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"Thank you for helping me through the whole house-buying experience! You provided so much information that was so clear and you were always available to talk to - even when I was freaking out. Thank you for being so calm and honest with me. I look forward to learning more about home ownership and I'm glad to have friends like you!" - Gil & Lauren RiveraMORE TESTIMONIALS |
BUYER TIPS
THE MYSTERY OF CLOSING COSTS: EXPLAINED!
Whether it's your first closing or you're a 'seasoned pro', virtually no
one buys or sells property without help from one or more real
estate-related services. Your costs can include fees for brokers,
lenders, surveyors, attorneys, title companies, and other who are
involved in the transaction. Altogether, the total costs of these
various services become your actual closing costs.
Settlement Statement
When you close a transaction, your closing costs will be detailed in a
HUD-1 settlement statement that includes seven categories.The borrower (buyer) pays everything in the Paid from Borrower's Funds column. The seller pays the costs listed in the Paid from Seller's Funds column. A notation next to each charge indicated who received the monies. Before the Closing
Three business days (or less) before the closing you should receive a
good faith estimate of the settlement charges. Since these charges are
just an estimate, the final charges may vary.One business day before the closing, call and request a copy of the actual settlement statement. Carefully study the statement and call the title company (or the attorney who will be handling the closing) if you have any questions. Commission Costs
This category is paid by the seller. The first category in the settlement
statement is Sales/Broker's Commission. This is the commission that is
paid to the real estate agent, usually by the seller, and is often a
percentage of the selling price. It may be the largest settlement charge,
so ensure that it's properly calculated and that it included any
negotiated discount.
Loan Charges
The next category of costs, Items Payable in Connection with Loan, is
usually paid by the borrower (buyer) and includes the loan origination
fee (if any), as well as fees for the appraisal, credit report,
inspection, and private mortgage insurance (PMI).You may often see lower fees for couriers, processing, administration, and flood certification. These amounts add up, so verify that they match the estimated charges and ask questions if anything puzzles you. Advance Costs
The third category, Items Required by Lender to be Paid in Advance,
includes prepaid interest on the loan, a mortgage insurance premium
and a hazard insurance premium. These costs are usually paid by the buyer.
Escrow Accounts
Reserves Deposited with Lender, the fourth category, represents money
placed in an escrow account to pay taxes to the city, county, and other
taxing entities, such as the school district, etc. The buyer is usually
responsible for these fees.
Title Charges
The fees itemized in the fifth category, Title Charges, are often split
between the buyer and the seller. They may include charges for title
search, title insurance, document preparation, notary fees, attorney's
fees, and other fees, such as escrow fees, fees for tax certificates,
and fees for messengers or couriers.
Recording Fees
Government Recording and Transfer Charges, the sixth category includes
costs associated with recording the title change at the courthouse. The
recording fees, the costs for tax stamps and deed releases, and other
fees are usually paid for by either the buyer or the seller.
Final Charges
The seventh and final catch-all category, Additional Settlement Charges,
is where you'll find costs for additional surveys, pest inspections,
various treatments, home warranties, repairs and real estate office
administration fees - almost anything agreed upon by the buyer and
the seller that will be paid by one or the other at closing.
Negotiate
Remember that closing costs can be negotiable. You are entitled to ask
for an explanation of any fee and/or request that the fee be removed
or paid by someone else.Closing costs may vary by state and region, according to customs and practice. Inquire about the specifics in your area by contacting your title or mortgage representative. KEYS TO YOUR HOME CLOSING
Here's what to expect at your closing:
What is "closing"?
A meeting at which the sale of property is completed. The deed is transferred
from the seller to the buyer. The buyer signs the mortgage documents, makes
the down payment and pays the closing costs. The meeting also is called a
settlement. It usually takes less than two hours to read and sign the documents.
Where is it held?
Usually at a pre-selected title-company office, which represents an
unbiased third party. You can request a different location or a branch
of the title company near your workplace or home.
Who will be there?
The buyer, the buyer's Realtor and a representative of the title company.
