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March 2020

what are closing costs

The True Explanation of Closing Costs

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Closing costs are often misunderstood. New home buyers often have a lot of questions like:

  • Where do they come from?
  • Who receives the money?
  • Who pays them — seller or buyer?
  • Is there really a no closing cost loan?

Investopedia tells us that,

“Closing costs occur when the title of the property is transferred from the seller to the buyer. The total dollar amount of closing costs depends on where the property is being sold and the value of the property being transferred. Homebuyers typically pay between 2% to 5% of the purchase price but closing costs may be paid by either the seller or the buyer.”

That’s somewhat helpful, but let’s look at a number of these costs, address them, and then ascertain who might pay them. Also, remember that our cost estimates are truly only estimates. You could find even wider fee ranges than we show below:

Appraisal fee ($300-$700)

Lenders will not offer you a loan until an independent third party has valued your property. If the appraisal comes in lower than the property purchase price, the bank will usually not lend the money. During the 2008 financial crisis, many blamed appraisers for artificially inflating real estate values as they were sometimes kicked back fees by banks or agents. This is highly illegal, however, and lenders today carefully vet each individual home appraisal. The buyer usually pays for the appraisal.

Home inspection ($300-$500)

According to NewsDay:

“A good home inspection can uncover repair and/or condition issues not readily apparent to the buyer. If the inspection turns up issues, the buyer can attempt to renegotiate the deal, and if the inspections was performed within the sales contract time limits, a troublesome inspection report can allow the buyer to back out of the sales contract. Buyers usually pay for this and it’s worth it.”

Application fee (varies)

Some lenders charge this but sometimes buyers can ask for a waiver.

Attorney’s fee (varies)

This can be a catch-all charge since many lenders have in-house lawyers. You can try to negotiate this out or convince the seller to pay for it.

Prepaid interest (based on loan amount)

Mortgage interest is typically paid in arrears. This means that you pay for interest accrued in March on April first. Interest accrues from the minute the loan closes, and your first payment usually isn’t due for about a month. Therefore, at closing, you are charged for the interest that is due from the closing date until your first payment. The buyer pays this. 

Origination fee (about 0.5% of loan amount)

This is simply a way for lenders to make more money by charging a small percentage of the loan to in effect make the loan to you. A half percent can be a lot of money–$2500 on a $500,000 loan, so try to get your lender to waive this.

Discount points (One point costs 1% of the loan amount)

We like Bank of America’s explanation:

“Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can lower your monthly mortgage payments. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000). Essentially, you pay some interest up front in exchange for a lower interest rate over the life of your loan.”

If you don’t want to buy down the interest rate, you won’t incur this cost.

Mortgage broker fee (0.50% to 2.75%)

Buyers sometimes use a mortgage broker because these agencies can shop the loan to multiple lenders. Only one application is needed, and the broker’s staff will babysit the transaction all the way to closing. Mortgage brokers will tell you upfront what the cost of their services will be. This is definitely buyer-paid.

Mortgage insurance application fee (varies)

Private mortgage insurance is required for some loans and loan amounts, but we don’t like this fee and urge you to ask whomever is demanding to waive it.

Property taxes (two months’ worth at least)

Most lenders will not allow your property taxes to go unpaid, so they take upfront money from you and put it in escrow so that they have control of tax payments. You have to advance them money at closing to start your escrow fund. Usually no way out of this one.

Homeowners insurance (depends on home value and location)

This is another item that lenders do not want to see unpaid, so you’ll have to escrow this money also.

Title Policy

There can be two necessary title polices—one for the seller and one for the buyer. You can negotiate who will pay for what.

There are other closing costs that you may discover, and prudent buyers will mentally set aside three percent of the total sales price for closing costs. If you are buying during a down economy in a buyer’s market, you can ask the seller to pay many of these costs and you may be successful.

If you are in a seller’s market, you can sometimes get your lender to add these costs on the back end of the loan. Either way, when your title company presents you that all-important page that lists all of the closing costs along with the net-to-seller proceeds, make sure you carefully scrutinize that list.

real estate software

11 Software Products Realtors Need in 2020

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The old days of simply meeting a prospective seller, explaining your skill at moving properties, signing the client, placing the listing on MLS and waiting for the leads and appointments to roll in are long gone.

