BECOME A HOME BUYING EXPERT

You've found your dream home, the seller has accepted your offer, your loan has been approved and you're eager to move into your new home. But before you get the key, there's one more step--the closing.

Also called the settlement, the closing is the process of passing ownership of property from seller to buyer. And it can be bewildering. As a buyer, you will sign what seems like endless piles of documents and will have to present a sizeable check for the down payment and various closing costs. It's the fees associated with the closing that many times remains a mystery to many buyers who may simply hand over thousands of dollars without really knowing what they are paying for.

As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government imposed. Although many of the fees may vary by locality, here are some common fees:

Meanings & Definitions

This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.

This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.

This fee covers the lender's loan-processing costs. The fee is typically one percent of the total mortgage.

You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.

These fees generally include costs for the title search, title examination, title insurance, document preparation and other miscellaneous title fees.

If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.

 This fee covers the interest payment from the date you purchases the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.

 In locations where escrow accounts are common, a mortgage lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year advance plus two months worth of homeowner's insurance premium will be collected. In addition, taxes equal approximately to two months in excess of the number of months that have elapsed in the year are paid at closing. (If six months have passed, eight months of taxes will be collected.)

This expense is charged by most states for recording the purchase documents and transferring ownership of the property.

Make sure you consult a real estate professional in your area to find out which fees--and how much--you will be expected to pay during the closing of you prospective home. Keep in mind that you can negotiate these costs with the seller during the offering stage. In some instances, the seller might even agree to pay all of the settlement costs.

First-Time Home Buyers

If you are a first-time home buyer, use the guide below for helpful hints and tips and learn how to avoid common mistakes when buying your first home in Lake Norman, NC.

All the above may seem rather overwhelming. That is why having a professional represent you and keep track of all the details for you is highly recommended. Please contact me directly to discuss any of these matters in further detail.

MAKING AN OFFER

Before the offer to purchase is created, it is very important that you have been at least pre-qualified or better yet pre-approved by a lender.

This is one of the best negotiating tools a buyer can have. It shows the seller that you are financially able to purchase the home. After you have found the right home, it is time to prepare the offer.

When you are buying a home, there are many problems that the seller is obligated to disclose. For example, in most states, it is illegal to withhold information about major physical defects on the property, but these disclosures don't always paint the entire picture of the home. Here are six questions you may want to ask that can offer additional insight about the prospective home before you make a final decision.

1) Why is the seller selling the house? This question may help you evaluate the "real value" of the property. Is there something about the house the seller does not like? If so, you may be able to adjust the purchase offer accordingly.

2) How much did the seller pay for the home? This question can, in some instances, help the buyer negotiate a better deal-maybe even get the seller to carry part of the loan. However, it is important to remember that the purchase price is influenced by several factors, like the current market value and any improvements the seller may have made to the home. The original purchase price might not have anything to do with the current value of the house.

3) What does the seller like most and least about the property? By asking the seller what he or she likes most and least about the property, you might get some interesting information. In a few cases, what a seller likes the most about a home might actually be something the buyer is looking to avoid. For example, if the seller describes his house as being in a "happening community," the buyer might consider this a negative factor because the area may be too noisy or busy for his or her taste.

4) Has the seller had any problems with the home in the past? It is also a good idea to ask the seller if he or she has had any problems with the home while living there. Has the seller had problems with a leakage from the upstairs bedroom in the past? If so, even if the leak has been corrected, the floor and walls around the bathroom might have been damaged. You should also check that these items were repaired properly.

5) Are there any nuisances or problem neighbors? Use this answer to find out about any noisy neighbors, barking dogs, heavy airplane traffic or even planned changes to the community, such as a planned street widening. This may give you insight on why the seller is really moving.

6) How are the public schools in the area? Because the value of a community is usually greatly influenced by the public schools in the area, finding out the buyer's perception can give you some insight about the quality of the area's schools.

Knowing all you can about a prospective home, not only helps you decide if it's the home of your dreams, but what offer to make as well. Your real estate professional can help you get your key questions answered and give you advice on how to evaluate your findings.