Most escrow holders will be destroying the files after the statutory retention period, usually five years. Maintaining and storing the closed escrow files is a costly endeavor to the escrow holder. Therefore, a nominal fee may be charged by your escrow holder for the retrieval of a file from storage, photocopying the requested documents and returning the file to storage.
What Fees and Costs will be Charged?
Escrow fees are not regulated by the State. Escrow holder, like any other businesses, will charge fees that are commensurate with the costs of producing the service, the liability undertaken, and the overhead expenses which include a profit factor. Therefore, the fees will vary between companies and from county to county. Normally, the escrow holder will follow its minimum fee schedule, which will provide for extra charges based upon the differing elements of your escrow. On occasions, an additional fee will be charged for unusual expenditures of time on a given transaction.
The escrow holder has no control over the costs of other services that are obtained, such as the title insurance policy, the lender’s charges, insurance, recording charges, etc.
Your escrow officer, upon request, can provide you with an estimate of the escrow fees and costs as well as fees charged by others, provided such information is available.
What About Cancellations?
No escrow is opened with the intention that it will cancel, but there are occasions when a contingency cannot be met or when the parties disagree during the pendency of the escrow. Some escrow holders provide for such an event by incorporating an instruction in the typed or printed General Provisions.
Ordinarily, an escrow holder will take the positions that no funds on deposit can be refunded until the escrow holder is in receipt of mutual cancellation instructions signed by the principals. The escrow holder cannot normally make a determination as to who is the "rightful" party in a dispute on a cancellation and therefore will not return the funds or documents until the principals agree; the escrow holder is not a judge.
Do expect to be charged a cancellation fee, as this is a charge for professional services rendered and quite often for several "out of pocket" expenses that have been incurred on the client’s behalf. These fees can vary from company to company depending upon their policies.
Sometime, when a dispute exists, the escrow holder may be forced to allow a court to decide which party is entitled to what documents or funds; this is called an Interpleader Action. Fortunately, most disputes are resolved before the Interpleader is filed, as the costs for such legal actions are extreme. Those costs, incidentally, are normally paid out of the funds on deposit in the escrow.
What about Title Insurance?
Title Insurance is usually obtained when real property is purchased. The policy of title insurance insures the owner and/or the lender of ownership of the property. There are various coverages afforded, but a basic policy insures that the buyer is the owner and that any lender shown on the policy is an "insured" lender. Many different types of extended coverages are available; for example, an ALTA policy is quite often required by institutional lender to afford them additional protection under the title insurance policy. The title policy is written after an extensive examination of the public record is made and the recording of the required documents as called for in the escrow.
The title insurance policy fee is a one-time fee, paid at the close of escrow. The determination of who pays for the policy is not uniform from county to county in California. In some counties, the buyer will pay while in others the seller will pay. In other counties the seller will pay for the lender’s title policy. But in almost every case, the question of who pays closing costs is a matter of agreement between the parties. Usually this agreement is based on the customary practice in your county or area. In the case of some FHA or VA transactions, the escrow officer must follow the guidelines as required by the lender and/or government.
What About Property Taxes?
The terms of your transaction and the resultant escrow instructions determine how the property taxes will be handled. If there is no mention of the proration of taxes, your escrow officer will not deal with any credits or charges for prorated taxes. However, if your escrow calls for a proration of taxes, there will be an item in your closing statement that will reflect either a credit or charge to your account. If the taxes are not paid (even though there has been a credit or charge against your account), the buyer is obligated to obtain a tax bill and pay the taxes. If the buyer does not have a tax bill with which to pay the taxes, you can request a bill from the Tax Collector; send a photocopy of the deed.
Supplemental Property Taxes is another concern of the buyer. Upon transfer of real property, a supplemental tax bill is generated. This is accomplished in cooperation with the County Assessor and the County Tax Collector.
Shortly after the close of an escrow involving the conveyance of real property, the County Assessor will request information about the property from the buyer. This information assists the Assessor in determining the value of the property for taxation purposes. The escrow holder may have previously supplied some of the information at the time of the closing of the escrow, via Preliminary Change of Ownership form that should accompany each deed when it is recorded.
The Perfect Escrow - Does it Exist?
Perfection is sometimes difficult to achieve, especially in dealing with the complexities of the escrow, the desires of the parties and other matters that are sometimes far beyond the control of the escrow officer. It is human nature to err on occasion, but your escrow officer has the background, training, education, support and systems in place necessary in order to accomplish the objectives of the escrow instructions.
In the event you have any problems in the handling of your escrow, you should first contact the escrow officer.
If you problem is not resolved, you should next contact the management or owner of the company.
If the matter requires additional attention, you can call the proper regulatory agency.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=39
Why Do I Need an Escrow?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
Escrow – How Does it Work?
The principals to the escrow – buyer, seller, lender, borrower – cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.
The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed." Each escrow, although following a similar pattern, will be different in some respects, as it deals with your property and the transaction at hand.
The duties of an escrow holder include; following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same – the Closing or Settlement Statement.
Who Chooses the Escrow?
The selection of the escrow holder is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend an escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees; this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.
What Do I have to do while in Escrow?
The key to any transaction as important as your sale, purchase or loan is to read and understand your escrow instructions. If you do not understand them, you should ask your escrow officer to explain the instructions.
Your escrow officer is not an attorney and cannot practice law; you should consult your lawyer for legal advice. Do not expect your escrow officer to advise you as to whether or not you have a "good deal" or are doing things the right way. The escrow officer is there to follow the instructions given by the principals in the escrow.
In order to expedite the closing of the escrow, you should check with your escrow officer as to what specific items you could do to assist. Ask the question – "What can I do to expedite the closing of this escrow?"
Respond quickly to correspondence. This will assist in the timely closing of the transaction.
If you are required to deliver funds into the escrow, make sure that you provide "good" funds in the form required by the escrow officer. Company procedures differ in this regard, and there are many ways you can help at the time of closing; check with your escrow officer. Do not give the escrow officer a personal check and expect the escrow to close immediately; the escrow can only close on cleared funds, and the processing of a personal check can take days, possibly even a week or more.
When the escrow officer closes the escrow, some of you may want the closing papers, checks, title policies, statements, etc. Made available immediately. There are many aspects to the closing of the escrow, and some of these cannot be processed on the day of the closing; they may take several days. If you have a special need, for example, a cashier’s check on the day of closing, you should communicate that need to the escrow officer early in the processing of the escrow.
