Home Buying Tips: Three Items to Watch out for in a Purchase Agreement Contract

The purchase agreement is a vitally important document that outlines the provisions, terms and conditions for the transfer of property.

It should be read carefully and any ambiguities should be clarified prior to signing. It is a legally binding contract between the buyer and seller.

The purchase agreement may vary depending on the location. Most real estate agents use a form that has been approved by a state realtors association.

The seller may have a different version that was drawn up by an attorney. It should not be assumed that they are all the same.

Typically, the purchase agreement will include an inspection period. This allows the buyer time to verify the conditions stated on the purchase agreement. Three of the most important stipulations in the contract are listed below.

All Owners Must Sign the Purchase Agreement

In most cases, the purchase agreement should be signed by the legal owner of the property.

If there is more than one owner, each owner should sign the agreement. In many states, both parties in a married couple have an interest in a property even if the title is held in one party’s name alone. Therefore, the purchase agreement should be signed by both parties of a married couple.

In the event the property is being sold by a corporation, verify that the person signing the agreement is authorized to commit the corporation to the sale.

List All Fixtures to be Transferred with the Sale

The purchase agreement should list all items that are to convey with the property. “Fixtures” are considered items that are attached to the property.

Legally, they should be included with the sale, but more than a few buyers have been dismayed to find the property stripped of countertops, appliances and window coverings. Any fixtures and personal property that are part of the sale should be included in the purchase agreement.

Verify Zoning Ordinances

The purchase agreement may contain various stipulations. One should include the right to cancel the contract if zoning prohibits the use of the property as planned.

Zoning ordinances may restrict the use of buildings or land. This may prove to be an obstacle for someone who intended to include a workshop on the property. The buyer should be able to withdraw from the contract if they discover that zoning prohibits the intended use.

Separation Anxiety: How to Deal with a Joint Mortgage Loan in the Event of a Divorce

During the course of a marriage, it is common for the couple to acquire property together. This is what is referred to as joint or community property.

When a couple divorces, it is up to the parties involved to determine what happens to this joint property or let a judge use applicable law to determine how property is to be split.

What Happens To The House?

A couple of options are available when deciding what to do with a house where both partners are listed on the mortgage. First, the couple may decide to simply sell the home and split the proceeds from the sale.

Another option would be for one person to give the other person the house as part of the divorce settlement.

Technically, the house is sold or transferred and whoever gets the home is now the sole person listed on the mortgage.

Beware Of The Tax Implications

Typically, the person who gets the house should be the person who is in the lower tax bracket. This is because capital gains taxes may be lower or non-existent for those who are in the 10 or 15 percent tax bracket.

If the house is sold and the proceeds are split, capital gains taxes are exempted on the first $250,000 of profit made on the sale. For a married couple, the exemption is $500,000. Therefore, it may be worthwhile to sell the house before the marriage is over.

What If Children Are Involved?

In the event that the divorcing couple has a child, the best interest of the child must be considered. Typically, a judge will award a principal residence to the parent who will raise the child after the divorce is finalized.

To help the custodial parent afford any payments on the house, the other parent may be asked to help make payments as part of a child support or alimony agreement. This may be beneficial to the noncustodial parent as payments that are considered alimony are tax deductible.

When a couple divorces, they have a lot to think about. As this may be an emotional time, figuring out what to do with a home where both parties are on the mortgage can be difficult. However, those who are divorcing amicably or who want what is best for their children can come to an agreement without a lot of stress or drama.

Lowballing 101: How to Avoid Insulting a Home Seller when Making a Low Offer for Their House or Condo

Buying a home is a huge step for people who are ready to make an investment in their future. Getting a great deal on a home is just as important and knowing how much to offer could be confusing. It is important to make sure the home seller is not insulted by the lowball offer and is ready to negotiate to make sure everyone wins.

Make a List of Necessary Improvements

One of the best ways to validate a lowball offer on a home is to list improvements that need to be made to the property. If the home needs a new roof or a new heating and air conditioning system, these are reasons to offer less than the asking price. Sometimes a home may also need new flooring, paint, or matching appliances which all cost money. The buyer can make a lowball offer stating additional expenses of making sure the home is move in ready.

Explain Any Issues with the Location

Another option when considering a lowball offer is to point out problems with the location. If the home is on a busy street or close to a manufacturing district, the buyer has legitimate concerns. In the offer, list the potential problems of living too close to fast food restaurants, train tracks, or airports. A less desirable location could equal a great buy on a new home.

Provide Pricing for Comparable Homes in the Area

A knowledgeable real estate agent can help compare homes that have sold in the area. When you are writing up a lowball offer, look at the lower priced homes that have sold in the same neighborhood. A seller will quickly realize that if he wants to sell the home, he will need to accept a reasonable offer or risk letting his house sit on the market for weeks or months.

