If you have ever asked yourself how to take a mortgage and what is the cost of a mortgage, here you will find some answers and also some interesting tips you should take on consideration when you’re about to apply to a mortgage.
Taking a mortgage is the most common way in the United States to buy a property, and with that being said, we should know how to deal with the negotiation process in order to balance the agreement between the seller and the buyer.
Before applying to this, you need to be clear about the cost of a mortgage, because it is a huge responsibility that you are taking when you tell the bank, I need money to buy a house, or I have a house but I, either way, I need money to invest.
The Origination Fees and the Closing Costs – Cost of a Mortgage
When you start a mortgage transaction, you have what they call the origination fees and the closing costs.
In the Origination Fees you have the application fee when starting this process; the appraisals, which is very useful for the bank to know the real value of the property; the surveys and finally, the title search, to make sure the bank is financing something owned by the actual owner and not by someone else.
In the Closing Costs you basically deal with taxes, the attorney’s fees and the title recording fees to make sure the title is actually transferred from the seller into your name. These last mentioned are the most important taxes here. Then, the next step is the insurance and the cost of your real estate agent.
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What you can negotiate with the seller – Cost of a Mortgage
There are some fees that are paid generally by the buyer, but there is a big chance of negotiating them with the seller. The negotiation is normally set for the seller to pay from 5% to 7% of the fees and the buyer to take care from 1% to 6%. Then, you have a fee for getting a new property which is generally split equally.
There are cases where the titles and surveys are also split but that depends on the amount of money that is being managed and on the negotiation itself.
Save money buying in “cash”
If you know an investor who has all the money to buy a property, but doesn’t want to spend his time looking for a nice opportunity with a seller, you, as the investor’s representative, could close a deal using that cash.
If you, somehow, can find cash to buy a property, that means you don’t have to go through the bank and mortgage process and you will be able to avoid the payment of some fees like the mortgage application and the appraisals only if your realtor can get you a price evaluation on that specific area that has the same criteria as the one you want to buy, in order to have a conversation with the seller and agree on a price.
On the other hand, there are few fees you still have to pay like the taxes, the title recording, the insurance and, of course, the attorney.
The process needs to be clean of liens, that’s why you cannot eliminate the survey and the title from it because this is how you find out if it’s actually clean or not.
Another way to find cash to buy a property is using services provided by financial companies like Fund & Grow which help those who want to apply for credits to buy in cash.
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