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Respa What It Means To You

Dec 29

Posted by admin in Real Estate

The United States Department of Housing and Urban Development (HUD) drafted and enacted the Real Estate Settlement Procedures Act (RESPA) more than 30 years ago as a consumer protection statute designed to help home buyers navigate their way through the sometimes complicated business of real estate. Specifically, RESPA addresses the issue of home buying closing costs and settlement procedures.

Under the terms of RESPA, home buyers are entitled to receive certain disclosures during the course of a real estate transaction. The law also prohibits kickbacks and referral fees that unnecessarily inflate the cost of settlement services and therefore falsely driving up the cost buying a home. RESPA provisions apply to loans secured with a mortgage on residential properties designed to house one to four families. Examples of the types of loans covered by RESPA include:

Purchase loans
Assumptions
Refinancing loans or measures
Property improvement loans
Lines of credit based on equity

An office within HUD, called ‘RESPA and Interstate Land Sales’ enforces the RESPA statute. Buyers may contact the office directly if they think the terms of closing and settlement in their house deal do not respect RESPA provisions.

RESPA stipulates that certain disclosures be made at particular times during the real estate transaction process. When a buyer goes to apply for a mortgage loan, his or her broker or lender must provide : either at the time of the application or by mail within three days : a Special Information Booklet, a Good Faith Estimate (GFE) of potential settlement fees, and a Mortgage Servicing Disclosure Statement.

The Special Information is required for home purchases only, and contains details about different kinds of real estate settlement services. The GFE outlines the type and amount of settlement costs the buyer will likely encounter when his or her house deal closes, as well as whether the broker or lender requires the buyer to use a particular settlement services vendor. The figures in the GFE are estimates, but they should be relatively close to the actual settlement costs at closing. Finally, the Mortgage Servicing Disclosure Statement reveals whether the broker or lender will handle the buyer’s loan or whether it will be transferred to another lender. The Mortgage Servicing Disclosure Statement should also have a section dedicated to options the buyer may employ to resolve any complaints.

If the buyer decides to go ahead with the transaction after securing appropriate financing, the next RESPA-required disclosure is an Affiliated Business Arrangement disclosure (AfBA), which is used if a settlement service vendor or provider refers the buyer to another provider that is affiliated with the original service provider. The affiliation can be part or full ownership of any other beneficial interest. The AfBA disclosure must be made before or at the time the referral is made, and it must give a full description of the relationship that exists between the two companies as well as a reasonable estimate of the fees of the second settlement service provider. In most cases, the buyer is not obligated to accept the services offered by the second service provider, but he or she may choose to do so.

One day before the settlement (or closing) date, the borrower may see the HUD-1 Settlement form, which details all settlement charges imposed on borrowers and sellers. All parties receive a complete copy of this form, showing all of the actual settlement costs, at the time of settlement, or in the mail shortly thereafter.

Another disclosure that is made at the time of settlement is the Initial Escrow Statement, which lists the estimates of charges that are expected to be paid from the escrow account during the first year of the loan. Charges may include taxes and insurance premiums. After the first year, loan servicers must provide borrowers with an updated annual escrow, which lists all deposits and payments, as well as any relevant shortages or surpluses related to the account.

If, at some point after the settlement occurs, the loan servicer reassigns the loan to another servicer, the borrower must be notified 15 days in advance by means of a Servicing Transfer Statement.

While RESPA does not set out particular penalties for non-disclosure of the above mentioned items, kickbacks and referral fees that violate Section 8 of the law are subject to fines of up to $10,000 and imprisonment for up to one year.

Settlement or closing fees cost Americans about $55 billion each year. HUD has initiated a RESPA reform process that the department hopes will simplify the costs involved with buying a home to better reflect the Bush administration’s goal of helping to build an ‘ownership society’ in which all Americans can own their own home. The reform process has not been completed, and for now, the rules remain as they have been for the past three decades.

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Setting Your Homes Listing Price

Dec 10

Posted by admin in Real Estate

When it comes to buying a home, most home buyers will filter the homes they are interested in by listing price. When buying a home the price is typically the number one criteria for choosing which home to buy. Ultimately it is the buyer that determines the selling price of your home. So how can you get the most return on your investment when selling your home? The simple answer to this question is educate yourself on the local real estate market. Finding local real estate information is fairly simple to obtain and easy to interpret.