Escrow and Your New Loan
If you are obtaining a new loan, your escrow officer will be in touch with the lender who will need copies of the escrow instructions, the preliminary title report and any other documents escrow could supply. In the processing and the closing of the escrow, the escrow holder is obligated to comply with the lender’s instructions.
It has become a practice of some lenders to forward their loan documents to escrow for signing. You should be aware that these papers are lender’s documents and cannot be explained or interpreted by the escrow officer. You have the option of requesting a representative from the lender’s office to be present for explanation, or arrange to meet with your lender to sign the documents in their office.
Escrow: What is a Closing Statement?
A closing statement is an accounting, in writing, prepared at the close of escrow which sets forth the charges and credits of your account. The items shown on the statement will reflect the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services and a determination of the funds you are entitled to at the close of the escrow. When you receive your closing papers, review the closing statement; it is extremely logical and reflects the financial aspects of your transaction. If anything does not make sense to you, you should ask your escrow officer for an explanation.
When going through your closing papers, examine all of them; there may even be a refund check hiding in there. Cash the check quickly, please. Be sure to have the check properly endorsed. All payees must endorse the check. This will eliminate the check being returned unpaid due to irregular or missing endorsements.
Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes.
Your accountant will need the information about the sale or purchase of the property. IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The closing statement will assist in this task.
Do not rely on your escrow holder retaining the escrow file so that you can "always call and get copies of the closing statement." Most escrow holders will be destroying the files after the statutory retention period, usually five years. Maintaining and storing the closed escrow files is a costly endeavor to the escrow holder. Therefore, a nominal fee may be charged by your escrow holder for the retrieval of a file from storage, photocopying the requested documents and returning the file to storage.
What Fees and Costs will be Charged?
Escrow fees are not regulated by the State. Escrow holder, like any other businesses, will charge fees that are commensurate with the costs of producing the service, the liability undertaken, and the overhead expenses which include a profit factor. Therefore, the fees will vary between companies and from county to county. Normally, the escrow holder will follow its minimum fee schedule, which will provide for extra charges based upon the differing elements of your escrow. On occasions, an additional fee will be charged for unusual expenditures of time on a given transaction.
The escrow holder has no control over the costs of other services that are obtained, such as the title insurance policy, the lender’s charges, insurance, recording charges, etc.
Your escrow officer, upon request, can provide you with an estimate of the escrow fees and costs as well as fees charged by others, provided such information is available.
What About Cancellations?
No escrow is opened with the intention that it will cancel, but there are occasions when a contingency cannot be met or when the parties disagree during the pendency of the escrow. Some escrow holders provide for such an event by incorporating an instruction in the typed or printed General Provisions.
Ordinarily, an escrow holder will take the positions that no funds on deposit can be refunded until the escrow holder is in receipt of mutual cancellation instructions signed by the principals. The escrow holder cannot normally make a determination as to who is the "rightful" party in a dispute on a cancellation and therefore will not return the funds or documents until the principals agree; the escrow holder is not a judge.
Do expect to be charged a cancellation fee, as this is a charge for professional services rendered and quite often for several "out of pocket" expenses that have been incurred on the client’s behalf. These fees can vary from company to company depending upon their policies.
Sometime, when a dispute exists, the escrow holder may be forced to allow a court to decide which party is entitled to what documents or funds; this is called an Interpleader Action. Fortunately, most disputes are resolved before the Interpleader is filed, as the costs for such legal actions are extreme. Those costs, incidentally, are normally paid out of the funds on deposit in the escrow.
What about Title Insurance?
Title Insurance is usually obtained when real property is purchased. The policy of title insurance insures the owner and/or the lender of ownership of the property. There are various coverages afforded, but a basic policy insures that the buyer is the owner and that any lender shown on the policy is an "insured" lender. Many different types of extended coverages are available; for example, an ALTA policy is quite often required by institutional lender to afford them additional protection under the title insurance policy. The title policy is written after an extensive examination of the public record is made and the recording of the required documents as called for in the escrow.
The title insurance policy fee is a one-time fee, paid at the close of escrow. The determination of who pays for the policy is not uniform from county to county in California. In some counties, the buyer will pay while in others the seller will pay. In other counties the seller will pay for the lender’s title policy. But in almost every case, the question of who pays closing costs is a matter of agreement between the parties. Usually this agreement is based on the customary practice in your county or area. In the case of some FHA or VA transactions, the escrow officer must follow the guidelines as required by the lender and/or government.
What About Property Taxes?
The terms of your transaction and the resultant escrow instructions determine how the property taxes will be handled. If there is no mention of the proration of taxes, your escrow officer will not deal with any credits or charges for prorated taxes. However, if your escrow calls for a proration of taxes, there will be an item in your closing statement that will reflect either a credit or charge to your account. If the taxes are not paid (even though there has been a credit or charge against your account), the buyer is obligated to obtain a tax bill and pay the taxes. If the buyer does not have a tax bill with which to pay the taxes, you can request a bill from the Tax Collector; send a photocopy of the deed.
Supplemental Property Taxes is another concern of the buyer. Upon transfer of real property, a supplemental tax bill is generated. This is accomplished in cooperation with the County Assessor and the County Tax Collector.
Shortly after the close of an escrow involving the conveyance of real property, the County Assessor will request information about the property from the buyer. This information assists the Assessor in determining the value of the property for taxation purposes. The escrow holder may have previously supplied some of the information at the time of the closing of the escrow, via Preliminary Change of Ownership form that should accompany each deed when it is recorded.
The Perfect Escrow - Does it Exist?
Perfection is sometimes difficult to achieve, especially in dealing with the complexities of the escrow, the desires of the parties and other matters that are sometimes far beyond the control of the escrow officer. It is human nature to err on occasion, but your escrow officer has the background, training, education, support and systems in place necessary in order to accomplish the objectives of the escrow instructions.
In the event you have any problems in the handling of your escrow, you should first contact the escrow officer.
If you problem is not resolved, you should next contact the management or owner of the company.
