Understanding the Closing Process

Once your offer on a home has been accepted, your inspections are complete and your financing is in order, you’ll likely breathe a sigh of relief and get focused on packing for the move. But before you’re handed the keys to your new home you’ll need to attend the settlement orclosing. The more you understand about the closing process, the easier it should be.

Preparing for Settlement

Settlement regulations vary from one jurisdiction to another, but two aspects of the process are usually the same no matter where you buy a home.

Your contract should allow you to schedule a walk-through of the property 24 hours before the closing. At this walk-through, you need to make sure the seller has completely vacated the property (unless you’ve arranged to rent back the property after closing) and that the home is in the condition described in the contract. Look to make sure any required repairs have been made and that items that are contractually supposed to convey to you are in place. If the walk-through reveals any problems, you can delay the closing or ask for money from the seller to address the issues.

You have the right to receive the HUD-1 settlement statement for review 24 hours before your closing. Compare the HUD-1 statement to the Good Faith Estimate that your lender provided to make sure they’re similar, and to ask your lender to explain any discrepancies between the two documents.

What You Need at the Closing

Throughout the home search you’ve likely accumulated a lot of paperwork. Bring these documents with you to the closing in case an issue arises and you need to produce one of them, particularly your proof of homeowner’s insurance and your copy of the contract.

Bring your identification and discuss with your lender how you’ll make the down payment and closing costs that aren’t rolled into your loan. You may be able to transfer these funds electronically based on an estimate before the closing, but you could also be required to provide a cashier’s check or certified funds. You should bring your checkbook, too, for the difference between the estimated balance owed and the final amount.

What Happens at the Closing?

As a buyer, you’ll sign a stack of legal documents including paperwork related to your mortgage and paperwork related to the transfer of ownership of the property.

You’ll also pay closing costs and fees and the initially required escrow payments for your homeowner’s insurance and property taxes.

Traditions vary by location, but at closing there’s usually a representative from a title company or an attorney. In some cases, both the seller and buyer will have an attorney present. Typically your REALTOR® will attend your closing and usually the seller’s REALTOR® and the seller will attend as well. Some lenders attend the closing, but others simply provide the loan documents to the title company.

When your closing is finished, you should not only have your keys to your new home, but also a stack of documents that you’ll need for future tax returns and when you eventually sell the property. These documents include your final HUD-1 statement, your Truth-in-Lending statement that outlines your mortgage terms, your mortgage note and your deed of trust. Full Article

Congratulations — you’re a homeowner!

Weekly Update

This week was a busy one at MySecretAgent! Below are our new listings for the week: 

5276 S 285th St Auburn WA 98001

MLS# 586636 

$389,000

Beautiful Schneider Family Homes resale located in the popular Highlands at Woodbrook neighborhood. House features formal living room with crown molding, spacious great room, den, 2 car garage with shop, 4 bedrooms, and 2.5 baths with a 5 piece master bath. Large kitchen island with gas cook top, stainless steel appliances, slab granite counter tops. Close to private neighborhood park with sports court, play structure and gazebo. Energy Star certified home

3717 Beach Drive SW #203 Seattle WA 98116

MLS# 586378

$425,000

Like living in a resort in a one of a kind building that will never be replicated. Perched on pilings over saltwater with eagles above this magical space is open and airy with bright wall colors,bamboo floors, a wood burning fireplace, lots of closets and spacious bedrooms. Waves lull you to sleep and sounds from the entry fountain drift into the dining room. Kayak racks, boat launch, sauna, heated pool, community room, extra storage and million dollar views from the private deck.

2626 101st ST SE Everett WA 982008

MLS# 586590

$329,999

Amazing mountain views and sunrises at this wonderful family home. With 4 spacious bedrooms, 2.5 baths, a large family room, rec room, and over-sized garage, you won't be disappointed! The master bedroom has a 5 piece bath, along with a walk-in-closet. Quietly located at the end of a cul-de-sac, with no neighbors behind you. Solace can be found while still being close to everything. This home has a new roof and all new appliances within the last 2 years. 

