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How Do You Know Your Money Is Safe When You Sell?

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mortgage-escrow-basicsThe Secret Strengths Of The Escrow System

During the process of buying and selling residential real estate there will be some point at which the funds have to go from one party to the other, while the title to the property is transferred in the opposite direction. When you are not in a high trust situation and can’t be certain that everything will be fairly transferred you need to have a higher power on your side.

When the stakes are as high, as they are in real estate sales, that need is doubly important. The practice of using the services of a reputable third party institution for closing is the way that real estate sales are carried out in the United States. So the question that lurks in the back of the minds of many buyers and sellers is: How safe is my money during closing?

The Agents Of Closing

Generally the term that describes the actual payment and transfer of real estate is referred to as closing. The term used for the third party companies that make it happen varies from state to state but it is about creating a safe transfer of payment and property during the closing process of a real estate transaction. You will hear the terms escrow, title or abstract company, depending on which state you is dealing with.

The factor that provides safety to the participants in real estate sales and purchases is the institutional nature of the businesses that handle the closing process. Like the real estate profession they have governing.

Look At That Escrow Go

The term escrow is used in some states because it describes the process of holding the title, earnest money deposits and all other elements by a neutral third party. The term title applies because it is the title to ownership the property that is the documented focus of the exchange. The set of documents that define the transfer is collectively referred to as a property abstract.

This gives all necessary and sufficient terms to describe the legal limits of the transfer. The safety of the system lies in the institution and the regulation and oversight that states give it. The escrow or title company acts on ledger entries and instructions to process the transactions.

Take It To The Bank

The transactions themselves are just creating documents and moving them between parties as well as the wire transfer of funds from one bank account to another. Whether it is called an title or escrow company, think of closing like going to the bank, a neutral bank that takes in all the elements of a transaction, subtracts a fee and then sends everything on its way to the correct recipients. That is a process that is about as safe as houses.

What To Look For In A Neighborhood

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real-estate-basicsA Few Outstanding Features

The importance of a neighborhood for homebuyers is that, when you are house hunting, you need to keep the big picture in mind. You are looking not just for today but for the value of the home should you wish to sell it at some point in the future.

When you look at a neighborhood for your future home you are thinking about the context and the relationship that you are going to have with the community as a whole. So, there are a few factors that will be important to think about and also do a little research on before you commit to a home and the community in which it sits.

Everyone has different needs in the amenities of a neighborhood and each location will have a selection of features that will appeal to some and not to others and that will have an impact on the value of properties. So, for example, while you might not have young children yourself you want to consider proximity to local elementary schools.

Taxes: Mello Roos Fees

Some counties across the country have higher bond obligations and depend on proper taxes more than others. This can lead to wide variations in your assessment if there is some sort of millage or tax to recoup the cost of a local bond issue. The notorious California Mello Roos taxes are an example of the burden you might end up carrying. So make certain that you find out what sorts of taxes you will have piled on top of the basic local tax load.

Schools Need The Right Distance

You may have a need for the use of public or private schools in the near future or you may not. Regardless, you should take the local schools into careful consideration when you are looking at neighborhoods for your prospective next home.

Other amenities such as shopping and public transportation might be important to you individually. The convenience of accessibility is always a factor in choosing your home. The flip-side to that is if a major freeway runs near by the convenience might be outweighed by the noise volume of the cars and trucks speeding past at all hours of the day.

Crime Statistics

Look at the crime statistics for the neighborhood. These are a matter of public record and so they should be easy enough to access, either through the county records office or through one of the large national real estate websites.

Sources Of Noise And Disruption

Some of the most scenic and pleasant locations can have surprising noise sources such as airports and railway tracks nearby. If the local air force base starts up and moves out a fleet of cargo plans at “oh dark thirty” in the morning on regular occasions you really want to know about it.

Likewise if there is a railroad line track near the property you don’t want to awake a three AM as they sound the horn for the local road crossing. Even if that is the only fault in a location it can be absolutely a deal breaker if you intend to be asleep as it happens.

Invest In Your Neighborhood Choice

Schools, crime levels accessibility must be balanced against nuisance features such as noise. It is the key feature of real estate that every property location is different so take your time to compare each potential new home location measures up for  better or worse.

The Mature First Time Buyer – It’s Never Too Late To Dream

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Before You Purchase Your HomeThere Is No Time Limit

Home ownership is much more predominant in the older part of the population. That doesn’t mean that that there are no people out there who made it to the senior section without buying a home but who may still wish to do so.

