We’re a little tight on cash. How can we shift some settlement costs to reduce out of pocket expenses?

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Piggy BankSome buyers reduce the cash needed at settlement by scheduling closing at the end of the month. But there are several other ways to save on closing costs that may work better in the long run.

  • Skip late-month settlement

      Since interest on the loan is paid to the end of the month at settlement, the interest payment gets lower as you get closer to the end of the month. But another approach is to wait a few days until the beginning of the next month. That way, you’ll need to pay more up front at settlement, but you’ll gain a whole month’s delay before the first full mortgage payment is due, because mortgage interest is paid in arrears, after the month has passed.

 

  • Reduce out-of-pocket cash

      Another way to reduce the cash needed at settlement takes some advance planning. By negotiating with the seller, the buyer may be able to pay more for the home and finance it, while the seller puts an equal amount toward out-of-pocket settlement costs.

 

  • Finance closing costs

      A third option is to find a lender who will finance closing costs by wrapping them into the mortgage. This method may, however, cost more over the long run, as lenders often will then charge a higher interest rate for a “no closing costs” loan.
Categories: closing on a home, homes, wilmington, Wilmington NC homes, wilmington nc real estate, wilmington nc relocation, Wilmington nc schools

BUYING POWER :: Lock-In A Low Mortgage Rate Now To Save More

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Rising interest rates adversely impact a homebuyer’s buying power. Say a buyer can afford a $200,000 home at a 4.5% mortgage interest rate. If the interest rate moves up one percentage point to 5.5%, that same buyer would only be able to afford a home priced at $179,000, meaning a $21,000 or 10.5% reduction in buying power.

To keep your buying power strong, and hedge against a rise in interest rates, lock-in your mortgage rate as soon as you can. The key is making sure your loan is likely to be approved because lenders don’t want to lock loans that are going to be rejected. Find out from your lender exactly what documents are needed to get your loan approved and get those documents collected and submitted quickly. If you’re pre-approved for a loan already, you might be in better shape to lock-in a mortgage rate sooner rather than later.

Time is money. Protect yourself, your financial situation and your buying power with an interest rate with which you can live with for the long term.

Categories: Wilmington NC homes, Wilmington NC Market Statistics, Wilmington NC Neighborhoods, wilmington real estate stats, Wrightsville Beach NC

MONEY DIET :: 7 Easy Ways To Reduce Your Loan Payment And Increase Your Savings

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There are many ways to reduce the amount of money you send each month to your mortgage company. You just have to know where to cut the fat. Check out these seven money-diet tips to discover how you can slim down your monthly mortgage payment.

1. Refinance to a lower interest rate. Even a half-percent drop in your interest rate could save you hundreds of dollars a year. Drop a whole percentage point, say from 6% to 5% on a $150,000 mortgage for 30 years, and you’ll save more than $1,100 annually. Get a lower rate and save even more! Remember, though, you may have to pay closing costs to refinance. Make sure you’ll live in your home long enough to recoup those costs.

2. Refinance to two loans. If you took out a jumbo loan (one that is larger than local conventional loan limits in your area) when you purchased your home, you probably paid a higher rate than what was then available for conforming loans. Currently, a non-conforming jumbo loan is anything higher than $417,000 in most parts of the country. If you want to refinance above that amount, you can get around the higher jumbo rate by taking out two mortgage loans instead.

For example, say you want to refinance $500,000. You could take out a first mortgage for $400,000 at the lower conforming-loan rate. Then, you would take out a second mortgage or home equity loan for $100,000. Although the rate on the second may be higher than rates available for a jumbo, you’ll be paying that rate on a comparatively small amount of money. Overall, your rate for the entire $500,000 in loans will be lower than for a jumbo. That will mean a lower total monthly payment.

