December 16, 2008
Time to refi
Just a note to all home owners that rates are very low and now is probably a good time to refinance. Wells Fargo's website has 30 year fixed mortgages at 5% (with 1 point).
CEMA, rates and bank closing costs
The fact that a CEMA is utilized, either in a refi or a purchase, can have an effect on the interest rate or other bank closing costs. In a residential transaction, the lender pays .25% of the mortgage recording tax. On a loan of $400,000.00, the bank has to shell out $1,000.00 which they would save on if the prior lender assigned its mortgage to your lender. Because the loan costs the bank that much less to close, they are making more money on it. This is one of the many factors that go into the bank's formula when figuring out the rate and costs to charge a borrower. Of course, they are not going to tell you this so it is your duty to bring it up.
I would tell the bank to reduce the rate slightly and once you are rebuffed (most likely) tell them to waive the application fee or processing fee. Explain to them that by doing the deal as a CEMA, they are saving on the mortgage tax that the lender pays so in essence, you are helping them out. Just my opinion, but I am pretty confident that they will waive something to make you happy and close a deal.
I would tell the bank to reduce the rate slightly and once you are rebuffed (most likely) tell them to waive the application fee or processing fee. Explain to them that by doing the deal as a CEMA, they are saving on the mortgage tax that the lender pays so in essence, you are helping them out. Just my opinion, but I am pretty confident that they will waive something to make you happy and close a deal.
December 10, 2008
Mortgage tax credit - save on condo purchase
When a sponsor sells a condominium unit, a purchaser may be entitled to a credit on the NYS Mortgage Recording Tax. There is a complicated formula used to determine the amount of the credit but if the sponsor has a mortgage on the condominium (and unit) which is dated no more than 2 years prior to the sale of the unit, some credit is due to the buyer.
However, sponsors are smart. It has become common practice for the contract of sale of a condominium prepared by a sponsor to state that if any credit is due to the buyer, the buyer will pay that same amount to the sponsor. In effect, what the sponsor is saying is: "you (Buyer) were expecting to pay the full mortgage tax and I don't want to disappoint you, so, whatever you save, you pay to me". The sponsor is right in that the buyer ends up paying the same amount except that a portion is going to the sponsor rather than the State.
As we all know, the current state of the market is such that sponsors need to sell and so as a buyer, there is much more negotiating power than say, 2 years ago. So, when negotiating, give an offer that you are comfortable with but also add that any mortgage tax credit will not be paid to sponsor. This can save you thousands of dollars depending on the circumstances of your transaction.
However, sponsors are smart. It has become common practice for the contract of sale of a condominium prepared by a sponsor to state that if any credit is due to the buyer, the buyer will pay that same amount to the sponsor. In effect, what the sponsor is saying is: "you (Buyer) were expecting to pay the full mortgage tax and I don't want to disappoint you, so, whatever you save, you pay to me". The sponsor is right in that the buyer ends up paying the same amount except that a portion is going to the sponsor rather than the State.
As we all know, the current state of the market is such that sponsors need to sell and so as a buyer, there is much more negotiating power than say, 2 years ago. So, when negotiating, give an offer that you are comfortable with but also add that any mortgage tax credit will not be paid to sponsor. This can save you thousands of dollars depending on the circumstances of your transaction.
November 21, 2008
Coming back soon
I got a little busy over the past month but I will continue posting regularly after Thanksgiving.
I got some new ideas to really spruce up the blog so stay tuned...
I got some new ideas to really spruce up the blog so stay tuned...
October 20, 2008
CEMA
It looks like the CEMA posts are getting the most attention on this site and so I wanted to direct new visitors to my post of September 2, 2008 for a concise tutorial on the NY CEMA process and its benefits to both buyers and sellers.
As mentioned, on refinances of residential properties, CEMAs have been the norm for years for anyone dealing with a reputable mortgage broker. However, most buyers did not pursue this option on purchases even though it would have saved thousands on closing costs.
Comments and questions are welcomed from visitors to this site.
