Would you like to learn more? Here are 7 tips for searching the Arizona MLS.
What Are Closing Costs And How Much Are They?
What are closing costs?
Are you in the market to purchase a home or just starting to consider purchasing a home?
Are you wondering how much of your own money you will need or what are the costs involved when purchasing a home?
Earlier, you learned what your typical up front out of pocket costs could be once you get under contract to purchase a home. You might want to go back and review those costs, so that you’ll know what you’ll need out of pocket, right away.
Now you can dive more deeply into the actual costs of obtaining financing and purchasing a home.
There are a couple different areas that “costs” are typically grouped into:
- Your down payment.
- Your closing costs.
Learn more about down payments here.
Closing costs explained, the short and sweet version.
Closing costs are costs associated with your home purchase and they are typically related to a few different items.
As a general rule of thumb, your closing costs should be in the area of 3% of your anticipated purchase price.
For example: With a purchase price of $200,000, it’s $200,000 x 3% = $6,000.
This is a very rough estimation and it really depends on the type of loan you will be getting.
Your actual closing costs could be more or could be less depending on your type of loan and other variables.
There are several different types of loans, including FHA, VA, USDA and Conventional.
Closing costs must be paid when you purchase the home.
For a more detailed explanation, see below.
Closing costs in detail:
Here are the most common closing costs associated with your home purchase:
- Title company fees
- Lender fees and Prepaids
- HOA fees
Title company fees
Title company fees differ from company to company, although there are three fees that almost every title company charges a buyer.
- The lender’s title insurance policy – this is the insurance policy that you, the home buyer will purchase for your lender to protect against any unforeseen claims to ownership of the home, after your purchase.
- The escrow or settlement fee – this is the fee for title work, including researching the chain of title on the home, to make sure that the seller actually owns the home and has the right to sell it.
- Recording fees – to record your deed at the County Recorder’s Office.
The amount of these fees vary, depending on the purchase price of the home. Here is an example of typical title fees.
These are typical title company fees associated with purchasing a home.
Lender fees and prepaid fees
Simply put, you must pay your lender to loan you money.
Lenders make their money by collecting interest from you and collecting fees to give you a loan, many times this is put into a fee called the “Origination Fee.”
Once again, the fees your lender will charge varies depending on the loan program that you use.
Prepaids are charges collected up front to cover different items, such as
- The interest you pay for the remaining days of the first month you are in your home.
- Mortgage insurance reserves.
- Homeowner’s insurance reserves.
- Property tax reserves.
These are typical lender’s fees and prepaid items that are charged in connection with your new loan.
HOA fees
If your home is located in an HOA, also known as a Homeowner’s Association, then there are usually fees associated with the transfer of the property to the new owner. Whether the buyer or seller pays these fees is negotiable.
Usually with an HOA, there will be monthly or quarterly fees as well.
As with everything else, HOA fees can vary, depending on the association and the amenities of the neighborhood. Typically, the more amenities in the neighborhood, the higher the monthly or quarterly fees you must pay.
Hopefully this has shed a little more light on the subject of closing costs. If all else fails, just remember the rule of thumb.
Your closing costs will be roughly 3% of your anticipated purchase price.
What Will I Need For A Down Payment When I Buy A Home?
Are you looking to buy a home and wondering what you will need for a down payment?
What is a down payment?
A down payment is the money that you, the home buyer will contribute, from your own funds, towards the purchase of your future home.
If you intend to finance your home, also known as obtaining a mortgage, your lender considers this down payment as your “skin in the game,” or the gauge of your seriousness and willingness to repay your loan.
If you don’t repay your mortgage, you lose your home and all of the money that you put into it, including your down payment.
The more money you put down on the home, the more acceptable of a risk you are to your mortgage lender. With that line of thinking, usually comes lower monthly payments.
Down payment amounts can vary and it really depends on the type of loan that you are getting. There are several different loans that are available to the average home buyer, including Conventional, FHA, USDA and VA.
Conventional Loans
Typical down payment amount: 5%-20% of the purchase price.
Example of down payment needed: if the purchase price of your home is $200,000 and your down payment is 20%, then the amount that you will need is $40,000. $200,000 x 20% = $40,000.
Conventional loans are typically loans that are available to home buyers with good (or better) credit and have the potential of carrying a lower interest rate and no mortgage insurance.
FHA Loans
Typical down payment amount: 3.5% of the purchase price.
Example of down payment needed: if the purchase price of your home is $200,000 and your down payment is 3.5%, then the amount that you will need is $7,000. $200,000 x 3.5% = $7,000.