Sure, personal client contact and superb responsiveness to client needs are paramount, but if you’re not using all of the technological tools that are available to you, someone else one certainly is, and instead of growing your business, you will watch it fade.

Whether you’re working in a corporate office or a coworking spot, check out this list of the key 2020 real estate and 3d software products you need to consider using now:

DocuSign

If you’re not using this, you’re somewhere in the dark ages of real estate transactions. DocuSign has been used for years and allows you to collect digital signatures. Worried about the legality of those digital signatures? DocuSign says this:

“Thanks to a federal law passed in 2000, the Electronic Signatures in Global and National Commerce (ESIGN) Act, and to the Uniform Electronic Transactions Act (UETA), electronic signatures cannot be denied legal effect (enforceability) solely because they are electronic.”

person using iMac

MoxiWebsites

Sure, you can find multiple real estate software methods to build your unique real estate website, but MoxiWebsites was designed for real estate professionals. There is no sense fighting with a generic GoDaddy-type website builder when there is real estate-agent specific software available.

IXACT Contact

Customer relationship management or CRM is a necessary tool that will help keep your client information organized. IXACT Contact is a real estate software that can designate prospects as hot leads, for example, and it will track the status of your client interactions. When you get a lead, just immediately enter the pertinent information into IXACT Contact and watch your level of organization rise exponentially.

WPL Platform

If you choose to use WordPress, you can use this real estate software plugin to build your site and add functionality like thorough lead capturing, up-to-date map functions and more. You also can choose from over 35 add-ons, although you may have to pay extra for these.

flat screen monitor

The Wise Agent

There is a lot of CRM software out there, and we have alluded to some above. With The Wise Agent, you’ll get targeted real estate CRM solutions for only $29 per month, and that is after a free trial. Contact management, lead automation, transaction management, marketing and more functions are available.

Showing Time Appointment Center

Making appointments quickly and accurately and getting that information to all appropriate parties is what you do, and with the Showing Time Appointment Center, this can be accomplished seamlessly. Sarah D’Angelo (Keller Williams) says:

“If you’re not using a showing service, you’re missing out on a key piece of leverage. This technology acts as your virtual assistant so you can help more clients or spend more time with family.”

person holding pencil near laptop computer

Total Brokerage

This software is like an automated smart home app; it combines items like CRM, Lead Management, Marketing, Transaction Workflow, E-Signature, a Forms Library and even integrates with QuickBooks. This is one to absolutely check out.

two person shaking hands near white painted wall

RIO Genesis Office

Get your office up to speed with this all-in-one office software platform. One user said:

“I have converted my whole office over to RIO Genesis because it is fast and easy. It has allowed me to streamline all of my checklists and processes. The online offer submission is my favorite feature because I don’t have to send out fifty different emails to agents. I can now do this with the click of a button.”

EYESPY 360

Clients want to shop for homes online before they take the time to schedule a visit. This, of course, is Real Estate 101, but in order to facilitate this, you need a way to provide virtual tours of your sellers’ properties. This is what EYESPY does:

“Upload 360 photos from any 360 camera or mobile phone and create feature-rich 360 Virtual Tours, 3D Models and Floor Plans. Take advantage of our Tour-as-a-Service solution where all you do is simply upload the 360 photos and we do the rest.”

Follow Up Boss

This is another highly useful sales software that allows real estate professionals to follow up more quickly and to subsequently convert more leads to sales. This is a stand-alone product, but it may be very useful to those that have other real estate software programs but are missing this piece.

man holding black smartphone in front of a windowpane

Brokermint

Brokermint claims that they are the “last real estate back office management system you will ever need.” Their site further states that “brokermint has been designed to include everything your brokerage needs to effortlessly manage, assign, track and evaluate all of your back-office tasks. From setting custom commissions to organizing documents, to allowing agents and clients to digitally sign and secure their documents.”

As you can see, many of the aforementioned programs, platforms and apps are similar. They’ll all claim that they are the most sophisticated model, and many state that if you purchase their software, you won’t need anything else in order to run your real estate business efficiently. It’s best to carefully vet each of the products you are interested in and look for verified online reviews before you make a final decision.

