Month: November 2022

When it comes to who pays for closing costs in a real estate transaction, there will be closing costs that are unique to both buyer and seller. The buyer can incur costs that are equal to 3% to 6% of the sales price of the property. Each party is responsible for paying their own costs at closing. However, if the market is in the buyer’s or seller’s favor, it may determine if either party negotiates paying some of the other’s fees and costs in order to make a deal.

Most of the buyer’s costs are associated with the loan. The biggest costs incurred for a loan will be the loan origination fee and any discount points paid to buy down the interest rate. Other costs may include those for an appraisal, HOA assessments, prorated insurance and taxes.

The seller’s biggest closing cost liability is paying the real estate commission. Other fees would include paying the title insurance, transfer taxes and prorated property taxes.

In a buyer’s market, it may have been negotiated that the seller pay for some of the buyer’s closing costs, called seller concessions. In a seller’s market, a buyer may offer to pay for some of the seller’s closing cost liability, such as the title insurance or the home warranty plan. If a buyer does this, it increases the seller’s net proceeds and gives the buyer an advantage in a seller’s market.

Whether you are a buyer or seller, I can help you use the anticipated closing costs to help complete a sale to your advantage. Call or email me today and we can go over your specific goals and circumstances. I am always here for you to provide guidance and help you navigate all aspects of the sale.

A mortgage preapproval is most valuable when you can get it prior to your home search. Provided by a lender, it determines how much of a mortgage you can afford. Your credit history, income, assets and debts will be reviewed in order to arrive at a price point for homes you can comfortably consider buying.

Having a mortgage preapproval in hand when presenting an offer to a seller demonstrates to that seller your serious intent to purchase with the ability to close on the sale. Even though you have been through the process to get preapproved, the approval is not a guaranteed commitment to lend. The property you select will still have to appraise for the negotiated sales price, and you will have to qualify for whatever interest rate and terms you chose.

To obtain a loan preapproval, you need to meet with a lender, who will ask you about your financial history and pull a credit report. Your credit score will be the most important factor in determining preapproval qualification. The lender will also want to verify your income and assets. Be prepared to provide pay stubs, 1099s, evidence of any other sources of income and bank statements. This proof of income and assets adds strength to the preapproval letter the lender will generate for you. It also helps in deciding which kind of loan works best for you.

Please contact me. I am here to help you get the home-buying process started by guiding you through the loan preapproval process.