Austin Texas Real Estate Closing Costs

Fees for buying or selling a home are called closing costs. These fees are assigned to either the buyer or the seller and some costs are negotiable.

Seller’s Costs
The seller’s most important closing cost is paying off the remaining amount of their loan. Before the closing, the escrow officer will contact the lender for the amount needed to close out the loan. Other costs include transfer taxes, title insurance, prorated property taxes, doc stamps on the deed and broker’s commission.

Buyer Costs
Lenders provide the buyer with a good faith estimate of their closing costs. The fees vary to many factors including the type of loan and the terms of the purchase contract. Some of the closing costs paid in advance. Other buyer closing costs include title insurance, down payment, pre-paid insurance, doc stamps on the note, loan fees, hazard insurance and mortgage insurance.

Prorations
Certain costs are often distributed between buyer and seller. Prorations are for property taxes because property taxes are paid at the end of the year when assessed. If a home is sold in OCT the sellers will have lived in the house for eight months and the taxes will not come due until the following year. The taxes are prorated to for the amount of time the seller has lived on the property in comparison to the buyer for the year.

Negotiating Costs
Escrows can include closing costs in their negotiations. An example would be if the buyers did not like the carpet and request the seller pay for the replacement but would like to choose the brand and color so the seller releases the amount to the buyer. Also if a buyer is short of funds for repairs they may pay full price and but receive the necessary amount at closing.

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Real Estate Refinancing

Austin Texas Real Estate: Refinancing your home can be a good way to bring down your mortgage payment, raise money or merge debts with high interest rates. However, you need to do your homework before deciding to refinance. One important factor is the difference between current interest rates and the rate of your original loan. Also homeowners need to take into account the amount of time it will take to recoup the costs of refinancing.

When to refinance

You should refinance your home if interest rates fall more than 2 points below your existing mortgage rate because refinancing usually involves most of the same closing costs as the original loan. Anything less than 2 percent the savings on your monthly mortgage payment might not be significant enough to be worth your while.

Is it worth it
If it costs $4,000 to refinance a house, and the monthly mortgage payment is lowered by $120 it would take almost 4 years for the savings to cover the costs of refinancing.

In addition, you may be able to roll the closing costs of a refinance loan into the new note. You don't avoid the closing costs, but instead pay them back over time along with the rest of the loan. Refinancing usually lengthens the time it takes to pay off your house. If you are 2 years into a 30-year mortgage and then refinance with a new 30-year loan you'll end up making payments on the house for 32 years. If the monthly savings are substantial enough you still could end up paying much less over the long haul with the new loan.

Adjustable Rate Mortgages

Rising interest rates might influence you to covert your ARM into a fixed-rate loan if you plan to stay in your house for several more years. You may plan to move in a year or two and find a lender who is willing to offer you dramatic interest rate savings with an ARM. In this case it might make sense to switch from a fixed-rate loan to an ARM.

Equity
With enough equity you can refinance in order to take cash out of the property. Lenders will typically allow you to borrow against the equity you've built in your house. These types of loans are also called home equity loans.

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Erasing Government Programs That Slow the Recovery of the Real Estate Market

Austin Texas Real Estate:  Republicans are planning to kill several White House plans aimed at keeping borrowers close to foreclosure in their homes.

The plans on the being threatened include the Home Affordable Modification Program, the Neighborhood Stabilization Program, the Federal Housing Administration Refinance Programs and the Emergency Homeowner Relief Fund and would save about $38 billion.

The mortgage modification program has faced criticism because of the lack of success and is only delaying what needs to happen plus slowing the recovery. The constant delay could force the real estate market to delay for years. The natural cleansing of the capitalist market needs to take place with artificial delays.

Another other issue at hand is fining numerous banks for robo signing. If the government does succeed in fining the banks this will incite litigation among millions and delay more foreclosures that will happen over time anyway. This will freeze up banks equity because they cannot clean their books and will need reserves for litigation.  All this forces the banks to work on their internal safety rather than producing more loans to help the market recover. 

Always let the market naturally correct itself and do not interject money programs to try to heal the downfall because all that is left is less government funds and a slower recovery.

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