If the matter requires additional attention, you can call the proper regulatory agency.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=39
Thorough inspection gives agent \'rude awakening\'
Quality work protects agents from liability, buyers from 'terminal problems'
Dear Barry,
I've been a Realtor for nearly 20 years and for the past five years our office has been recommending one of several inspectors for our buyers. Recently, a client insisted on using a certain inspector not on my list – someone we consider to be a "deal killer." To my rude awakening, his inspection was the most thorough I've ever seen. Among the defects he found, some were quite serious and in places my recommended inspectors never even check. The seller refused to make any repairs and refused to renegotiate the price and my client opted not to buy the property. Now if I had only heard about this, it would have confirmed this inspector's "deal killer" reputation, but having been part of the inspection, I consider my buyers fortunate. That house was a disaster waiting to happen and had we not used this inspector, I fear my clients would be stuck in a house with terminal problems. Three days later, my buyers found another home, we used the same inspector and despite the defects found, the sale went through. Considering how we gave this inspector no referral business in the past, I feel I've done a disservice to both this inspector and my past clients. Funny how in the inspection industry the more thorough you are the worse it is for your business. Just though I'd share this and ask for your comments. — Dotty
Dear Dotty,
You've dredged up on one of the touchiest and most controversial subjects in the home inspection business: the conflict of interest affecting home inspection referrals and the ominous and unfortunate epithet, "deal killer." Your letter reveals an important truth: Faulty conditions and safety hazards in homes are the true deal killers, not the home inspectors who reveal those problems. This is one of those cases where the proverbial messenger is blamed for the message, and the ill effects of this misplaced blame can be far reaching: The "deal killer" loses business for reasons that are not justified; buyers are denied the benefits of the "deal killer's" services; and agents lose the liability protection afforded by the "deal killer."
Another observation you made also warrants comment: There probably isn't another profession where quality, integrity and professionalism may discourage business (with the possible exception of great statesmanship.)
Fortunately, there is a positive light that illuminates this picture: The response to home inspection that has occurred in your immediate circle is not the ruling principal of the real estate profession. In fact, many Realtors welcome the services of home inspectors with reputations for thoroughness. This is probably why the "deal killer" in your neighborhood is still in business. While those in your office were afraid to recommend him, other agents must have been keeping him busy. Fortunately, you have now joined the ranks of the prudent ones.
Acceptance of home inspection by the real estate profession has been slow and gradual and is now nearly complete. Home inspection, as you recall, hit the real estate world by surprise in the 1980s, and there was considerable resistance to it at first. Since that time, the majority of agents and brokers have come to recognize the inspection process as immeasurably beneficial to all parties concerned. Buyers benefit from foreknowledge of the properties they are purchasing, while sellers and agents enjoy reduced liability because fewer problems are discovered after the sale.
Now you can recommend the best home inspector in your area, confident that you are benefiting your client while limiting your own liability. Keep up the good work, and please send my best regards to your "deal killer."
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=112
Dear Barry,
I've been a Realtor for nearly 20 years and for the past five years our office has been recommending one of several inspectors for our buyers. Recently, a client insisted on using a certain inspector not on my list – someone we consider to be a "deal killer." To my rude awakening, his inspection was the most thorough I've ever seen. Among the defects he found, some were quite serious and in places my recommended inspectors never even check. The seller refused to make any repairs and refused to renegotiate the price and my client opted not to buy the property. Now if I had only heard about this, it would have confirmed this inspector's "deal killer" reputation, but having been part of the inspection, I consider my buyers fortunate. That house was a disaster waiting to happen and had we not used this inspector, I fear my clients would be stuck in a house with terminal problems. Three days later, my buyers found another home, we used the same inspector and despite the defects found, the sale went through. Considering how we gave this inspector no referral business in the past, I feel I've done a disservice to both this inspector and my past clients. Funny how in the inspection industry the more thorough you are the worse it is for your business. Just though I'd share this and ask for your comments. — Dotty
Dear Dotty,
You've dredged up on one of the touchiest and most controversial subjects in the home inspection business: the conflict of interest affecting home inspection referrals and the ominous and unfortunate epithet, "deal killer." Your letter reveals an important truth: Faulty conditions and safety hazards in homes are the true deal killers, not the home inspectors who reveal those problems. This is one of those cases where the proverbial messenger is blamed for the message, and the ill effects of this misplaced blame can be far reaching: The "deal killer" loses business for reasons that are not justified; buyers are denied the benefits of the "deal killer's" services; and agents lose the liability protection afforded by the "deal killer."
Another observation you made also warrants comment: There probably isn't another profession where quality, integrity and professionalism may discourage business (with the possible exception of great statesmanship.)
Fortunately, there is a positive light that illuminates this picture: The response to home inspection that has occurred in your immediate circle is not the ruling principal of the real estate profession. In fact, many Realtors welcome the services of home inspectors with reputations for thoroughness. This is probably why the "deal killer" in your neighborhood is still in business. While those in your office were afraid to recommend him, other agents must have been keeping him busy. Fortunately, you have now joined the ranks of the prudent ones.
Acceptance of home inspection by the real estate profession has been slow and gradual and is now nearly complete. Home inspection, as you recall, hit the real estate world by surprise in the 1980s, and there was considerable resistance to it at first. Since that time, the majority of agents and brokers have come to recognize the inspection process as immeasurably beneficial to all parties concerned. Buyers benefit from foreknowledge of the properties they are purchasing, while sellers and agents enjoy reduced liability because fewer problems are discovered after the sale.
Now you can recommend the best home inspector in your area, confident that you are benefiting your client while limiting your own liability. Keep up the good work, and please send my best regards to your "deal killer."
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=112
Tips and tricks for refinancing your home mortgage
Thanks to today's ultra-low interest rates, the home mortgage business is booming at a record pace.
Although new home construction and home resales are at near-record volume, surprisingly most of the home mortgage originations are not coming from these sources.
Only about 24 percent of new mortgages are from home sales. Approximately 76 percent of new home loans represent house and condo owners who are refinancing their existing mortgages.
WHY REFINANCE YOUR HOME LOAN?There are many reasons homeowners refinance. Perhaps you want to spend some of your home equity on a frivolous luxury trip around the world. Or maybe you want to use your home equity to pay for a child's college tuition.
