Jim Savage

Expect the unexpected. Anticipate the hidden costs by researching the real estate and mortgage markets. Keep in mind that there are hidden costs and that you have different options to deal with them. The best way to avoid Hidden Fees is to ask and receive a complete breakdown of costs from both the lender and the escrow company at the time you open escrow and begin securing finances. Lenders are required to immediately send you a document called "good faith estimate". Take the time to review each charge carefully. Challenge the ones you don't find appropriate or that you don't understand. Don't wait until it is too late. Do your research ahead of time.

Hidden Extra Fees 1. Application Fee - Many mortgage applications do not require an application fee. Although you need to fill out the mortgage application to get the mortgage, you do not need to pay the application fee to get one.

2. Assumption Fee - If you are taking over an existing mortgage, the lender will probably charge a fee for handling the paperwork. Find out what different lenders are charging and compare their fees. Know how much is too much.

3. Commission - Know who is paying the agent's commission fee; is it the buyer or the seller? Unless you have a written agreement to pay part of the seller's agent's fee or your buyer's fee, the commission should not appear on the buyer's estimate of cost sheet.

4. Appraisal Fee - A lender wants to know that the property on which a loan will be made is worth more than the loan. Your lending institution may request an appraisal of the property, which would be your responsibility to pay for. Appraisals can vary in price from approximately $175-$300. However, if you are refinancing a loan which you had applied for in the last year, the lender does need to have the home appraised again.

5. Closing Review Fee - Sometimes the lender will charge you for going over the closing documents. The Closing Review Fee is unnecessary.

6. Courier Fee - Be wary of unnecessary delivery fees. Some companies will charge you for courier fees even when they haven't used a courier.

7. Credit Report Fee - The Credit Report Fee is required, but be wary of charges that are above $100. Again, find out what the normal and customary fees are for credit reports.

8. Discount Points - Points are used to adjust the yield of the mortgage to correspond to market conditions. Make sure that you aren't paying for more points than you agreed to when you first signed up for the loan. If there are discrepancies between what you thought and what the lender has put into writing, discuss them with your lender before signing the agreement.

9. Document drawing/signing Fee - Sometimes the escrow company will charge a fee for writing out the documents and having you sign them. Question your escrow company if you come across it.

10. Document Preparation Fee - Some lenders will try to charge you a fee for writing out the loan documents. Also commonly referred to as the Processing Fee. This is part of their job and the fee is one of those "garbage" fees that you should just throw out.

11. Escrow Charges - The escrow company accepts all the monies, gets the deed prepared, and handles the actual closing of the transaction. An escrow fee is required but again, compare what different escrow companies are charging to get the best rate. Check to see if the title company and the escrow company are affiliated. They may have discounts available if you use both of their services.

12. Fire Insurance - You will be required to provide fire and hazard insurance policies to protect the lender. Be sure to shop around for the best rates.

13. Impounds - If your mortgage was for more than 80% loan-to-value ratio, you will probably be required to impound taxes and insurance. The lender will collect a couple of months of taxes and insurance from you in advance in order to get the account started, and then pay them when due. Make sure that the right amount and not more is set aside.

14. Impound setup - Challenge any setup costs. A lender's primary responsibility is to set up the impound.

15. Lender's attorney fee - You are not required to pay the lender's attorney fee. It should be included in the lender's services.

16. Lender's title insurance - Most lenders require a separate policy of title insurance. Compare the different rates to find the best one.

17. Mortgage Insurance Premium - If you have an FHA loan or a loan for more than 80% LTV, you'll have to pay for insurance in case you default on the mortgage. If this charge does not apply to you, question your lender.

18. Origination Fee - This is like a start up cost. Many lenders will add this fee and not waiver it. However, you can find lenders who do not add this fee on top of their interest.

19. Underwriting Review Fee - Lenders usually hire underwriters to double check a buyer's employment and income to make sure that everything is in order. The lender should pick up any fee that the underwriter charges. Usually the underwriter fee varies from $200-$400. If you can avoid this fee, do so.

20. Warehousing Fee - Lenders sometimes charge for the interest on the mortgage between the time the lender makes it available to you and the time the deal actually closes. There's no need for you to pay interest on it until you receive the mortgage.

21. Administrative Fee - Some real estate agents will charge a separate fee for writing and managing your documents. This is another example of a charge for a job that is routine for an agent.

An appraisal and a home inspection have some similarities, but they are two distinct functions in a real estate transaction. The services provided by an appraiser and a home inspector ensure that your property meets certain, basic criteria. The appraisal assures the market value for the buyer and the lender. The home inspection focuses on the physical elements of the property and doesn't consider the value or the potential value.

An appraisal is usually ordered and required by a lender to estimate the value of a property to ensure that the house is marketable in the event the buyer should default on the loan. An appraisal considers the age of the home, its condition, floor plan, amenities, square footage, the size of the lot, improvements, location and the recent sales of any comparable homes.

