What You Should Know About Closing Costs
How to Plan Ahead for Closing Costs
Before you buy a home, it’s important to plan ahead. While most buyers consider how much they need to save for a down payment, many are surprised by the extra fees they have to pay. To ensure you aren’t caught off guard when it’s time to close on your home, you need to understand what closing costs are and how much you should budget for.
What Are Closing Costs?
People are sometimes surprised by closing costs because they don’t know what they are. According to Bankrate:
“Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”
In other words, your closing costs are a collection of fees and payments involved with your transaction. According to Freddie Mac, while they can vary by location and situation, they typically include:
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender origination fees
- Title services
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting Fees
How Much Will You Need To Budget for Closing Costs?
Understanding what they include is important, but knowing what you’ll need to budget to cover them is critical, too. According to the Freddie Mac article mentioned above, the costs to close are typically between 2% and 5% of the total purchase price of your condo or home. With that in mind, here’s how you can get an idea of what you’ll need to cover your closing costs.
Let’s say you find a condo or home you want to purchase for the median price of $366,900. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,500 and $18,500.
Keep in mind, if you’re in the market for a condo or home above or below this price range, your closing costs will be higher or lower.
What’s the Best Way To Make Sure You’re Prepared at Closing Time?
Freddie Mac provides great advice for homebuyers, saying:
“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”
Work with a team of trusted real estate professionals to understand exactly how much you’ll need to budget for everything. We can help connect you with a trusted, local lender, and together we can answer any questions you might have.
Bottom Line
It’s important to plan for the fees and payments you’ll be responsible for at closing. Let’s connect so I can help you feel confident throughout the process. Contact us today at The Bouma Group, Realtors at 734-761-3060 or info@condohotline.com.
Pre-Approval in 2023: What You Need To Know
Pre-Approval in 2023: What You Need To Know
One of the first steps in your condo or home-buying journey is getting pre-approved. To understand why it’s such an important step, you need to understand what pre-approval is and what it does for you. Business Insider explains:
“In a preapproval [sic], the lender tells you which types of loans you may be eligible to take out, how much you may be approved to borrow, and what your rate could be.”
Basically, pre-approval gives you critical information about the buying process that’ll help you understand your options and what you may be able to borrow.
How does it work? As part of the pre-approval process, a lender will look at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow. That can make it easier when you set out to search for condos or homes because you’ll know your overall numbers. And with higher mortgage rates impacting affordability for many buyers today, a solid understanding of your numbers is even more important.
Pre-Approval Helps Show You’re a Serious Buyer
Another added benefit is pre-approval can help a seller feel more confident in your offer because it shows you’re serious about buying their property. A recent article from Forbes notes:
“From the seller’s perspective, a preapproval [sic] letter from a reputable local lender often can make the difference between accepting and rejecting an offer.”
This goes to show, even though you may not face the intense bidding wars you saw if you tried to buy during the pandemic, pre-approval is still an important part of making a strong offer. In fact, Christy Bieber, Personal Finance Writer at The Motley Fool explains it may be the most important part of making an offer:
“Pre-approval maximizes the chances you’ll be able to actually close the deal – and sellers want to see that.
The fact that a pre-approval gives you a better chance of getting your offer accepted is undoubtedly the most important reason to complete this step . . .”
Bottom Line
Getting pre-approved is an important first step toward buying a condo or home. It lets you know what you can borrow and shows sellers you’re serious about purchasing their condo or home. Connect with a local real estate professional and a trusted lender so you have the tools you need to purchase in today’s market. Contact us at 734-761-3060 or info@condohotline.com to discuss your path to ownership!
Searching for a Smaller Home or Condo? Here are the Top Tips for Downsizing
Downsizing can be a great choice for homeowners looking to make a financial or lifestyle change. After all, a smaller amount of space means less money on utility bills and less stress from clutter.
Are you a recent empty-nester? Moving for financial reasons? Or maybe you’ve watched a few episodes of Tidying Up with Marie Kondo and feel inspired? No matter your motivation, you’re not alone—downsizing has become an increasingly popular trend for homeowners everywhere.
If you’re making the move to a smaller place, here are the top tips for a Marie Kondo-style downsizing experience.