3. Double up on a small down payment. Refinancing to two loans also makes sense if you put a small down payment on your home. If you paid just 10% down on a $150,000 property, for example, you’re probably paying a private mortgage insurance (PMI) premium with your monthly mortgage payment. Once you have 20% equity in your home, you can drop that payment (as we’ll discuss later). But with less than 20%, it might pay to refinance to a 75/15 mortgage. Under this scenario, you would take out a first trust for 75% of the home’s value and a second trust for 15% of its value. With neither loan showing less than 20% equity in the home, PMI won’t be required.

4. Review your ARM calculations. Industry experts say consumers can lose money to calculation errors lenders sometimes make when re-computing adjustable-rate mortgage payments as they change year to year. Dust off your closing papers and look up the current rate to find out what you’re supposed to be paying according to the adjustments and caps stipulated for your loan. If you find a mistake in your favor, contact your mortgage company to have your payment changed to the lower amount.

5. Drop Private Mortgage Insurance (PMI). If you bought your home with less than a 20% down payment, you probably have private mortgage insurance. PMI can cost hundreds of dollars monthly on some loans. The Homeowners Protection Act of 1998 says your lender must automatically cancel PMI when your equity reaches 22% on the loan pay-down schedule. But you can also drop your PMI once your equity reaches 20% through market appreciation and payments. If your home has been appreciating, and you think you owe less than 80% of its current value, contact your lender. Chances are you’ll have to pay for an appraisal (about $300 to $400) to prove your home’s current worth. But after that, you’ll see monthly savings in a lower mortgage payment without the PMI premium.

6. Get a longer term. Although this method may not suit everyone, if you need to increase cash flow by reducing your monthly payment, you could extend the term of your current loan. For example, if your balance is down to $100,000 on a $150,000 30-year mortgage that you took out 18 years ago at 7.5% interest, your monthly principal/interest payment would be $1,048.82. If you refinanced the $100,000 12-year balance with a 30-year loan at even the same interest rate, the longer term would lower your principal/interest payment to $699.21. That’s a big drop in payment, but it also means you’ll be paying on your home 12 years longer than before refinancing. And, of course, your total interest expense on the purchase of that home will be much higher.

7. Correct an outdated tax assessment. You’re probably paying a portion of your annual real estate taxes with your monthly payment to your mortgage holder. Have you checked your tax assessment to make sure you’re not paying too much? The taxing authority could be calculating taxes on your house with incorrect information, e.g., counting an extra bedroom, bathroom or finished basement that you don’t actually have. This would increase your tax bill and your monthly payment. Keep track of your tax assessment and challenge it if it doesn’t reflect actual property values in your area.

 

Categories: Mortgage ideas, Wilmington NC Neighborhoods, wilmington nc relocation

Buying a Foreclosure? What every buyer should know

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FORECLOSURE:
What Every Buyer Must Know

 In today’s market, you’ll hear lots of terms used to describe “bargain” properties – distressed, short sale, pre-foreclosure, auction, REO, bank owned, foreclosure, foreclosed, and more. Confused? That’s understandable. Some of these terms are interchangeable, some are not, and some cover a whole range of bargain property types.

To understand the terms, it’s important to understand the three stages of foreclosure:

