The process of closing on a home can seem lengthy and complex if it’s your first time buying or selling a house. There are several costs and fees required to close on a home, and while it’s up to the individuals to decide who covers what costs, there are some conventions to follow.
In this article, we’re going to talk about closing costs for selling a house and signing on a mortgage. We’ll discuss who pays what, and whether there is room for negotiation within the various fees and expenses.
But first, let’s talk a little bit about what closing costs are and what to expect when you start the process of buying or selling a home.
Closing costs, simplified
If you’re just now entering the real estate market, the good news is you can often estimate your closing costs based on the value of the property in question. You can ask your real estate agent relatively early on in the process for a ballpark figure of your costs.
Closing costs will vary depending on the circumstances of your sale and the area you live in. In some cases, closing costs can be bundled into your mortgage, such as in “No Closing Cost Mortgages.” However, avoiding having to deal with closing costs often comes at the expense of a slightly higher interest rate.
If you are planning to buy a house and have recently applied for a mortgage, laws require that your lender sends you an estimate of your closing costs within a few days of your application.
Now that we know how closing costs work, let’s take a look at who plays what.
Buyer closing costs
In terms of the sheer number of closing costs, buyers tend to have the most to deal with. Fortunately, your real estate agent will help you navigate these costs and simplify the process.
They can range from two to five percent of the cost of the sale price of the home. However, be sure to check with your lender for the closest estimate of your closing costs. It’s a good idea to shop around for mortgage lenders based on interest rates as well as closing costs charged by the lender.
Here are some of the costs you might be asked to pay as a home buyer:
Prepaid interest or discount points
Home inspection fee
Insurance and Escrow deposits
Seller Closing Costs
While the seller pays a larger amount of closing costs, sellers still have obligations at closing that can be just as expensive. The biggest expense for sellers is to pay the real estate commission. Commission usually falls in the vicinity of 6% of the sale price of the home. This covers the commission of both the seller’s and the buyer’s real estate agents.
The main takeaway? Buyers and sellers both share the burden of closing costs. While the buyer has more expenses to take care of, the seller pays for the largest costs.
Often in real estate, the saying goes that “a picture is worth a thousand words.” While pictures can help buyers to get more interested in a property, going a bit further in the listing description can help to get the property even more in-person views. If you work diligently with your real estate agent to create a great description of your home for sale. There’s a few simple tips to make sure that the listing description of your home will bring buyers knocking.
Think Of Your Audience
Remember that one of the most important things in writing anything is to write it for the audience that you’re trying to reach. Who will actually be reading your home’s listing? Besides potential buyers, other realtors and home search engines will be glancing at your listing. This means that you have to meet a few different purposes with one description. Your description should include:
- A clear, concise description of the home and its contents
- Important information surrounding the sale of the home including if it’s a short sale, foreclosure, etc.
The Limitations Of The MLS
The MLS is where homes are listed most often. It does not give a lot of room for creativity in listing descriptions. Keep in mind that you don’t want to repeat a lot of the same information throughout the description. For example, there’s no need to repeat that the home has 3 bedrooms and one bathroom multiple times. There is a property details section that lists all of these major factors about the property. It’s definitely to your benefit to include alluring features of the property that you think are unique and possibly hard to find. Describe something that you know other people will want to see.
Improved Homes Are Attractive Homes
If you have made upgrades to a home such as new appliances, new kitchen countertops, or a new roof, make sure that you include that in the listing description. Buyers love homeowners who have taken good care of their homes. People are much more likely to buy a home that they believe is move-in ready. It’s much more comforting to buyers.
It’s What You Say And How You Say It
There’s a lot more clout behind certain words than others when it comes to real estate. These words make buyers more likely to act and go see a listing in person. The words you use can vary including those that describe:
- The type of countertop
- The landscape of the home
- The condition of the home
- The materials used within the home
Certain marketing buzzwords don’t work when it comes to selling a home. These include anything that sounds too good to be true like a “quiet” neighborhood, or stating that the home is ready to move into. While these things can be true, it’s often best to let the listing description lead buyers to see the home, and discover these bonus points for themselves.
When it comes to making your home and property safer for your family and others, the Boy Scouts motto says it all: "Be prepared!"
While it's next to impossible to completely eliminate all risks and potential hazards in and around your home, there are dozens of things you can do to make your property safer.
Every family's safety needs are unique, but here are a few basic precautions that can help reduce the chances of home accidents occurring -- both large and small.
Stair safety: All things being equal, it's riskier to walk down a flight of stairs than it is to walk on level ground. While that may seem obvious, most people don't stop and think about the potential risks of descending stairs as they're about to do it. Although tripping and falling on stairs can be injurious to just about anyone, it's especially dangerous for elderly people. From a homeowner's standpoint, there are several things you can do to reduce the risk of family or friends stumbling on your stairs. On an ongoing basis, it's necessary to make sure there are no loose objects on the stairs that could cause someone to lose their footing. Keeping stairs clear of toys, building blocks, and slipping hazards can be challenging if you have young children. Until they're taught to pick up after themselves -- which might occur sometime between now and college -- stair safety is an important issue to be aware of. Another key strategy for preventing household accidents is to make sure railings are properly installed and firmly anchored. Basement stairs can pose additional risks because they're sometimes inadequately lighted. Concrete floors at the bottom of some staircases can make a fall even more hazardous (not to mention painful). Increasing lighting, if needed, and making the bottom step more visible so that it's not accidentally skipped, are two preventative measures for reducing the chances of anyone falling on basement stairs.