One of the best places to start is to look on the Internet and see homes for sale in your general area. Filter the homes you look at by the amenities and attributes of your own home. This should give you a general price range of what others are asking for their home. Another method is to contact a real estate agent and ask them to provide you with a CMA, comparative market analysis. A CMA analyses is great to have and it offers valuable information on the past and current real estate market.

Obtaining a CMA is easy and typically free. Of course the real estate agent provides a CMA in hopes of listing your home. A great way to get several CMAs to compare is to contact several real estate agents and have them all do a CMA on your home. Review the information and list your home with the real estate agent that provided you with the most informative and comprehensive CMA. If they did a bang up job on gathering that information chances are they will do a great job in marketing your home.

Keep in mind that the real estate agent does not set the price of your home. That is completely up to you. Gather the facts and make the best decision you can when setting your price. If the real estate market is strong and your home does not sell or get much traffic that may be a sign that you priced your home to high. The key to selling your home in a reasonable amount of time is correct pricing and the real estate market reacts quickly to homes that are priced well.

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15 Tips To Help You Buy Your Home

Oct 9

Posted by admin in Real Estate

Thinking of buying another home or your first home? Here are some tips for maximizing the home buying experience. Detailed coverage of the topics below is provided in his website:

1. DON\’T WAIT TO BUY
Prices are only going to go up. Don\’t be a victim of it. Better to have the escalator go up with you on it.

2. BE REALISTIC
If you were a seller, would you take a lot less for your home than it was worth? Unless there is some highly unusual circumstance, the seller\’s not going to either. Don?t waste your time making unrealistic offers and risk losing the property in the meantime.

3. ALWAYS BUY NEIGHBORHOOD
Property in good, quiet neighborhoods with solid school systems always appreciates well. Avoid proximity to business establishments, factories, areas with odors, railroad tracks, heavily traveled streets, noise, nearness to police and fire stations and being too close to schools. (Within walking distance of a school can be a plus.)

4. AVOID PROPERTY DETRIMENTS
Factors in the property itself can be problems later. Always buy as if you have to sell. Someday you\’ll have to — often sooner than you think. Decreased demand due to any of these and other \”turn offs\” can mean a lower price when you sell:
– small backyards
– inadequate closet space
– poor floor plan
– tiny or outdated kitchen
– fewer than three bedrooms or more than four (except for condominiums and retirement communities where two bedrooms are common)
– inadequate number of bathrooms for the size of the home

5. USE A REAL ESTATE AGENT
Save time and avoid losing the best homes. Get recommendations and work only with one agent. When you \”work with\” a number of agents, you have \”everyone\” working with you (not in reality), but nobody working for you. The very best deals often go to an agent\’s best prospects. You\’ll be the first to know about fresh listings. When you call on an ad, the cream has often been skimmed already.

Work only with an experienced agent who qualifies you on the basis of your income and credit history. Avoid any agent who just pops you in a car and starts driving you around.

You should also feel a sense of progress. If what you\’re being shown is only what the agent wants to sell, instead of what you need, find another agent.

6. INSPECT THE PROPERTY
Look at properties during the day, and when \”the neighborhood is at home\”, to observe any annoying situations: noisy or pesky neighbors, loud music playing, cars racing up and down the street and the like, and to be able to tactfully solicit information from neighbors about the property and the neighborhood. Make multiple visits to the area,in addition to touring the inside of the property several times. Take someone else with you on subsequent visits to get additional points of view, particularly those with real estate construction, electrical and plumbing experience. Don\’t waste time between visits. The clock is ticking. If you\’re interested,other buyers are probably going to be too.

Have a professional property inspection done by a certified property inspector. Get recommendations. Be very careful of any properties with environmental problems, particularly any involving underground oil tanks. The cost of environmental cleanups can be huge. Just because you are told that the property has a \”tank policy\” should not give you a false sense of security.

The purpose of a home inspection is to detect major problems, not to expect the seller to fix everything noted. Keep your eye on the ball. Staying reasonable facilitates matters all the way around.

Be sure to have the property under contract, making the sale contingent upon a satisfactory inspection. You don\’t want to lose a property while waiting for an inspection.

Always conduct a \”walk through\” or pre-settlement inspection of the property, personally, on the day of closing. The utilities must be left on to do it properly. Make sure the basement is dry, turn on both the heating and air conditioning no matter what time of year it is, open and close all windows and doors, check all stove burners, make sure all keys work and that there are keys for all doors, and ensure that the premises are reasonably clean and free of all the seller\’s personal effects. The time to discover problems is before closing or escrow, not afterwards. While it should not and may not happen this way, cooperation will very likely wane when sellers and agents have their money.