Sometimes the seller, the seller's Realtor, a representative of the
lender and a real-estate attorney, if you hired one.
What should you bring?
A valid form of photo identification, such as a driver's license or
passport, and a certified check. The title company will not accept a
personal check or cash.
What will you do?
Read loan and title documents and sign them. Give the certified check to
the representative of the title company for your down payment and
your share of the closing costs.
What if you don't understand what you're signing?
Ask for an explanation from the title or loan representatives. If you're
still not sure, consult a real-estate attorney. "One of the mistakes
people make is turning to the Realtor for quasi-legal advice," says
Ilyce Glink, author of 101 Questions Every First-Time Home Buyer Should
Ask. "If things go wrong, or you don't know what you're signing, invest
that extra money in a real-estate attorney."
How do you keep from paying junk fees?
Junk fees serve no purpose other than to pad a lender's profit. They are
inflated charges for services required to prepare, approve and fund your
loan. For example, your mortgage lender may charge $75 for a legitimate
service. But instead of $75, the lender inflates the fee and charges you
$325. Insist that your lender give you a review copy of your Federal
Truth-In-Lending Disclosure Statement the day before the closing. If
all of your paperwork is in order, the lender should have a review copy
ready before the closing. Read the document before the closing or before
signing any closing documents. All fees will be listed on the form.
Federal law says you cannot be charged for fictional services. However,
closing expenses vary from lender to lender. Inflated charges, or junk
fees, are commonly labeled "Extra Work," "Underwriting," "Doc Prep,"
"Attendance," "Water or Flood Certification" and "Processing." Ask
for an explanation of the fees and ask which fees are negotiable.
Standard fees, such as government-transfer taxes, prepaid interest,
hazard-insurance and mortgage-insurance premiums are not negotiable.
When will you get the key to your home?
As soon as funds are distributed at closing or until after the loan has
been funded and recorded at the County Recorder's Office. Usually within
24 hours.
UNDERSTANDING REAL ESTATE TERMINOLOGY
Purchasing a home can be a complicated and confusing process, especially
for first-time buyers. Throughout the process, first-time home buyers
will encounter a variety of unfamiliar real state terms. There are
several key terms associated with purchasing real estate that are
helpful to learn.
For example, many buyers confuse the terms broker and salesperson. A
broker is a properly licensed individual, or corporation, who serves as
a special agent in the purchase and sale of real estate, a salesperson
is an individual employed or associated by written agreement by the
broker as an independent contractor. The salesperson facilitates the
purchase or sale of real estate.
Once you decide to purchase, a salesperson will prepare a sales contract
to present to the seller along with your earnest money deposit. The sale
contract is the document through which the seller agrees to give
possession and title of property to the buyer upon full payment of the
purchase price and performance of agreed-upon conditions. The earnest
money is a buyer's partial payment, as a show of good faith, to make
the contract binding. Often, the earnest money is held in an escrow
account. Escrow is the process by which money is held by a disinterested
party until the terms of the escrow instructions are fulfilled.
After the buyer and seller have signed the contract, the buyer must
obtain a mortgage note by presenting the contract to a mortgage lender.
The note is the buyer's promise to pay the purchase price of the real
estate in addition to a stated interest rate over a specified period
of time. A mortgage lender places a lien on the property, or mortgage,
and this secures the mortgage note.
The buyer pays interest money to the lender in exchange for the use of
money borrowed. Interest is usually referred to as APR or annual
percentage rate. Interest is paid on the principle, the capital sum the
buyer owes. Interest payments may be disguised in the form of points.
Points are an up-front cost which may be paid by either the buyer or
seller or both in conventional loans.
In general, there are two types of conventional loans that a buyer can
obtain. A fixed rate loan has the same rate of interest for the life of
the loan, usually 14 to 30 years. An adjustable rate loan or adjustable
rate mortgage (ARM) provides a discounted initial rate, which changes
after a set period of time. The rate can't exceed the interest rate cap
or ceiling allowed on such loans for any one adjustment period. Some
ARMs have a lifetime cap on interest. The buyer makes the loan and
interest payments to the lender through amortization, the systematic
payment and retirement of debt over a set period of time.
