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Monthly Archives: April 2016

Wanna Purchase Home?, See These Tips

# Make your property inspections count

If you are serious about a property for sale, you will need to organise a professional building inspection to check for structural defects, pest infestations, damp, asbestos and issues with the plumbing or wiring. But before you get to this stage, you will undertake your own property inspection. And while your emotional response to the home is important, you need to think carefully about its potential problems. There are key ways to spot a lemon, such as:

  • Search high and low for damp and mould. Look out for fresh patches of paint that could be hiding the problem and check skirting boards and ceilings.
  • Look for structural issues like sagging ceilings, uneven door or window frames and buckling in walls.
  • Test all the taps and see how long it takes for the hot water to come through, and check out the hot water heater.
  • Ask yourself: is this an energy efficient home? We all know how costly bills can be.
  • Don’t underestimate council rates and strata fees. Find out what these are before you proceed.

# Get good legal advice

The importance of getting solid legal advice when buying property cannot be overstated. A good conveyancer or solicitor can alert you to serious problems with the property that could cause the sale to fall through, including:

  • Illegal building additions or renovations which could be removed by council or costly to update
  • Complications with the existing title deeds and legal ownership of the property
  • Potential issues with strata management clauses and fees
  • State authority rights to the property pertaining to zoning and/or future developments to the area that could seriously affect the property’s value.

Your legal representative will also review the contract of sale and mortgage agreement to ensure these legally binding documents protect your interests.

# Get an accurate valuation

Sales have been known to fall through due to an inaccurate property valuation. This becomes a particularly precarious situation if you have committed to a purchase at auction, or signed an unconditional contract, and your chosen lender values the property at a lower price than what you paid. It could mean having to borrow more than you budgeted for. Always use an accredited valuer if sourcing your own valuation.

# Learn from the mortgage market

Knowing your borrowing power is essential before making a bid or offer on a property. By talking to different lenders, reviewing interest rates and investigating potential product add-ons (such as redraw facilities, offset accounts and repayment holidays) you can determine how much you can realistically borrow. Always consider your ongoing homeowner costs and ability to manage mortgage repayments in the future. Obtaining loan pre-approval will keep you ahead of the buying pack.

# Consider a buyer agent

Buying real estate can be a game of negotiation and bravado. If you’re not comfortable making sale offers, bidding at auction or negotiating settlement terms, it could be a good idea to hire a buyer agent. Along with finding property, buyer agents are experts at evaluating properties for sale and negotiating purchase terms. An alternative is to use a trusted friend or family member.

About Mortgage Breakdown and Lender fees

Whether you pick a variable rate, a settled rate or a mix of the two, your home advance will accompany an arrangement of expenses and charges. The Australian Securities and Investment Commission (ASIC) encourages home purchasers to painstakingly survey the expenses acknowledge suppliers charge as this will at last decide how much a credit will cost.

Your home advance supplier is required to unmistakably layout any expenses or accuses related of your home loan. Perused the fine print or ask your legitimate counsel or conveyancer to survey the home loan contract, as various moneylenders charge distinctive expense rates and call comparable expenses by various names. Perused on for points of interest of basic home loan related expenses.

# Establishment, approval or application fee

This is a one-off fee charged when your mortgage is being prepared and is called different things by different lenders. A fee of $600 is a common charge across the major lenders, though some loan products do not attract an establishment fee and others are higher.

# Mortgage registration fee

When you take out a home loan with a lender, it must be registered with the government and this attracts a fee. Your lender will pay your mortgage registration fee to the relevant state authority. The charge varies from state to state. For example, here are the state-based mortgage registration fees for the purchase of a primary residence (not a first home) at a sale price of $650,000 and with a 20 per cent deposit ($130,000) – Queensland: $162.90; New South Wales: $107; ACT: $127; Victoria: $111; South Australia: $152; Northern Territory: $137; Western Australia: $160; and Tasmania: $126.54.

# Service or administration fees

These are charged differently according to the lender and product type. They may take the form of a monthly service fee or a yearly administration fee.

# Lenders Mortgage Insurance

If you borrow more than 80 per cent of the property’s sale price (i.e. your deposit is less than 20 per cent), your lender will most likely require you to pay Lenders Mortgage Insurance (LMI). The LMI premium is usually in the form of a one-off payment at the commencement of your loan.

# Rate lock fee

If you choose to lock in an interest rate for a period of time, you are generally charged a rate lock fee. The fee will depend on the lender, the loan product and term of the loan.

#Early repayment adjustment (economic cost)

If you repay your loan in full, or in part, before the end of the fixed term, there may be early repayment fees. This cost may also apply if you switch to another fixed or variable interest rate. Some fixed term loans allow extra repayments up to a certain threshold, so it is important to talk about early repayments with your lender.

Other fees you should look out for include redraw fees, settlement fees, security guarantee fees, offset fees and late payment fees.

Great Real Estate Tips from Expert

real-estateSales of single-family homes will rise modestly again in 2016 and median sales prices should be up 3% to 5%, trade groups and researchers say. While rising mortgage rates and a shortage of first-time buyers may temper that outlook some, the coming year should be another seller’s market for real estate.

Despite an upsurge in construction, home inventories remain low and multiple offers are still common.

# Sellers: Exercise your clout, but don’t overplay it

If you set a price from 5% to 10% above the market, you’re more apt to get an offer close to your home’s real value than if you start much higher and force your listing to go stale. However, if your home has better qualities than area comps, you have a bit more latitude.