The dynamics are a little different that for younger buyers but that’s not to say that you wouldn’t gain a benefit from owning your own home. Fortunately, even though you might not stick a round long enough to pay off a thirty-year mortgage (but you never know!) there are some affordable options that can make it possible to achieve that further stage of the American dream.

Federal housing laws do not allow lenders and sellers to discriminate based on several sets of protected statuses when offering a home for sale or home financing. One of those is a legal restriction against age discrimination. So, that is one less obstacle to surmount when you decide to buy your first home late in the day.

The principles are the same if you are 65 when you decide to buy your first home or you are 27. You will need to gather your resources, find out if you have any potential blots on your credit history, generate income and some modest funds to pout as a down payment and for costs at closing.

What Becomes Of Your Estate?

If you do end up short on years and long on bank balance then the executors of your estate will be required to sell the home to clear your loan balance before the remainder of your equity can be released to your heirs.

Can you get in trouble with property taxes? In theory yes you could but these days your lender will withhold taxes due to protect their interests. You just have to make the monthly payment and the bank sends the tax money to your county out of those impounds when it falls due.

It All Just Seems So Overwhelming

It doesn’t matter what stage of life you are at when you decide to buy your first home, you will at one point or another feel extremely overwhelmed. That is where your realtor or broker comes in. Any experienced agent knows that this is coming and will make it his or her business to get you through the moments of fear and doubt. That is the real way that they earn their monies.

Statistics do not show homeowners as being happier better adjusted people than those who do not. But still there is a definite satisfaction to be had in owning your first home. The laws against discrimination protect you from missing out, if you can afford it, why should you withhold this simple pleasure of the American Dream from yourself?

Finding Your Core Credit Information

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credit-report-basicsEach Credit Agency Has A Little List

Credit is recorded by agencies that act as clearinghouses of information about consumer credit, specifically, how consumers use credit over time. There are three agencies that have come to dominate and they are the ones that lenders will turn to when they want to assess the creditworthiness of an applicant. They compile a record of credit applications that consumers make and the record of their behavior when they make payments.

The value of these credit reports is in the amount of information that you contain and they give a detailed picture of how you are likely to behave and if you are going to be responsible based on your credit history and public records. The agencies have deeply involved relationships with lenders and as part of the contract to gain access to consumer records companies report your behavior to the agencies.

Reducing Your Creditworthiness To Points

There is another aspect to your credit record that is derived from the information that is reported about your behavior. The Fair Isaac Credit score or FICO score reduces your credit worthiness to a number. This has become the shorthand for assessment in the financial services industry.

You have the right to review all of your credit reports without charge once a year and every consumer should do so. The agencies and regulators have agreed on a website to allow access at annualcreditreport.com. The agencies also run credit-monitoring services on a variety of terms, a common one is for a monthly fee. Credit Karma is a recent entrant into the market that is disrupting these paid services because you can sign up for free and has immediate access to your credit records and to a wide array of information about your financial self.

Taking Over The World

Your credit score and reports have become vital parts of the modern world. The value and virtue of this state of affairs is one that could be argued at length. In practical terms it is something that must be dealt with, whether you agree with it in principle or not. Everything from banking access to insurance rates and who gets hired for employment are all decided based on the credit background of the applicants.

It used to be that hiring decisions depended on character references and references. Those days are now gone as litigation has made it difficult to give a reference without incurring liabilities. For example, in California and presumably other states as well employers will now limit references to giving confirmation of employment dates and job title. Hence the same companies are forced to seek alternative sources of information and credit histories have become established in that role.

You should take advantage of the information available about your credit reports as discussed above, even if you have no immediate plans to apply for a loan. Getting your financial house in order is vital for all sorts of transactions these days. It is a process of creating a long-term record and you will be glad of the effort invested when the time comes to begin hunting for a home.

The Internet Of Things And How It Can Help Sell Your Home

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Home Selling TipsAs a homeowner or a potential home buyer it’s important to be aware of the things that have an impact on what the term homeowner actually means. Over the years and even centuries owning a home has come to mean an increasing number of features can be expected in your possession and at your convenience.

Indoor plumbing and central heating go back to the basics of what it is to have a house and to make it a cozy home. There are many other things that have made life at home more comfortable such as vacuum cleaners and refrigerators. We can all too easily discount that there was a time when we did without them and take them for granted.