Once the contract has been signed and a mortgage note obtained, the buyer
and seller must legally close the real estate transaction. The closing is
a meeting where the buyer, seller and their attorneys review, sign and
exchange the final documents. At the closing, the buyer receives the
appraisal report, an estimate of the property's value with the
appraiser's signature, certification and sporting documents. The buyer
also receives the title and the deed. The title shows evidence of the
buyer's ownership of the property while the deed legally transfers the
title from the seller to the buyer. The final document the buyer receives
at closing is a title insurance policy, insurance against the loss of the
title if it's found to be imperfect.
Buyers should plan on a least four to twelve weeks for a typical real
estate transaction. The process is difficult and at times, intimidating.
A general understanding of real estate terminology and chronology of the
transaction, however, will help any real estate novice to confidently buy
his or her first home.
About The Author
W. Troy Swezey is the author of "Understanding Real Estate Terminology."
As a Realtor at Century 21 Paul & Associates, he has helped many
individuals with their real estate needs. Visit his web site to download
his free e-book, "Real Estate Secrets Exposed."
http://www.TroyIsMyRealtor.com
or mail to: TroyC21@usa.net
PROPERTY TAX FAQ'S
Q: If I forgot to file for homestead exemption by March 1, 2005. Is
it too late to file?
A: No.Homestead exemption applications may still be late-filed and considered for 2005, provided a value adjustment board petition is also filed no later than the petition filing deadline, which is estimated to be during the second half of September 2005 in both Miami-Dade and Broward Counties. Review your Notice of Proposed Taxes ("TRIM" notice) when it arrives in August to be sure of the filing deadline.
Q: Doesn't Florida law prohibit an annual increase in assessed value
of more than 3%?
A: Only on residential property in years after the year homestead
exemption is established, with certain exceptions.
Q: How much will my previously-exempt homestead residence increase in
assessed value for 2005?
A: 3% or the cost-of living index, whichever is less, with certain exceptions.
Q: Can my commercial, industrial and non-homestead residential
property assessment increase annually?
A: Yes. All non-homestead property is reassessed annually based on its
market value as of January 1st.
Q: How and when can I appeal my tax assessment?
A: By filing a petition within 25 days from the date of mailing of the
Notice of Proposed Taxes ("TRIM" notice), which is mailed during the
month of August by the Property Appraiser in each county in Florida.
Q: May I hire a lawyer or other agent to appeal my tax assessment?
A. Yes.
Q: May I hire someone to appeal whose compensation is based on any tax
reduction obtained?
A: Yes.
Q: Can the same person address my homestead, charitable, agricultural,
and tangible personal property issues?
A: Yes
About The Author
Daniel A. Weiss has over 24 years property tax experience. Mr. Weiss
represented the taxing authorities in administrative matters, litigation
and appeals between 1981 and 1995 as a Miami-Dade Assistant Attorney;
served as Legal Special Master for the Miami-Dade County Value Adjustment
Board from 1999-2000, and has represented municipalities and taxpayers in
tax assessment, classification, exemption and collection matters since
1997.Mr. Weiss has more than 70 published opinions to his credit, including 55 property tax opinions, is co-author of Chapter 64 of the Florida Tax Service 2d, "Agricultural and Other Classified Properties" published by legal publisher Matthew Bender, and is a lecturer on property taxation for the National Business Institute. In Florida Trend magazine's "Legal Elite" issue, July 2004, Mr. Weiss was selected by his peers as one of the top 30 government lawyers in the State of Florida. The Legal Elite represents the top 1.6% of lawyers in the State, as chosen by their peers.Mr. Weiss's practice involves not only property taxation consulting, appeals and litigation, but also real estate, zoning, code enforcement and civil appeals. Other lawyers in our firm handle state and federal criminal and civil trial and appellate matters, including employment and commercial issues. Mail to: daw@tannebaumweiss.com. Learn more at http://tannebaumweiss.com/property_tax.php. |
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