3 Secrets to Buying a Home: What The Experts Don’t Tell You
OK, I know what your thinking: if I’m a “First Time Home Buyer Specialist” then wouldn’t I be considered an “expert”? Well, yeah I guess. But nonetheless, I’m going to give you some secret advice I tell my clients when we are making an offer, and getting ready for closing.
1. Ask for Seller Paid Closing Costs. Most people know what closing costs are. They’re the payments you have to come up with to obtain the loan, do a title search, and cover the cost of getting the deed. There are a lot of random fees usually in the HUD statement which buyers have to pay for, but what a lot of sellers are doing in today’s market is paying a portion or all of these closing costs for the buyer, in order to get the house sold.
Since we’re in a “Buyer’s Market”, it’s harder for sellers to compete with one another when selling. So we are seeing more and more buyers ask for closing cost contributions to help cover the acquisition fees.
In some agents’ minds, this can deter the seller from accepting an offer. But in truth, the average time on market in MN is still around 6-10 months for single family homes.
If you submit an offer and want to save a few bucks, make sure you ask your Realtor about some “Seller Paid Contributions”.
2. Set The Closing Date Near The End of The Month. Why would this matter? It’s simple, really. On most real estate purchase agreements, there is a section that lays out the property tax payments, and who will pay for these taxes upon the transfer of the deed.
While every deal is different, it’s very common practice to have the property taxes be prorated from the day of closing, so that each party, the buyer and seller, are only paying for the days in which they have ownership of the property. If you’ve ever started a rental lease in the middle of a month, you’re probably familiar with this practice of proration.
On top of that, however, there’s another financial perk to a late-month closing date. When you go the closing table, you will be paying the interest for your loan, for the remainder of the month in which you close. So if you’re closing December 30, you only have to pay 1 day’s worth of interest up front at the closing table (note: the seller is responsible for the day of closing).
What this means, is that the later in the month you close, the less you’ll have pay up front. And, your first mortgage payment won’t be the 1st day of the next month, but rather the 1st day of the second month. So in our Dec. 30th example, your first mortgage payment isn’t due until Feb. 1st. Essentially you get to live first, and pay second. It’s the total opposite of most rental agreements, where you have to pay on the 1st of the month in order to live there for that month.
3. Setup Your Utilities Before Closing. This is not a very important point for the actual sale of the house. But if you’ve ever tried to get the cable company to hook up your new service, you know it can take a week or two for them to schedule an appointment.
While the closing documents are being assembled, I also gather the utility information for my clients so they don’t get moved in and find out there’s no water or garbage service yet. Remember to contact your local companies and let them know the date you’ll be taking over ownership for the house. Include things such as
- Water
- Garbage
- Recycling
- Electricity
- Natural Gas
- Cable TV
- Phone Land Lines
- Internet
Also don’t forget to transfer your address at the post office and get your mail forwarded to the new place. Call your credit card companies, banks, car insurance, and other services that may have your address in their database. It will save you a ton of headaches and frustrations by taking care of this before moving in. That way you can start decorating and getting comfortable in your new house, rather than worrying about having no heat or lights.
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