Monday, November 19, 2012

MORTGAGES, LOANING, OWNING, BUYING, REFINANCING, SELLING, MAINTAINING a Home, House, Condo, Property, Real State:



Two general categories of mortgages:

1. FRM - Fixed Rate Mortgage (Locked-in)

- interest rate and payments won't change during the term you select


2. ARM - Adjustable Rate Mortgage (Variable)

- interest rate changes



I. TYPES OF FIXED RATE (LOCKED-IN) MORTGAGE:

Closed Mortgage

- payments have to be made according to the term. After the term ends, payments can be made as much as you want

- recommended if you're planning to pay off your mortgage in the long run

- interest rates for closed term mortgages are generally lower than for open term mortgages

- ability to save on interest costs

- prepayment charge applies if you wish to renegotiate your interest rate

- prepayment charge applies if you want to pay off your mortgage balance prior to the end of its term


Convertible Closed Mortgage

- provides the same benefits as a closed mortgage, but can be converted to a longer, closed term at any time

- no prepayment charges when you convert to another term


Six-Month Convertible Mortgage

- you can take advantage of interest rate fluctuations

- lower interest rate for six months

- option of converting to a longer closed term at any time during the six months at no cost


Open Mortgage

- the mortgage loan can be repaid either in part or in full at any time without prepayment charges

- recommended if you want to pay your mortgage loan as soon as posssible in the short term

- can be converted to any other term, at any time, without a prepayment charge

- interest rates for open mortgages are generally higher than for closed mortgages because of the added pre-payment flexibility


One-Year Open Mortgage

- you can prepay any amount of your mortgage, at any time, with no administration costs and no prepayment charges

- interest rate is fixed over the one year term

- flexibility to convert your mortgage at any time, to a longer term without a fee




II. TYPES OF ADJUSTABLE (VARIABLE) RATE MORTGAGE:


Convertible Adjustable Rate Mortgages (ARM)

- excellent for situations like rising income expectations, high interest rates, and short-term home ownership

- can be turned into a fixed rate mortgage after a set period (usually 2nd-5th yr)

- allows the homeowner to convert to a fixed rate mortgage for a fee (may prove reasonable versus the costs of Refinancing)


Five-year Closed Variable Interest Rate Mortgage

- pay an interest rate that will change with Mortgage Prime Rate for the full 5-year term of your mortgage


Five-year Open Variable Interest Rate Mortgage

- flexibility of increasing your payments to any amount at any time

- you can pay off all or part of your mortgage without paying compensation (administration fee)

- you can make lump sum payments of any amount at any time



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Typical costs, fees, charges, expenses in BUYING A HOME, HOUSE, CONDOMINIUM, PROPERTY, REAL STATE:


- Mortgage application and processing fee

- Mortgage insurance

- Mortgage life insurance

- Property insurance

- Home inspection fee

- Appraisal fee

- Lawyer fee [Offer to Purchase, Title search from registry, Mortgage documents, Closing]

- Registration of deed and mortgage fee

- Land survey fee

- Land title insurance

- Land transfer tax

- GST (General Sales Tax)

- Property tax

- Estoppel Certificate on the condo corporation's financial and legal state

- Monthly fees for common elements maintenance

- Connection charges for utilities (electricity, water, telephone, gas), or transfer thereof

- Appliances, Furnitures, Drapes, Decorations, etc.

- Repairs

- Moving expenses



CLOSING COSTS:


- Real Estate Broker Commission/Fees

- Loan Fees (Direct Loan Costs)

- Items Required by the Lender to be paid in advance (Prepaids)

- Escrows/Impounds/Reserves

- Title and Closing Charges

- Recording/Government Filing Fees

- Miscellaneous Charges




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REFINANCING A HOME:
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- discharging a mortgage with the proceeds from a new mortgage obtained at a lower interest rate

- replacing an older loan with a new loan offering better terms


When to refinance a home?

- Interest rates are lower than the mortgage rate

- Effects or outcome of refinancing will offset the transaction costs involved


Example:


Mortgage term: 30-year mortgage

Mortgage rate: 6%

Mortgage loan: $400,000.00

Current interest rate: fell down to 4%


Is refinancing your house worthwhile?

