Buying A House And Tax Breaks

[MorningStar]

Unless you use a local bank there is a good chance you will end up at Bank of America. They are by far the largest buyer of mortgages in the secondary market. Places like Cosco originate the mortgages then bundle them and then the big guys come in and buy them up. It's OK as long as you don't have problems but if you do have problems they treat you terrible.

Thanks! My friends said they ended up with Wells Fargo. I would be OK with that, but I hate Bank of America.

[ERayR]

Thanks! My friends said they ended up with Wells Fargo. I would be OK with that, but I hate Bank of America.

I don't have much positive about either one.

[Garden Girl]

I've heard a number of people speak favorably about Credit Unions... do they handle mortgages?

GG

[cinepro]

If you want some good info on how the Realty Cartel works, check out this article:

Economists are baffled. The internet has squelched inefficient middlemen in other industries, from insurance brokers to travel agents. Why not American realtors? Although scores of discount brokers and for-sale-by-owner websites have sprouted up, traditional full-service realtors have somehow maintained their market share of 80% without reducing fees.

[cinepro]

The lender is just going to sell your loan within a few months, so as long as you get good service, good rates, and low fees, it doesn't matter what the company name on their building is. So shop around and see what your options are.

More important than being able to pick the right bank is having the flexibility to reduce your closing costs.

Here are eight tips for how you can reduce your closing costs:

1. Shop around for lenders

Most lenders will volunteer their menu of products and corresponding interest rates, and many will provide an estimate for closing costs if you ask for one. Once you have a handful of estimates, compare the costs.

Tip: If you have a good credit score then going to a bank or mortgage lender directly may be a better option.

2. Reduce fees not performed by 3rd parties

Third party costs include the title search, appraisal, attorney's fees, credit report and title insurance. There is usually very little variation in these charges among mortgage companies and lenders because these costs reflect actual costs that are incurred. Fees for services not performed by third parties, however, such as courier, express mail and other administrative services, typically have room for cost reductions.

3. Go for a zero-point option or reducing points

Paying points may help reduce your interest rate. (Each point is one percent of the loan amount.) Although, if you are short of money for closing costs, then you could consider paying for lesser or no points. This depends on the mortgage you select and your financial situation.

Tip: Consider reducing the points and instead adding to the down payment. This way you will be reducing the loan balance and get better rates and terms with a higher down payment.

4. Close later in the month

Lenders usually collect interest for the current month at closing, so if you close later in the month, the lender will only collect a few days of interest, reducing your closing costs and saving you some money. This is effective especially if your loan balance and interest rate is high.

5. Negotiate with the home sellers

Another way to cut back is to ask the home sellers to credit you money to pay for some of your closing costs. When you ask sellers to do this, however, take into account that you are asking them to accept less for their home.

6. Shop around for mortgage brokers

Mortgage broker fees depend on what the loan officer wants to charge (nowadays up to five percent). Mortgage brokers earn commissions in exchange for bringing borrowers and lenders together. Usually, the broker's commission is paid indirectly by the buyer, in the form of closing costs or additional loan points. Shop around for the best rate, and ask your Realtor for recommendations.

7. Talk to your Realtor®

Realtors also ask for an average of a four to six percent commission in exchange for their services. Keep in mind that many Realtors will ask which services to reduce if they were to reduce their commission rate. Regardless of whether they negotiate with you, asking your Realtor may also present several other options for how you can cut back on closing costs.

8. Beware of "junk" or "garbage" fees These fees are the excessive processing and documentation fees for settlement costs, underwriting fees and application fees, which might be little more than alternative names for the same services you're already paying for.

Saving a little here and a little there could end up making a big difference. Doing some research, paying attention to small details, asking for reductions, and speaking to your Realtor before you sign on the dotted line could save you hundreds of dollars. It may not be likely you'll be able to bring down your closing costs to zero but it is possible to reduce the overall amount.