  1. Pre-foreclosure stage. This stage begins when the homeowner falls behind on home-loan payments (or sometimes other terms of the loan). Lenders may wait for a second, third or even fourth missed payment before sending the homeowner a Notice of Default — which becomes public record. The homeowner then has a given period of time to respond to the notice and/or come up with the outstanding payments and fees — sometimes by selling the home in a pre-foreclosure sale, also known as a distress sale. (If a judicial procedure is required, it occurs after the notice of default is given.)One type of pre-foreclosure or distress sale is a short sale — when proceeds from the sale of a home are less than the amount of mortgage still owed to the homeowner’s lender. A lender-approved short sale (or short payoff) occurs when the homeowner’s lender agrees to accept the proceeds of the home sale as satisfaction of the mortgage owed, even though proceeds are less than the outstanding debt.
  2. Foreclosure stage. At this stage, the former homeowner may or may not have been evicted — depending on state law — when the lender puts the home up for public auction (after a judgment of foreclosure in those states requiring judicial procedure).If the home sells at the foreclosure auction, (sometimes called a sheriff’s sale, trustee’s sale or step sale) money from the sale is used to pay off the costs of the foreclosure, taxes and other prior liens, service charges and advances, interest and principal on the mortgage, late charges or fees, and liens recorded after the first mortgage. Any amount left over is paid to the borrower (former homeowner). When proceeds from the sale are less than the various amounts owed, the lender may be able to hold the borrower responsible for the difference (deficiency judgment).
  3. Post-foreclosure stage. When a property that does not sell at auction — either because no one bid on it or because bids did not meet the lender’s or agency’s minimum price — the property becomes real estate owned (REO) by the lender or government agency that guaranteed the loan (such as FHA/HUD, VA, etc.). You’ll also hear the term bank-owned applied to these properties, whether they are owned by an actual bank or some other type of lender. (Be aware: The term REO also applies to properties purchased by companies from employees who didn’t sell their home on the market before relocating, which is to say that not all REOs are foreclosed properties.)Once the lender or agency has repossessed a property following a failed auction attempt, the home is put back on the market. Most REO properties are listed for sale through real estate brokers and placed on the Multiple Listing Service.

At this stage, the foreclosure process is complete, and the property may be accurately described as a foreclosed property, while in the first two stages the home is in foreclosure and should be referred to as a foreclosure property. (You’ll find, however, that real estate writers and others sometimes misuse this terminology; be sure to ask if you are unsure what stage of foreclosure a particular property is in.)

Categories: Uncategorized

PROPERTY RIGHTS :: Buyers Must Know How Easements Can Impact A Property’s Value

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If you are thinking about buying a property that comes with an easement, be sure you understand how it could affect your life and the property’s value. An easement means a third party has been granted the right to use a defined area of an owner’s property for a general or specific purpose (see box). Easement restrictions could, for example, prevent you from building on the easement area or from installing fencing that would prevent access to or through it.

There are many different types of easements. A common one—a right-of-way easement—allows a specific person or persons to travel across a piece of land owned by someone else. This type of easement is sometimes used in rural areas so farmers or ranchers can get to a piece of property they own that does not have road frontage.

Easements may be granted as permanent arrangements that continue indefinitely or until a release is given by the person receiving the easement. In this case, the easement would normally become part of the property deed.

An easement can also be granted as a limited-time agreement—expiring at a stated time, when a specified event occurs or when the benefiting person dies. Limited-time easements are normally not recorded as part of a deed description.

Other easements you may encounter could grant the right for a utility company to run lines or poles—even high-tension power lines—over, on or under the property, or for a local government or housing development to install sewers or water mains or allow access to a park, for example.

Beware: Just because an easement is not being used does not mean it will never be used.Should the benefiting party decide to exercise their right, can you live with whatever impact their use might have on your property and lifestyle? Be sure to consult a qualified real estate attorney for advice. In addition, carefully consider whether future buyers will shy away from the property because an easement exists.

Beware: Just because an easement is not being used does not mean it will never be used.Should the benefiting party decide to exercise their right, can you live with whatever impact their use might have on your property and lifestyle? Be sure to consult a qualified real estate attorney for advice. In addition, carefully consider whether future buyers will shy away from the property because an easement exists.

Other Common Easements

  • Provide pathways across two or more pieces of property.
  • Forbid neighbor from blocking view with a wall of trees.
  • Allow neighbor to use owner’s driveway to reach neighbor’s home.
  • Permit public access to beach or park through private land.
  • Grant historic preservation organization rights to enforce alteration restrictions.
  • Allow an individual to fish in a privately owned pond.
  • Permit land owner to drive cattle over another’s land.
  • Restrict development, commercial and industrial uses on a property to preserve views, habitat or other amenities of the land.

 

Categories: Uncategorized

BIDDING WARS 8 Hot Tips To Win The Dream Home You Want When Other Homebuyers Want It Too

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Wilmington NC and many markets and neighborhoods around the country are experiencing a shortage of homes for sale right now. When that happens, prospective buyers can find themselves losing out to other buyers who have their ducks lined up and a good real estate pro working with them.

