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Have you saved enough for your closing costs?
By Chris
January 23, 2017

There are many potential homebuyers, and even sellers, who believe that they need at least a 20% down payment in order to buy a home or move on to their next home. Time after time, we have dispelled this myth by showing that many loan programs allow you to put down as little as 3% (or 0% with a VA loan).

If you have saved up your down payment and are ready to start your home search, one other piece of the puzzle is to make sure that you have saved enough for your closing costs.

Freddie Mac defines closing costs as:

“Closing costs, also called settlement fees, will need to be paid when you obtain a mortgage. These are fees charged by people representing your purchase, including your lender, real estate agent, and other third parties involved in the transaction. Closing costs are typically between 2 and 5% of your purchase price.”

We’ve recently heard from many first-time homebuyers that they wished that someone had let them know that closing costs could be so high. If you think about it, with a low down payment program, your closing costs could equal the amount that you saved for your down payment.

Here is a list of just some of the fees/costs that may be included in your closing costs, depending on where the home you wish to purchase is located:

  • Government recording costs
  • Appraisal fees
  • Credit report fees
  • Lender origination fees
  • Title services (insurance, search fees)
  • Tax service fees
  • Survey fees
  • Attorney fees
  • Underwriting fees

Is there any way to avoid paying closing costs?

Work with your lender and real estate agent to see if there are any ways to decrease or defer your closing costs. There are no-closing mortgages available, but they end up costing you more in the end with a higher interest rate, or by wrapping the closing costs into the total cost of the mortgage (meaning you’ll end up paying interest on your closing costs).

Home buyers can also negotiate with the seller over who pays these fees. Sometimes the seller will agree to assume the buyer’s closing fees to get the deal finalized, which is known in the industry as ‘seller’s concession.’

Bottom Line

Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.

Renters Insurance

About a week ago, a young couple that I know had lost everything in a home fire.  They lived in a duplex and both units were total losses.  The young couple on one side, a family of 5 on the other, all had nothing except what they wore out of the home.

Most people do not have unlimited funds to purchase everything.  Imagine having to purchase all new clothes, a new cell phone, all new furniture, a new vehicle, new toiletries, new food, the list seems to go on and on.  One unit had renters insurance and one did not.  Many landlords recommend and some even require renter insurance.  All insurance companies can work with you to list items to determine coverage amounts.  Most policies are less than $30 per month.  So for a dollar a day, you have the protection for the worst case scenarios.  I highly recommend rental coverage.

Be careful out there and be prepared.

 

How to Improve Your Credit Score
By Chris
November 6, 2016

Information About Your Credit

 

Your credit score is unique and individual as you; it is your history.  It reflects your payment pattern over time with an emphasis on recent history.  First you have to know where you stand.  The Federal Trade Commission protects consumers.  You are entitled to get your credit report for free once every 12 months from each of the three credit reporting companies.  You can order at www.annualcreditreport.com which is the only authorized website according to the Federal Trade Commission.  You will need to provide your name, address, social security number, and date of birth to verify your identity.  When you get your credit report, you will then be able to see the good and the bad on your report. You will then be able to focus on improving your score and your history.

You can help your credit most by paying your bills on time.  Any late payments or delinquent accounts have the largest impact on your credit.  Keep your balances low on revolving credit.  The higher the balance, the larger the impact to your credit.  Do not open any new accounts.  Some people think that opening new accounts or a mix of accounts can improve their score.  Most times, it does not impact your score and somtimes can harm.  You also want to pay off your debt and not just move it around.  

Paying your bills is the number one way to greatly impact your credit score.  You want to minimize outstanding debt and do not overextend yourself.  You do not need to impress anyone and you would be surprised at what you actually need verses what you want.  Refrain from using your credit or appliying for credit as much as possible.  When you apply for credit, it shows as an inquiry.  Multiple inquiries can lower your score.  

It takes time to impact and improve your score.  Again, the most important thing is to pay all your bills on time.  You have to establish the good history.  If you have years of bad history, just paying your bills on time for 6 months, will not erase that bad history.  Delinquencies and public record iteems remain on your credit for 7 years.  Bankruptcies and unpaid tax leins can remain for 10 years.  Just keep paying and limit your usage of credit lines.  Just keep at it.  You can do it!

Be careful when closing or combining credit lines.  It can help because it lowers the amount of accounts that you have.  However, it can hurt because reduce the amount of available credit.  This can increase the balance to limit ratio, which generally lowers your credit score.  Many financial experts and advisors will recommend paying off the credit line then closing it out if you are no longer wanting to use the line.  But also the length of accounts can also impact the credit.