Utilizing 14-day free trials is another great way to see if the product really fits your needs. Finally, there are third-party vendors like Software Advice that—for no charge—will help guide you as you attempt to choose the proper real estate software product.

Now, take the next steps to grow your awesome real estate business using great software and tools available!

How Do Late Payments Impact Your Credit Score?

 1000 500 Sam Radbil
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Whether you’re looking to purchase a house on a contract for deed, acquire a loan for college, or put down a car payment, your credit score is an essential part of the process. Credit scores are created based on a wide variety of criteria, and items such as late payments can reflect negatively on your score for years. 

Knowledge is half the battle when it comes to maintaining a high credit score, so read on to learn how late payments affect your credit and what you can do about it.

What is Your Credit Score?

To understand the importance of paying your bills on time and why late payments hurt so much, we first need to look at your credit score. Credit scores are compiled by three major credit reporting bureaus: Equifax, Experian, and TransUnion. 

They keep a record of every purchase and payment you’ve ever made. They’ll also know how many lines of credit, outstanding loans, and the debt you have to your name. So, what exactly is your credit score, and what does it mean? 

Stated by a credit repair Austin expert, the bottom line, your credit score determines how likely you are to pay creditors back on time. When you need a loan for any reason, loan officers will file with a credit reporting company for your credit report. 

Generally, the lower your credit score, the more hesitant a loan company will be to offer you the loan you want at the low-interest rate you desire. Higher credit scores always gain better loans at the best interest rates possible. 

A low credit score means you are less likely to obtain the full amount of your loan or, if you do, you’ll be paying a high-interest rate.

How Do Late Payments Impact Your Credit Score?

The single biggest factor that determines your credit score is your ability to pay back loans on time. Your credit score is the bottom line for creditors in determining how much of a loan they’ll be willing to give you, and how much of a risk you pose to their company. 

Loans are always risky, so loan companies use credit scores to ensure they’re making the wisest lending decisions possible.

When you miss a payment on your credit card, auto loan, mortgage, or other loan-device, the three reporting companies will be notified. Your late payment will then get placed into the scoring system that makes up your score.

Payment history accounts for 35% of your credit score, so missing even one payment can hurt your total score. The entire point of a credit score is to determine how reliable you are in paying back loans. Other factors impact your score but, outside of how much credit you’re using, the other factors contribute much less weight to your score.

Since payment history impacts such a large portion of your score, you could potentially drop 100 points due to a single late payment. It stays on your record for seven years, though its impact does lessen over time. 

It will, however, take quite a while to rebuild your score after significant damage.

What is Considered Late?

Nearly everyone has forgotten a bill from time to time. Two days past its due date, you suddenly remember you forgot to pay the water company and panic. You call, find out that you can pay right then and there, they slap a $20 late fee onto your regular bill, and you’re done. A sigh of relief. 

But did that late payment get recorded by the credit companies that keep track of your score? The straight answer is no. 

Late payments only get reported to the three credit reporting bureaus when they are a minimum of thirty days past due. The bill that you paid two days late will only affect your wallet, not your credit score. The car payment that you couldn’t make until forty-five days after it was due, however, will definitely show up on your score.

Do “Good Faith” Payments Help?

If you know you’ve got a bill incoming that you can’t pay in full on time, will it do you any good to pay half of the bill as a good faith statement? Unfortunately, no. 

A payment that is over thirty days late will be marked as delinquent by the credit reporting agencies, whether you’re late on $300 or .30¢. Good faith payments, while they might help you pay down your debt, will not help your credit score.

Not only do “good faith” payments not help, but the longer your bill goes unpaid, the more damage is done to your credit score. A 30-day late payment could drop your score as much as 90 to 100 points, even for someone who has never missed a payment.

How to Repair Damages

If you’ve missed a payment for a month or two, the damage has been done. There are action steps you can put into place, however, to help you get back on track.

  • Pay off debt as soon as possible. Save up and pay down your credit.
  • Get back to on-time consistent payments. The more you pay on time, the less damage your one-time late payment will do.
  • Set up auto-pay so you’ll never miss another payment.
  • If you know you’re going to be late, contact your credit agency and ask about working out a payment plan and adjusting the monthly amount owed.
  • Monitor your credit report. Keep up to date on payment history, penalties, and improvements in your credit score. Many companies that help you monitor your score will also provide tips and tricks to help you improve it.