As mentioned, on refinances of residential properties, CEMAs have been the norm for years for anyone dealing with a reputable mortgage broker. However, most buyers did not pursue this option on purchases even though it would have saved thousands on closing costs.
Comments and questions are welcomed from visitors to this site.
October 16, 2008
REO listings
I across this website that has direct links to several banks' REO listings including Fanny, Freddie and Countrywide. I skimmed through them and there are some well priced houses (at least well priced for now). Again from, my experience, you should be able to get a substantial reduction from the listed price.
If you make an offer and your offer is accepted, make sure an attorney reviews the contract. The REO contracts are very tough on purchasers in that often the bank wants the purchaser to pay transfer taxes (which are a seller's charge). Brokers will tell you that this is how it is but you must negotiate this point. The bank will not kill a deal over $3,000.00.
Anyone needing further advise may contact me via email or phone.
If you make an offer and your offer is accepted, make sure an attorney reviews the contract. The REO contracts are very tough on purchasers in that often the bank wants the purchaser to pay transfer taxes (which are a seller's charge). Brokers will tell you that this is how it is but you must negotiate this point. The bank will not kill a deal over $3,000.00.
Anyone needing further advise may contact me via email or phone.
October 14, 2008
REO houses
Due to the rotten state of the real estate market, REO houses, houses owned by banks after the foreclosure have become very attractive buys. I have seen banks accept offers as low as .50 cents on the dollar meaning, if the bank foreclosed on a loan of $450,000.00 and no one purchased the house at the foreclosure auction, the bank will sell that same house at $225,000.00.
You can get listings for REO properties on various websites or through brokers. Some banks have their properties listed on their websites (for example EMC Mortgage's properties are at here). My advise is if you see a REO house that interests you, make whatever offer you want without any shame. What will probably happen is that the lender will negotiate a price with you and maybe you will get a steal in this market. Remember, the bank may very well sit on the house for years and years to come and have already taken a loss on their books.
You can get listings for REO properties on various websites or through brokers. Some banks have their properties listed on their websites (for example EMC Mortgage's properties are at here). My advise is if you see a REO house that interests you, make whatever offer you want without any shame. What will probably happen is that the lender will negotiate a price with you and maybe you will get a steal in this market. Remember, the bank may very well sit on the house for years and years to come and have already taken a loss on their books.
How to make an intelligent lowball offer.
Many houses have been lingering on the market for many months and the sellers are desperate to get rid of them. Many of these sellers would probably like to just pay off their mortgage, closing costs and broker and walk away. If you have the time, you can try to figure out what price point would accomplish just that.
For houses in the five boroughs, you can go on the ACRIS website online (click here) and find out whether there is a mortgage on the house and what the original mortgage amount was. With that information, you know approximately how much money the seller needs to be at a break even point (assuming its a fairly recent mortgage) and you can make an intelligent offer. Outside the five boroughs try logging on to Propertyshark.com. You never know the situation of the seller until you make an offer.
A recent popular trend is for sellers to apply for a "short sale" with their lender. This means that the seller will try to convince the bank to accept a lower amount of the balance due on the mortgage. If the lender agrees, then the seller will be able to sell the house for less than the amount due on the mortgage.
I will post more about this in the future but for now, buyers should know that they should not be afraid to make low ball offers.
For houses in the five boroughs, you can go on the ACRIS website online (click here) and find out whether there is a mortgage on the house and what the original mortgage amount was. With that information, you know approximately how much money the seller needs to be at a break even point (assuming its a fairly recent mortgage) and you can make an intelligent offer. Outside the five boroughs try logging on to Propertyshark.com. You never know the situation of the seller until you make an offer.
A recent popular trend is for sellers to apply for a "short sale" with their lender. This means that the seller will try to convince the bank to accept a lower amount of the balance due on the mortgage. If the lender agrees, then the seller will be able to sell the house for less than the amount due on the mortgage.
I will post more about this in the future but for now, buyers should know that they should not be afraid to make low ball offers.
