INTERESTING TIDBIT OF REAL ESTATE HISTORY

 More than one thing seems crooked here!

An 18th century British pub known as the Crooked House was originally built in 1765, but only got its name in 1830 after it started sinking on one side of the building due to coal mining in the area. Yet it remained standing until last year when 

a fire coincidentally destroyed it just two weeks after it was sold to new owners, and they bulldozed it two days later before authorities could even investigate the fire.

As you might presume, the circumstances seemed suspicious to authorities, and they’ve ordered the new owners to rebuild the pub back to its original lopsided looks before the fire.

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How Much Will I Pay for Closing Costs? In Closing (Part 5)

If you’ve heard people vent frustration with the process of buying a home, you’ve likely heard complaints about unexpected costs at closing. Let’s unpack what you should expect so you’re not surprised, too.

Closing costs can vary widely by location and your home’s purchase price. Costs are split between the buyer and the seller, but the buyer cover the lion’s share. Buyers can generally expect closing costs to be 3% to 4% of the home’s sales price. So, on a $300,000 home, a buyer can pay anywhere from $9,000 to $12,000 in closing costs. (Meanwhile, the seller typically pays closing costs of 1% to 3% of the sales price.)

You can try to predict closing costs with calculators like Nerdwallet’s, which lets you plug in your mortgage details to get a rough estimate of what your costs will be. 

Closing fees often include (but are not limited to):

• Commission for the buyer’s agent and seller’s agent
• A loan application fee
• An origination fee, which lenders charge for processing your loan
• The appraisal fee
• A fee for pulling your credit report
• An underwriting fee, which covers the lender’s costs of researching whether to approve you for the loan
• A title search fee
• Property taxes, which are due within 60 days of the purchase
• A recording fee for filing a public land record with the courthouse

These fees are a bummer. The bright side: Almost all of them are one-time deals.

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Who’s Invited to the Closing? In Closing (Part 4)

Certain people will be there. Who, exactly, depends on your state. Typically, you’ll be joined by:

• Your agent
• The seller
• The seller’s agent
• A title company representative
• Your loan officer
• Any real estate attorneys involved in the transaction

The closing usually takes place at the title company, attorney’s office, or the buyer’s or seller’s agent’s real estate office. FYI: Some states, like California, don’t require an in-person, sit-down closing, because they’ve enacted legislation that allows for electronic closings with remote notaries.

Nonetheless, as the home buyer, you’ll have to sign what might seem like a mountain of paperwork — including the deed of trust, promissory note (promising the lender you’ll pay back the loan), and other documents. That cramp in your wrist will be worth it once everything is done.

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When Will the Final Walk-Through Happen? In Closing (Part 3)

Most real estate sale contracts allow the buyer to walk through the home within 24 hours of settlement to check the property’s condition. During this final inspection, which usually takes about an hour, you and your agent will make sure any repair work the seller agreed to make has been completed.

During the walk-through, you’ll also double-check that everything in the house is in good working order. Be sure to: 

• Run water in all the faucets and check for leaks under sinks
• Test appliances
• Check the garage door opener
• Flush toilets
• Open and close all doors
• Run the garbage disposal and exhaust fans

If the home is in good shape — woo-hoo! Your next stop is the closing table.

If anything is amiss, your agent will contact the listing agent and, in most cases, negotiate to get the seller to compensate you at closing — typically in the form of a personal check — for the costs of fixing the problems yourself. 

Worst-case scenario: You have to delay closing to resolve problems. If that unlikely event happens, your agent will help you address the issue.

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What’s a Closing Disclosure? In Closing (Part 2)

Lenders must provide borrowers with a closing disclosure, or CD, at least three days before settlement. This form is a statement of your final loan terms and closing costs.

You have three days to review the CD. compare it to the loan estimate you received shortly after you applied for the loan. If you need a refresher on loan estimates, you can view a sample version here.

The point of this formal review process is to ensure there are no surprises at the closing table. If there’s a significant discrepancy between the loan estimate and the CD, notify your lender and title company immediately. Depending on what the underlying issue is, the closing has to stop and a new closing disclosure must be sent out with a new three-day review period.