Research your options. Talk with a professional and see what debt can be written off.

What Is Your Next Step?

If you’re reading this article, you’ve probably made a late payment and realize your score has been affected. While a late payment will most certainly impact your score, it’s not permanent, and it will improve over time. 

By paying your bills consistently and keeping track of your credit score, you’ll be able to get your score back up. What step will you take to improve your score?

remodel tips

Remodel Tips Contractors Don’t Want You to Know About

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Your home may need to be remodeled, but maybe you are holding off. The high cost of contractors, because of these major trends in the industry, can make a lot of people put off remodeling their homes. However, remodeling raises the resale value of your home and makes it more comfortable for you to live in. It is fair to say that remodeling is an important part of homeownership. 

Don’t let the high cost of contractors deter you. In this article, we provide the top remodeling tips that contractors don’t want you to know. If you want a beautifully renovated home that still fits into your budget, read on. 

grey stove range oven

Hire Your Own Sub Contractors

Before we jump into the tips below let’s talk about one of the biggest ways to save a bundle. Mike Epson at the TheSmartConsumer.com says that “it’s easier than you think to be your own contractor. All you need is general knowledge of how something needs to be done.

You don’t even need to know how to do it.” Many contractors do not do hands-on work, many of them just take on the planning, inspection, and organizing of subcontractors. For taking on all the hassles their fees can increase a project anywhere from 10%-30%.

If you need to hire help, consider hiring subcontractors, or working with a staffing agency instead of one general to manage it all.

Remodeling tips

There are many ways that you can cut down on the costs of home remodeling. Below we’ve included the top four tips. Some are tips about DIY work you can perform, and some are ways to cut down on extra contractor costs. Each will save you money and make your remodeling plan much easier. 

Exterior painting is easy

Painting the exterior of your home is very easy. You don’t have to be a handyman to do it well. According to rl-remodeling “as long as you prepare the outside of your home to paint properly, the actual painting process is quite easy, it’s all in the prep work.” Most importantly, you will need to wash, seal cracks, and patch your home’s exterior. It takes time to tape and cover all the surfaces you don’t want the paint to get on. Preparation is often the most time-consuming step, but the effort will be worthwhile when you actually begin painting.  

While you can choose to use a paintbrush to paint the entire exterior of your home, that can get very time-consuming. I have actually seen people do this.

Instead, consider renting a paint sprayer. Anyone can use to learn these machines in about ten minutes. Plus, they are easy to rent at any equipment rental place, which saves you the cost of purchasing your own. 

If you use a sprayer to paint your home’s exterior, make sure it gets back rolled. Someone will also need to check for drips. You don’t want to have to deal with paint drips all over your lawn and patio. If you are not experienced in or intimidated by spray guns, you can also choose to rent a powered roller. These work off of a spray pump and will likely be easier for the beginner to control. 

Tiling Backsplashes and Countertops

Just as painting the exterior of your home is quite easy, so is tiling backsplashes and countertops. Many manufacturers now make a special glue that makes putting the tile in place much easier. You just glue the tile directly to drywall or the counter. It removes the need for extra backer board. This saves you time, effort, and money.

Just like painting, all of the expensive tools that are needed to install tile can be rented. You do not need to spend a lot of money purchasing them. Plus, now you can find pre-made tile backsplashes and countertops that are even easier to install. Just glue them where they need to go and you are done. There isn’t even any need for grout with some of the products out there. Tiling yourself does not cost much and will cut down on a lot of contractor costs. 

If your laying backer board on a wood subfloor one trick that the experts use is to use a roofing nailer to place short nails with big heads in place of some of the tile screws. Some installers will only use roofing nails. It definitely speeds things up, but I would recommend still using some screws with this method, probably somewhere in the 50% range, just because screws hold better and get the board tighter to the subfloor.

Even novices can do plumbing and electrical

Plumbing and electrical work can seem a little bit more intimidating than painting or tiling. And, you definitely want to do your research and make sure you are confident before you attempt any major repairs. However, there are now products, especially plumbing products, that make these tasks much easier for the novice. Let me be clear on this, do not do electrical work if you have no idea what you are doing.