7. BEWARE OF HIDDEN DEFECTS
All sellers, and real estate licensees, are duty bound to reveal any hidden or latent defects in a property not observable by a reasonable inspection. Agents are required to conduct a visual inspection of the entire property when taking the listing. Dealing with agents gives you some added protection. Dealing directly with the owners doesn\’t.

8. CONSIDER A HOMEOWNER\’S WARRANTY
The cost is modest, many items are covered (after a small deductible) and they usually provide one year coverage. Your agent can advise you how to obtain one.

9. NEGOTIATE TO WIN — FOR REAL
When you find the home that ideally meets your needs, buy it. Even if you think it is slightly overpriced, pounce on it anyway before someone else does. In some areas, such as parts of Northern New Jersey, paying in excess of the listing price is often virtually standard procedure.

Don\’t let pride or ego get in the way of taking the long view. If the property is well located, you\’ll make up the \”overpayment\” quickly. Remember the \”97% Rule\”. If you think a property is worth enough to pay 97% of the listing price, how can it be worth it to lose it for the last 3%?. Winning doesn\’t mean winning a negotiating battle of wits with the seller, it means getting the property that meet your needs that will provide you with a satisfying home and a solid profit later.

Time is always critical. There used to be a television show in the 1950\’s called \”Dollar A Second\”. Host comedian Jan Murray would have a contestant perform stunts. As long as they did so successfully, they kept earning a dollar a second. But an outside event was always brewing, such as a staffer standing in Times Square until he saw ten Tennessee license plates or some similar gimmick. If the outside event siren blew before the contestant decided to quit, he lost everything. Some contestants did. Trying to get it all, they wound up with nothing. Similarly, other buyers can ?come out of nowhere? anytime to make a property you have your heart set on disappear for good, even if there have been no offers yet, or for months. Ask any active agent.

When you find the right property, take immediate action or someone else may leave you empty-handed. If the home is desirable to you, it\’s going to be equally desirable to others. It should be your goal to have the seller execute a contract of sale as soon as possible, so you can be assured that the property is tied up. If another buyer comes to terms with the seller (\”the outside event\”) before you do, you lose. Be flexible and get there first with the most.

10. DON\’T GET COLD FEET
Buyers sometimes get \”terminal terror\” after they have made an offer to buy. Don\’t cancel out just because you\’re apprehensive. You\’ll only wind up paying more for less later. Get a hold of yourself and hang in there. Remember John Wayne\’s definition of courage: \”Being afraid, but doing it anyway\”. If you\’ve done your homework and are buying in a good area, you are very likely doing the right thing.

11. SHOP AROUND FOR FINANCING
Check your own bank, the Internet and the real estate agency\’s contacts. An experienced mortgage representative will help you find the right loan. Rates and terms vary, so look around. Always lock in a good interest rate.

Always tell the truth on the mortgage application. All relevant matters are verified. It\’s a violation of the law to lie on a mortgage application and it can foul up getting the loan as well.

12. BUY WHAT YOU CAN AFFORD
Your agent and mortgage representative will guide you. Don\’t underestimate what you can buy. Lenders aren\’t usually going to let you bite off more than you can chew. Relatively few loans go to foreclosure. Yours probably isn\’t going to be one of them.

13. CONSIDER FINANCING AS MUCH AS YOU CAN
If you\’re in a position to make a substantial down payment on a home, you may wonder whether to make a big down payment to keep your monthly payments smaller or to make a smaller down payment and finance more with resultant larger payments. Strictly from an investment point of view, you\’re probably better off most of the time financing as much as you can.

A smaller down payment allows you to control the same asset that a larger one would, so why put out more money than you have to? You also maximize your leverage, increasing your rate of return on your invested dollars. Over time, you are going to be paying the lender back in cheaper, inflation eroded dollars, while the asset you\’re holding will probably continue to increase in value, if you were careful about what and where you bought. Finally, you still have those excess uninvested dollars that you didn\’t tie up in your home for other investments, which could potentially yield higher rates of return and which would also be available for emergencies.

14. GET AN ATTORNEY
Obviously any inexperienced buyer should have one. Experienced ones should too. It is easy to delude yourself because you have some knowledge and experience, thinking you know all you need to know to protect yourself. As Thoreau noted: \”I count some parts and say I know\”. Well you don\’t. Neither do I. Real estate transactions are far more complex than they used to be for a variety of reasons, and they are only going to get more involved. Look upon getting an experienced real estate attorney as an insurance policy to protect you.

