From the first step of using a mortgage calculator to actually beginning to look for a lender, home buyers don’t always know the right steps to take. The most common mistake I see buyers when shopping for a mortgage is getting quotes from a few different lenders over a period of days, weeks or even months. Since rates change daily, the only way to compare lenders on an even playing field is to get quotes from two or more banks on the same day. This will ensure an apples to apples comparison of fees. And don’t worry about getting your credit pulled more than once, your FiCO score considers all inquiries pulled within 45 days to be one single inquiry.
Using our home affordability calculator is a great first step, but you may need more help with cost estimates than that. To help clients estimate the cost of new constructions, I’m currently using $175/square foot to estimate the cost of construction. But that does not factor in utility installation costs. If your home has public city and sewer and you won’t have to run electric and gas a great distance to reach the home, $40,000 is a ballpark estimate to work around. That consists of $20,000 for a water tap, $10,000 for a sewer tap and about $5,000 for electric and $5,000 for gas. Prices will vary widely between municipalities, especially for water taps. I’m happy to help you obtain bids for each of these utility installs as part of my services when representing you on the purchase of vacant land. Also, note and when buying land without public utilities, your total cost will be closer to $50,000 as septic systems are currently running about $20,000.
While you can get a general idea of what you’ll pay on a home loan using a mortgage calculator, there are still other costs to consider. Buyers often ask me how much they can expect to pay in loan closing costs. I’ve heard Realtors use a rule of thumb of 1%-2% of the loan amount but that is not helpful because loan costs vary so much between different banks, loan products, and buyer situations. The fact is, you can structure a loan in a myriad of ways. If you want to pay ZERO loan closing costs and get a rate that is a bit higher than the market, you can do that. If you want to pay all of your closing costs plus points to get a below-market interest rate, you can do that as well. Or, you can opt for an option somewhere in between, and that’s what most of my clients end up doing. To give you a concrete example, on a recent transaction where our client got a loan of $352,000, they paid $4,596 in closing costs. There was no lender credit involved so they paid all their closing costs out of pocket, got the market interest rate, and did not pay extra to buy down the rate.
A survey is a professional drawing of a property that shows the lot lines as well as improvements on the property. Improvements are things like structures, fences, driveways, sidewalks, wells, ponds, decks and any other permanent feature. A survey will also show easements that run with the land. The most common easements are for utilities such as power, gas, or water companies that have been granted rights to access and maintain their lines that run through, along, or near a property. If a city or county road runs along a property, there may also be a right of way that could allow future road expansion, a survey will locate and describe these features.
One of our Fort Collins home buyer tips is for buyers to know what they need to know concerning Radon and their homes. Radon is a naturally occurring radioactive gas that exists in Colorado and naturally emanates from the ground. While radon exists in very low levels even outside. It becomes a concern when it collects indoors, increasing concentrations. This occurs especially in crawl spaces and basements, and subsequently, the gas ends up in living areas of a home. According to the EPA, radon is the second leading cause of lung cancer behind cigarette smoking and is the leading cause of lung cancer for nonsmokers.
Today’s Fort Collins home buying tip involves your potential new home inspection. When considering which home inspector to use, ask for inspection reports from a few different inspectors. An actual report the inspector has performed in the past is a great way to evaluate the inspector’s proficiency. In our experience, inspection reports vary greatly from one inspector to another because of the quality and number of photos and the depth of the explanations. Looking at a couple reports side by side will give you a good feel for the type of analysis you’ll receive.
You’ve probably already spent time calculating your mortgage to try to figure out the costs of a new home. When shopping for new construction, you’ll often see the builder offering incentives if you use their preferred mortgage provider. They may offer $5,000 towards upgrades and options, which sounds great, and, in some cases, it is a good deal. But you won’t know for sure until you compare the Loan Estimate they provide with a competing lender’s loan estimate. Loan Estimate is a technical term for a government form that the lender must provide when you’re applying for a mortgage. It’s especially important to request these estimates from both lenders on the same day. Because rates are always changing, same day quotes are the only way to ensure an apples to apples comparison. Loan closing costs and interest rates can vary significantly between lenders; that $5,000 credit may not be worth it if you’re paying a few thousand dollars more in closing costs combined with a higher interest rate.