If you want to purchase a home and you’re in a tight market—or you know someone who is—here are some pointers on how to win a bidding war.

1. Get pre-approved for a mortgage. Pick your lender (we’re standing by!) and loan type, and then submit all the paperwork requested. When you find the home you want, you’ll be able to make an offer quickly with a pre-approval letter from your lender tailored to the specific property.

2. Have cash at the ready—and prove it. You’ll need cash for earnest money (a check with the offer; make it a big one), your down payment and closing costs, along with bank statements that show the sellers you have more than enough cash to close the deal.

3. Find a great real estate agent. Look for an experienced, knowledgeable and committed pro who has the time to pay close attention to your house hunt. Overly busy agents may not be able to meet your needs in a timely way.

4. Jump on new listings. Being the first buyer to see a home and make an offer puts you at the head of the line—and at an advantage. Work with your agent to learn about homes that are about to come on the market and keep an eye out for new for-sale signs in the neighborhood(s) where you want to live. Sometimes signs go up a few hours or days before homes show up on the multiple-listing service.

5. Offer and counter-offer quickly. Work with your agent to have offer paperwork ready to go so you need only fill in the blanks for the particular property. If your offer is not accepted but countered, respond to the sellers as quickly as possible to “stay in the game”—hopefully keeping other buyers at bay.

6. Find out about the sellers. This is where your agent can be especially helpful, asking the sellers’ agent what the sellers are looking for in an offer, such as a particular settlement date. In addition, a personal “Dear Seller” letter from you, describing specifically why you like (love!) the home and want to live there, makes a great first impression for your offer. Flatter away!

7. Make a “clean” offer. Typically, offers include contingencies for financing, appraisal, inspections and more to protect buyers from surprises. Ask your agent for advice on skipping these contingencies or making other arrangements to protect your interests. If you decide on inspections, get them done quickly and resist the urge to nickel and dime the sellers on every little deficiency found. Offer your best price without requests for seller financing, help with closing costs, conveyances or a home warranty.

8. Consider an escalation clause. Your agent can help you decide whether an escalation clause should be a part of your offer. An escalation clause offers to pay a certain amount more than the highest offer in hand, up to a specified price. Before you set that price, however, make sure you understand how much the home is worth so that you don’t end up overpaying. If the lender’s appraisal comes in under your contract price, you would either: 1) have to pay the difference in cash; 2) lose the home (and your deposit, if you don’t have an appraisal contingency); or 3) try to renegotiate a lower price with the seller.

 

Categories: Bidding Wars, wilmington nc real estate, wilmington nc relocation, wilmington real estate stats, Wrightsville Beach NC

HAPPY DANCE More Local Sellers Are Making Fast Moves To Closing

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dance

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Our local housing market is busy. You’ve probably seen a good number of “for sale” signs around town that were swiftly topped with “sold” signs. It’s not a mirage. And those sellers weren’t just lucky either.

The key to getting your home sold today is being an involved, educated seller. Sellers who actively participate and partner with their real estate professionals get their homes sold faster and for top dollar.

Sellers today know that getting their home ready for sale takes some effort. It’s worth it when buyers view their polished home online and then flock to the property—and like what they see. In this market, offers come easily when home sellers have done some fancy footwork ahead of time!

We can give you all the real estate advice you could ever need or want. The secret is to put the advice into action. If you’re serious about selling your home, call us now for a pre-listing evaluation.

We’ll work with you to set the right price and right strategy to meet your real estate needs and get your house sold. Stepping forward to closing can be easy…if you know the right moves. We’d love to do the home seller’s happy dance with you!

Choreographed Pricing
Your best foot forward is looking at recent solds in your area that tell us what homes like yours are selling for. We call them ‘comps,’ or comparable properties. Then we mix in the unique features of your home in relation to the larger market trends to price ahead of a rising or declining market.