No need to pay closing costs or offer other incentives to the buyer, especially if it means keeping your in-demand home off the real estate market. For example, a sale contingent on the buyers selling their home is reasonable but only with a contractual escape for you, often called a “kick-out” clause. That gives you the right to continue marketing your home. If a less-encumbered bid comes in, you then offer the initial buyers a set time of 48 or 72 hours to withdraw their contingency.

# Buyers: Don’t overreach

A bidding war might spur you to overspend, but paying an inflated price can make it tough to resell when prices stabilize or sink. (Read 2008-2009 real estate columns as a reminder.)

A decision to pay a premium isn’t always an errant one, though, when you plan to live in the house long term. Rather than focus on overheated developments, look at comparable homes in neighboring areas with the same access to the schools and amenities that you value. Set a bid ceiling, and try to have a few other deals in the works so you’re less inclined to overbid.

# Sellers: Know your agent’s commission split

A heated market is causing sellers to question why they should pay the full 6% commission.

Hence, sellers’ agents are accepting less, then offering less of a split to buyers’ agents in a practice known as “sell to the commission.”

When the co-op fee is low, buyers’ agents tend to be less than enthusiastic in showing such houses, and yours will typically take longer to sell.

# Buyers: Be ready, be early, be flexible

Are the best houses still getting snapped up quickly? Then don’t wait until you find a home to go loan shopping. Keep your preapproval letter, as opposed to a basic prequalification letter, in tow. Winnow your neighborhood choices before you shop.

Line up an action-ready inspector for an immediate property visit.

Have your agent ask what the sellers would value most in the sale. If you can accommodate a fast settlement or short-term, rent-back condition or fewer contingencies and conditions, that can make you stand out when that dream home is hanging in the balance.

# Sellers: Know your influential rooms

Upgrades rarely pay for themselves, but there are 2 spaces that can make or break a home sale: the kitchen and master bath.

Because kitchens are the heart of the home, or the “new living room,” make yours homey. Hide the coffee maker and toaster. Add simple decorative touches to the wall behind the sink.

Sure, new granite countertops and appliances are optimal, but new hardware for cabinets, new faucets, new lighting fixtures and fresh (neutral) wallpaper are inexpensive touches that carry weight. Thoroughly scour and depopulate the fridge and take magnets off it, please.

For bathrooms, always display a sparkling bathtub and commode. A new tub liner, or “shell,” can make that marred tub look like new and save you from replacing it.

A new faucet, new lights, fresh caulking, a new towel rack or new mirror may be in order. Clean out the medicine cabinet. Of course, this doesn’t mean you shouldn’t declutter, depersonalize, paint and scrub the rest of your space, too.

# Buyers: Buying new?

Get what you pay for. Builders are cranking production to pre-recession levels. But some are cutting corners by hiring untrained help, not waiting for concrete to cure, painting walls without primers or quietly substituting cheaper materials such as a lower grade of countertop granite, or installing inadequate plumbing or HVAC units.

Consider hiring an independent inspector to oversee construction (at $400-plus). Builders may tell you not to worry because they’ll hire one. Ahem!

# Sellers: Consider the replacement

You’re getting multiple offers on your home, with several over asking price. Wow, that was fast! But can you find your next home in time to move once you sign?

If not, one option would be to request a lease-back from the buyer, allowing you to remain in your old home for the time you need to shop for the replacement. This will be contingent on when the new owners need to occupy, and the period is usually limited to 60 days.

The other option is to slow the selling process by asking for a longer period before closing.

Whatever you do, get your prospects and finances lined up (see tip No. 3!). Yes, a seller’s market swings 2 ways!

# Buyers: Beware hidden costs

When is a $250,000 house not a $250,000 house?

Answer: Always! Consider these and myriad other closing costs when buying:

  • Origination fee: On a $200,000 mortgage for a $250,000 home, assuming 3.5% interest and no points, you’d pay the lender about $1,800.
  • Home inspection: Even if the mortgage insurer doesn’t require one, get one for peace of mind.
  • Property taxes: You’ll usually pay a few months upfront.
  • Appraisal: The bank will need to determine how much the place is really worth.
  • Private mortgage insurance, or PMI: This depends on your down payment and credit rating.

Other pre-occupancy costs should include home insurance, title insurance and deed-recording fee, and possibly title insurance, survey costs, credit report fees, flood insurance and homeowners association dues/insurance.

# Buyers: Seek out an up-and-coming neighborhood

Things to look for include proximity to a new or resurgent business center, the addition of a major employer, a light-rail station, a city cleanup initiative, young people moving there, crime watch and other neighborhood groups being formed, multiple renovations underway and other up-and-coming neighborhoods abutting it.

# Sellers and buyers: Don’t play the bubble game

Thousands of would-be sellers and buyers are agonizing over how they can time their next sale or purchase to coincide with the “pop” of this housing bubble, either by selling soon for optimal profit or swooping in with cash to pounce on post-pop pricing.

True, the bust of 2007-2008 was a loud and robust one, but don’t look for anything catastrophic this time. The present froth is being fueled by narrow supply and widespread demand, not easy credit and “liars’ loans.”

Most real estate cycles don’t explode like the last one; they just deflate slowly. Real estate continues to be a reliable long-term investment prone to usually modest peaks and valleys, done on a deal-by-deal basis and subject to local economies.