The Internet Of Things Is Getting In Everything

The next big innovation in the conveniences of the home are likely to come as part of the emerging trend of all appliances and machinery to include electronic monitoring gear and software that can connect it directly into the Internet. This potential of connecting everything to everything else is referred to as the Internet of Things. It has been building momentum in recent years and it could easily become an accepted part of the home in the near future.

The possibilities include the connection of all heating, air conditioning and the rest of your home’s utilities. Other appliances will be connected wirelessly and so your Wi-Fi router will become another vital appliance, the hob of the network of everything that is connected in your house.

The Internet of Things will give you immediate access to vast amounts of information about the state of each appliance or piece of furniture, warning of failures and energy usage. You won’t have to be at home to utilize such features. By connecting through the appropriate app you will have it all at your fingertips, even when you vacation on the other side of the world. It is likely that your refrigerator will soon be able to inventory its contents and alert you to replace anything in short supply. A more extreme possibility is that you could select options that allow the fridge to contact the supermarket on your behalf and make the order directly.

Living In Public

The downside of the Internet of things is that we could be tracked so completely that our every move is noted and logged. Whether it is by the range in the kitchen, the air-conditioning in the living room or a humble lamp in the back bedroom.

IN spite of that privacy invasion the Internet of Things promises to have such complete coverage of everyone’s lives that it will be like you are in a cocoon of electronic tracking. This is something that new homes will have as standard. For some people this may be less appealing but still it may become an important factor in creating the most modern curb appeal for your property. Millennial new homebuyers may be much more comfortable with total envelopment by the Internet of Things than the rest of us but we need to consider the potential benefits going forward.

If you are considering buying or selling in the near future the Internet of Things is a topic that you should discuss early in the process with your realtor. The possibilities and trends are evolving so rapidly that you will need to be aware of what to look out for and what to offer buyers as high-tech incentives that might be all the difference in how quickly you sell and the price that you can agree in negotiations.

The Breakdown For Condo Fees

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real-estate-basicsWhether you are hunting for your first home or the next, you will probably want to look at condominiums as an option. They cost less than detached homes generally and there is someone to take care of the chores and upkeep of the building so you don’t have to do it yourself.

All of this comes at a price obviously and that cost is called a homeowners’ association fee or condo owners fee. This monthly bill covers the cost of managing the community. You will need to factor it into the equation of your decision to buy or to make your purchase elsewhere.

The Structure And Purpose Of Condo Fees

The legal term describing condominiums that you may see in documentation is common interest development or CID. The whole point of a condominium is that it is a community that is managed collectively by the homeowners association or HOA.

HOAs usually employ a professional management company to run the day-to-day operations. The fees that go to the management company for your condominium association or HOA what do they cover? There are several factors that account for the monthly homeowners’ association fees that you pay each month for your condo unit or townhome.

Some Services Covered

Here is a list of some of the most common elements of the bill you will pay each month as a member of an HOA:

  • Insurance – For everything outside your unit, you still need a policy of your own to cover the interior of your unit.
  • Pest control – the shared structure of your building requires that there is a holistic approach to fighting the sort of pests that can get up inside it.
  • Lawn and landscaping If you look closely you can tell the difference between condos and rental units by the quality of the yard work.
  • Maintenance and repair – All work on the shared structures and spaces of the community and the shared link to municipal services.

HOAs Wrap It Up And Put A Bow On Top

This list is not exhaustive however when you are looking at condos to buy your realtor should be able to acquire a comprehensive breakdown of what you will be paying and why.

Likewise, once you are settled and living in your condo there should be at least an annual report detailing what your board of directors has spent and what they intend to spend in the next year.

Work Gets Done So You Don’t Have To

HOA fees mean that you don’t have to worry about doing the yard work and yearly upkeep that is essential to keep the property looking good and habitable. The fee that you pay may go up in future years if there is an unexpected expense or just an increase in the cost of management.

In the balance, if you lack the time or inclination to do chores or potter around and work on your home you might find that your HOA fees represent good value and a subscription to membership in your community.

The Difference Between Houses Townhouses And Condominiums

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real-estate-basicsShould I Stay Detached Or Go Condo?

Have you ever wondered about the differences between detached homes, townhouses and condominiums? From a standpoint of comfort it is a matter of choosing the lifestyle that best suits your needs. However, from legal and practical standpoints there are numerous things that clearly mark out the distinctions between one and the others.

