Thursday, December 05, 2013
Should You Pay Points at Closing?
If you havent bought a home in the past, you might find the concept of "points" also known as "discount points" confusing. Every home sale is different, so there is no one-size-fits-all answer when it comes to determining whether you should pay points at the closing of your home sale. Here are the answers to a few questions that you might have about points.
To begin with, what are points?
Put simply, points are a type of pre-paid interest on a loan. One point is the equivalent of one percent of the entire value of the loan. On a 100,000 loan, a borrower can expect to pay 1,000 for one point. Points are paid at the closing of a home sale or refinance transaction.
Who is responsible for paying points?
The answer to this question varies, but paying for points is generally the responsibility of the buyer. However, under certain circumstances, the buyer might negotiate for the seller to pay points as part of the terms of the sale. It is also possible that the buyer and seller may split the cost of the points.
Is paying for points mandatory?
Paying points is not required in every instance. If you feel like you are paying a high interest rate, you might wish to pay points to reduce that rate; if your interest rate is attractive, you may not feel the need to reduce it further. However, its important to understand the terms of the loan you are applying for. Some lenders might offer an attractive interest rate on a loan but require that the borrower pay points at closing in order to qualify for that rate.
What are the benefits to paying points?
For those homebuyers planning to stay in a home for a long time, paying points up front as pre-paid interest can reduce the interest paid across the long life of the loan. Although paying points raises the upfront costs associated with the loan, the payoff is reduced monthly payments for the long term. Points paid on a residential sale are also tax deductible on an annual tax return for their year in which they were paid.
Are there risks or drawbacks associated with paying points?
Assuming that a buyer has the cash upfront to pay for points, the investment can result in long-term savings. For homebuyers who dont plan to stay in a property for very long, its important to understand at what point the savings will kick in and translate to long term reduction in cost. Buyers who are planning to turn around a property quickly may not see the payoff of a lower interest rate. Likewise, if a loan is paid off early via refinancing, points are not refundable and client would not see a break even on the upfront cost of points .
A loan officer can help you calculate the savings that will result from each point paid on a loan as well as how long a property would need to be retained in order to see any savings associated with paying points. By talking to your loan officer, you should be able to answer whether "to pay or not to pay" is the right option for you.
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Understanding Real Estate Terminology
If youre thinking of buying a home soon, you may be wondering about some of the language youll hear. Since a home sale involves many people real estate agents, attorneys, lenders, appraisers, and inspectors, just to name a few some of the lingo tossed around might be confusing, especially for a first-time buyer. Financing a home, in particular, carries with it some terms that are important to understand. Here is a brief primer on some of the terminology you can expect to hear as you head down the path to home ownership.
Credit Rating. Your credit standing can determine whether you are eligible for a loan as well as the amount of loan a lender is willing to extend to you. It can also affect the interest rate on your loan. Order your credit report annually for free from the three credit reporting agencies TransUnion, Equifax, and Experian to find out your credit rating and check for any errors or points of dispute.
Mortgage. A mortgage is quite simply a home loan. This loan is extended by a bank, credit union, or other lender and can carry a fixed or adjustable rate. Some loans, like FHA Federal Housing Administration and VA Veterans Affairs are backed by the government. Theoretically, the note is the loan and the mortgage is what secures the loan with the property.
Pre-Approval. Its a good idea to be pre-approved for a mortgage when you start your search for a new home. Pre-approval differs from pre-qualification, which is me>
Appraisal. Performed by a professional, an appraisal is an assessment of the value of the property you wish to purchase.
Title. The title is a legal document verifying ownership of a property and is important for proving that there are no liens against it at the time of sale.
Contingencies. A contingency is a condition written into the contract for a home purchase and is meant to protect the buyer during the sale. Common contingencies include securing financing for the home, a satisfactory home inspection, and the sale of a buyers current home prior to the purchase of the new property.
Down Payment. A down payment is the amount of cash paid up front to finance a new home. The rest of the home purchase is paid by a mortgage loan. While loan options vary, conventional wisdom suggests that the buyer provide a down payment of 20 of the price of the home.
Amortization. This is the schedule to pay off a mortgage loan over a certain amount of time often 15 or 30 years via monthly insallments.
Closing Costs. These fees, due at closing, are one-time costs associated with a home purchase. They can include payment for inspections and appraisals, attorneys and recording fees, and title service costs. They might also include taxes and pre-paid homeowners insurance. Closing costs may be paid by the buyer or the seller or be divided between both parties.
Earnest Money. This is the money included along with an offer letter to show a seller that a buyer is serious, or earnest, about the purchase or good faith deposit.
