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A new book written by an industry insider.
You will Learn How to Save Thousands of Dollars when You
Save Money from:
About the Author
John Granger has 20 years of experience as a computer consultant. Most of his career, he has consulted and written custom software for the title insurance, real estate and mortgage industries.
John does not profit from any of these industries, so he can tell you the real story of how to save Thousands of Dollar's when you buy, sell or re-finance real estate.
Purchasing a house starts when the seller signs the agreement of sale. It culminates with settlement or closing. In between are mortgage applications, appraisals, title searches, etc.
At settlement or closing, the buyer and seller will meet to sign papers and officially transfer the property. In California and Texas they will probably not settle together.
The settlement sheet or HUD-1 is a standard federal form. It is required by the mortgage company and will be used for all settlements.
The HUD-1 is divided into sections. Each section is differentiated by line numbers which range from 100 to 1400. The following explanations relate to line numbers on the HUD-1.
The second or back page of the settlement sheet is where most of the charges are located and will be covered first in this book. The first or front page can not be completed without doing the back page.
The back page has one description or label per line and there is a separate column for buyers / borrowers and sellers. On refinances, the charges will be on the left or buyer's side.
There are separate labels and descriptions on sides for the buyer / borrower and seller. The first or front page of the settlement sheet is where the beginning and ending totals are. The beginning total is the sale price. The ending total is money from/to by the buyer and money to/from the seller. All charges are required to be entered on the settlement sheet. Items that are paid outside of closing will be marked POC and should not appear in the buyer or seller's column. Each charge should be explained to the buyer and seller. The deed and mortgage papers, if any, will be signed. The buyer will pay closing costs and the seller will receive the proceeds.
There are several different approaches for buyers. The first time, stretching or overextended homebuyer needs to get in as cheaply as possible. No money down can work and sells lots of books, but there are some closing costs you will have to pay.
Making deals with sellers and following some of the ideas below will allow you to save money or know what to expect when you go to settlement.
Objective: Get in as cheaply as possible.
Loan Origination Fee: Try to find a mortgage with no or a low loan origination fee. This can be one point. A point is one percent of the mortgage amount. On a $100,000 mortgage a point is $1,000.
Loan Discount: Get your mortgage directly from a mortgage company or savings and loan. Banks make money when they give you a mortgage and then they sell it. You pay for their profit. Try to find a mortgage with no or a low loan discount. This can be three points.
Negotiate a low sale price. The best way to save money is paying less in the first place.
Buy a house in a new development that is still dirt. Buying at this stage can save you 10% on the sale price. Once the sample house is finished and a few sales are made, the prices go up. Make sure that the builder is reputable, so the development really will be built. Make sure that all money that you pay is marked to be in an escrow account. This means that you will get your money back if something happens.
There are several different approaches for sellers. The regular sale is what you should have. Saving money at settlement means that you keep more of your equity when you sell. FHA and VA sales will require the seller to pay extra items and maybe repair the property to meet their requirements. Objective: Get out as cheaply as possible. Ie., keep your equity.
Sell the house yourself. This is the largest savings that you have available. This will save you 6 or 7 points. On a $100,000 house this is a savings of $6,000 - $7,000.
Negotiate a low brokers commission. Real estate brokers usually charge 6 or 7% commission. This is generally shared by the listing and selling broker's. Each broker gets 3%. If you give special rights to the listing broker, you may be able to negotiate a lower real estate commission. Be careful that these exclusives do not restrict you from the market like not being listed on MLS. MLS is the multiple listing service. MLS gives realtors in the area access to the property.
There are several different approaches for owners who are refinancing. FHA and VA mortgages may now allow you to refinance very easily. Contact your mortgage company for more information.
When you refinance and get a new mortgage company the old mortgage company loses a customer. The old mortgage company may often offer you better rates and lower costs to stay with them. They are very interested in keeping customers. If they do not and you find a better mortgage, ask if they will match it. This will allow you to save on mortgage escrow charges.
Objective: Get a new lower payment with better rates as cheaply as possible.
Do not pay any points whatsoever. This is the biggest way to save money.
Do not pay any closing costs. Some mortgage companies will allow this. Financing closing costs can be extremely expensive. $1,000.00 for 30 years at 7% is $2,394.00. At 10% it is $3,160.80. If you have the money, this will save you in the long run.
Order the book for $19.95.
John Granger, JGranger@erols.com