Fire safety: Most people are aware that it's essential to have several working smoke detectors placed in strategic locations in your kitchen, bedroom area, and other parts of your house. Even though it's common knowledge, people don't always remember to install enough of them, replace worn out batteries when necessary, or test them every few months to make sure they're in good working condition. Some people remove the battery to silence smoke alarms while they're cooking, which can be dangerous if they don't remember to put them back afterwards. If your kitchen smoke detector has a "push to hush" button, then that can be a safer way to temporarily quiet a smoke detector when you're cooking dinner. Home fire safety also entails several other precautions, including having a fire extinguisher in the kitchen (and other areas), having a second-floor fire-escape ladder available, and teaching children how to avoid and respond to potential fire dangers. More detailed information and educational materials on fire safety is available from government agencies and non-profit organizations like the American Red Cross and the National Fire Protection Association.
Stay tuned to this blog for more helpful tips, pointers, and ideas for keeping your home safer and more secure.
One of the best things that you can add to your home is a solar power system. These can be costly but they save you a lot in the long term on utility costs. While government programs have scaled back for these energy saving improvements over the years, there’s still many benefits to them. You can even get a loan specifically for installing solar power to your home.
Before you take the leap, you’ll want to know for sure if solar will really add value to your home. Of course, you want a return on your investment.
The good news is that there’s no doubt about it that installing solar panels does definitely add value to your home. There’s one caveat to the value: You should own your solar power system as opposed to leasing it through a solar company or a power purchase agreement.
Homes that have solar panels sell for more money simply because they offer a definite return benefit to the future owner.
Does A Leased Solar System Offer The Same Benefits?
Owning your solar system will save you more money in the long run than leasing your system. When you own a solar power system, the FHA requires that the total value of your solar system be added to the total value of your home when you go to sell it. If you lease the panels, this value cannot be added to the home during an assessment.
If you have financed the system, the rules may be a bit more lenient. While you technically don’t own the system, you are paying towards owning the system yourself. Each lender will have their own standards for this, so check with them for specifics, as your home must meet certain standards and eligibility requirements.
Securing A Mortgage With A Leased Solar System
If someone is looking to secure a mortgage with a leased or currently unowned solar energy system, there are a few hurdles that you might face through the process. These problems include:
Solar lease payments must be included in the buyer’s debt-to-income ratio.
The panel owners must have a third-party insurance to cover damage to the property that’s being mortgaged in the event of malfunction or faulty installation of the panels.
Solar Panels Are An Overall Great Investment
It’s really hard to go wrong if you purchase or finance your solar panel system. As long as you own the system, value will be added to your home. You’ll also save on your own utility bills. Your home will undoubtedly become more attractive to buyers if you decide to sell your home in the future.
Perhaps the only downside of living in a relatively secure, desirable part of town is that you might let your guard down completely. When that happens, especially on a regular basis, you're creating a vulnerability that could eventually be taken advantage of. That's why is pays to be consistent when it comes to locking doors, teaching your kids good security practices, and always making your home appear as if someone's home.
Your home IS your castle and -- short of building a moat -- there are a variety of practical measures you can take to keep it safe and secure.
- Install a burglar alarm or home security system. There are a lot of options for making your home more burglar-proof, such as installing video surveillance cameras, window and door alarms, or a whole-house alarm system that alerts the local police department or alarm monitoring service of a break-in or other security breach. Virtually any security steps you take will help "tip the scales" in your favor, but a professional advisor from a reputable home security company can assist you in identifying potential vulnerabilities and choosing the options best suited for your budget, your degree of risk, and your comfort level.
- Plan ahead when going on vacation. Allowing your mail or newspaper deliveries to pile up on your front steps or driveway is like extending an open invitation to burglars who might be scoping out the area. Temporarily suspending your deliveries while you're away is a good starting point for keeping your house looking occupied in your absence, but you might also ask a trusted neighbor to keep an eye out for unexpected deliveries. If you really trust them, you could even give them a key to your house, in case they're inclined to water your plants and take care of your pets! (That would eliminate the need and expense of sending your dogs and cats to a pet-boarding facility.) One tactic that a lot of homeowners forget about when they're going away for a few days (or even just overnight) is to hook up an automatic timer to a few of their lights. That simple step will help ensure that their house isn't pitch black at night. There's also the more expensive strategy of having a home security system that can be activated and monitored from your mobile device. Do-it-yourself installation kits are available, but some homeowners prefer the technical support features that come with a professional home security service.
- Outside lights can be a deterrent. A few motion-activated outdoor floodlights placed in strategic locations around your home can significantly reduce the risk of night-time prowlers staying on your property for very long. Since one of their primary objectives is to remain undetected and low profile, bright spotlights that turn on when they approach the house will often be enough to send them on their way.