The main division is between the ownership of a single, detached property and one in which there is a common, shared interest with other members of the community. This shared interest is governed by the condominium agreement, a relationship that dates back to ancient times. You are said to own a condo, or a unit, meaning a unit of space when it is part of a legal condominium community; the name refers both to the unit and the contract.

The HOA Advantage

The organization that supports and operates the community, the homeowners association or HOA, is the main feature of the difference. If you own your own detached home you are responsible for all of the bills and maintenance issues.

In a condo communities the shared assets are the responsibility of a management team. Oversight of the management is provided by a board of directors that is elected by all of the members of the association.

The use of condominium rules is something that is applied to a wide range of housing needs and building types. The most familiar is the unit that is most commonly associated with the word condo and it usually brings to mind an apartment in a building that stacks up the units like shipping containers. In fact many condo complexes start out as apartment buildings that convert at a time when it is best suited to get the best return on the developer’s investment.

Different Structures Still Strictly Condominium

A townhouse is an attached home that has is like the close-packed row houses in many urban communities. They are arranged side-by-side and usually consist of two levels or more. They have an HOA to take care of the common areas and some of the amenities. Landscaping for each unit might not be included.

Detached houses in gated communities and in some privately developed subdivisions are another type of community that share responsibilities and costs. The same services as with condos and townhomes but homeowners may be expected to contribute more in the upkeep of the exteriors of their homes as well as adhere to strict rules on appearance.

For the avid gardener who is keen to create a unique and distinctive look to their home this may be a restriction that prevents them doing what they really desire. In such cases the independence of a traditional home might be much more preferable. For other buyers, the sense of community and grooming of the common areas might be just right. There are many types of ownership options because there are so many different needs of people seeking to own their own homes.

The Stages Of Home Ownership

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stages-of-home-ownershipFirst time buyers or recently new homeowners may feel like there is so much that must be done to set the stage for that all important first home purchase. Just the thought of it can be overwhelming. The real secret is to start modestly and keep making those home payments over time; it all adds up eventually.

As you gain equity what do you do? Stay? Refinance? Sell and move to a larger home? What is the right choice for you? At different times in life you are going to view home ownership through different lenses and with different sets of needs. The following simplification is intended to give a basic roadmap of the needs of homeowners at different ages and levels of need in life.

Ownership Rules For Youth And First Time Buyers

If you don’t already have equity in real estate or cash in the bank then it might be worth looking into the different ways to leverage what cash and assets that you do have. Fortunately, there’s a lot of help available. If you have reasonably good credit and income you might qualify for a government insured loan that will get your foot in the real estate front door.

Your first home will likely be more of a stretch financially than later purchases. Firstly, you don’t have that much cash presumably and if you don’t have enough cash to make a twenty percent deposit or higher you will have a mortgage insurance premium as part of your monthly payment. Government backed loans such as those offered by the FHA and VA help you get into home ownership quickly.

Different Rules For The Owner With Equity

When you have gained enough equity under your belt, you begin to have choices. However, those choices must be balanced against the cost of change. For the former first time buyer this is the time to choose between refinancing and moving.

If you are settled and happy with the home that you’ve built equity in it may still be time to determine if you can save some expense by refinancing at a higher appraisal. This will help if you have been paying mortgage insurance premiums or you want to change the term of the loan.

Larger deposits mean lower payments. Faster payments mean lower payments. Fifteen-year terms get a preferred rate compared to thirty-year mortgage terms. The difference in the monthly repayments can be surprisingly small as shorter terms benefit from less interest compounding.

Ownership In The Sunset Years

Having some leverage applied to your home may not be a bad thing. If you have a small home loan, say less than 50% of the value of your home there is an advantage in the interest deduction for tax purposes. Lenders often manage the property tax issues by impounding an estimated monthly amount and using it to pay the bill as it comes due. With this taken care of as part of the monthly payment it is one less thing to have to worry about.

The laws against discrimination are clear that you cannot be refused a loan because of your age. Holding a loan balance may be preferable to a so-called reverse mortgage, where the value of your home goes to the lender when you pass away.

Speak with your realtor or financial advisor about the best plan for your circumstances and your point in life. You may find as many have before that, regardless of your starting point, there is a plan that will suit your life and times. The earlier that you start the more opportunity you have to move up the property ladder and to enjoy your home throughout your life. A little planning and saving in early adult life can go a long way to creating your lifestyle dream come true in the long-term.