Here are the 10 most frequent home refinance reasons:
1. To reduce the current mortgage interest rate and lower the monthly mortgage payments
2. To take out tax-free cash from home equity for personal use
3. To combine a first and second mortgage into one mortgage with a lower total payment
4. To pay off other loans that have non-deductible interest, such as credit card and auto loans
5. To eliminate expensive PMI (private mortgage insurance) or FHA mortgage insurance premiums
6. lender, such as one who fails to credit your monthly payments promptly or who messes up your escrow impound account
7. To switch from an adjustable to a fixed-rate mortgage
8. To finance home improvements, such as remodeling or a family-room addition
9. To cut interest costs and speed up loan payoff by switching to a 15-year or 20-year mortgage
10. To borrow on your home equity to start or buy a business, or to expand your current business.
WHO SHOULD NOT REFINANCE THEIR HOME MORTGAGE? The "old rule" used to be that homeowners should not refinance unless they can reduce their interest rate by at least 2 percent. But that was before today's low-cost and no-cost refinancings.
I know homeowners who have refinanced two and even three times within the last two years. The reason they repeatedly refinanced was they could reduce their monthly mortgage payments without incurring any refinance costs.
In other words, the refinance costs were included in their mortgage interest rate.
However, by today's home loan standards, most homeowners won't benefit unless they can reduce their interest rate by at least one-half percent.
Homeowners who plan to remain in their homes for more than five years should definitely refinance with a fixed-rate mortgage. However, if they are absolutely certain of selling within five years, they should consider an adjustable rate mortgage (ARM), which is locked in for five years. Today's ARM interest rates are typically around 5 percent, sometimes even a bit lower.
HOW TO BEGIN THE HOME MORTGAGE REFINANCE QUEST. Most home mortgage lenders are now swamped with loan applications from refinancing homeowners. The delay in refinancing is often four to eight weeks. Plan to be patient.
Due to the nationwide shortage of appraisers, the big bottleneck is getting an appraiser to evaluate your house or condo's current market value. But most homeowners are in no rush, especially since mortgage interest rates are currently very stable.
1 - CHECK YOUR "FICO" CREDIT SCORE. Before contacting mortgage lenders about refinancing, get a copy of your credit report and your FICO (Fair, Isaac and Co.) credit score, which most lenders use to evaluate your loan application.
Your FICO score estimates the probability you will make your mortgage payments on time, based on your history of paying your credit cards, mortgage and other debts.
If you have a FICO score of 620 or above, you'll probably get a low interest rate. Below 620, however, refinancing will be expensive and might not be worth the effort. Above 700, lenders don't worry about your probability of repaying your mortgage.
Surprisingly, your income is not considered in your FICO score. The easiest place to get your current FICO score is on the Internet at www.myfico.com. The cost is $12.95, charged to your credit card.
At that Web site, you will instantly receive your credit report, your FICO score and suggestions on how to improve your FICO score. If your credit report reveals errors, before applying to refinance be sure to contact the three major credit bureaus to "verify" the mistake, correct it and receive a corrected credit report within 30 days.
2 - CONTACT AT LEAST THREE MORTGAGE LENDERS. After you are certain your credit report and FICO score are accurate, it's time to begin loan shopping. Each mortgage lender is different. That's why it pays to mortgage shop among mortgage brokers, local banks and S&L direct lenders, and mortgage bankers. For best results, contact at least one lender of each type.
A - MORTGAGE BROKERS. These lenders are "middlepersons" between the borrower and the lender. They originate about 60 percent of all home loans. But they don't loan their own money.
After you fill out a mortgage broker's loan application, it will be "shopped" among many lenders to find the best loan terms for your situation. Most mortgage brokers represent dozens of lenders. If your situation is unique, such as a rural, one-of-a-kind hilltop retreat, an experienced mortgage broker will know which lender likes that type of mortgage.
However, pitfalls I have encountered with mortgage brokers include (1) bait-and-switch loan quotes that proved to be unavailable, (2) unexpected last-minute "junk loan fees" that were not previously disclosed, and (3) poor service, such as failure to return phone calls. However, mortgage brokers often perform "mortgage miracles," especially with unusual property or unique borrower circumstances.
B - BANK AND S&L DIRECT LENDERS. Local banks and S&Ls, also known as direct lenders, loan their own mortgage funds. But they often immediately resell their mortgages into the secondary mortgage market to major nationwide lenders, such as Fannie Mae and Freddie Mac, to raise cash to make more loans.
Examples of nationwide direct lenders include Washington Mutual (the nation's largest direct lender), Bank of America, Chase Manhattan and Wells Fargo Mortgage. These lenders often retain their adjustable-rate mortgages but sell their fixed-rate mortgages, usually retaining the very profitable loan servicing.
A major drawback of some direct lenders is that if your situation doesn't fit their formulas, you won't get a mortgage. Loan and borrower qualification flexibility of some direct lenders is very limited.
C - MORTGAGE BANKERS. The third major category of mortgage lenders is a hybrid of mortgage brokers and direct lenders. Mortgage bankers lend their own money to homeowners. But they usually quickly sell those home loans in the secondary mortgage market, much like direct lenders.
Because mortgage bankers specialize in developing many ways to dispose of loans they originate, they often have a wide variety of creative home loans to fit different situations. The largest mortgage banker, Countrywide, has both local offices and a huge Internet Web site at www.countrywide.com.
AVOID PAYING LOAN FEE POINTS WHEN REFINANCING A HOME LOAN. Unlike home buyers who can immediately deduct any loan fee points paid to obtain an "acquisition mortgage," refinancing homeowners can only deduct loan fee points over the 15- to 30-year life of the mortgage. Each "point" equals 1 percent of the amount borrowed.
For example, if you pay a one-point loan fee to obtain a $100,000 30-year refinanced mortgage, that $1,000 can be deducted at the rate of only $33.33 for the next 30 years.
A better alternative is to obtain a "no-cost" or "low-cost" refinanced mortgage without any loan fees. Study the lender's "good faith estimate" of loan charges, which must be given to you within three days of your submitting a loan application. Although you might pay a one-eighth percent higher interest rate for a loan without a loan fee and extra "junk" or "garbage" fees, the savings are usually worthwhile.
SUMMARY. Today's ultra-low mortgage interest rates mean this is a great time to refinance home mortgages. However, it pays to shop among at least three different lenders to compare their interest rates and loan terms. Watch out for any loan charges that were not disclosed in the lender's "good faith estimate." If necessary, be prepared to walk away if the lender attempts to bait and switch loan terms.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=67
Although new home construction and home resales are at near-record volume, surprisingly most of the home mortgage originations are not coming from these sources.