15. WHAT ABOUT PROBLEMS?
Be guided by your attorney. A first step in resolving problems would be to contact your real estate agent, the office manager and the broker of record of the firm in that order. If the firm is a member of the Board of Realtors, they have arbitration panels that can help settle unresolved disputes. A written complaint can also be filed with your state\’s real estate commission or department if all else fails, or at any time. With your attorney?s direction, the same goes for filing a lawsuit in state or federal court, depending on what the problem is.

Enjoy your home. It will provide you with much happiness and the opportunity to build a solid financial future.

For a more detailed presentation of the tips provided here,and access to many home buying and home mortgage resources, visit:

http://www.buyingahome.bz

Larry Danks is a Licensed Real Estate Broker and state approved Real Estate School Director and Instructor.

Writen By : Larry Danks

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Laguna Beach Home Buying Up Over Last Year

Aug 29

Posted by admin in Real Estate

In what seems like its most promising quarter since the real estate crash, Laguna Beach real estate is seeing more buyer activity as 2010 nears the end of its first quarter. On March 15, real estate information provider DataQuick showed that home buying in the South Coast city went up 34% compared to this time last year, even with median prices going slightly higher as a result of fewer distressed homes. While full market recovery may still be some years away, these figures are definitely a step in the right direction.

The rest of coastal Orange County is also going strong, posting a year-over-year rise of 16% in home sales in the same period. This has led experts to believe that beach homes, although among the hardest hit by the housing crisis, are also the most likely to regain their pre-recession status in the next few years. With its beach views and family-friendly neighborhoods, real estate Laguna Beach is easily among the most coveted in Southern California, if not the entire state.

One thing that has contributed to Laguna Beach real estate buying is the percentage of distressed homes in the past few months, which have been historically high. Although it has since gone down, the low median prices over a third lower than fair market value have attracted buyers from both in and outside the state, many of them first-timers. For many, it offered a rare opportunity to invest in real estate Laguna Beach, or simply to get their hands on luxury beach homes for relatively cheap.

Government support has also played an important role in increasing buyer activity in the city, as well as the rest of Orange County. With tax credits being offered to both first-time and repeat home buyers, Laguna Beach real estate has become increasingly attractive across various markets. The credit has been extended up to midyear, leading many to believe that the positive streak will continue well into the next couple of quarters.

Ultimately, what will define the outlook on real estate Laguna Beach is whether or not the home buying surge can be sustained. Experts have given mixed opinions on the matter—some take it as a sign of good things to come, while others believe it is still too early to tell. One thing’s for sure, however: whether one decides to buy now or wait for smoother economic times, Laguna Beach real estate is always worth the investment.

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Home Buyer Closing Costs

Mar 23

Posted by admin in Real Estate

The most important question a home buyer asks is “How much can I afford?” A buyer needs to know the maximum purchase price of homes that they should be looking at. Smart Miami buyers know that there are closing costs involved in the purchase of a house, above and beyond the purchase price. Your team of professionals, including a lender, possibly an attorney and a real estate broker should be able to ensure that the only surprises at closing are pleasant ones.

Some typical costs that may be associated with your property purchase:

Appraisal: Typically, an appraisal will be required to determine, as accurately as possible, the real value of the property you are purchasing.

Lender Fees – Some fees will vary from lender to lender, so in addition to shopping for the best rate for a loan, you should also pay attention these additional costs. The fees that might be assessed by your lender or other outside parties can include:
Underwriting fee Administrative fee Points (cost to buy down the rate) Flood certification fee (to determine if the property is located in a flood zone) Tax collection fee (to make sure they are notified of property taxes due and paid Origination fee

Credit Report: All lenders will require a credit report. Many lenders use what is known as a “tri-merge report.” The charge for this report is minimal and is often expected to be paid up front.

There are additional charges assessed by a Title Company or Transfer Agent, plus there may be more special fees that may be charged by your city, county and state.

Deed and Mortgage Documentary Stamps: “Stamps” may be assessed for recording the deed with the county. A second set of documentary stamps could be assessed for recording the loan.

Intangible Tax: The actual mortgage is considered intangible property which could also be taxed. This tax for the mortgage is assessed similarly to the doc stamps, except that it is calculated on the loan amount.

Recording Fees: The County assessor charges you for each page of the documents needed to record your deed.

Title Insurance and Escrow Fees: Title Insurance protects you and the lender. It guarantees clear title to the property at the time the loan closes. The Title Company will also very likely charge an escrow fee to pay for their services. Additional escrow and title fees are not unusual.