The home inspection identifies items that need to be repaired or replaced and estimates the useful life of major systems, equipment, the structure itself and the finishes. The inspection doesn't comment on or ascertain cosmetic imperfections, nor does it assign a value to the property or any of its elements. A home inspection does not include a termite inspection. This inspection is required by most lenders and is performed by a qualified professional. Having a professional home inspection before you list your property can give you an unbiased evaluation of its physical condition and clue you in as to recommended repairs and necessary updates. By tending to these matters before your home goes on the market you can avoid problems, disputes and/or delays later. If your home is pre-inspected, the buyer may want to order and pay for an additional inspection, which is the buyer's privilege. Your real estate professional can help you decide if an appraisal or home inspection would be helpful before you list your property.

Your home's square footage is important, not just because you know how much space you have to enjoy, but because it can also help determine your home's value. When you get an appraisal, one of the items listed is square footage. The appraiser will take this into account with a price per square foot estimate that figures in with your homes other features. So, how do you come up with this number? First, measure your home, beginning at one exterior corner and going around the length of all the walls. Make a sketch using these dimensions. If you need to measure from the inside, add the appropriate amount for the walls, six inches for exterior walls and four inches for an interior wall. Multiply the length times the width to find your home's square footage. There are a few exceptions to take into account. The square footage must be finished for living, including conventional heating, walls, floors and ceilings of acceptable materials and it must be accessible to other parts of the home. Unfinished space is generally not included. Basements, garages and attics fall into that category. And in most areas, there must be a specific amount of 'head room.' Finished attics and upstairs rooms may lose some square footage if the ceiling falls below acceptable levels.

Buying a home is an important decision that can make an enormous difference in your lifestyle. It is also the biggest financial transaction you may make. There are some specific things to consider about a home to buy.

* Be realistic: There are no perfect homes. Decide what is important to you, and make sure you find a home that has the features you require. Be prepared to compromise on some of the items on your wish list.

* Decide on a price: Get pre-approved for a loan, not just prequalified. Consider not only the amount of the loan the lender will allow, but also what you feel comfortable spending every month. Take an honest look at your budget.

* Choose carefully: Buying a home is much more permanent than renting. Purchase a home that you are prepared to keep for a while. Select a home that will be reasonable to maintain, in both utilities and/or repairs.

* Build up to your dream home: Most people nowadays buy more than one home in their lifetime. The average turnaround time is seven years. Buy a home you can afford today. Start to build equity, and then you can trade up or even build your dream home. Please don't hesitate to call or email us if you have any questions or concerns.

Sincerely,

Jim & Tracy Savage (CBR)

Certified Buyer Representatives

oldcolonyhomes@gmail.com

Per your request, this article has been sent to you by Jim Savage of ERA Belsito & Associates.

Negotiating for Your Interest Many of us subscribe to the Old West credo that a deal is finished when both parties shake hands on it. If that's your way of thinking, then be prepared to get skinned alive when you buy real estate. The modern credo is """"Never stop negotiating""""--even after the deal is signed, even after escrow has opened, even after escrow has closed and title has passed to you. If you truly want to look out for your own interests, you won't stop negotiating! Yes, this is a bit of an exaggeration. Nevertheless, those who do get the best deals in real estate are often those who keep right on negotiating as long as, so to speak, there's anything left on the table.

Negotiate as Part of Making an Offer The entire process of making an offer involves negotiation. You purchase a home at a certain price for specified terms, including contingencies that allow you to back out in certain circumstances. The sellers read you offer and then either accept or, more likely, counter at a different price and with different terms, perhaps eliminating some of your contingencies and modifying others by limiting them for example, in terms of time. Thus the sellers may agree that you can have an inspection, but you must approve the report within, say, 14 days. Back and forth it goes with counteroffers, and counters to the counteroffers and counters to the counter to the counteroffers. This is the negotiation process and, depending on how good you are at it, you'll get a better or worse deal. If you get a deal that's acceptable to you and is the best you feel you can get, and if the same is true for the sellers, there's agreement and everyone signs. The presumption is that the deal is made. Don't count on it.

Negotiate Over the Disclosures A wise buyer knows that the really tough negotiations frequently don't start until after the deal is signed. Usually the next negotiation takes place over the disclosures. Within a few days of signing, you should receive a list of defects in the property as revealed by the sellers. (If you get the list before negotiation start, then this point is moot.) If your offer was properly filled out (or if your state gives you rights here), you now can back out of the deal without penalty. If something seriously wrong is revealed, you may want to simply say no, take back your deposit, and move on. Or you may want to negotiate some more. You do this by letting the sellers know (through their agent, if they have one) that you disapprove of the disclosures because of the problem(s) they reveal. However, you're willing to go through with the deal if the sellers either repair the problem or reduce the price. If it's price you want, you indicate what you consider to be a fair price (sometimes a figure significantly lower than what was originally agreed upon), and negotiations begin again. Typically the sellers will balk, but if they want to sell and there is a problem, they very likely will counter your offer. Back and forth it goes until both parties feel they can live with the same set of terms. If something significant was revealed in the disclosures (or if you said that, in you view, what was revealed was important), you may get a significant price reduction or better terms.