Consider the Seller's Reasons for Selling

Finally, the seller's situation can also be key in getting a good deal on a home. If the seller is desperate to sell because of a job relocation or if he has already bought a new home this can be the perfect reason to make a low offer and take the home off the seller's hands. Without insulting the seller, the buyer can make an offer for less than the asking price and agree to a quick closing.

Scam Alert! Three Mortgage Modification Scams to Watch out for (And How to Avoid Them)

As if homeowners who are facing foreclosure don't have enough to worry about, a multitude of loan modification scam artists have invaded the internet, public files and even foreclosure notices in newspapers in hopes of targeting their next victim. By identifying the top three modification scams and learning how to avoid them, at-risk homeowners can protect themselves (and their homes).

Never Pay For Mortgage Modification Assistance

Many desperate homeowners fall victim to scam artists who offer to provide them with assistance in the loan modification process for an exorbitant fee. Many times the scam artist who promises to provide assistance will require that the homeowner pay the fee upfront, after which they will provide very little assistance or simply take the money and run. Consumers should be aware that assistance and counseling services are offered for free through a number of reputable HUD approved counseling agencies.

Avoid Transferring The Deed

One popular scam that at-risk homeowners often face is the property deed scam in which scam artists promise to purchase the home in question, agreeing to let the desperate homeowner rent it out. They suggest that turning over the deed to a borrower with a better credit rating will offer additional financing opportunities, thus preventing the loss of the home. The scammer often promises to sell the home back to the homeowner, but in reality has no intention of doing so.

Many times the scam artist will sell the home to another buyer. In some instances, the crook will collect any processing fees, take the title to the home and any equity, and then leave the home to default. It is a good idea for consumers who are approached with a property deed scam to report it to the FTC.

Ignore Unrealistic Promises

Mortgage modification scammers often make promises to do such things as negotiate a solution to the foreclosure more quickly, process mortgage payments for the consumer while the negotiation is being worked out, or even guarantee a loan modification. Since the actual lender is the only one who can agree to a loan modification, and this solution requires additional processing time, overnight fixes are almost always scams. Additionally, consumers should never make mortgage payments to anyone other than their lender.

For additional information about mortgage modification scams and how to avoid them, or to receive assistance with working out a solution to avoid foreclosure, at-risk homeowners should contact their mortgage professional.

What's Ahead For Mortgage Rates This Week - Aug 18, 2014

Last week's economic news brought little housing-related content, but several economic reports in other sectors contributed to overall perceptions of the economy.

In a speech given in Sweden, Fed Vice President Stanley Fischer noted that the economy might be in a period of "secular stagnation." This condition is expected to keep interest rates low for longer than expected.

A survey of small business owners showed that confidence increased by 0.70 in July. Job openings for June increased from 4.60 million to 4.70 million. Readings for several reports fell shy of expectations and new jobless claims were higher than expected.

Economic Readings Lower Than Expected, Weekly Jobless Claims Rise

Retail sales for July were flat and fell shy of June's reading of 0.20 percent, which was also the expected reading for July. Retail sales except autos were also lower in July with a reading of 0.10 percent against the expected reading and June's reading of 0.40 percent.

Weekly jobless claims were reported at 311,000 against expectations of 300,000 new claims and the prior week's reading of 290,000 new jobless claims. According to the U.S. Department of Commerce, this was the highest reading since June.

New jobless claims were close to pre-recession levels which suggested a slower pace of layoffs. The four-week average of new jobless claims, which presents a less volatile reading than for weekly reports, rose by 2000 new jobless claims to a reading of 285,750.

Mortgage Rates Lower

Freddie Mac's weekly survey reported lower mortgage rates last week. Average rates were as follows: 30-year fixed rate mortgages had a rate of 4.12 percent and were two basis points lower than the previous week.

Discount points averaged 0.60 percent against the prior week's reading of 0.70 percent. The average rate for a 15-year fixed rate mortgage was 3.24 percent as compared to the prior week's reading of 3.27 percent. Discount points were unchanged at 0.60 percent.

The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 2.97 percent with discount points unchanged at 0.50 percent.

A couple of good news bytes from last week included an increase in small business sentiment in July. The National Federation of Independent Business Index for July increased from June's reading of 95.00 points to 95.70 points.

The federal government also reported that job openings increased from 4.60 million in May to 4.70 million in June.

What's Ahead

Several housing-related reports are set for release this week. The National Association of Home Builders (NAHB) will release its Home Builder Index for August, which measures builder confidence in market conditions for newly built homes.

The Department of Commerce will release Housing Starts for July, and the National Association of REALTORS® will release its Existing Home Sales report for July. The Federal Open Market Committee (FOMC) of the Federal Reserve will release the minutes of its most recent meeting on Wednesday; this could provide details concerning the Fed's recent monetary policy decisions, which include the wind-down of asset purchases under the current quantitative easing program.