Do you discuss "The Real Estate Net" with your clients?

When people come to Family Abstract, Inc. for a Real Estate closing wherein we handle the Title Insurance, the cost of home ownership is often discussed around the closing table.   When it comes to real estate, it’s easy to get lost in the asset that is your home and lose sight of the fact that there are other expenses that come with owning real estate. So do you know what your real estate net is?

The following is a list of costs you might want to consider when analyzing your real estate net:

Real estate net #1

Mortgage penalties
In your mortgage contract, look for a phrase like “prepayment penalty.” Most lending institutions charge a fee for refinancing a mortgage. In an effort to retain more business via mortgages, they will place a mandatory window on a mortgage during which you cannot refinance the loan.

If you decide to refinance in this window, a fee is charged and it tends to be quite substantial (e.g., a percentage of the total loan amount).

Real estate net #2

Transfer of utilities
From your water and cable, to your land line and snail mail, redirecting everything to your new place will add up. So make sure you have managed to budget for it before you find yourself sleeping with 20 blankets.

As well, make sure that you contact the companies well before your moving date, as things don’t sometimes move in the blink of an eye. Begin the process one month in advance so that you can begin to make appointments as needed, if applicable.

Real estate net #3

Moving costs
You may not realize it, but moving alone will run you into the potential thousands – especially if you want to do it right. From boxes and paper to wrap your fragile items to hiring a moving company, you need to get organized and be prepared to dish the cash.

Of course, you are welcome to rent a truck and do all the heavy lifting yourself, that would definitely save you hundreds of dollars.

Real estate net #4

Carrying two mortgages
Ah yes, the no-choice situation of carrying two mortgages until the deal is completed, every home seller’s and home buyer’s virtual nightmare. Of course, there are loopholes that won’t make it hurt as much, but two mortgages does tend to put a pinch in the wallet.

Try to plan payments so that you are not living on tuna for the next few months and make sure you speak with your lending institution to ensure that the penalties are minute if not non-existent.

Real estate net #5

Renovation of new home
Whether it’s painting or knocking down the entire kitchen and starting all over, home renovations of any kind require money to be spent. Typically, however, most of us tend to purchase homes that are virtually move-in ready.

Perhaps a light paint job and some slight redecorating (perhaps new window treatments) is in order beforehand, so make sure to take care of these things before all your furniture makes its way over.

Real estate net #6

Land transfer tax
Land transfer tax is necessary when you purchase or acquire a property. The tax must be paid when you register changes to a certificate of title with the official Land Title Office. A registered change may include adding or deleting a name from the title.

Property transfer tax is not the same as property tax, mind you. You pay property tax on an annual basis for services received from your local government.

Real estate net #7

Home insurance
All homeowners need home insurance to insure that, if anything goes wrong with the home at any point, they are covered and won’t have to pay tenfold what insurance costs in the first place.

Make sure you shop around for the best possible deal and keep in mind that when you lump insurance coverage together (home, auto, life), you tend to get a better deal every time.

Real estate net #8

Appraisal of new property for financing
Before mortgages are handed out, lending institutions want to ensure that the property is worth what they are about to lend you. This appraisal adds itself to the myriad expenses that you are taking on.

Real estate net #9

Legal costs for sale and purchase
The real estate lawyer is the major player in this endeavor so he is a necessary part and expense in the process. Prepare to pay costs incurred to have him or her look over the documents and make sure that everything is copacetic.

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