In some states, an attorney may be involved in the closing process, instead of, or in addition to a title company.

Pre-paid expenses are in addition to closing costs. These can include property insurance, property taxes, and accrued interest.

You should expect a Good Faith Estimate of all closing costs and fees, within 3 days of applying for your loan. As a general rule, you should expect your total closing costs to average between 1% – 3% of the total loan amount.

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Home Buying Basics – Calculating Your Reservation Price

Mar 22

Posted by admin in Real Estate

Making the right offer is one of the most important part of the home buying process. Experts advise all homebuyers to find out home prices in an area and set their own reservation price, or the maximum price they are willing to pay for a home. A reservation price actually helps homebuyers in negotiating with the seller and stay within their budget when making an offer.

Barron states that buyers typically reduce or discount their offer price to create some allowance for negotiations. How much the discount is will largely depend on market conditions and the homebuyer’s desire to acquire the home.

Here is a basic process for calculating your reservation price so you can negotiate the best price for your dream home:

- Write down the amount you can afford to pay each month. This may be close to what you are paying now, or what you are comfortably willing to spend per month on housing costs.

- Calculate your loan term and interest rate. Record your loan term and interest rate in years. Use the loan payment tables to locate the payment applicable to each loan term and interest rate.

- Calculate your tax and insurance expense. Use the following suggestions from Barron’s ‘Smart Consumer Guide to Home Buying’ when calculating your tax and insurance costs. Use a rate of .68 for areas with relatively high tax and insurance. If an area has relatively cheap tax and insurance rates, use a factor of .85. Lastly, you can just use the standard .75 to do a rough estimate. Multiply the rate applicable to your area by the amount in the first step to arrive at your affordable loan principal and interest payment.

- Compute for your total loan amount. This information can also be found in the loan payment table or you can just ask your mortgage lender for the total amount.

- Add your cash on hand for the down payment. This will give you a final calculation of the total amount available to you for purchasing a home.

You then have to compare the calculations you made on Step 1 with the amount on Step 5. The difference between the two will give you your negotiating range when making an offer. If the amount in Step 1 is larger than the amount in Step 5, you can offer a higher price for a home to secure the bid. If the reverse is true then you need to negotiate to bring down the final price into the range that you can afford.

Figuring out your reservation price will help you in identifying your negotiation options to obtain best possible deal. Use the above calculations for each home you consider buying so that you can negotiate with the confidence that you are dealing within your budget.

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How To Get Started On Your Search For The Best Home

Feb 6

Posted by admin in Investing, Real Estate

Finding the best when it comes to owning a house doesn’t have to be that difficult a process as you can now search through online listings. Home search is made simpler with the advent of online resources because in just a few clicks of the mouse, you may choose the home with all your desired features and amenities.

Defining exactly what you want is another advantage that can be provided by online real estate listings. Most of the time, people are bothered by the fact that they are not sure what home styles or designs they want, but it may help you in determining what you need when you browse the Internet for online catalogues. First time homebuyers may begin their search by using accredited online listing services like Realtor, according to the authors of ‘Questions Every First-Time Home Buyer Should Ask’. Narrowing down your search is easier since these websites have complete listings of neighborhoods and homes with pictures, video presentations, and many other visual aids.

In essence, you can have all the info you need and print them out for future reference. Another great resource are search engines and websites like the ones managed by several leading national chains namely Coldwell Banker, Re/Max and Century 21. You can also contact realtors whenever the need arises with individual offices regularly updating their databases of listings and contact information.

Moreover, online resources like Realestate has up to date MLS listings and provides street views of homes. Listings can be located by city and state, zip code or MLS number. If you need more data on home sales prices, crime rate, commuting, or weather in your desired location – you can check their ‘Local Community Information’ bulletin.

These types of sites make it easy for you to do preliminary research about a neighborhood, compare home values and stay up to date with the latest listings available on the market. This can be valuable objective information to have by your side before you even approach a real estate agent. Your local library is another good resource for local real estate listings. If your library has an online equivalent of its resources, you can log in from anywhere to start your search. If not, you can just spend an afternoon looking at listings in the library’s in-house database. The only drawback of this strategy is that listings here can be out of date and not updated regularly enough to be relevant for your search.

Despite the fact that the Internet or online resources have become a big help in home searching, you still need the assistance of a real estate agent when actual visit to the property commences. Drilling down local listings and defining your home preference according to your style and personality are major benefits in using online searches. And finally, you can benefit from all these if you use regularly updated resources in your searches.

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