What Are Closing Costs?

We in the real estate business tend to throw around a lot of terms that we some times just assume that our clients and customers understand. One of these is “closing costs.”

Especially in the case of first-time buyers, not all buyers understand exactly what we mean when we talk about closing costs.

Closing costs are the expenses that a buyer (and there are some for sellers, too) will encounter as a result of closing the transaction with a title company, in addition to the expenses resulting from a particular loan. With regards to the closing itself, the title company where you close will charge for the closing itself and the title insurance policy that protects you in case someone came back later with a claim on the title. There may be some additional closing costs from the title company for recording and other fees.

The closing costs associated with the loan can range anywhere from origination and document fees, to the standard charges for the credit report and appraisal. This amount really depends on the loan program that you use. Conventional loans tend to have less in closing costs than government loans like FHA or VA.

The bottom line is that there will be extra charges to cover in addition to the downpayment. In the next post, we’ll talk about the option of having the seller pay closing costs on behalf of the buyer.

For more information on closing costs or other issues concerning purchasing your first home, see our website at www.springfieldfirsthome.com or give us a call or text anytime at 417.872.9222. 

Considering a Fixer-Upper for a First Home?

Some first-time homebuyers consider purchasing a home that is not necessarily ready to move into at the time of purchase.

With the recent increase in the numbers of short sale and foreclosed properties, more and more first-time homebuyers are considering the purchase of homes that need work. And even before that, buyers thought of buying homes that needed this kind of work in order to purchase a home for less money and in which they could instantly gain equity once repairs were completed.

If you are considering this, however, there are some things to consider beyond just the cost of those repairs, including living arrangements, financing, and knowing what the true future value of the home will be.

First, many first-time home buyers currently live in an apartment or rental home. The maintenance of this home or apartment is usually done by someone else. There is a natural adjustment. For almost all first-time homebuyers that they are the ones responsible for making repairs to the home they just purchased. Adding larger repairs or wholesale improvements to home can add to the stress of this adjustment. The coordination between the termination of a current lease and moving in to the purchased home can be tricky enough let alone adding to that the estimation of when larger improvements will be completed. Living in the property while repairs or improvements are being made can add an additional layer of difficulty to one's life.

Secondly, most financing programs utilized by first-time homebuyers are not repair and improvement friendly. The amount, and indeed the approval for the loan itself, is usually based on the final appraised value of the home as it meets the standards of the financing program. Loans that allow for the future improvement of the property to be built into them usually require a down payment larger than those normally available to first-time homebuyers. Only very specific programs within FHA or other government loans allow for repairs to be built in the loans, so make sure if this is something you want to do that it is something you can accomplish using a home loan.

Finally, in recent times it's been harder and harder to estimate what the future value of a home will be. In a time of even slightly decreasing home values, a buyer who makes large improvements or repairs for property may face an extended time for the recapture of the money spent on those repairs and improvements. Be very sure that the money you spend is money that can be returned to you if you, for some reason, needed to sell the property earlier than initially planned.

Our job here is not to discourage a buyer from purchasing a home that needs repairs or improvements done simply to spell out some of the things that you need to consider before doing so.

Resources for Finding School Information

One of the biggest considerations for any homebuyer is the school district in which they wish to live, or in which school district the home or neighborhood in which their interested is located.

 

Knowing this is the case, one of the pages of our www.springfieldfirsthome.com website provides links to a number of Springfield area school district websites. These websites will give you information about the school, enrollment information, and a general feeling for the district. You can visit that page by clicking here.

If you are looking for school district information for a district not listed on that page, a good resource to start your investigation is located here: http://mcds.dese.mo.gov/quickfacts/SitePages/DistrictInfo.aspx. This website is provided by the Missouri Department of Elementary and Secondary Education (DESE) and allows you to search information for each district in the state.

For any information about purchasing your first home, visit our website at www.springfieldfirsthome.com or email us at firsthomebuyers@remhob.com. 

Who Fixes the Problem?

QUESTION: Let’s say you have a home inspection and a problem (or, defect, in real estate speak) is found. Who fixes this problem?

ANSWER: In the contract used by most real estate brokerages in the Springfield area, when this happens, the buyer completes a ‘Defects Notice’ to the seller, which serves as written notice that the problem was found and the buyer is now requesting that the seller repair or replace it.

The seller has the option to fix the problem. If this happens, the seller is required by the Springfield contract to fix it in a workman-like manner with good quality materials. The seller has the option to either do the work him/herself, or hire someone to do it. If the seller agrees to fix the problem, the seller is responsible for the costs associated with it.

The buyer and seller could agree to share the costs of the repairs by an addendum to the contract, but some home loan programs don’t view this favorably, and a buyer should check that out before agreeing to do so.

For any information about purchasing your first home, visit our website at www.springfieldfirsthome.com or email us at firsthomebuyers@remhob.com