Pex pipe can make any novice a plumbing expert in no time. Additionally, shark bite fittings are just pushed onto the pipe, which means you don’t need dedicated tools. Finally, as long as you have a PVC cutter and push-on fittings, you can perform almost any plumbing refit without expert-level knowledge. Plumbers literally hate that any average Joe can now attach pipes together without the use of a torch.

Just because you can easily do large plumbing and electrical remodels doesn’t mean you have to. If you choose to use a contractor, there are a few ways to cut down on costs. The biggest way to save on costs for both electrical and plumbing jobs is to do the trim work yourself. These are small jobs that plumbers and electricians can use to jack up their prices, but that you can easily learn to do on your own. 

DIY Examples of Outsourced Tasks

Plumbing trim includes

  • Connecting faucets 
  • Setting toilets 
  • Attaching shower heads

Faucets are a simple task anyone should be able to install

Macro Photography of a Stainless Steel Faucet

Electrical trim includes

  • Installing outlets and their covers 
  • Installing switches 
  • Installing indoor and outdoor lights 
  • Connecting a water heater

Electrical Covers are another simple DIY task

Remodels of HVAC systems are some of the most popular out of necessity and the most expensive. Although it is not recommended that novices install HVAC systems themselves, there are some cost-saving options. 

Ideally, you would buy the HVAC system online. This could save hundreds or even thousands of dollars. As long as you still find a licensed contractor to install it for you, your warranty would remain valid. Legally, you might not have to use an installer. Instead, you would just have to meet your city code. 

Wrapping It Up

Clearly, there are many ways to remodel your home. The ones you choose will depend on your own experience level and the type of remodel job. You can even choose to work with a contractor to make your home improvements, you just need to approach the relationship in the correct way. If you just need it done and don’t want the here a good place to start, remodeling contractors. 

As an end to this article, here are two ways to lower the cost of working with a contractor. 

Supply your own materials 

Contractors mark up the materials they use when remodeling your home. Often, contractors will claim that they can purchase the materials at a wholesale price, which theoretically would save you money. However, if they pocket the difference, then you haven’t really saved anything at all. It may be a better idea to purchase the materials yourself and provide them for your contractor. Do the math on both options before choosing the best route.  

Create a bidding war

Contractors need work. They want your business. So, if you get a few estimates, you can use the lowest to bring down the price of the contractor you really prefer. Creating a bidding war may take a little skill, but it can save you lots of money in the long run. 

The next time you remodel your home, use the tips and tricks discussed in this article. They will save you money. All that’s left will be for you to enjoy your updated home. 

home improvement ideas

7 Home Improvement Ideas for Modern Homeowners

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Our homes are our places of rest and happiness, and they deserve to be properly maintained. This means they need to be protected from leaks, pests, structural damage, natural disasters and a lot more. There are many things homeowners need to do to keep their properties whole, but are they affordable and can we DIY all of them during remodeling? 

Being a homeowner is not an easy task, you have to take care of the overall condition of the property, and there are tons of tasks associated with that. Doing repairs and home improvements is not a favorite task, but it’s necessary if you want to keep the quality of your investment. If you’re determined to participate in these projects actively, here are some tips to keep in mind during renovations. They will help you create a modern, safe home for your family.

THE SURPRISING WAYS YOUR HOUSE COSTS YOU MONEY (READ HERE)

Plan Carefully

Regardless if it is a bunch of small touch-ups or a major spring/summer renovation, you should start with a plan. 

The first thing you need to take into account is that the best and most affordable contractors will be booked first and probably won’t have a suitable slot for a home visit for months ahead. 

In this case, planning ahead and looking for the best price and most reliable handyman specialist seems more than relevant, advised Australian Fantastic Handyman Company. Start by making a list of all the closest contractors, then start checking them one by one and writing down their price estimates. This will help you compare the competition and make an informed decision. 

Invest In Energy-Saving

To save more energy, you need to think and live green. There are lots of ways to upgrade your household appliances, if you haven’t done it until now, that is. 

Buying a new fridge, air conditioning or other household devices with a class A+ or A++ will significantly decrease your energy bills. 