Only about 24 percent of new mortgages are from home sales. Approximately 76 percent of new home loans represent house and condo owners who are refinancing their existing mortgages.
WHY REFINANCE YOUR HOME LOAN?There are many reasons homeowners refinance. Perhaps you want to spend some of your home equity on a frivolous luxury trip around the world. Or maybe you want to use your home equity to pay for a child's college tuition.
Here are the 10 most frequent home refinance reasons:
1. To reduce the current mortgage interest rate and lower the monthly mortgage payments
2. To take out tax-free cash from home equity for personal use
3. To combine a first and second mortgage into one mortgage with a lower total payment
4. To pay off other loans that have non-deductible interest, such as credit card and auto loans
5. To eliminate expensive PMI (private mortgage insurance) or FHA mortgage insurance premiums
6. lender, such as one who fails to credit your monthly payments promptly or who messes up your escrow impound account
7. To switch from an adjustable to a fixed-rate mortgage
8. To finance home improvements, such as remodeling or a family-room addition
9. To cut interest costs and speed up loan payoff by switching to a 15-year or 20-year mortgage
10. To borrow on your home equity to start or buy a business, or to expand your current business.
WHO SHOULD NOT REFINANCE THEIR HOME MORTGAGE? The "old rule" used to be that homeowners should not refinance unless they can reduce their interest rate by at least 2 percent. But that was before today's low-cost and no-cost refinancings.
I know homeowners who have refinanced two and even three times within the last two years. The reason they repeatedly refinanced was they could reduce their monthly mortgage payments without incurring any refinance costs.
In other words, the refinance costs were included in their mortgage interest rate.
However, by today's home loan standards, most homeowners won't benefit unless they can reduce their interest rate by at least one-half percent.
Homeowners who plan to remain in their homes for more than five years should definitely refinance with a fixed-rate mortgage. However, if they are absolutely certain of selling within five years, they should consider an adjustable rate mortgage (ARM), which is locked in for five years. Today's ARM interest rates are typically around 5 percent, sometimes even a bit lower.
HOW TO BEGIN THE HOME MORTGAGE REFINANCE QUEST. Most home mortgage lenders are now swamped with loan applications from refinancing homeowners. The delay in refinancing is often four to eight weeks. Plan to be patient.
Due to the nationwide shortage of appraisers, the big bottleneck is getting an appraiser to evaluate your house or condo's current market value. But most homeowners are in no rush, especially since mortgage interest rates are currently very stable.
1 - CHECK YOUR "FICO" CREDIT SCORE. Before contacting mortgage lenders about refinancing, get a copy of your credit report and your FICO (Fair, Isaac and Co.) credit score, which most lenders use to evaluate your loan application.
Your FICO score estimates the probability you will make your mortgage payments on time, based on your history of paying your credit cards, mortgage and other debts.
If you have a FICO score of 620 or above, you'll probably get a low interest rate. Below 620, however, refinancing will be expensive and might not be worth the effort. Above 700, lenders don't worry about your probability of repaying your mortgage.
Surprisingly, your income is not considered in your FICO score. The easiest place to get your current FICO score is on the Internet at www.myfico.com. The cost is $12.95, charged to your credit card.
At that Web site, you will instantly receive your credit report, your FICO score and suggestions on how to improve your FICO score. If your credit report reveals errors, before applying to refinance be sure to contact the three major credit bureaus to "verify" the mistake, correct it and receive a corrected credit report within 30 days.
2 - CONTACT AT LEAST THREE MORTGAGE LENDERS. After you are certain your credit report and FICO score are accurate, it's time to begin loan shopping. Each mortgage lender is different. That's why it pays to mortgage shop among mortgage brokers, local banks and S&L direct lenders, and mortgage bankers. For best results, contact at least one lender of each type.
A - MORTGAGE BROKERS. These lenders are "middlepersons" between the borrower and the lender. They originate about 60 percent of all home loans. But they don't loan their own money.
After you fill out a mortgage broker's loan application, it will be "shopped" among many lenders to find the best loan terms for your situation. Most mortgage brokers represent dozens of lenders. If your situation is unique, such as a rural, one-of-a-kind hilltop retreat, an experienced mortgage broker will know which lender likes that type of mortgage.
However, pitfalls I have encountered with mortgage brokers include (1) bait-and-switch loan quotes that proved to be unavailable, (2) unexpected last-minute "junk loan fees" that were not previously disclosed, and (3) poor service, such as failure to return phone calls. However, mortgage brokers often perform "mortgage miracles," especially with unusual property or unique borrower circumstances.
B - BANK AND S&L DIRECT LENDERS. Local banks and S&Ls, also known as direct lenders, loan their own mortgage funds. But they often immediately resell their mortgages into the secondary mortgage market to major nationwide lenders, such as Fannie Mae and Freddie Mac, to raise cash to make more loans.
Examples of nationwide direct lenders include Washington Mutual (the nation's largest direct lender), Bank of America, Chase Manhattan and Wells Fargo Mortgage. These lenders often retain their adjustable-rate mortgages but sell their fixed-rate mortgages, usually retaining the very profitable loan servicing.
A major drawback of some direct lenders is that if your situation doesn't fit their formulas, you won't get a mortgage. Loan and borrower qualification flexibility of some direct lenders is very limited.
C - MORTGAGE BANKERS. The third major category of mortgage lenders is a hybrid of mortgage brokers and direct lenders. Mortgage bankers lend their own money to homeowners. But they usually quickly sell those home loans in the secondary mortgage market, much like direct lenders.
Because mortgage bankers specialize in developing many ways to dispose of loans they originate, they often have a wide variety of creative home loans to fit different situations. The largest mortgage banker, Countrywide, has both local offices and a huge Internet Web site at www.countrywide.com.
AVOID PAYING LOAN FEE POINTS WHEN REFINANCING A HOME LOAN. Unlike home buyers who can immediately deduct any loan fee points paid to obtain an "acquisition mortgage," refinancing homeowners can only deduct loan fee points over the 15- to 30-year life of the mortgage. Each "point" equals 1 percent of the amount borrowed.
For example, if you pay a one-point loan fee to obtain a $100,000 30-year refinanced mortgage, that $1,000 can be deducted at the rate of only $33.33 for the next 30 years.