Escrow Account. When extending financing, a lender sets up an escrow account for a buyer to pay extra above the amount of the loan principal and interest. This financial cushion is used to pay homeowners insurance and property taxes.
Points. Also referred to as discount points, these costs are paid at closing on certain types of loans. Points represent a percentage of the loan paid up front in exchange for a lower mortgage interest rate.
Dont be afraid to ask questions if you dont understand a particular aspect of the home buying process. Your real estate agent is your best resource if you need clarification of any terminology. He or she will be happy to walk you through the details.
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7 Eco-Friendly And Beautiful Flooring Options To Enhance Your Home
Eco-friendly materials are rapidly gaining popularity in todays homes. Personal health and environmental concerns are turning more builders, designers, and homeowners to sustainable flooring.
Eco-friendly flooring is cost-effective, durable, and devoid of harmful pollutants such as formaldehyde, benzene, and volatile organic compounds VOCs. Sustainable flooring is also designer-friendly. You can choose from a wide variety of sustainable materials in beautiful colors and patterns.
Try one of these 7 eco-friendly and beautiful flooring options to enhance your home:
- Produced from the bark of cork oak trees.
- Trees are not cut down to harvest the bark, which grows back every three years.
- Provides thermal and acoustic insulation.
- Hypoallergenic, fire-retardant, and natural insect repellant.
- Can be finished in a variety of paints and stains.
- Lasts 10-30 years.
- Grows quickly reaching maturity in 3-5 years.
- Naturally resistant to water, mildew, and insects.
- Varied grains and colors offer many design options.
- Edges out conventional hardwood flooring in durability.
- Made from renewable materials such as linseed oil, cork dust, pine resins, wood flour, ground limestone, and pigments placed on a burlap or canvas backing.
- Durable, fire-retardant, and water-resistant.
- Available in a large variety of colors.
4 Hardwood Floors:
- Choose Forest Stewardship Council, FSC-certified lumber.
- The FSC promotes the conservation of biodiversity, air, and water quality of the worlds forests.
- FSC-certified wood is available in hundreds of colors and >
5 Glass Tiles:
- Made from recycled glass bottles.
- Mildew and mold-resistant.
- Easy maintenance.
- Available in a wide array of colors, patterns, and finishes.
- Flooring is made from recycled tires.
- Comfortable to walk on.
- Versatile and durable.
- Available in many pattern and color options.
7 Green Rugs and Carpets:
- Choose natural fibers with little to no chemical treatment.
- Use water-based low VOC glues for carpet installation.
- Try tacking instead of gluing carpet.
- Consider P.E.T. Berber carpeting made from recycled plastic bottles.
- Berber carpeting is durable, economical, spill-resistant, and available in many color and pattern options.
Sustainable flooring is a stylish, durable, and economical choice to enhance your home. Create a naturally beautiful and healthy home with eco-friendly flooring.
Do you have sustainable flooring in your home?
Share your comments below
Continue to green up your home with eco-friendly house paint.
For more information on eco-friendly flooring click here.
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Top 5 Best Practices for Finding Qualified Real Estate Vendors
In the real estate industry, how do you find qualified local vendors for projects or services on your property? Making sure to look for specific and certain criteria can make all the difference.
1. Use a Real Estate Specific Vendor Network
Using a website like Angies List, Yelp, or Craigslist can bring back results for a large varieties of vendors, but wont necessarily filter down the results to real estate vendors for your property. Youll want to use one that is easily searchable, so that you can search by vendor type, category, or by your location.
2. Contact References
Does the website offer reviews or references for each vendor? Instead of just basing your decision off of a review, follow up with the company that wrote or rated them. In order to perform due diligence, make sure that the total service offered was completely satisfactory from beginning to end. How did they follow up the project? If they did at all.
3. Make Sure they are Insured
It may seem like a weird question to ask a potential vendor, but being prepared is the smartest way to run a business. Do they offer errors and omissions, workers compensation, property damage, or liability insurance? If so, what is the amount covered, and do they readily offer up policy numbers to verify?
4. What Types of Associations are they Affiliated With?
Many of you may already employ this tip. Being affiliated with a service specific trade association typically shows initiative, interest in furthering education, and great contacts for help with work, or professional advice on projects. If they arent associated with any trade associations, I would ask "why?"
5. Do They Have an Internet Presence?
While some may disagree on this point, in this day and age online branding should be a main source of marketing. If the vendor you are researching does not have a website, or while one is being set up, research the company on Google. What comes up? Websites are they associated with, other companies theyve done work for, etc. If they do not show up anywhere on the internet, hopefully they were referred to you by a very trustworthy source.