Know What You Have
Walk through your place room by room, and make a detailed list of your belongings. A helpful tip for keeping track? If you aren’t in a rush to downsize, take note of each item and how often you use it over the course of a few weeks or a month. That way, you learn exactly what you’d miss most and what you could go without.
Some downsizers use a color-coded sticker system, some jot notes in a notebook, and some just sort things into piles. Find the method that works best for you, and go from there.
…And What You Don’t Need
Once you’ve found out what items aren’t essentials, it’s time to toss them out. Try to focus on things like duplicate items, such as more than one kitchen utensil, and large collections that have accumulated over the years. To paraphrase the aforementioned organizing consultant Marie Kondo: keep the things that spark joy….but get rid of the rest.
There are plenty of great options for rehoming your unwanted items. Try making a little extra money by selling online, donating things to a good cause, or giving items to friends and family.
Maximize Your Space
When your overall amount of space goes down, you’re required to think of ways to use what you have more efficiently. Storage gadgets such as wall racks, built-in shelves, and pull-out cabinets can tuck belongings out of the way and give you a surprising amount of real estate to work with.
You might also have some furniture that can do double duty. Lots of kitchen or coffee tables either come with or can be customized to include drawers underneath, and bed frames are great for hiding away sliding storage units.
Measure, Measure, Measure
Hopefully, you’ll have a solid idea of the space you’ll be moving into—at least as far as square footage goes—so you’ll know exactly how much room you have for all of your belongings.
Once you know the size of your space, break out the measuring tape, and take note of the dimensions of the furniture you’re bringing along. The last thing you want is to haul your couch all the way to your new home only to discover that it doesn’t fit in the living room.
Ready to Make a Move?
We know that paring down your possessions can be tough, and moving comes with a wide range of emotions. Try taking pictures of the things you’ll miss most, so you can keep the memories around in your new space.
Once you’re ready to get started on your new home or condo search, give our team at The Bouma Group a call. With over 35 years of local experience and a wide range of professional expertise, we’re here to make sure your real estate experience is successful and stress-free. 734-761-3060 or info@bouma.com.
4 Tips for Making a Competitive Offer
So, you’ve been searching for that perfect place to call ‘home,’ and you’ve finally found it! The price is right and in such a competitive market you want to make sure you make a good offer so that you can guarantee that your dream of making this condo yours comes true!
Below are 4 steps provided by Freddie Mac to help buyers make offers, along with some additional information for your consideration:
1. Determine Your Price
“You’ve found the perfect condo and you’re ready to buy. Now what? Your real estate agent will be by your side, helping you determine an offer price that is fair.”
Based on your agent’s experience and key considerations (like similar condos recently sold in the same area or the condition of the condo and what you can afford), your agent will help you to determine the offer that you are going to present.
Getting pre-approved will not only show the sellers that you are serious about buying, but it will also allow you to make your offer with confidence because you’ll know that you have already been approved for a mortgage in that amount.
2. Submit an Offer
“Once you’ve determined your price, your agent will draw up an offer, or purchase agreement, to submit to the seller’s real estate agent. This offer will include the purchase price and terms and conditions of the purchase.”
Talk with your agent to find out if there are any ways in which you can make your offer stand out in this competitive market! A licensed real estate agent who is active in the complexes you are considering will be instrumental in helping you put in a solid offer.
3. Negotiate the Offer
“Oftentimes, the seller will counter the offer, typically asking for a higher purchase price or to adjust the closing date. In these cases, the seller’s agent will submit a counteroffer to your agent, detailing their desired changes, at this time, you can either accept the offer or decide if you want to counter.
Each time changes are made through a counteroffer, you or the seller have the option to accept, reject or counter it again. The contract is considered final when both parties sign the written offer.”
If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the unit.” If the inspector uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made with the seller or even cancel the contract altogether.
4. Act Fast
The inventory of condos listed for sale has remained well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.
Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as quickly as possible.
Bottom Line
Whether buying your first home or condo or your fifth, having a local real estate professional who is an expert in his or her market on your side is your best bet in making sure the process goes smoothly. Let’s talk about how we can make your dream of home ownership a reality! We are the Ann Arbor Condo specialists, give us a call today at 734-761-3060 or info@condohotline.com.