A better alternative is to obtain a "no-cost" or "low-cost" refinanced mortgage without any loan fees. Study the lender's "good faith estimate" of loan charges, which must be given to you within three days of your submitting a loan application. Although you might pay a one-eighth percent higher interest rate for a loan without a loan fee and extra "junk" or "garbage" fees, the savings are usually worthwhile.
SUMMARY. Today's ultra-low mortgage interest rates mean this is a great time to refinance home mortgages. However, it pays to shop among at least three different lenders to compare their interest rates and loan terms. Watch out for any loan charges that were not disclosed in the lender's "good faith estimate." If necessary, be prepared to walk away if the lender attempts to bait and switch loan terms.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=67
Too many houses, but only one fits
Finding a home to buy is rarely easy. Some buyers look for months, even years, before finding the right house. When you do find the right house, a mixed bag of emotions can cloud your good judgment. You'll probably wonder if you're making the right decision.
Recently, one buyer who'd been looking for months decided that she was ready to buy. She was intent on making one of several new listings work for her and her family. When she previewed a new listing in her favorite neighborhood, she was sure she'd found the home she was going to buy. The listing showed beautifully. It had been nicely renovated. It has the right number of bedrooms and baths. There was a family room and a lovely yard.
Then she visited another new listing that she also liked. In fact, she liked the living space better. While this house didn't have a remodeled kitchen and nice family room like the other house, it was bigger. The yard wasn't as nice as the one at the first house and the school district wasn't as good. But, the house worked better for the life style of her growing family.
To complicate matters, her husband preferred a listing that was larger than either of the other two and it was located in the better neighborhood. However, it was on a busy street and it needed a lot of work.
HOUSE HUNTING TIP
THE CLOSING: That's why it's important to step back and rationally analyze how well the listing will work for your needs before you make an offer.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=170
Recently, one buyer who'd been looking for months decided that she was ready to buy. She was intent on making one of several new listings work for her and her family. When she previewed a new listing in her favorite neighborhood, she was sure she'd found the home she was going to buy. The listing showed beautifully. It had been nicely renovated. It has the right number of bedrooms and baths. There was a family room and a lovely yard.
Then she visited another new listing that she also liked. In fact, she liked the living space better. While this house didn't have a remodeled kitchen and nice family room like the other house, it was bigger. The yard wasn't as nice as the one at the first house and the school district wasn't as good. But, the house worked better for the life style of her growing family.
To complicate matters, her husband preferred a listing that was larger than either of the other two and it was located in the better neighborhood. However, it was on a busy street and it needed a lot of work.
HOUSE HUNTING TIP
THE CLOSING: That's why it's important to step back and rationally analyze how well the listing will work for your needs before you make an offer.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=170
Unhappy customers can do more than write to HUD
The great majority of loans today are serviced by firms that don't own them. The servicer is paid by, and is beholden to the owner of the mortgage. Borrowers have no say in who services their loan, and if they get poor service, about all they can do is write a letter of complaint to the Department of Housing and Urban Development (HUD). Therefore, it is hardly surprising that servicing does not generally meet the needs of borrowers.
But it doesn't have to be that way. Servicing systems can be designed to meet the needs of borrowers, who would pay for the service. The borrower would be the client rather than the lender, and could fire the servicer if he messed up.
A servicing system for borrowers (SSB) would not replace existing servicing systems. The firms providing the services described below could be called “second-tier servicers.” Borrowers would make their payments to second-tier servicers, who would then make payments to the primary servicers.
With the payments going through its hands, the second-tier servicer has command of information on the borrower's payment history. In contrast to the primary servicer, however, the second tier servicer will use the information to provide useful services to the borrower. The services, for which the borrower will pay a modest monthly fee, will be provided over the Internet.
Access to Payment History: The major purpose of this service is to provide peace of mind that the lender is properly crediting mortgage payments. Many borrowers, and especially those who make extra payments, are extremely anxious about this.
The SSB would allow borrowers to monitor their accounts continuously, and “what-if” capacity would allow them to experiment with different future payment patterns. This would allow borrowers to actively plan the amortization process, instead of passively watching it unfold.
Access to Details of ARM Rate Adjustments: The major purpose is to provide peace of mind that the new rate has been properly calculated. Adjustable-rate mortgage (ARM) borrowers worry about this. The SSB would show the details of the ARM rate adjustment, rather than just the resulting new rate, which is all they get now. Borrowers will also be able to forecast what the new rate will be months in advance so they can prepare for a possible refinancing.
Cost Reduction Refinance Opportunities: The purpose is to flag profitable refinance opportunities. The SSB would continually monitor the relationship between the borrower's interest rate, current market rates and the borrower's credit as affected by his mortgage payment record. On ARMs with rate adjustments scheduled within the next (say) 4 months, refinance analysis would be based on the new rate forecasted at the adjustment.
Cash-Raising Opportunities: The purpose is to provide borrowers who request it with a tool for assessing alternative ways to raise cash. The system would already know many of the required data inputs, including the borrower's existing mortgage balance and terms, as well as current market terms. Other data inputs, such as the amount of cash needed, would be entered by the borrower.
PMI Termination: The purpose is to give the borrower a “heads-up” that it may be possible to terminate mortgage insurance. This is a major concern to many borrowers because automatic termination under the Federal legislation passed in 1999 does not take account of extra payments to principal, or house price appreciation. Earlier termination that does take account of these factors requires that the borrower take the initiative. The SSB would do this for the borrower, flagging a termination opportunity when it arose.
Alternative Payment Options: The purpose is to allow borrowers to pay biweekly, bimonthly or weekly. Borrowers may prefer one of these options because they find the schedule more convenient, or because they want to build an early payoff plan around shorter payment periods.
The firms offering SSBs will be positioned to extract maximum value from them through the sale of services that borrowers may need. If the system reveals a refinance opportunity, for example, the second tier servicer will be much better positioned to become the new lender than the primary servicer. I am not able to reveal at this time, however, who these innovators will be.
What Is Title Insurance? Why Do You Need It?
You're having breakfast. There's a knock on the door. A former owner's brother introduces himself. He was out of the country when his sibling passed away and didn't sign-off his interests as an heir to the estate. Could this be a problem?
A title insurance policy protects against losses that occur when you discover after closing that someone else can claim ownership of the property. Could that happen? Yes, if the rights of a previous owner were overlooked during your title examination or a search that came before it.
What is a title examination, or title search?