Hiring Contractors And Home Improvement

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choose-a-contractorThe Buyer Must Always Beware

When you decide to commit to a home improvement project for your property, you are hoping to make the house you bought into the home that you’re going to love. You may not have the time or the experience to confidently do it yourself so you have to hire a local builder who contracts for construction projects; you hire a contractor. There are a few points to ponder before you commit on what could be an expensive and time-consuming venture.

Even Nice Guys Can Turn Mean Eventually

When homeowners work with contractors to do some home improvement there is always a risk. There are incentives to cut corners and overprice work on the contractor’s side. Believe it or not this doesn’t make them a bad person per se. It just means that they are trying to get the better end of a deal in the transaction in a competitive business.

If you have never been self-employed or worked in the building industry you may not be aware of just what a cutthroat environment it is. The cycles of the economy, the ruthless competition and many harsh lessons along the way to your doorstep are enough to harden the heart of any kind soul, who is likely working to put food on the table for his or her family.

Some Points To Ponder In Hiring Contractors

When you are preparing to hire a contractor you should keep the following points in mind. Generally, you need to make certain that you hire right, so that you don’t have issues down the road. Needless to say, a little due diligence goes a long way.

  • Research the job on your own to find out what is going to be involved
  • Check out the social media reputation of prospective local builders
  • Seek referrals from people you know and trust who recently had work done
  • Get at least three bids from unconnected businesses to determine if the pricing is fair
  • Visit your local planning office and start the permit process on your own
  • Make payment for the project contingent on satisfactory approval by the city building inspector

For larger projects work with an architect or builder as consultants who oversee the project. You might even wish to consult a real estate attorney to review the intended process. In this case, you want to apply the selection process to them as much as the actual builder. The experience of a professional overseer can be the key to getting the job done right, and on time.

Make sure you ask your local real estate professional for contractor referrals. Realtors have a reputation to uphold and any reference they give will be someone they trust not to abuse that favor.

Some Clichés Will Tell You The Truth

Hiring contractors for real estate rehab, and home improvement brings to mind a whole host of clichés. That is only natural be cause of the transactional nature of the business of home improvement projects.

So, remember to caveat emptor and don’t pay the ferryman ‘til he gets you to the other side, et cetera. Contractors are people too so be prepared to apply a little character judgment and wisdom to the process and, with any luck, you can have an on-time under-budget home improvement project that will be the envy of the neighborhood.

Building Permits And Why You Need Them

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Planning PermitsCould They Make You Tear Your House Down?

If you build or convert your home without a building permit there is always the ultimate threat. It is the fear that the county, city or municipality will resort to making an example of what happens to people who fail to get the right permits before making major changes to the structure of their real estate assets.

There is no good reason why it should get anywhere near that situation. In fact the building department has your interests at heart and can be a goto resource during your construction project.

A Short History Of Building Safety

Regulation of construction and buildings has developed over centuries to regulate best practice in the building industry and to make certain that there we occupy basically sound structures. Going back to the seventeenth century in Great Britain, the Great Fire of London devastated huge portions of the city of London and surrounding areas.

The King demanded an inquiry after the fact, which uncovered so many bad building practices that destruction had all but been inevitable. This led to the a watershed moment in the formation of building codes that require designs to limit and stop the spread of fire and other hazards.

The Phrase That Pays Is Due Diligence

Do not leave it to your contractor to determine whether or not you need a permit. It is your property and responsibility to carefully check and double check that you are following the right path.

When a project costs as much as a house, or at least a good sized extension there is much pressure to save money by cutting corners and skipping the important steps in planning your build. Don’t end up being that person who spends vast sums because they attempted to take the cheap and easy route, only to find that it is full of potholes that will cost you a fortune.

Keeping Contractors Honest

Any time that you make a change to the structure of your property you need to have the right permit from the controlling authority, usually your city or county. If you are in doubt or your contractor suggests that it is not necessary it is time to take the initiative yourself and contact the local building department.

With the right planning permit you have the peace of mind that comes from knowing that a building inspector will ensure that your contractor has done the work correctly and as agreed. In this way the planning department is actually on your side and a guardian against shoddy building practices.

The Building Department Is A Resource

Any time you undertake to modify the structure of a property you are going to be making an investment of both finance and time. Make certain that you have all of the right paperwork before you start and it will make a big difference in how your plan proceeds.

The building department is there for the good of the community and for your protection. Make good use of its resources to ensure you have good advice before you start and to have your project inspected on completion to ensure that you get what you paid for at the end of the job.

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