October 1, 2008
The Credit Crisis = buy a house for cheap
I think its time to discuss whats going on in the market right now. Due to the current climate on Wall Street and the coverage that the "Credit Crisis" has received on the news over the past few weeks, it is probably not a great time for everyone to look for a house. Its also probably not a great time for anyone to sell a house.
What I am seeing is that there are plenty of people just casually seeing what available as far as inventory but not pulling the trigger. Obviously this is a good decision as we wait and see the direction of the market in the coming months.
However, there are two pieces of advise I can give those looking for a house: (1) don't be afraid to make a low offer, and (2) get listings of REO properties (properties owned by the bank after foreclosure).
Above I will discuss both.
What I am seeing is that there are plenty of people just casually seeing what available as far as inventory but not pulling the trigger. Obviously this is a good decision as we wait and see the direction of the market in the coming months.
However, there are two pieces of advise I can give those looking for a house: (1) don't be afraid to make a low offer, and (2) get listings of REO properties (properties owned by the bank after foreclosure).
Above I will discuss both.
September 18, 2008
Lawyers and Brokers
This post is not necessarily about closing costs but I think it is important - and maybe obvious.
Brokers are a great source of referrals for lawyers. Personally, I very much appreciate brokers who refer clients to my office because (although it goes without saying) there are many lawyers out there and therefore, the referral must mean that the broker has had clients who were happy with my representation in the past.
After an offer is made, or accepted, a reputable broker will always advise his client that they should retain a lawyer who specializes in real estate. When referring a lawyer, a reputable broker should do nothing more than provide the lawyer's contact information to the client with a recommendation. I have seen some brokers actually drive their client to a lawyer and sit in on the meeting between the lawyer and client. Many buyers or sellers, especially first time buyers, go with the flow and probably do not think anything of it. Unless the broker is a friend or family, this is a sure sign that you should not be working with that broker (and probably not with that lawyer).
As mentioned in past entries, the attorney client relationship should be one where the client feels absolutely comfortable and that the communications are confidential. The broker's role is to put a deal together and once there is a deal, to expedite certain matters (such as helping with purchase applications in the case of a condo, coordinating home inspections and appointments). The lawyer's role is to protect the client. Sometimes, the interest of the broker may be different than the interest of the client such as when the deal could potentially fall through (and a commission is lost). A reputable broker will recognize when to step back and allow the client and the attorney to do what is in the best interest of the client regardless of the broker's commission.
Neither the lawyer or the client (buyer or seller) should ever be pressured by a broker. If you feel that a lawyer is more concerned with the broker rather than your interest, get another lawyer. There are plenty who would be happy to have your business.
Brokers are a great source of referrals for lawyers. Personally, I very much appreciate brokers who refer clients to my office because (although it goes without saying) there are many lawyers out there and therefore, the referral must mean that the broker has had clients who were happy with my representation in the past.
After an offer is made, or accepted, a reputable broker will always advise his client that they should retain a lawyer who specializes in real estate. When referring a lawyer, a reputable broker should do nothing more than provide the lawyer's contact information to the client with a recommendation. I have seen some brokers actually drive their client to a lawyer and sit in on the meeting between the lawyer and client. Many buyers or sellers, especially first time buyers, go with the flow and probably do not think anything of it. Unless the broker is a friend or family, this is a sure sign that you should not be working with that broker (and probably not with that lawyer).
As mentioned in past entries, the attorney client relationship should be one where the client feels absolutely comfortable and that the communications are confidential. The broker's role is to put a deal together and once there is a deal, to expedite certain matters (such as helping with purchase applications in the case of a condo, coordinating home inspections and appointments). The lawyer's role is to protect the client. Sometimes, the interest of the broker may be different than the interest of the client such as when the deal could potentially fall through (and a commission is lost). A reputable broker will recognize when to step back and allow the client and the attorney to do what is in the best interest of the client regardless of the broker's commission.
Neither the lawyer or the client (buyer or seller) should ever be pressured by a broker. If you feel that a lawyer is more concerned with the broker rather than your interest, get another lawyer. There are plenty who would be happy to have your business.
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