Home insulation and noise-cancelling materials are other property enhancements you could take advantage of and stop the large percentage of heat loss during the colder months. Consider this a reasonable investment that will define your future expenses on energy. 

When insulating your property, however, don’t forget the parts attached to the property like the garage, basement, or conservatory. If you don’t cold-proof them, your place will lose more heat than the air conditioning generates, and this will result in huge energy bills and great heat loss. Setting up your insulation is not a simple task, as there is a lot of things to take into account. That’s why it’s very important to find top-quality metal building insulation that will bring you the best energy-saving results.

What you should also consider is that energy upgrades cost less during the home renovation than when adding them post-refurbishment.

Consider Alternative Energy Sources

If you’ve already upgraded your household appliances but would like to cut the costs, even more, adding a few renewable energy sources to your home is the next step to take. 

Solar panels are a classic eco-friendly home enhancement. So, let’s talk about the different spots you can place the photovoltaic energy sources for your home: 

  • Solar Awnings. This is a very practical combination, preventing heat from squeezing in your home. They keep different percentages of solar heat off your property’s interior- 77 % for windows situated on the west side of your home and 65% from windows facing south.
  • Interior Blinds. These, especially the slat-consistent shades, offer very good protection for your place. The slat type of blinds doesn’t look very dependable, but their flat slats offer flexibility. As opposed to ordinary shades, these can be adjusted in order to let a little natural light in without letting the devastating summer heat in the premises.
  • Exterior Blinds. These are generally made of wood, aluminum or vinyl and are, respectively, more resistant to the changing weather conditions outside. When rolled down their slats meet edge by edge and provide a thick shade. If you wish to let a little bit of sunlight in, you can raise them partially. This will leave a slight distance between the slats creating a dappled shade pattern.
  • Solar Power. Also, don’t forget about your backyard and patio. You can install solar panels on the ground of any home to run electric lawnmower and other tools. Solar power could also be used to water and light your garden. For a comprehensive view read the full post about solar lights and garden wind spinners.

Easily Avoid Common Mistakes

When you plan small repairs or bigger refurbishments, you should hire a professional, especially if you don’t have the experience and equipment to cope with the task. If not, then afterward you’ll most probably not like the outcome or worse – injure yourself and damage your property. This will automatically increase the budget planned for your home improvements and decrease its market value. 

In case you’re hesitant, many handyman service providers will advise you what materials to buy.. What is more, many of these companies offer reasonable prices and a considerable decrease in final payment, if you book more than one service for a visit.

Tackle Small Doable Projects

There are small improvements you could do yourself if you’re more experienced in DIY. And this is, undoubtedly, the best way to save money for other expenses. If you have no idea how to install your new shelves, tiles or how to repaint the walls at home, you can shop for materials.

Whatever you decide, it would be better to talk to the contractors first and schedule the tasks accordingly. This way the home repair, maintenance, or renovation projects happen faster.

Buy Materials Personally

There are thousands of websites for supplies and materials for practically every type of home improvement. 

But when you order them over the Internet, there are at least two problems that will definitely occur at some point. 

  1. First, you won’t have the chance to personally check any of the products you’re buying for defects. If you wish to buy furniture or anything of the sort, it would be better to go to the store yourself and take a look at it. This way you’ll be able to see the item and make a reasonable decision on whether it will be suitable for your home. 
  2. Second, ordering household items or maintenance and renovation supplies via website services, often carries the risk you won’t get the right color, size or type of the supplies you ordered. In this case, returning the order seems the only reasonable thing to do. 

However, there will definitely be a delay with your home improvement project.

Major Home Improvements

There are a few types of home repair and maintenance tasks you should not even think of tackling, and namely – structural, plumbing, and electrical. 

WHAT TO LOOK FOR WHEN BUYING A HOUSE (READ HERE)

Don’t take this the wrong way- you should have these features of the household regularly inspected in order to prevent major household disasters like a burst pipe. Unless you have the experience and equipment of a dependable trade, you shouldn’t even think of this. 

Changing the pipes or an electric circuit often requires more than cutting here and there and fixing this and that. Major plumbing projects include breaking into walls and can cost you thousands when done wrong. Imagine what a tiny mistake might lead to. Moreover, in many countries, there are certain certificates which are required in order for you to cope with this time and effort consuming tasks.