FHA loans are very popular with first time home buyers, as credit standards are a bit more relaxed than conventional loans. Along with lower credit standards, the down payment amount can be as little as .5% of the purchase price. FHA loans do tend to have higher interest rates than conventional loans and also carry mortgage insurance.
USDA Loans
Typical down payment amount: Zero down
USDA loans are zero down payment loans that are slated for rural housing in select areas. This is a great opportunity for first time home buyers, with less than perfect credit that wish to live in rural areas.
VA Loans
Typical down payment amount: Zero Down
VA loans are for our US Veterans. This is an excellent zero down program that can be used typically in any area.
Knowing how much your down payment will need to be is critical to your planning process when buying a home. We hope this article has shed some light on your questions.
Do you have more questions? Feel free to comment in the box below!
Rental Statistics May 2014 – Phoenix
Real Estate Market Statistics May 2014 – Phoenix
Real Estate Market Statistics May 2014 – Phoenix, Arizona
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Monthly Home Sales for Phoenix, Arizona May 2014
Homes sales in the Phoenix area are down, predictably, year over year. This continues to signify a lower buyer demand for homes in the Valley.
New inventory for resale homes
New inventory for resale homes is down and should start to flatten out as we move closer to summer.
Total inventory for resale homes
Total inventory for resale homes remains flat month over month, up almost 50% year over year.
Active inventory vs. homes under contract (UCB)
Months supply of inventory
New list prices
Sale Prices
Sales Price Forecast
Pending foreclosures
Distressed sales
Get This Report Every Month
While home buying demand is still down, we are seeing fewer and fewer distressed sales each month. This is a great indication of the real estate market getting healthier overall. 90% of homes sold in the Valley are normal sales.
Average days on the market
We are seeing what appears to be a balancing of the market, with monthly supply staying under 4 months and days on market flattening out.
Buyer demand continues to be a question mark in the current real estate market. There is definitely potential for a greater influx of home buyers:
- Retiring baby boomers
- Boomerang buyers (buyers with a previous short sale or foreclosure)
- First time home buyers
We can only wait and see what factors will come into play that will help these potential buyers to decide to enter the real estate market and purchase a home.
Real Estate Market Statistics April 2014 – Phoenix
Real Estate Market Statistics April 2014 – Phoenix, Arizona
Monthly home sales for Phoenix, Arizona April 2014
As predicted last month, the sales for resale real estate increased in March by close to 23% month over month. Year over year numbers are down by about 18%, which is also in line with last months numbers. We should see a decent increase in monthly sales again next month.
New inventory for resale homes
New inventory for resale homes continues to follow predictable trends for this time of year. 10,557 new resale homes came on the market for the month, representing an 8.8% month over month and year over year increase.
Total inventory for resale homes
29,939 total homes were on the market in Phoenix at the time of this publication. We’ll be able to see more in the coming months, as to how the total inventory increase plays out. It does appear at this point that we have a slowing of the increase in total resale inventory.
Active inventory vs. homes under contract (UCB)
Months supply of inventory
Months supply of resale home inventory has seen a slight down-tick as buying increases. This is another typical condition for this time of year.
New List Prices
As predicted last month, the average list price for resale homes has also come down a bit month over month. As days on market remain in the 80-90 range, we should continue to see slight downward pressure on new list prices.
Sale Prices
Sales price forecast
Pending foreclosures
Distressed sales
Average days on market
As monthly sales climb, we see downward pressure on days on market.
The market seems to be acting very predictably at this time. Continued buying and slightly lower new list prices should continue to fuel a healthy real estate market for the Phoenix Metro area.
How To Find The Best Places To Live In Phoenix
Are you looking for the best places to live in Phoenix?
Has this already happened to you?
You are looking for the best places to live in Phoenix and you receive an email with a newly listed home on the market or you search our site and find a home for sale and it looks perfect!
You’re super excited! The interior photos are beautiful and it has everything that you have been looking for in a home! This could really be the one!
You jump into your car so you can take a look at the exterior of the home and to get a feel for where it is located.
You leave the comfort of your home, expend the gas and time to reach the home, only to realize that the neighborhood isn’t at all what you had hoped for.
You drive all the way back home in utter disappointment.
It can be hard to find the best places to live in Phoenix.
Don’t wast your time.
We live in a (ever increasingly) fast paced world and your time is precious.
Here at Desert Premier Realty Group, it’s our goal to share as much of our experience and knowledge as possible with you, so that you can be smarter and more efficient than the average home buyer.
1 quick way to find the best places to live in Phoenix.