As we choreograph your individual selling scenario, we’ll also use expired listings as an indicator of overpriced listings. Some homes may call for a paid pre-listing appraisal, if setting a slightly under-market price will attract more buyers. Finally, we’ll review competing listings—not that they will sell for those prices, but to position your home to advantage versus long-on-market wallflowers.

Ultimately, local market conditions and current homebuyers will determine what is a fair price for your home.

Clutter Shuffle
Before you list your home for sale, you’ve got to deal with your stuff. Sure, your clutter might be neat, it might be hidden under things and behind doors, but buyers will see it eventually, and it will distract them. Start on a clutter-busting plan before you put your home on the market. You’ll have less to move later, and your home’s true character will shine for buyers.

The Remodeling Twist
If your home doesn’t show like a model home, all is not lost. Don’t hurry into a major remodel, though. Many large-scale home improvements won’t pay you back at sale time, and some buyers may not like your choice of upgrades. Instead, consider giving buyers an upfront credit for new flooring, updating a half bath or whatever deficiencies your home has. One very worthwhile upgrade would be a fresh coat of neutral-color paint throughout the home.

Do The Stage-And-Slide
Once you get your home de-cluttered and all your small home projects are complete, take the best pieces of furniture from each room and arrange them to invite buyers in. If you need help, we can refer you to professional stagers who can make your home look stellar. For some long-time owners, moving out early and staging with select furniture can transform a ho-hum listing into an instant hit.

Waltzing Away
If you carefully heed professional advice to get your home cleared out, staged, prepped, priced right and open for inspections and appraisals, you’ll be ready to waltz to closing/settlement, and then do the happy dance to your next home.

Categories: wilmington nc real estate, wilmington nc relocation

Are there any inside tips on down payments for first-time buyers?

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Folks who are new to the home-shopping world need more than just good luck. You should, of course, save all you can for closing costs and a down payment. For further help:

  • Revisit your “wish list”

Reconsider what you’re looking for in a first home. Find out what you can afford now, and consider buying a starter home that requires a small down payment with the idea of moving up in a few years.

  • Take advantage of special programs

Look into special low- and no-down payment programs like loans guaranteed by the Department of Veterans Affairs (VA) and Federal Housing Administration (FHA). Some areas also have local programs for low- and moderate-income families or first-time buyers, offering lower interest rates or down payments.

  • Gather gifts

Check with parents and relatives for monetary gifts that can go toward a down payment or closing costs. A 20% down payment can dramatically cut monthly costs and eliminate monthly mortgage insurance premiums.

  • Consider “sweat equity”

If you can fix up a home that’s in poor condition, you increase the value of your investment faster. Ask us about special combination loans that provide fix-up funds as well as purchase money.

  • Scour market for bargains

Call on us to research foreclosure properties, housing auctions and other homes available at below-market costs.

Want to know more? Click on “Ask Your Own Questions” or call or e-mail us today with questions of your own. We can tell you how much house you can afford, and we can help you get into your first home.

Categories: first time home buyers, Waterfront Wilmington NC, waterfront wrightsville beach, wilmington real estate stats

SELLING A HOME HAS CHANGED Retiring Soon? Avoid These Common (And Costly) Home Selling Myths

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Myth: A neighborhood pretty much like the old one we have is just fine.
Truth: If you have your heart set on certain activities such as swimming, golf, volunteering, etc. choose a location where these activities are readily available. Are you a gardener who thrives getting your hands in the dirt or are you trying to escape yard work?

If you are thinking of continuing to work—part time or more—are there job opportunities available? Consider: Even if you don’t want to work now, down the road, your finances may require you resume working and you’ll want to avoid relocating for a job.

Myth: Every place has the same healthcare resources.
Truth: Good healthcare access is a necessity as we age. Make sure suitable hospitals and doctors in your health insurance network are within easy proximity to your retirement location. If you already have preferred healthcare professionals, consider whether your new home gives easy access or if you will need to find new providers. TIP: Ask your existing medical team for referrals and recommendations for professionals in your new location.