- the homeowner should consider the long term savings against the transactions costs, fees, charges, and expenses involved in refinancing the house

- consider also the length of time the homeowner intends to stay at the home



Typical costs, fees, charges, expenses in a home refinance:


- Points (to secure the loan)

- Document preparation fees

- Appraisal fees

- Loan Application Fee

- Origination Fee

- Processing Fee

- Licensed Appraisal Fee

- Land Survey Fees

- Attorneys Fees

- House Inspector fees

- Underwriting Fee

- Discount Fee/Discount Points

- Funding Fee

- Loan Set-up Fee

- Administrative Fee:

- Transfer Fee

- Wiring Fee

- Flood Certification Fee

- Tax Service Fee

- Credit report cost

- Title search

- Title insurance

- Early Payoff Penalties & Fines

- Remaining Balance Costs

- Homeowners Insurance




CLOSING COSTS:

- application fees

- mortgage insurance

- points

- lawyer fees (Attorney's fees)

- loan origin fee

- survey cost

- homeowner and title insurance

- home inspection fee

- title search

- Prepayment penalty



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Typical costs, fees, charges, expenses in SELLING A HOME:


- Inspection Report

- Competitive market analysis(CMA)

- Automated valuation model(AVM)

- Appraisal

- Advertising Expenses

- Multiple Listing Service(MLS) Providers

- Website Expenses

- Print Ads (Local Newspaper, Flyers, Brochures, Magazines)

- Signage (For Sale sign, Open house signs)



CLOSING COSTS:


- insurance

- loan fees

- taxes

- transfer and assumption taxes

- escrow fees

- inspection fees

- homeowner's insurance

- recording fees

- appraisal fee




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Typical HOME EXPENSES:


- Mortgage

- Insurance

- Property Tax

- Home equity loan

- Interest costs

- Utilities

- Gas

- Oil

- Electricity

- Cable

- Telephone (regular & long distance)

- Cellphone (wireless)

- Satellite

- Internet service

- Garbage removal

- Water

- Sewer



Additional costs & expenses in MAINTAINING, REPAIRING, FURNISHING, EQUIPPING, REMODELING, RENOVATING a Home:


- Kitchen (countertop, cabinets, sink, faucet, exhaust fan, refrigerator, freezer, stove, microwave, dishwasher, etc.)

- Bathroom (bath tub, shower, sink, toilet, exhaust fan, etc.)

- Appliances (clothes washer, laundry dryer, TV, Radio, Home Theatre and Sound system, Electric Fans, DVD players, Amplifiers, Computers, etc.)

- Dining room sets (tables, chairs, glass, etc.)

- Living room sets (sofa, couch, glass, etc.)

- Decorations, curtains, drapes, etc.

- Fixtures (electrical, mechanical, structural)

- Bulbs, tubes, lights and lighting

- Electrical wire, wiring, panel, breaker, etc.

- fire extinguishers

- batteries

- smoke detectors/smoke alarms

- carbon monoxide alarms

- filters

- furnace

- Boiler

- hot water heater

- air-conditioning

- blowers, exhausters

- Humidifiers

- air cleaner

- air duct cleaning

- basement

- crawl space

- tiles

- floor boards

- carpets

- attic

- roof

- chimney

- termites protection and treatment

- ants spray and infestation

- bugs, cockroaches, mice control

- gutters & downspouts

- eaves

- Interior and Exterior sidings, walls

- painting

- windows

- doors (latches, locks, hinges, etc.)

- screens

- plumbing, pipes, hoses

- insulations (thermal, electrical)

- septic system

- Garage

- Driveways and Sidewalks

- Landscaping

- Grading (slope)

- Retaining Walls and Fences

- Weatherproofing, waterproofing

- Gardening (soil, compost, fertilizer, plants, flowers, pots, tools, etc.)

- Garden tractor

- Trees, Shrubs and Vines

- Lawn mowers

- Patios, Porches and Decks

- snow throwers, snow removal machines

- snow salts

- seal coatings


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