329 NE Skipanon DR Warrenton OR 97146

MLS# 14531937

$186,500

UNIQUE WATERFRONT CONDO AND BOAT SLIP COMBINATION. A 2nd floor waterfront condo.This condo has the best view of all the boating and scenic activity in this growing community. Includes a lower bedroom and loft bedroom (or office). Also includes optional moorage for  36' boat minutes from your door.

8601 NE 25th Cir Vancouver WA 98662

MLS# 14568804

$349,900

Great investment opportunity: Centrally located desirable DUPLEX, 3 bed, 2.5 bath,1 garage,1422 sq each, both units rented currently.

13120 106th Ave CT E Puyallup WA 98374

MLS# 586373

$239,000

Discretion: Corner Lot, double Car Garage, all appliance new, new carpet, new hardwood flour, new paint in side and out side, new roof large rooms, new deck new driveway.

4061 James St Bellingham WA 98226

MLS# 586445

$575,000

Custom home built 1985, 2450 sq ft. Value is in the land, zoning allows development. Home operates as a Daycare, special conditions apply. 4 bedroom, 2.5 bath, Formal and Informal Dining, Cathedral Ceilings Living Room, Family Room off Kitchen, Gas Fireplace. Shop 24' x 36' 1.20 Acre Zoned, 10-24 units per acre. All utilities in street including sewer within city limits. Room for 3 to 5 four plexes.

301 Dallas St Mount Vernon WA 98274

MLS# 586365

$239,900

Immaculate property with beautiful upgrades to kitchen, flooring and exterior. Great curb appeal, upgraded trim and stone accents with covered front porch. Upgraded interior trim, great kitchen with stainless steel appliances and skylights, gas fireplace, nice master suite with walk in closet and 5 piece bath with jetted tub. Fully landscaped, stained and sealed fenced backyard with stone patio and raised/irrigated garden, nice details, backs up to community park, splendid afternoon sun!!!

1545 NW 57th St #416 Seattle WA 98107

PENDING

MLS# 584279

$229,900

Terrific location in the heart of Ballard! Condo includes parking spot in a secure garage, washer/dryer, stainless steel appliances, spacious walk-in closet and balcony. Outstanding amenities include: a full 24 hr fitness center, 2 hot tubs, dry sauna, concierge, community lounge with cable TV and fireplace, business center with free internet/fax, conference room, bike and kayak racks, and a pea patch on the big rooftop deck with a stunning view of the Olympic mountains. Pets also welcome.

8216 Canal Rd SE Yelm WA 98597

MLS# 584011

$239,000

Pristine 4BR, 2.5BA with open floor plan facing private ranch in Yelm! HUGE kitchen w/ stainless steel appliances and island, LR/DR combo with picturesque ranch view out front windows, sunken family room with fireplace, 4th BR/office off FR, utility/mud room, fenced, landscaped yard and newly stained DECK! MASSIVE master closet with custom organizer, large 5-piece master bath. New hardware on cabinets throughout, wood blinds, white trim. ADT system. 

Sellers Closing Costs

If you’re monitoring your home value and maintaining an eagle eye on the remaining balance of your mortgage so you can sell and reap a worthwhile profit, don’t forget to factor in closing costs on your home sale.

You may be estimating that you can sell your property for $350,000 and pay off your $200,000 home loan and reap a $150,000 benefit. But before you start counting your dollars and debating the size of the down payment for your next home, you need to calculate your closing costs.

While buyers also pay closing costs, you’ll see a long column on the HUD-1 Settlement Statement for seller costs. Closing costs vary according to where you live, but as the seller you can expect to pay anywhere from 6 percent to 10 percent of the home’s sales price at settlement. This won’t be cash out of your pocket, rather it will be deducted from the profit on your home — unless you are selling with very low equity. In which case, you may need to bring a little cash to the table.