It's a close examination of all public records that involve title to the real estate you are purchasing. The person conducting the search looks at past deeds, wills, and trusts to make sure the "chain of title" has passed correctly to each new owner. The examiner also tries to verify that all prior mortgages, judgments, and other liens have been paid in full.
"Clouds" on the Title
If a problem (called a "defect" or "cloud" on the title) is found it should be corrected prior to closing. For instance, a previous owner sold the property 15 years ago. His wife was listed on the deed but for some reason did not sign-off at closing. Her interest in the property must be removed to clear the title.
A title search should uncover other potential problems or nuisances, such as rights another may hold (right of ways, view easements, power line easements, mineral rights), claims by prior undisclosed heirs, and pending legal actions.
If the title looks good why do I need title insurance?
Because no one is perfect. In my state the examination covers all aspects of ownership during the 40 years prior to closing. Even an expert title examiner can miss a defect that might crop up to create problems for you later.
What does the policy cover?
What isn't covered?
Do I have to buy title insurance?
Not if you're paying cash for the property.
To whom is the policy issued? Who is paid if there's a problem?
Who pays for title insurance?
The buyer, unless your state requires the seller to pay. Even if it's not required buyers can make seller payment a stipulation of an offer to purchase.
Buyers may be able to save money on the title search and policy if the present owner's policy can be updated and reissued. Ask your closing agent if that's possible.
How often must I pay the premium?
Title insurance policies are paid in-full with a one-time fee which is usually part of closing costs.
Am I protected if my home increases in value?
Ask about inflation riders for your policy. They increase the coverage amount as the property's value increases.
Title insurance is a relatively inexpensive item and can be one of the best purchases you'll make for your new home. You'll sleep a little better knowing you're protected if a long-lost heir shows up on your doorstep.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=34
What Type of Real Estate Makes the Best Investment?
During the economic downturn of the early 1990s, a home in the Crocker Highlands area of Oakland, Calif., sold twice in two years. The house did not change substantially during this time, nor did its price. But, average prices in the neighborhood dropped about 15 percent during the same time.
Some homes hold their value better than others. It makes sense to pay particular attention to what you buy and where if you're worried that the housing market is overdue for a correction.
What did the Crocker Highlands home have that caused it to be more desirable than other listings? It had a good floor plan. There were four bedrooms on one level. The master bedroom had its own bathroom, and there were two additional bathrooms.
The house was an older home, built in the 1920s, but it had been extensively renovated with quality, high-end finishes. There was no deferred maintenance. It had a spacious eat-in kitchen/family room that opened directly out to a level, private and sunny backyard. It was a house that was easy to live in and it required no work.
The house was also located on one of the best streets in neighborhood. What made it such a desirable street? It was not a thoroughfare, so the traffic was minimal. It was quiet. Yet, it was within walking distance of the local school. The street was virtually level so children could ride bikes and it was easy for homeowners to get in and out of their driveways. There was plenty of street parking for guests.
This is not to say that you shouldn't buy a home unless it includes all the desirable qualities of this particular Crocker Highlands home. However, it does make sense to keep resale value in mind when you're considering a home purchase, particularly if you don't intend to stay there forever.
Other attributes that tend to add to resale value are good storage space, a garage, a bathroom on each level and a convenient location. Good views tend to add value, and so does easy access in and out of the house.
One-level homes are usually in high demand, especially with older home buyers. Two-story homes are often preferred by younger buyers. Homes that are on three or more levels tend to sell for less than a similar sized home with only one or two levels.
It can be difficult to find a home with a good floor plan, good indoor-outdoor living and the right number of bedrooms and baths that is also in top condition. If you're up for the challenge, consider buying a home that you can improve over time. But, first make sure that the basic structure is sound and the floor plan is good.
Also, get a handle on how much you'll need to invest in the property before you start negotiating with the seller. Don't pay an inflated price for a house that needs work.
Location is one of the most important indicators of value in residential real estate.
Neighborhoods with good public schools tend to have higher property values than areas where schools are a problem. Close proximity to a major metropolitan area has a positive effect on home values, particularly if there's good transportation.
Neighborhoods where the residents are predominantly owner-occupants tend to be more desirable than neighborhoods where most of the homes are owned by absentee landlords.
THE CLOSING: The local economy directly affects home values, and so does supply and demand. Areas with a lot of building can end up with a glut of homes for sale when there is a correction in the housing market. This can depress local property values.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=226
Some homes hold their value better than others. It makes sense to pay particular attention to what you buy and where if you're worried that the housing market is overdue for a correction.
What did the Crocker Highlands home have that caused it to be more desirable than other listings? It had a good floor plan. There were four bedrooms on one level. The master bedroom had its own bathroom, and there were two additional bathrooms.
The house was an older home, built in the 1920s, but it had been extensively renovated with quality, high-end finishes. There was no deferred maintenance. It had a spacious eat-in kitchen/family room that opened directly out to a level, private and sunny backyard. It was a house that was easy to live in and it required no work.
The house was also located on one of the best streets in neighborhood. What made it such a desirable street? It was not a thoroughfare, so the traffic was minimal. It was quiet. Yet, it was within walking distance of the local school. The street was virtually level so children could ride bikes and it was easy for homeowners to get in and out of their driveways. There was plenty of street parking for guests.
This is not to say that you shouldn't buy a home unless it includes all the desirable qualities of this particular Crocker Highlands home. However, it does make sense to keep resale value in mind when you're considering a home purchase, particularly if you don't intend to stay there forever.
Other attributes that tend to add to resale value are good storage space, a garage, a bathroom on each level and a convenient location. Good views tend to add value, and so does easy access in and out of the house.
One-level homes are usually in high demand, especially with older home buyers. Two-story homes are often preferred by younger buyers. Homes that are on three or more levels tend to sell for less than a similar sized home with only one or two levels.
It can be difficult to find a home with a good floor plan, good indoor-outdoor living and the right number of bedrooms and baths that is also in top condition. If you're up for the challenge, consider buying a home that you can improve over time. But, first make sure that the basic structure is sound and the floor plan is good.
Also, get a handle on how much you'll need to invest in the property before you start negotiating with the seller. Don't pay an inflated price for a house that needs work.
Location is one of the most important indicators of value in residential real estate.
Neighborhoods with good public schools tend to have higher property values than areas where schools are a problem. Close proximity to a major metropolitan area has a positive effect on home values, particularly if there's good transportation.