Make sure to perform due diligence when selecting contractors or vendors for your property. A lot of websites offer free directory searches for real estate professionals, so check them out today and get to re-paving that asphalt
|About the Author: Elizabeth Whited is the Operations Coordinator at the Rent Rite Directory. She has written educational articles for multifamily magazines and Real Estate websites to help Property Managers and Owners improve their properties, in an effort to reduce crime in their communities. The Rent Rite Directory educates Property Managers and Owners at Crime Watch Meetings, and Crime Free Association Conferences, and works closely with law enforcement nationwide. For more information, visit www.therrd.com.|
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Home Equity And The Five-year Rule
When you buy a home, you should plan on staying in your home at least five years. Why? Youll need equity in order to sell the home without bringing cash to the closing table.
Equity means ownership. Building equity takes time, usually about five years for typical households to be able to sell at a profit, break-even, or without losing money.
This five-year rule can change depending on what state you live in, how much you put down to reduce the size of your loan, and how healthy the housing market is in your area. In some states, you could pay as much as 14 in closing costs and fees to buy and sell a home.
These include the fees to close your original loan, Realtor fees when you sell, title and/or abstract company fees, attorneys fees, surveys, home inspections, and so on.
Building equity can be challenging. With any mortgage loan, youll find that the first five years worth of payments go more toward paying interest to the lender than reducing your principal obligation.
That said, there are four ways you can build enough equity so you can sell at break-even or better:
1. Put more money down. If you put 20 percent down, youre covered. If you put down 3.5, 5, or 10 percent, youll have a little equity, but not enough to sell your home anytime soon.
2. Pay your mortgage on time and in full. Some of your principal will be reduced along with interest. The longer you pay, the more principal youll reduce.
3. Make additional payments toward reducing your principal. You can add an extra 50, 100 a month, 500 or whatever you want as extra payment.
4. Let the housing market raise the value of your home. The housing market typically rises one to two percentage points above inflation annually, but for nearly a decade, the market has been volatile. Many homes gained and lost significant value. As the market stabilized, home prices have risen again, replacing lost equity and adding more value in most markets.
Putting money into your home is the most >
- How To Wait Out Creeping Home Equity Gain
- Home Equity Lines of Credit, In Context
- 17 Questions To Ask Before Tapping Your Home Equity
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Things To Do In Newport Beach: Best Restaurants And Daytime Fun
Originally posted at:http://www.firstteam.com/blog/?p=6543
Newport Beachis a great city to live in because there are so many fun and exciting things to do in town. This beach town is the perfect mix of upscale quality and casual cool fun.
Best Local Restaurants In Newport Beach, CA
A breathtaking ocean view is what makes Newport Beach restaurants unique and such wonderful dining experiences. Mastros Ocean Club and Javiers Cantina are two of the best local restaurants in Newport along PCH to enjoy a great meal with a wonderful atmosphere.
Mastros Ocean Club
Located along PCH, Mastros Ocean Club is a must visit restaurant in Newport Beach. Not only does Mastros have the freshest fish in town, its also one of the best Steakhouses in Orange County. Mood lighting and an outdoor patio area overlooking the ocean give the restaurant a >
Menu favorites:Mastros is well known for their create your own Seafood Tower appetizer. Your choice of any fresh shellfish on the menu to share which means there are tons of combinations to try each one more delicious than the next The restaurant also has a full bar with a signature Mastros Cosmo cocktail infused with dry ice so it bubbles and smokes while you drink it. Not only is it magnificently shaken, its also unique and fun.
Javiers Crystal Cove
Javiers is also located on PCH in Crystal Cove in Newport Beach. Delicious food and a swanky night hot spot, this restaurant features fresh home->
Menu favorites:All of Javiers seafood dishes are popular like their Lobster enchiladas and appetizer crab cakes. The restaurant has a full bar with a wide selection of top shelf tequilas and several Mexican beers to enjoy.
Daytime Fun In Newport
Balboa Bay Fun Zone
Balboa Bay Fun Zone is a great place to bring your kids and a nostalgic piece of >
Balboa Bay Fun Zone is extra fun as well because its just a quick walk from the beach and Newport Pier and surrounded by tons of great restaurants and downtown shops. Frozen bananas and dipped ice cream treats are available and the best way to top off a day in Newport Beach.
Crystal Cove State Park
If youre a nature lover and enthusiast, Crystal Cove is a must visit. This state park beach offers amazing tide pools, hiking, horseback riding or just hanging out on the beach enjoying the ocean views and sunshine. The sandy coves and tide pools are tons of fun to explore and the perfect low-key way to appreciate all of the natural beauty Newport Beach has to offer.