The LE includes a couple of items that can’t change by the time you get the CD — namely interest rate and lender fees. Some items can change by only 10% (fees paid to local government to record the mortgage might be one). Others can change without limit, like prepaid interest, because it can’t be predicted at the start of the loan process.

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PROS AND CONS OF A USDA LOAN

A USDA loan could be a good fit for you, as long as you're aware of the potential trade-offs. Here are the good and the bad to getting this type of mortgage:

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Pros

• Low interest rate. You'll likely pay a lower rate on a USDA loan than you would on a conventional mortgage. Keep in mind that you'll get an even better rate with an excellent credit score, low debt-to-income ratio, or money toward a down payment.
• No down payment. Other than a VA loan (which is only for borrowers associated with the military), a USDA loan is the only type of mortgage that doesn't require any money upfront, making it easier to get a mortgage if you don't have a lot of money saved.
• Low insurance costs. You do need to pay for mortgage insurance with a USDA loan, but it's lower than what you'd pay with other types of mortgages. You'll pay 1% of your principal at closing, then an annual premium of 0.35% of your remaining principal. You'd pay private mortgage insurance on a conventional loan until you reached 20% to 22% equity in your home, which could take a long time and be expensive if you don't have a big down payment.
• You can refinance into another USDA loan. If you decide later that you want to refinance to get lower monthly payments or a better interest rate, you can refinance into another USDA loan.

Cons

• Location restrictions. USDA loans are for people in rural and suburban parts of the US. If you want to buy a home in the city or an area with more than 35,000 residents, you probably won't qualify.
• Income restrictions. You must be at a low-to-moderate income level (the exact number varies by county) to be eligible for a USDA loan.
• No adjustable-rate loans. You can only get a fixed-rate mortgage with the USDA program, not an adjustable-rate mortgage.
• Only single-family homes. You can't use a USDA loan to buy a multi-family home. If you aren't looking for a single-family home, you might consider an FHA loan instead.
• No cash-out refinances. A cash-out refinance is a type of loan that lets you receive cash if you've built equity in your home. You can refinance a USDA loan, but cash-out refinances aren't an option

https://www.businessinsider.com/personal-finance/usda-loan#:~:text=You'll%20likely%20pay%20a,No%20down%20payment.

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In Closing: How to Seal the Home Buying Deal (Part 1)

 By: HouseLogic

Sign that paperwork. Write those checks. Get those keys! 

The closing. It all comes down to this. The grand finale. Once you have the keys, the house is yours. (Cue: Air horn sound!)

Nice work getting this far. You’re almost a homeowner! Let’s run through some questions you may have as you cross the finish line.

What Does “Closing” Mean?

The close or settlement is when you sign the final ownership and insurance paperwork and get the keys to your new home.

The closing process technically begins when you’ve signed a purchase and sale agreement. That agreement should specify a closing date. From the signing date to the closing date typically takes four to six weeks. During this time, purchasing funds are held in escrow, where your money is safe until the deal is officially done.

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USDA LOANS in Texas Information

USDA Rural Development in Texas administers the Single Family Housing Direct Home Loan Program.  Please review the following information and contact us with any questions.

https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-direct-home-loans-6

What does this program do? 
Also known as the Section 502 Direct Loan Program, this program assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.

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Who may apply for this program?
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt.

Applicants must:

• Be without decent, safe and sanitary housing
• Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
• Agree to occupy the property as your primary residence
• Have the legal capacity to incur a loan obligation
• Meet citizenship or eligible noncitizen requirements
• Not be suspended or debarred from participation in federal programs

Properties financed with direct loan funds must:

• Not have market value in excess of the applicable area loan limit
• Not be designed for income producing activities

Borrowers are required to repay all or a portion of the payment subsidy received over the life of the loan when the title to the property transfers or the borrower is no longer living in the dwelling.

Applicants must meet income eligibility for a direct loan.  Please select your state from the dropdown menu above.