Neighborhoods where the residents are predominantly owner-occupants tend to be more desirable than neighborhoods where most of the homes are owned by absentee landlords.
THE CLOSING: The local economy directly affects home values, and so does supply and demand. Areas with a lot of building can end up with a glut of homes for sale when there is a correction in the housing market. This can depress local property values.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=226
Why Buy a New Home? (Or, Why NOT Buy a Re-sale Home?)
There are many factors one must consider when deciding between the purchase of a new or re-sale home.
To help you make the right decision, we have listed the most relevant factors below:
SAFETY AND PEACE OF MIND
Newer homes must adhere to up-to-date standards for structural stability, energy conservation and general safety, especially with regard to electrical systems, fireplaces and heating equipment. Also on the plus side are the lack of general wear, modern design features, contemporary conveniences, and of course, the builder's warranty.
APPRECIATION
Newer homes are often (but not always) found in upcoming and developing areas, where value appreciation may be more pronounced than in localities where older homes are found. Thus, in many cases, there can be investment advantages with a new or relatively new residence.
ENERGY EFFICIENCY
With rising utility costs, lack of energy efficiency in an old home is also a major consideration, and upgrades in this area can be cost prohibitive. Insulation in ceilings, walls and floors is often substandard or nonexistent, and old-style windows waste heat almost as badly as if they were open. Old heating equipment is typically not designed for efficient use of fuel, requiring more money to produce a given amount of heat. Furthermore, with old heaters, safety problems are more likely to occur.
CRAFTSMANSHIP
People often assume that workmanship in past generations was superior to what is practiced in today's workplace. Given the value denigration in much of our culture, this is probably true in a general sense. But to apply this as a blanket condemnation of current construction quality would be a grave mistake. Good and bad craftsmanship have had their place in every era, and builders with skill and integrity are by no means an extinct species.
AFFORDABILITY
Generally, re-sale homes are more affordable that their newer counterparts. This is simply a function of supply and demand, and the economic realties of the real estate market. It should be noted, however, that the short-term savings in the purchase of an existing home may be lost over time when repairs, renovations, pest control, and lower appreciation are taken into account. These issues are much less likely to concern new home buyers.
OTHER
With many older homes, there are additional advantages, such as proven stability, established landscaping, ambient character, and antique design features. But here also, there is a list of down-side considerations. There are many issues involving deterioration, wear and obsolete design. Many older homes have been upgraded to offset these disadvantages, but such improvements are not always the work of qualified persons, nor is such work always done with a permit.
In many respects, the choice between a new or old home hinges upon individual considerations, such as personal likes and dislikes, long-term objectives, available time and capital for home improvements, do-it-yourself skills, age and season of life, etc. When all factors are considered, the choice should be the one that is most consistent with your practical needs, desires and finances. And as always, it should include the disclosure advantages provided by a well-seasoned, qualified home inspector.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=156
To help you make the right decision, we have listed the most relevant factors below:
SAFETY AND PEACE OF MIND
Newer homes must adhere to up-to-date standards for structural stability, energy conservation and general safety, especially with regard to electrical systems, fireplaces and heating equipment. Also on the plus side are the lack of general wear, modern design features, contemporary conveniences, and of course, the builder's warranty.
APPRECIATION
Newer homes are often (but not always) found in upcoming and developing areas, where value appreciation may be more pronounced than in localities where older homes are found. Thus, in many cases, there can be investment advantages with a new or relatively new residence.
ENERGY EFFICIENCY
With rising utility costs, lack of energy efficiency in an old home is also a major consideration, and upgrades in this area can be cost prohibitive. Insulation in ceilings, walls and floors is often substandard or nonexistent, and old-style windows waste heat almost as badly as if they were open. Old heating equipment is typically not designed for efficient use of fuel, requiring more money to produce a given amount of heat. Furthermore, with old heaters, safety problems are more likely to occur.
CRAFTSMANSHIP
People often assume that workmanship in past generations was superior to what is practiced in today's workplace. Given the value denigration in much of our culture, this is probably true in a general sense. But to apply this as a blanket condemnation of current construction quality would be a grave mistake. Good and bad craftsmanship have had their place in every era, and builders with skill and integrity are by no means an extinct species.
AFFORDABILITY
Generally, re-sale homes are more affordable that their newer counterparts. This is simply a function of supply and demand, and the economic realties of the real estate market. It should be noted, however, that the short-term savings in the purchase of an existing home may be lost over time when repairs, renovations, pest control, and lower appreciation are taken into account. These issues are much less likely to concern new home buyers.
OTHER
With many older homes, there are additional advantages, such as proven stability, established landscaping, ambient character, and antique design features. But here also, there is a list of down-side considerations. There are many issues involving deterioration, wear and obsolete design. Many older homes have been upgraded to offset these disadvantages, but such improvements are not always the work of qualified persons, nor is such work always done with a permit.
In many respects, the choice between a new or old home hinges upon individual considerations, such as personal likes and dislikes, long-term objectives, available time and capital for home improvements, do-it-yourself skills, age and season of life, etc. When all factors are considered, the choice should be the one that is most consistent with your practical needs, desires and finances. And as always, it should include the disclosure advantages provided by a well-seasoned, qualified home inspector.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=156
Win a $10,000 Bond While Shopping For A Home
When was the last time you won a sweepstakes? Like most of us, you probably have never won a decent prize. The reason is simple…the odds of winning most large lotteries or sweepstakes are often slimmer than a million to one.
Now, the probability of winning a sweepstakes is actually within reach. American Home Guides is offering a $10,000 US Savings Bond to the winner of its “Home Bonus Sweepstakes”. Unlike the lotteries, there is no purchase necessary. To enter the sweepstakes, all you need to do is schedule an appointment at any community listed on an American Home Guides web site. After visiting the community, you’ll complete the entry by simply answering two questions that will be emailed to you – what impressed you most about the community and how likely are you to purchase a home there. There are no wrong answers.
The best part is that at the time of writing this article, the odds of winning are better than one in a thousand. You can’t beat it! You may never again come across a better chance to actually take home a $10,000 savings bond (and you might even find the home of your dreams in the process!).
So visit AmericanHomeGuides.com and find a community you would like to see. Then click the “Schedule Appointment” button at the top of the listing and you will have begun entering the sweepstakes.
Good luck!
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