The Next Florida Home Mortgage Step: Negotiate Contracts, Closing Costs

You’ve picked out the perfect home and Florida mortgage product? Congratulations!

But you aren’t done yet. Let’s talk about the most effective way to negotiate that contract and those closing costs in order to save the most money …

The Real Estate Deal on Your Terms
Finalizing closing costs in any real estate deal is tricky. It’s like playing the end-game in chess. But once you know how to move your pieces, you can negotiate with confidence and strike a deal that makes sense for you.

As a general rule, buyers and sellers (or their negotiating agents) meet to resolve percentages in the payment of closing costs from the time of the initial offer. This process can go back and forth, depending on the buyer’s financing, the condition of the seller’s property after inspections, and broker fees.

For parties selling the house, closing costs may not be critical if the buyer has met or surpassed the asking price. But if a seller believes he already carries too much of the burden, it may be worthwhile to enter closing-cost negotiations with resolve. On the buyer’s side, the heavy cash layout that comes with finalizing a home purchase may jeopardize their ability to purchase the house. Although it feels like both parties are playing roulette, it pays to explore all the options in closing costs and contracts before someone walks away unhappy.

Often people leave it up to their respective Realtors or Florida real estate agents to negotiate the terms.

For the home seller, typical closing costs may include transfer and property taxes, deed stamps, title insurance, and a broker’s commission. The seller may also be asked to pay 2-3% of the total cost of the home to cover the mortgage fee.

Buyers usually hope to pass along attorney fees, inspection fees, title search fees, and title insurance fees. The seller is frequently asked to pay for repairs on the property before closing, or the repair is deducted from the selling price.

An Unprepared Buyer Runs Scared
Buyers should expect to pay their share of the closing costs. Within three days of applying for a loan, mortgage lenders are required to give buyers a Good Faith Estimate (GFE). The GFE, mandated by the Federal Real Estate Settlement Procedures Act, stipulates all fees the buyer must pay within 30 to 60 days of closing.

Buyers also may share the home seller’s responsibility in paying the notary fees, mortgage insurance, appraisals, and inspections. There are also assumption fees for taking over a Florida mortgage loan.

Other immediate outlays for the homebuyer include escrow costs, city or county property taxes, attorney fees, recording and survey fees, and hazard insurance required by the lender. A Bankrate.com national survey of closing costs on a $125,000 loan in 2001 estimated national average closing costs of $4,651.

This can include an additional two months of up-front mortgage payments at closing. The down payment can be considerable, but it may also be negotiable.

Getting to the Bottom Line
From the initial offer by the buyer, exchanges continue over the closing costs. The buyer may also counter in the exchange asking the seller for points. These may be critical in closing the deal. A point has nothing to do with the asking price. It is one percent of the buyer’s total loan.

For example, if the buyer cannot afford the entire Florida home loan, the seller may negotiate, agreeing to finance up to one percent, thereby dropping the buyer’s overall rate.

At this point, both parties should ask themselves how much they really want to concede in order to complete the deal. Be firm, but nice. There are plenty of buyers and sellers out there.

SOURCE: Guide to Realty