What is an eligible rural area?
Utilizing the USDA Eligibility Site you can enter a specific address for determination or just search the map to review general eligible areas.

How may funds be used?
Loan funds may be used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

How much may I borrow?

Using the Single Family Housing Direct Self- Assessment tool, potential applicants may enter information online to determine if the Section 502 Direct Loan Program is a good fit for them prior to applying.  The tool will provide a preliminary review after a potential applicant enters information on their general household composition, monthly income, monthly debts, property location, estimated property taxes, and estimated hazard insurance.  Potential applicants are welcome to submit a complete application for an official determination by USDA Rural Development (RD) regardless of the self-assessment results.  Upon receipt of a complete application, RD will determine the applicant’s eligibility using verified information and the applicant’s maximum loan amount based on their repayment ability and the area loan limit for the county in which the property is located. 

What is the interest rate and payback period?

• Effective March 1, 2024, the current interest rate for Single Family Housing Direct home loans is 4.5% for low-income and very low-income borrowers.
• Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower
• Interest rate when modified by payment assistance, can be as low as 1%
• Up to 33 year payback period - 38 year payback period for very low income applicants who can’t afford the 33 year loan term

How much down payment is required?
No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.

Is there a deadline to apply?
Applications for this program are accepted through your local RD office year round.

How long does an application take?
Processing times vary depending on funding availability and program demand in the area in which an applicant is interested in buying and completeness of the application package.

What governs this program?

• The Housing Act of 1949 as amended, 7 CFR, Part 3550,
• HB-1-3550 - Direct Single Family Housing Loans Field Office Handbook

Why does USDA Rural Development do this?
USDA Rural Development’s Section 502 Direct Loan Program provides a path to homeownership for low- and very-low-income families living in rural areas, and families who truly have no other way to make affordable homeownership a reality. Providing these affordable homeownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.

NOTE: Because citations and other information may be subject to change please always consult the program instructions listed in the section above titled "What Law Governs this Program?" You may also contact your local office for assistance.

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4 Common Home Buyer Slip-Ups

  Real estate professionals see a lot of reasons why home buyers ultimately end up losing out on a deal. Practitioners recently shared some of the more common mistakes and ways to correct the situation:

1. Shopping outside their price range.

It sounds obvious, but some home buyers just have trouble sticking to a budget. Shopping online may increase the temptation to bump up the price range. One way to avoid this situation is to get preapproved for a loan so you know what you can truly afford and stay within your limits.

2. Submitting lowball offers in a hot market.

We are in a seller’s market, making a crazy lowball offer can piss off the seller.  Buyers would be smart to offer full price when homes are priced well. I can help you understand how a comparative market analysis can offer insight into pricing.

3. Making a big purchase while in escrow.

Buyers often don't realize they will need to delay big purchases and opening new credit lines while in the process of buying a home. Even buying a fridge can throw off your credit or debt-to-income ratio. If a big purchase is made, the mortgage lender’s underwriter will need to re-evaluate the buyer’s finances and recheck her credit report before closing to ensure the buyer still qualifies for the mortgage, so be sure to heed warning when you're approaching this period.

4. Forgetting to budget closing costs.

Buyers don’t just need money for the down payment. There are a lot of extra fees at settlement, too. Buyers can receive an estimate from their mortgage lender of what the closing costs will be before even making an offer on a property. Make sure to review that information carefully. Closing costs can vary drastically but typically cost 2 to 7 percent of the home’s purchase price.

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Think You Should FSBO? 5 Reasons to Think Again!

Patt Lee Properties - Results that Move You!

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers

Recent studies have shown that 88% of buyers search online for a home. That is in comparison to only 21% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you? 

2. Results Come from the Internet

Where did buyers find the home they actually purchased?

• 44% on the internet
• 33% from a Real Estate Agent
• 9% from a yard sign
• 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial. 

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies, which work for the buyer and will almost always find some problems with the house
• The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $210,000, while the typical house sold by an agent sells for $249,000. This doesn’t mean that an agent can get $39,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

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