Edited May 27, 2012 by cinepro

[thesometimesaint]

I've heard a number of people speak favorably about Credit Unions... do they handle mortgages?

GG

Real Estate laws vary so check local, and state laws.

[emeliza]

Our realtor directed us to our broker. He also directed us to our home inspector. My husband made the joke that typically if you have a guy who knows someone who can do it all for you, there is a chance they are dishonest. However we were very pleasantly surprised. The broker was great with explaining everything I asked and making sure she had time for us. She made a house visit and we made a house visit to her once as well. The inspector was really through and we felt good about him as well. The realtor though, he was just fantastic. He was great at the house and after we left and gave our opinion, he would often point out things we didn't notice. He never ever pushed us. He did tell us a few times that we shouldn't buy. He would also talk to the realtor for the home we were looking at and get a feel for how much less we could offer on the house. One thing we really liked is that he didn't push homes that he was selling or that his company was selling. He showed us a few, but that was because we wanted to look at them.

But keep in mind, this was our third realtor and our second broker. The first broker didn't get back with us timely so we dumped them and the first two realtors either didn't want to waste their time on us or were pushing in a different direction.

[MorningStar]

Thanks, everyone! I'm talking to a couple different banks right now (haven't pulled my credit yet). One has a union program that leads to some reduced fees and they have a credit so we won't have any closing costs. Interest rate seems decent. I'm going to go talk to them in person tomorrow and have all of my questions answered. Then I'll talk to the other bank again. The hard thing is that interest rates can change every day, so who knows how much it will change in a month or so? Hard decision.

[rpn]

But you can lock in your interest rate for a period of time.

[thesometimesaint]

Morning Star:

30 year fixed rate is the only way to go. Then pay your mortgage every four weeks. You be surprised at how fast it goes down.

[MorningStar]

This is what $200,000 gets you in our town - a 3 bedroom 1 bath house that's under 1,000 square feet, the roof is in bad shape, hardly any yard, on a really, really busy road, and then the family occupying it leaves dirty diapers all over the place.

The stench. Oh, the stench.

[blackstrap]

Are there any vacant lots for sale anywhere near you? In today's recessionary market,it is possible to have a home built of 1000sqft.+ for about $150,000 if you can find a private lot.

[thesometimesaint]

MorningStar:

If you're handy with tools you could get a fixer upper. But don't take on anything beyond your skill level. They're usually much cheaper, so you're trading your sweat equity for an eventually better place to live.

[MorningStar]

My husband is extremely handy, but we need to weigh the cost of materials. We would probably have someone else install the windows, at least for the higher levels, but he could fix any flooring, plumbing, electrical, etc. We also have everything we need for a yard. We used to live on base and kept everything - hoses, rakes, shovels, weed whacker, etc. He also used to do excavation. If we could buy a fixer in this town, we could turn around and sell it for $50,000 to $100,000 more. Most people who move here have tech jobs and want a place that's ready to live in, not a fixer.

I don't see any lots for sale in this area right now, but when my friend had a house built, she said they got charged extra for sewer and gets a huge bill twice a year for some reason. I don't know what that's all about.

Our ward really wants us to stay, which feels great. I just hope we can find something affordable. Thanks for the support!

[thesometimesaint]

MorningStar:

Where I live when buying a new home the sewer hookups are part of the price of the home. If the city/governing authority puts in new lines to an existing home they send the bill to the new owner. You could look into recycling your gray water, some local laws allow for it. It is exceedingly dangerous to recycle toilet wastes. So unless you're a very skilled waste water specialist just pay for the hookups.

[MorningStar]

Yes, but for some reason she is getting two large bills per year for the service. Strange.

[ERayR]

This is what $200,000 gets you in our town - a 3 bedroom 1 bath house that's under 1,000 square feet, the roof is in bad shape, hardly any yard, on a really, really busy road, and then the family occupying it leaves dirty diapers all over the place.