Seller Costs

One of the larger costs at settlement paid by the seller is the commission for the REALTORS® involved in the transaction. Commissions are negotiable and vary somewhat by market, but a typical commission is 6 percent of the sales price of the home split between the listing agent and the buyers’ agent. For a home that sells for $350,000, the commission would come to $21,000.

Other fees paid for by the seller may include:

• Loan payoff costs. Your loan payoff will often be a little higher than the remaining balance on your loan because of prorated interest. In some cases, you may have to pay a prepayment penalty for paying off your loan before the end of the term. If you have a home equity loan or line of credit, this must be paid in full at settlement as well.
• Transfer taxes or recording fees. These are the taxes imposed by your state or local government to transfer the title from one owner to another.
• Title insurance fees. Sellers typically pay the owner’s title insurance premium.
• Attorney fees, if you have your own attorney represent you at the settlement. Market traditions vary, so while in some areas both the buyers and sellers have their own attorneys, in others it’s more common to have one settlement attorney for the transaction. In some areas the buyer pays the attorney fees, while in others the seller pays.
• Liens or judgments against the property.
• Unpaid homeowner association dues.
• Prorated property taxes and homeowner association dues up to the settlement date.

Depending on the contract, the seller may also have to pay:

• Termite inspection and remediation, if necessary.
• Home warranty premium.
• Repair bills or a credit for repairs for items found during a home inspection.

Also, don’t forget to estimate some of the costs associated with preparing to sell, such as cosmetic repairs or improvements to make your home more attractive to buyers. Those costs may be returned with a higher sales price, but you should still include them in your calculations. Full Article

Existing-home sales top 5 million in 2013 -- best year since 2006

More than 5 million existing homes were sold in 2013, the best year since the boom times of 2006, when 6.5 million were sold.

That's according to the National Association of Realtors, which reported that single-family homes, town homes, condominiums and co-ops sold at a seasonally adjusted annual rate of 4.87 million in December, up 1 percent from November.

Last year's total of 5.09 million sales was 9.1 percent higher than 2012's total.

Job growth, low mortgage interest rates and pent-up demand had been driving the market since 2011, said NAR Chief Economist Lawrence Yun.

"We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population," he said.

The national median price for an existing home rose 11.5 percent in 2013 to $197,100 -- the biggest jump since 2005, the association reported.

As of the end of December, 1.86 million homes were on the market.

Realtors are optimistic sales will remain strong this year, despite higher prices and higher mortgage rates.

"The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory," said NAR President Steve Brown, co-owner of Irongate Inc. Realtors in Dayton, Ohio. "With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home." Full Article

Super Bowl Appearances vs. Real Estate Prices

Fact: Most of the 10 NFL teams that have gone to the Super Bowl five or more times come from cities with high median home prices. Does this mean there is a correlation between Super Bowl appearances and real estate prices? We have created a graphic to explain this possible correlation. Here is a preview:

Road to Homeownership home-buying

Tax breaks real estate you should be prepared to do without in 2014

Dozens of tax laws are set to expire at the end of 2013. Many of these provisions are quite popular and likely will be extended by Congress. Exactly when or how lawmakers will get around to doing this is unclear.

The situation is complicated by the fact that both the White House and Congress want to enact serious tax reform in 2014. Key members of Congress and the Obama administration have proposed that extending or making permanent some of these expiring provisions be made part of the overall tax reform process instead of being done piecemeal though special tax extension legislation.

The expiring provisions of most importance to the real estate industry include:

Mortgage insurance premiums deduction: Since 2007, qualifying homeowners have been able to deduct premiums for mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and private mortgage insurance. Homeowners whose incomes are not too high can treat such payments the same as mortgage interest payments. (IRC Sec. 163(h)(3)(E).) Unless the law is extended, no deduction will allowed for amounts paid or accrued after Dec. 31, 2013.

Discharge of indebtedness on principal residence exclusion: Since 2008, homeowners have been allowed to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure. (IRC Sec. 108(a)(1)(E).) Full Article