Myth: Driving is always the best way to get around.
Truth: As visions of golf carts, public transportation options, bicycles, taxis and your own car, or two, dance in your head, prioritize what your main method of commuting will be in your new location. Will these options still be viable later on in life? Don’t forget safety considerations. If you have plans to attend evening events in a big city, will you feel safe on public transportation as your only transportation choice? TIP: Reliance on friends or relatives for occasional commitments may work in a pinch, but over time, these arrangements may be fraught with problems.

Myth: When it’s time to move, I’ll just hire a packer/mover.
Truth: Long before you decide to move, start to pare down and clear out furniture and household items you no longer need or want. It’s not just for showing your home for sale; in the process you can decide what is moving with you on the next stage in your life. Be ruthless. Go through everything you own—even those unknown boxes of “stuff” tucked away, enjoying and savoring the trip down memory lane. Determine what moves with you, what gets tossed or sold and what is give-away worthy or can be recycled. Don’t be surprised how long this takes. Remember: The stuff you shed now means an easier and cheaper move later.

Myth: Better to home shop before you sell to ensure you don’t miss your dream home.
Truth: Well ahead of home shopping, determine if your finances will allow you to purchase a new home before you sell your old one. Remember: You’ll have less negotiating power as a homebuyer if your home purchase must be contingent upon your current home’s sale. To avoid having to wait for your home to sell before you buy your next one, research whether you can tap the equity in your home (say through a bridge loan) or borrow against investment or retirement accounts as a temporary loan to purchase your new home.

Myth: Paying all cash is the best strategy for retiree homebuyers.
Truth: Previous homeowners and excellent savers may have the ability to pay cash for their retirement home. It’s comforting to many retirees—especially those on a fixed income—not to have the pressure of making a large mortgage payment every month. Before you make this decision though, sit down with your financial advisor and tax professional to determine whether it might make sense to take a mortgage on your new home. Doing so may free up cash that can be invested for a higher return than the mortgage interest rate. Plus, mortgage holders can take a tax deduction for their annual interest payments. TIP: Discuss the pros and cons of reverse mortgages during the same meeting to determine if this equity-drawdown is something you may eventually need or want to take advantage of

We’re experts in local real estate. Contact us today to help you separate market myths from local reality for your specific situation.

Categories: Buying Retirement Home, Retirement, Selling Home

What are some typical closing costs? | Wilmington NC real estate

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Cash In HandWhen you apply for a mortgage, the lender must respond with a Good Faith Estimate of Closing Costs, which explains the costs you will likely have to pay at settlement. But the numbers on the form are estimates, and the final tally could be higher or lower.

Some of the more common charges are:

  • Loan Origination Fee: usually 1% of the loan;
  • Loan Discount Points: a form of accelerated interest; each point is 1% of the loan amount (who pays points is negotiable between buyer and seller);
  • Appraisal Fee: the charge to have a professional appraiser certify the value of the property being purchased;
  • Credit Report: the cost of getting a credit history from a credit service;
  • Tax Service Fee, Document Preparation Fee: charges to set up a tax escrow account and prepare mortgage documents;
  • Attorney Fees: the settlement agent’s charges for processing the sale closing;
  • Title Insurance: charges for insurance to guarantee the validity of the property’s title for the lender; buyers can also purchase title insurance at settlement to protect their interests;
  • Recording Fees, Tax Stamps: local charges to officially record the deed and mortgage, and transfer taxes;
  • Survey: the charge to verify the boundaries of the property being purchased.
  • Call us, we can help do a net sheet on your costs.
Categories: Mortage options, Mortgage options, Mortgage points, Mortgages, Wilmington NC Neighborhoods, wilmington real estate stats


Kay Baker | 1001 Military Cutoff Rd. | Ste 101 Wilmington, NC 28405 | kaybaker@seacoastrealty.com | 910-232-0363 | Fax: 910-256-0473

Copyright © 2014 Wilmington NC Real Estate Guide. All rights reserved. Disclaimer: All content on this blog is my own opinion and should not be treated as fact or relied upon when purchasing or selling real estate.