About to buy a house

[Bulldog]

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Have you already done things such as:

Close out old credit cards and reduce the number of active ones you have accounts with?

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No CC debt and no open accounts.

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Gotten credit history checks yourself from 2-3 of the companies, to make sure there are no surprises you need to fix first?

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I'm pretty sure I'm good here. Also, I learned that checking your credit actually lowers your credit score!

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Gotten some information on housing resell values, both for the builder and the area that you're in?

Gotten a ranking and history of the school district you're in, which could affect your resell ability?

Gotten an estimate on taxes for the residence and compared them to neighboring areas?

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I'll look into all of these.

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I hope this place is going to be bigger than your current place? Will the builder have any problems configuring the gaming room?

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DPC West. Well, not five tables, but maybe three.

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Think very hard about the loan you'll get. I don't see interest rates dropping in the next few years, but how high they go, and how long you estimate you'll be there, is a key factor in your loan type.

We went from an apartment, to a twin (because of A-man) to an apartment, to the current location (because of Z-man)
We sold the twin for what we paid for it, and felt lucky to do so given the area/school district, so we lost money on that.

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So I'm learning, about the resale and the points.

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BTW- are you *ahem* buying this with anyone?

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Nope. I might pick up a roommate (probably get a three-bedroom duplex), but I'm working out a budget to cover things without one.

[sleepyjoeyt]

1. Once the sale price is established and you have a mortgage broker / bank picked out, ask them about financing the closing costs. Generally the closing costs could run anywhere from 3K - 10K, depending if you are paying points, etc. The banks will NOT finance closing costs. However, if you make an agreement with the Seller to increase the sale price by X, then he agrees to give you a Closing Cost Credit for that same amount, you can essentially finance your closing costs. This will save you from having to pay that money at the closing.

2. Be prepared for unexpected costs that come up at the closing. For instance, in MA, any taxes due within 60 days of the closing date have to be paid at the closing. Depending on how frequently taxes are paid in the town where you are buying, this could be a good chunk of change. For instance, if your town only collects taxes twice a year, you may have to come up with 6 months worth of taxes at the closing, which could be a grand or two.

3. MANY mortgage brokers think it is okay to add [censored] at the last minute, knowing that once you are this far into this lengthy ordeal you are unlikely to back out. Make it clear to them from the beginning that you have to see the whole picture NOW and that you will not tolerate any last minute additions, etc.

These are the ones that quickly come to mind.

I'm an attorney in MA and 95% of what I do is real estate. Feel free to PM me with any questions.

Good luck.

[Lottery Larry]

" However, if you make an agreement with the Seller to increase the sale price by X, then he agrees to give you a Closing Cost Credit for that same amount,"

How does this affect the commissions fees and the taxes?

[sleepyjoeyt]

Commissions - usually does not affect the commission (most realtors will agree that the commission is based on the original sales price)

taxes (I assume you mean the transfer tax that is paid in most if not all states) - you must pay the transfer tax based on the increased price. In MA the seller pays $4.56 per thousand of the sale price, so if you increased the sale price by $5K, then the transfer tax would be increased by $22.80. The amount of the transfer tax varies state to state (as does who pays it) but the tax amount will have to be paid based on the new sale price (as that is the amount that will be on the deed, which is what controls the tax). In some states, like NH, the tax is $15.00 per thousand of the sale price, so a 5K increase in sale price would mean $75 increase in the transfer tax.

If the seller complained about the increased cost the buyer could always agree to cover the increased cost OUTSIDE of the closing (by handing a check for $25 or whatever) but this "increased sale price" CANNOT be revealed to the bank. It happens all the time but the bank can't be informed that this was done.

One other thing: understand that the bank will only allow the credit going from the Seller to the Buyer to be as much as the ACTUAL closing costs. So it is important to have a pretty good idea of what the closing costs will be and to make sure that the closing cost credit is equal to or less than that amount.

If you guess $5K and there are only 4K in closing costs then the bank will only allow the 4K in a credit from seller to buyer. The other $1K will have to be given from the Seller to the Buyer after the closing, and the Seller is under no obligation to follow thru and give back the money (although it is clearly the decent thing to do, as the sales price was increased by 5K and they only gave a 4K credit at the closing).

The attorney that does the closing will know this is going on but is not supposed to have any actual knowledge that this is happening, so avoid having any discussion about this infront of him.

[Bulldog]

Thanks everyone.

Another great example of why OOT rules.

[samjjones]

My house has increased almost 50% in value in the two years I've owned it. Unfortunately, now I can't afford the bigger-type house that I would want since that has increased 60% in value!

[Lottery Larry]

bumped for recent house poster