Negotiate Over the Home Inspection The next negotiation frequently occurs over the results of the home inspection. It's rare that a home inspection, even of a brand new home, will reveal nothing. Usually there's something, even if it's just leaking faucets. Depending on the severity of the problem(s) discovered, savvy buyers now open negotiations all over again. How can you do this? Remember, a good inspection clause is actually a contingency that, in effect, makes the purchase subject to the buyer's approving the inspection report. You don't approve. There's no deal-unless the seller is willing to come down in price or up in terms. Keep in mind that problems such as these usually arise two weeks or so after the deal was originally signed. During those two weeks the sellers have begun making plans to move. They may even have put down a deposit and made a deal on another home. They are counting on your deal going through. Now, suddenly, there's a hitch. As the buyer, you are balking at something that came up in the inspection. You can bet that the sellers are going to be eager to smooth over the problem, if they can. I've seen deals where the price was knocked down $3,500 to handle a problem with paint, $17,000 for a problem with a roof, and $35,000 to accommodate a problem with the structure. Why would the sellers be so accommodating? It's not that they want to. It's just that once a problem is revealed, it will have to be dealt with one way or another, either with you or with other buyers. It might as well be you, since you're already involved in the deal. Further, seller sometimes simply get desperate to sell, Although they were adamantly against lowering their price or giving you a better deal during the initial negotiations, now they simply lay down and roll over. I've seen it happen. You may negotiate a cash settlement without actually having a disclosure problem corrected, provided the lender doesn't object. For example, the seller s may lower the price $5,000 over a leaking roof. However, instead of replacing the roof, you have it patched for $500 and pocket the difference (at least until the next rainstorm).

Negotiate During Escrow Some buyers with a lot of what might be called gall negotiate right through escrow. As the sellers get more and more used to the idea of their home being sold, the buyers keep coming up with new concerns that can be resolved only by further concessions from the sellers. I've heard buyers say that they drove by and became aware that the window trim was damaged. They then wanted several hundred dollars off the price to have it fixed. If not, they would simply hold off on buying the home. Yes, these buyers stand a chance of losing their deposit (and more), but the sellers won't get it either without going to court. In the meantime, the sellers' house is tied up. It simply becomes easier for the sellers to acquiesce than to fight. In a very slow market, buyers may demand a reduction in price because of market conditions. They simply tell the sellers that prices are going down. The house is no longer worth what is was when the offer was accepted. Either the sellers accommodate with a lower price or the buyers refuse the deal. Once again, the sellers have options, none of them particularly good in a down market. And many will acquiesce to placate an irritable buyer. The sellers could refuse a buyer's new terms, then demand the deposit, or even demand specific performance (the buyer either goes through with the purchase or, more likely, pays damages). But few sellers really want to go to court and fewer actually do. Buyer with gall and the willingness to risk a lot have pulled off some amazing deals in this fashion.

Negotiate After You Own the Property It is possible to get a better deal even after the escrow has closed and you take possession of the property. This frequently happens when buyers find something amiss, and demand that sellers make it good. In one case, the buyers discovered after they moved in that the sellers had allowed their pets to run wild over much of the home. A urine smell permeated the wall-to-wall carpeting in several rooms. The smell had not been detected earlier because the windows were always open when the buyers inspected the property. Further, the sellers had failed to disclose this problem. It's important to understand that animal urine in carpeting cannot really be removed. The smell will remain, often permeating the padding and even the flooring beneath. The buyers demanded that the sellers replace not just the carpeting in the rooms with the problem, but also the carpeting throughout the house, since it was all of a kind. They said it wouldn't look right to have just a few rooms fixed. After conferring with their agent, the sellers agreed. Then the buyers picked out the carpeting, which was valued at close to $15,000, installed. The sellers balked, but when confronted with the cost and possible outcome if the matter went to litigation, they sent the buyers a check for that amount. As long as there are problems, you can negotiate with the sellers. In some cases, even if the problem is something you imagine, you can still negotiate and win concessions simply because the sellers don't want to bother with the nuisance.

Remember, to paraphrase Yogi Berra, the deal isn't over until it's over. Don't pressure sellers too far. If you insist on unreasonable demands, they may simply refuse and buckle down, ready to fight you legally. That could mean you'd lose the house and have legal problems to boot.

For more information please contact: Jim & Tracy Savage (CBR) Certified Buyer Representatives Work: 781-831-0791

FOR ALL YOUR FINANCING NEEDS CALL !!!! Steve Ross National City Mortgage Sr. Mortgage Consultant 345 Court Street Plymouth, MA 02360 Cell Phone: 508-360-2115 Office: 508-746-4750 x128 Email: Stephen.ross@ncmc.com