Here is a tool that many of our clients use to help them get a feel for different neighborhoods in the Valley and help them find the best places to live in Phoenix:
Google Maps – Street View.
Let’s say that you’ve found a home for sale that you think has potential, but you’re not sure of the geographic area and you definitely don’t know the neighborhood.
Your could jump in your car and drive across town, spending an hour or two in traffic… Wait a minute… Haven’t we been there before?
You are the smarter home buyer.
Just plug the address into Google Maps and select Street View.
Drop the little yellow guy (peg man) right where you want him.
You can have a virtual tour of an entire neighborhood and surrounding area, without having to step one foot outside of your own home.
You can get an instant quick view of the home for sale and get a feeling for whether or not it fits within what you desire.
Now you know how to find the best places to live in Phoenix.
Once you’ve determined how you feel about the neighborhood, you can decide whether or not it’s worth your time to make the trip.
The best places to live in Phoenix are where you decide they are!
Simple, isn’t it?
See below for a quick demonstration of Google Street View.
Opening image above courtesy of Flickr and Jason Paris.
Out Of Pocket Costs – 1000 Ways To Save When Buying A Home
What out of pocket costs have you planned for your home purchase?
Are you aware of the up front monetary commitment that it takes to purchase a home?
As soon as you get under contract to purchase a home, a specific timeline that is outlined within the purchase contract begins. There are certain actions that you agree to take within that timeline.
For many, those specified actions include:
- Depositing the earnest money.
- Performing the home inspection.
- Performing the termite inspection.
- Performing any other inspections that are important to the home buyer.
There are out of pocket costs that are associated with the above actions. Let’s take a look at each one.
1. Depositing the earnest money.
Earnest money is part of a home buyer’s out of pocket costs and is the money that a buyer puts down on a home. The earnest money signifies the home buyer’s serious and good faith intention of purchasing the home.
When you are under contract to purchase a home in Arizona, the earnest money is due immediately.
Typically earnest money is to be deposited with the title company that is agreed upon. The amount of earnest money that the home buyer is to deposit is negotiable and typically hovers around 1% of the contract price.
For example, if the contract price is $100,000 and the earnest money that is agreed upon is 1% of the contract price, then the earnest money is $1,000. $100,000 x 1% is $1,000.
As you make your plans for your home buying journey, earnest money should be a prime consideration and knowing the potential purchase price of your home ahead of time will be instrumental.
Did you know that depending on your financing, you can receive a gift from a family member to cover your earnest money?
2. Performing the home inspection.
Here in Arizona, the inspection period for the home purchase typically begins upon execution of the contract. Usually, the inspection period is 10 days, unless otherwise negotiated.
The physical home inspection is almost always the most critical part of inspections. The home inspection will give you a basic understanding of the condition and functionality of the home. If there are any physical or functional deficiencies or problems with the home, this is when you will find out.
Soon after you are under contract to purchase, the home inspection is ordered. The cost of a home inspection will vary, depending on the size of the home and what amenities there are, such as a pool, spa, yard watering systems, etc…
For the average home, the out of pocket costs for home inspections can run from $300-$500.
3. Perform the termite inspection.
The termite inspection will typically be completed alongside the home inspection. The termite inspection is actually a wood destroying organism inspection. The inspector will look for any conditions conducive to wood infestation and deterioration. And report those findings to the home buyer, the title company and sometimes the state.
Termite inspections usually cost the buyer about $65.
4. Performing any other inspections that are important to the home buyer.
There are many other inspections that may be necessary, based on the home and termite inspections.
If the home inspector finds any issues with any of the major systems of the home, such as the plumbing or electrical, they may recommend that you get further evaluations of those systems.
The costs of these inspections can vary and range from an $80 service call on upwards to $250 for a roofing certification.
And Finally…
Although this item isn’t listed above as an inspection, it is one of a home buyer’s out of pocket costs that you must keep in mind.
5. Performing the appraisal.
When you are under contract to purchase a home and you are financing the purchase, your lender will require an appraisal.
An appraisal will assure your lender that they are making a good investment and the value of the home matches the contract price.
The out of pocket costs for home appraisals typically run between $400-$500 and up, depending on the size of the home.
We can help you.
As you can see, there are several up front, out of pocket costs that home buyers should keep in mind as they begin their home buying journey.
We have extended an excellent opportunity to our online community that can help to put your mind at ease as you evaluate your buying costs.
We have negotiated a fantastic promotion for our online community that encompasses the out of pocket costs for both the home inspection and appraisal.
The Buyer Advantage Program
When you purchase a home with us and use our preferred lender, we will reduce your out of pocket costs by up to $1,000, by paying for your home inspection and appraisal.
