Monthly Archives: April 2016

The Closing Costs When Buying or Selling a House

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Buying and selling a house in Western New York always has an additional expense in the form of closing costs. With this, the contract must state which party should shoulder which closing costs. Further inquiry about this matter should be discussed confidentially with a lawyer.

Here’s some basic information on closing costs whether you are a buyer or seller:

Basically, closing costs consist of the payment you make for the services of people who will be involved in the transaction, whether you are a buyer or a seller. These people are significant for a successful deal.

Closing costs for a seller

A seller will typically pay for local inspections and certificates, the title search updates, the updated survey, the transfer tax along with the filing fee for the transfer tax return, the recording fees for any additional legal papers for the purchaser to accept the title and attorney’s fee and disbursements.

The title search update is important, but to lessen cost a seller must possess the abstract of the title from the time of purchase in order to make the searcher’s job faster, thus, keeping the bill low. The cost of an update search is dependent on how extensive the searcher must look into public records.

Closing costs for a buyer

Aside from the house being purchased, a buyer will pay for the lender’s fees, recording fee for the deed, recording fee for the mortgage, mortgage recording tax and the title insurance. A discussion with an attorney regarding the title insurance is important for a buyer to do. If the buyer will borrow money from the bank, a title insurance policy that protects the bank’s lien position against the property must be purchased. Although the buyer has the option which policy to purchase to protect ownership in the property, the attorney must still be sought for counsel and decision be made after he or she reviews the title.

The First-time home buyer’s dilemma

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Affordable segments in the real estate industry include smaller homes in both suburban and urban areas. But sadly they don’t only appeal to first-time buyers but also to deep-pocketed investors. Making it difficult for the newbies to purchase their own home given the years of experience these investors have in the trade.

Ideally, investor buyers have higher incomes than both median and primary-income residence buyers.  This makes it tough for the first-time buyer to compete but given that they are owner-occupiers they will have an advantage of 50 basis points which the investor won’t have. With this, investors will pay higher mortgage rate because they do not live in the property as their primary residence.

Even though investors are more attractive to lenders they still pay higher rates. This results to an easy mortgage application and approval process and sometimes they don’t even have to undergo the mortgage process at all. Buyers with the ability to pay cash will have the advantage to get the deal because they can make offers without a financing contingency. Offers without financial contingency will close more rapidly.

With the millenials slowly being out there to purchase a home, rental properties’ demand will continually increase. This trend is not affected by the tight supply and credit environment the industry is operating in. In fact, homeownership is nearing a 48-year low as older household are also recovering from the crisis brought about by foreclosures.

With the investor buyer’s advantage over a typical buyer, the supply of smaller and lower-priced homes is slowly dwindling down. With every investment purchase, the available home for selling decreases. This year will see a similar pattern of buyers against the backdrop of growth if real estate sales. This makes it more difficult to buy a home, from qualifying for a mortgage, finding a home until the successful bidding to get a contract.