Archive for February 26, 2013

Who Pays Excise Tax?

Who pays excise tax?  In the state of Washington excise tax is 1.28% of the purchase price of the home and is paid by the SELLER.  So on a purchase price of $200,000, the state excise tax would be $2,560.  (some counties may add a small levy to this amount. King County total excise is 1.78%)

As a home buyer, why do I care what the seller is taxed?  In most instances you probably wouldn’t, UNLESS you’re buying a foreclosed/bank-owned property.  Some financial institutions may require the BUYER to pay the excise tax, and such is stated as part of the purchase and sale real estate contract!

Is this a rip off?  It depends on the scenario.  Maybe if you’re getting the property for 20% under fair market value, you’d be more than happy to pay an extra 1.28% out of pocket.  However, it’s something you need to be aware of BEFORE you get under contract on a home.

Can any real estate agent help me buy a foreclosed/bank-owned property?  Generally yes, but for the previous reason as well as others, it’s important to use a real estate agent that has EXPERIENCE with these type of properties, so you can go into the transaction eyes wide open.

Don’t make the biggest decision of your life without getting educated first!  If you would like more information about foreclosure/bank-owned properties or the first time home buying process in general, go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

Share

FHA Mortgage Insurance on the Rise

         

Is FHA mortgage insurance going up again?  Yes, FHA mortgage insurance will increase again this coming April.  It will be the FIFTH INCREASE for home buyers within the past 3 years!

Why does it keep increasing?  The Federal Housing Administration has decided that they must increase the premium to help cover any future losses that may arise from home buyers defaulting on their mortgages.  After the boom and bust in the housing market over the last several years FHA realized they may not have adequately accounted for the potential risk exposure.

Will FHA mortgage insurance rates continue to rise?  Let’s take a look at the last 3 years:

- April 5, 2010 increase to FHA mortgage insurance

- October 4, 2010 increase to FHA mortgage insurance

- April 18, 2011 increase to FHA mortgage insurance

- April 9, 2012 increase to FHA mortgage insurance

- April 1, 2013…yet another increase to FHA mortgage insurance rates, making the new premium approximately 2 1/2 times more expensive than in early 2010.  Do you see a trend?

How much affect will this have on first time home buyers?  That depends on purchse price, buyer scenario, etc.  The main thing to remember is that there are alot of other variables besides purchase price and interest rate that first time home buyers need to consider.

Don’t make the biggest decision of your life without getting educated!  If you would to find out more about FHA loans or the first time home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

Share

The 3 P’s of Real Estate

         

What are the 3 P’s of real estate?  The 3 P’s of real estate are Property, Price & Process.  You must consider ALL of these when buying your first home, as they all play an integral part of the first time home buyer process.

“Property” concerns the location and structure.  First time home buyers should be asking themselves questions about the area they’re buying in.  What are the school districts, what is the owner-occupancy rate, how walkable is the neighborhood?  You should also be evaluating the structure.  Were quality materials used, how has the property been maintained, will this house last longer than my 30 yr mortgage?

“Price” is obviously important as well.  You should be asking yourself, is this price in my budget, how does it stack up against other properties in the area, and how affordable is the monthly payment for me?

“Process” is probably the most overlooked item.  Most first time home buyers write an offer on a home solely based on the first two criteria, property and price.  However, process can affect how much of a hassle it can be to close the transaction, or even if the transaction will close at all!  Process is generally dictated by the seller, so normal transactions, bank-owned/foreclosures, short-sales, etc, will all have DIFFERENT processes.  Regardless of how nice the home is and how well it’s priced, the process involved may not align with a first time home buyer’s needs.

Don’t make the biggest decision of your life without getting educated first!  If you’d like more information about the 3 P’s of real estate or buying your first home in general, please go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

Share