We are very pleased to have been able to negotiate this with our preferred lender and are even more excited to make the offer to you.
You may not be ready to purchase a home at this time and we understand that. For that reason, we have a certificate for you to download and keep safe until it’s time. Just present the certificate at our first meeting and you will save $1,000 in out of pocket costs on the purchase of your home!
Click here to download your certificate and claim your $1,000 savings!
Find The Home That Is Right For You – 1 Quick Tip
How do you find the home that is right for you?
Just beginning your home search?
Or… Have you been researching the real estate market or looking at homes online for a while now?
There are many different things to consider about your future home as you start on the path to ownership. Things like:
- The number of bedrooms
- The number of bathrooms
- The size of your home
- The best location
And the list goes on…
While all of these items of consideration are extremely important to your buying decisions, there is one other item that is of utmost importance. This item will be a large factor that will help to shape the entire course of your journey.
The purchase price of your home.
What can you afford?
Depending on where you are in the buying process right now, the actual purchase price of your future home may or may not be your biggest consideration.
We think it should be. Just for right now.
In our many years of experience, we have come to learn that many buyers spend countless hours searching for and researching homes online, before they even know their price range.
The pendulum swings both ways when it comes to searching for and qualifying for a home. Many times buyers qualify for much more than what they think they can. Other times buyers are setting their sites on homes that are just out of their reach.
We want you to be the smarter home buyer.
We want you to work more efficiently with your time throughout your home buying journey, because buying a home shouldn’t take any more of your precious time than necessary.
Figuring out your purchasing price range early on in the home buying process will help keep you focused in on your target and keep you from looking at homes that don’t fit within your needs.
Are you less than a year away from purchasing a home?
It really depends on what stage you are in the home buying process as to how you should go about figuring out your price range.
If you are less than a year away from purchasing a home, then now is the time to consult a mortgage lender.
It’s critical to speak with a mortgage professional. They have the expertise to help you understand where you stand in regards to your credit and finances. They can give you the road map you need to have your financial affairs in order, so that when it’s time to make an offer on your dream home, you are ready!
Are you more than a year away from purchasing a home? Just work the numbers.
If you are over a year from purchasing a home, you’re probably fine with using a good mortgage calculator to see where you fit in.
If you are currently renting, are comfortable with the monthly rent payment and it is within your means, then you can just work the numbers backward to see what your potential purchase price would be. Once you’ve done that, you can feel pretty good that the homes you are researching and looking for are right for you!
Check out this quick video on how to use a mortgage calculator to figure out your home buying price range.
Real Estate Statistics March 2014 – Phoenix
Real Estate Statistics March 2014
Phoenix, Arizona
Monthly home sales for Phoenix, Arizona March 2014
As is typical for this time of year, we have seen a bump up in sales for February, to the tune of about 700 units. The number of home sales for February 2014 isn’t quite what we saw this time last year (it’s about 17% lower).
We should see another bump in home sales for the month of March as we get into the busy season for real estate here in the Valley.
New inventory for resale homes
New inventory is down almost 11% month-over-month. As you can see above, this is following last year’s trend quite closely. The difference we see here is the amount of new inventory for resale homes year-over-year. We have almost 11% more homes coming on the market in February 2014 than we did for 2013. This will add to our total inventory, as you can see below.
Total inventory for resale homes
The continued increase in new home listings, coupled with lower buying activity results in a higher resale home inventory.
Active inventory vs. Homes under contract (UCB)
Actives vs. UCB continue to diverge as we approach a more normal market. UCB on the Arizona Regional Multiple Listing Service stands for Under Contract – Accepting backups. UCB is a common label for short sales that are under contract.
Months supply of inventory
New List Prices
Average list prices should continue to flatten out and possibly drop a bit, as the average total days on market begin to rise.
Sales Prices
Sales price forecast
Pending Foreclosures
We continue to see lower pending foreclosures on a monthly and yearly basis. Hopefully the trend will continue, as the market becomes more and more healthy.
Distressed Sales
Average days on the market
We are at a 12 month high for days on market. We should start to see this statistic flatten as we move into the heat of the home buying season.
It’s always tough to predict the future. If history is any indicator, then we should start to see the number of home sales pick up as we move along in the month of March and into April.
With the continued rise of resale home inventory, home buyers will continue to have more choices, which should lead to less multiple offer situations on average. This should lead to an overall flattening of home sale prices and initial listing prices.
Are you a home buyer and just starting to research the housing market? Don’t miss this article on how to receive the most up to date home sale information that is available on homes for sale in the Phoenix metro area.
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