QUAD CITIES REAL ESTATE WITH RE/MAX

SERVING THE ENTIRE IOWA AND ILLINOIS QUAD CITIES ............................................................

DAVENPORT - BETTENDORF - ROCK ISLAND - MOLINE AND SURROUNDING COMMUNITIES

TOM & CYNDEE BROWNER - CRS, ABR, GRI

BROKER OWNERS OF RE/MAX BI-STATE - SERVING IOWA & ILLINOIS

1-563-388-0008 Office - 1-563-388-0083 Fax - 1-866-388-0083 Toll Free - 1-563-570-7629 Cell - 355-1616 Home

Have a question? The answer is just a call or e-mail away. Contact us at tom&cyndee@quadcitiesrealestate.com

We are both Accredited Buyers Representatives (Certified Buyer's Agents) we know you want to make the best decision. You want the best home possible for your investment. We know the market, and we work at your pace and not ours. We will guide you through all the forms, take you through the first time buyer programs and/or financing, inspections and explain everything each step of the way. We take care of all the details and problems before they become a problem to you. Call us on our private line at 570-7629 at RE/MAX BI-STATE or Contact us at tom&cyndee@quadcitiesrealestate.com - LOOKING TO SELL? Check out the services an Certified Residential Specialist can mean to you.

Our Goal is to provide you with the most up to date information and Exemplary Service at all times. Homes are an important decision and a long term investment. When Your Money Matters, you need and deserve the most competent professional help available. We strive to always be on top of the market and to further our education's, that we may be knowledgeable to give you the best service and advice at all times.

NORMAL BUYER CLOSING COST

Origination Fee - Charge by some banks to process your loan application. Currently a charge that can be avoided.

Discount Points - See discount points - Prepaid interest expense paid as a percentage of money borrowed to lower interest rate. A charge to be avoided by most buyers.

Closing Fee - A charge by some banks to prepare final papers or conduct closing, is often included in Attorney's fees or commitment fees. Compare banks good faith estimate. If charged, this fee should be about $75.00 and other fees should be less by this same amount.

Title Insurance - Iowa is the only state that closes by abstracts and attorney opinion. Other states just issue Title Insurance - an insurance policy protecting the bank that they are getting clear title. This does nothing for you. Some lenders may not charge you Title Insurance in Iowa. Most will if your mortgage is going to be sold on the secondary investment market. In Iowa the charge is $1.00 per thousand dollars value of the property plus about $50 for the paper chase with the State. In Illinois, the Title insurance will be about $4.00 per thousand plus a $50 to $100 paper chase add. In Illinois you can also buy additional insurance to protect yourself in the transaction, that you are getting clear title to the property.

Private Mortgage Insurance - PMI - If you have less than 20% down or are going FHA, you will have PMI or private mortgage insurance. Again this does nothing for you, it protects the banks from payment defaults and losses in foreclosure if you fail to make payments. You do have the privilege to pay for this bank insurance. I will take Conventional loans first. Currently you do not have to purchase the policy a year ahead. This is a change from a few years ago. However, they usually charge you .005% of principle amount borrowed, divided by 12 months as a monthly payment for PMI. The good news is that once your equity is 20% of the value of the home, either by the home going up in value or you paying the mortgage down, you can appeal this payment to the bank. Once you reach a 20% equity position, they will usually drop this portion of your monthly payment for the balance of the term of your loan. FHA - FHA gets you twice. First they add .038% into your principle balance and then they charge you another .005% of this total divided by 12 months, as a monthly payment. FHA goes on forever, there is no stop at the 20% to equity point. FHA justifies this because they allow people with less down payment, poorer credit scores, and less time on the job to purchase homes through their loan insurance program. For instance, two years clean credit and you can buy a home FHA. With conventional loans the time is 7 to 10 years of clean credit after a bankruptcy. As another matter, the Federal government sets the interest rates for FHA and VA and these rates are usually 1/4% higher than conventional loans.

Hazard Insurance - Hazard is just your regular Home Owners 3 Policy. It protects the home from fire, theft, tornado's and the little boy next door from suing you after he fell out of your tree. All these policies are the same, as they are regulated by the State. However, charges can vary significantly. If your insurance company wants another hundred dollars because of losses from a Hurricane in Florida, you may want to check out the competition. You may have an escrow account at the bank to pay your insurance when it comes due next year. The bank will take the cost of your policy and divide that amount by 12 months and include this 1/12 payment as part of your monthly payment.

Flood Insurance - If you are in the hundred year flood zone, you will pay another $600 a year for flood insurance to the Feds. The good news is that flooded homes are usually 20% cheaper than non flood areas, usually are updated more and can be a bargain as long as they only flooded once in the last hundred years and don't flood again. If you go after one of these bargains, you will pay $600 up front and another $50.00 per month to pay the premium next year. Same as above.

Escrows - 2 months of property tax, insurance, PMI, and flood insurance. As a renter, you pay your rent and deposit up front, before you move in. In a home, you are paying for the use of money. So you are not charged until after you have used this money. At closing the bank will take interest to the end of the month. Then your first mortgage payment will not be due for another month after the next first of the month. If you close on the second of July, you will pay interest to August 1 and then your first mortgage payment will be due September 1. This creates a problem. You were in the home all of July and all of August and did not make an insurance, property tax or flood insurance payment. To keep you from falling behind, the banks start your escrow account for these expenses at closing by taking two months of each liability up front. So you will pay ten payments, owe for 12 months, but the escrow amount will take care of the two months unpaid. You are even at the end of the year, and the bank has the money to pay your entire liability for hazard insurance, property taxes, PMI, etc. Note: not all banks escrow for PMI any longer and of course you may not have flood insurance at all.

Prepaid Interest was covered above. It is just the interest from the day of closing to the end of the month.

Inspections - If you are not competent to check things out, you should seek expert advice. As a matter of law, it is always better if you pay for any inspections you have done. A fiduciary relationship exist between the expert and the payer. (If you pay - He is your expert). As such, if he makes a mistake and it cost you money, your expert must make you well. Inspections are for wood destroying insects, roofs, furnaces, air conditioners, whole house inspections, plumbing or electrical, septic fields, wells or anything else you want checked out.

Payments - Principle and Interest, plus 1/12 of the property taxes, plus 1/12 the hazard insurance, plus 1/12 PMI of .005% of principle borrowed, and 1/12 of flood insurance if necessary: equals monthly investment. Of this, interest and property taxes may be income tax deductible.

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