For more information about Newport Beach, contact our local experts at theFirst Team Newport Beach Office. Our agents know the city better than anyone in the industry and have the best recommendations for where to eat, play and of course buy a home. Call or email us today and well connect you with the top agents in the Newport Beach area.
Email us at clientservices [at] firstteam.com
Call us at 888-870-1142
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Top 10 Sellers Markets In Los Angeles County, CA
Originally posted at:http://www.firstteam.com/blog/?p=6533
In a sellers market homes sell quickly at a good price equal with home values. Average Days on Market or DOM is how the real estate world measures how quickly a home sells.Days on Market is the time period between when a property is first listed on the MLS and when that property is sold. An average DOM is great for sellers because that means homes are in high demand, not staying on the market long and generally selling for at or above average value prices.
The averageDays on Market for Los Angeles County is 51 days 10 days shorter than the Orange County average. Based on city specific DOM, sold prices and square footage prices, weve found the Top 10 sellers markets in Los Angeles County.
Although they are sellers markets, each city on our list represents a good market for both buyers and sellers. Great for sellers because homes are in high demand and selling quickly and desirable because buyers have been snatching up this real estate If youre living in one of these L.A. County communities, it might be time to sell and move up to your next home.
1. Hawaiian Gardens Located in the Gateway Region, Hawaiian Gardens is in the economic core of Los Angeles County but still maintains and safe and secure community feel. The city is probably best known for the 57,000 Hawaiian Gardens Casino which has been in the city since 1996.
Avg. Sold Price: 225,000
Avg. Sq. Ft. Price: 181
ViewHawaiian Gardens Homes For Sale
2.Bell Gardens Along with Hawaiian Gardens, Bell Gardens is one of five Los Angeles County cities to legally allow casino gambling. The luxury Bicycle Casino is a major source of revenue for the city and community resource offering conference areas for business and delicious dining for pleasure.
Avg. Sold Price: 210,000
Avg. Sq. Ft. Price: 182
ViewBell Gardens Homes For Sale
3.Huntington Park This L.A. suburb community is popular with working >
Avg. Sold Price: 222,000
Avg. Sq. Ft. Price: 189
ViewHuntington Park Homes For Sale
4.Maywood Maywood is a small city surrounded by the bustling metropolis of Los Angeles. The city is popular with families who work in neighboring communities like City of Commerce and Vernon. Average square footage prices have increased37.9from just last month and average sold prices have increased41.2shooting up from216,000 to 305,000.
Avg. Sold Price: 305,000
Avg. Sq. Ft. Price: 252
ViewMaywood Homes For Sale
5.Signal Hill Completely surrounded by the city of Long Beach, Signal Hill is desirable to buyers because of its prime location. Average square footages prices have appreciated10.3from last month and average sold prices have gone up4.7since last year.
Avg. Sold Price: 315,000
Avg. Sq. Ft. Price: 243.1
ViewSignal Hill Homes For Sale
6. Rosemead Located in the west San Gabriel Valley, Rosemead has a rapidly growing Asian population. Rosemead, CA is a hot sellers market because property values are appreciating. Average sold prices have increased8.3from this time last year and19.9from last month.
Avg. Sold Price: 522,000
Avg. Sq. Ft. Price: 470
ViewRosemead Homes For Sale
7.Culver City Home to MGM studios, Culver City is a hub for motion picture, television and various entertainment production. The city has its own school district and a unique blend of shopping, entertainment and restaurants to enjoy.
Avg. Sold Price: 605,000
Avg. Sq. Ft. Price: 478
ViewCulver City Homes For Sale
8.South Gate South Gate Parks and Recreation department offers residents 9 city parks and a municipal golf course. The city is primarily served by the Los Angeles Unified School District and its neighboring cities include Downey, Lynwood and Bell.
Avg. Sold Price: 339,000
Avg. Sq. Ft. Price: 284
ViewSouth Gate Homes For Sale
9.San Marino San Marino is a beautiful and lush community making it a popular place to buy for affluent families and individuals looking to buy in Los Angeles County. Buyers love the expansive properties, beautifully maintained public parks and top rated school district.
Avg. Sold Price: 3,684,000
Avg. Sq. Ft. Price: 1,891
ViewSan Marino Homes For Sale
10.Lawndale South Bay is in the South Bay region of Los Angeles County and has become increasingly popular among home buyers. Average square footage prices have increased39.3from this time last year and5.9from last month and home sold prices have increased19.9from this time last year.
Avg. Sold Price: 476,00
Avg. Sq. Ft. Price: 362
View Lawndale Homes For Sale
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