The stench. Oh, the stench.

Don't get impatient. In today's market time is on your side. Check with the banks for repos. If you find something you like don't be afraid to make a low ball offer especially if it has been on the market for a while. I mean really low ball. The worst that could happen is that they will refuse and then you can revise your offer.

[MorningStar]

Yes, low balling is the plan. Now if we could just get inside to look at this one fixer, that would be awesome! The dead bolt is broken and the listing agent failed to mention it. It's been on the market for over 100 days. We can see what it needs on the outside and we're dying to know what the inside needs. The roof, furnace, and water heater are newer, so sounds like it should be habitable according to the VA. If we knew we could find a place here, I wouldn't be stressing so bad. I just don't want to have my kids change schools in the middle of a school year. If we buy here, then no biggie. We can move anytime.

There's another place that looks like was added onto without permits, so that might be another option too. They will probably have to drop their price a lot. Staying here feels right. It's just hard to have faith that it's going to work out. My parents would love for us to live by them, but even my mom cried when she drove into town and thought about us leaving here. They're only 30-45 minutes away, so they get to see us pretty frequently.

[ERayR]

Yes, low balling is the plan. Now if we could just get inside to look at this one fixer, that would be awesome! The dead bolt is broken and the listing agent failed to mention it. It's been on the market for over 100 days. We can see what it needs on the outside and we're dying to know what the inside needs. The roof, furnace, and water heater are newer, so sounds like it should be habitable according to the VA. If we knew we could find a place here, I wouldn't be stressing so bad. I just don't want to have my kids change schools in the middle of a school year. If we buy here, then no biggie. We can move anytime.

There's another place that looks like was added onto without permits, so that might be another option too. They will probably have to drop their price a lot. Staying here feels right. It's just hard to have faith that it's going to work out. My parents would love for us to live by them, but even my mom cried when she drove into town and thought about us leaving here. They're only 30-45 minutes away, so they get to see us pretty frequently.

What is the local procedure for unauthorized additions? In some places the make you remove them or there may be a very costly fine.

[MorningStar]

I'm not sure, but there's a special permit to apply for when you buy a house that has unauthorized work. You won't get in trouble for it, but someone will come over and inspect it, which may result in changes being demanded.

[Robert F. Smith]

I've heard a number of people speak favorably about Credit Unions... do they handle mortgages?

GG

Your federal credit union represents you and is not some alien corporate entity (such as a bank). I have found it wonderful to sit down with an officer at my FCU and run through all my options and various scenarios, and they can preapprove you for a reasonable amount. They can give you the lowest percentage rates. However, they will probably bundle your mortgage with others and sell them the same way banks do.

Just bear in mind that you want a fixed rate mortgage, and that, if you are a first-time homebuyer, you may qualify for some breaks with FHA. Just ask.

[ERayR]

I'm not sure, but there's a special permit to apply for when you buy a house that has unauthorized work. You won't get in trouble for it, but someone will come over and inspect it, which may result in changes being demanded.

Good as long as they don't require extensive fixes.

[MorningStar]

True. But my husband knows what's up to code and would know whether we should take it on or not. By the way my friend described it, I'm morbidly curious now.

[thesometimesaint]

MorningStar:

Just be careful.

[MorningStar]

Will do. Feeling frustrated tonight. Our landlord recently increased our rent and added on water/sewer/garbage, hiring a company to do the billing. They send the bill after the month is over and divide it up based on how many people are in your apartment. Less than 6 months later and now they have decided to bill us directly, but this will be added to our rent and billed in advance. We have been paying about $80 per month for the w/s/g and now they're telling us it will be $91.50 per month. They say we have to pay our bill to the billing company the end of this month and pay the same amount to them the end of this month and they count it as additional rent. If they're going to pull this crap, they should have to give 30 days notice as with any other rent increase. One of their oldest tenants is a prosecuting attorney, so I'm interested to hear what he has to say about it.