A Guide To Charlotte NC Real Estate
For home potential home buyers in Charlotte NC real estate, being armed with information is a huge advantage. Purchasing real estate always seems like a daunting task, but the more a consumer knows heading into the process, the easier the transaction will be. The biggest concern most people have is regarding costs. The major costs associated with a real estate purchase can be broke down into four subcategories; down payment, closing costs, prepaid expenses, and initial expenses.
A down payment is something most people who have made a large purchase before are familiar with. They are usually a 3.5% to 20% of the purchase price and paid in cash. The down payment is most often proceeded by a loan to cover the remaining balance. While in the current economy, there are many programs which offer no down payments, buyers should keep in mind that this does not include earnest money which is needed to open a transaction.
Many things combine to make up the overall closing costs in escrow. For those unfamiliar with the term, escrow is the neutral third party responsible for closing the transaction between buyer and seller. They will obtain all the necessary paperwork and money in order to successfully transfer the title of the home. In order to do so, they will also come up with a list of closing costs which generally include; inspection fees, mortgage fees, loan payoffs, prorated taxes and Home Owners Association dues, recording fees, title fees, and broker commissions.
Brokerage commissions are usually paid by the seller. They can be one of the largest costs associated with a real estate transaction. The rate of both brokers are usually a percentage of the selling price and will be defined in the listing agreement. As with the other costs associated with a sale of a home, the responsible party will clearly be defined and agreed upon. Just because the seller is usually the responsible party does not mean the buyer should assume so before signing the listing agreement.
While not a huge portion of the associated costs, prepaid expenses are very important. These costs paid through escrow are vital for the new homeowner in the following year. Hazard insurance and property taxes are most commonly paid through these accounts. The amount is settled during the transaction and held in account that will be used as bills come due during the first year of ownership.
Earnest money, option money, inspections, and appraisals make up initial expenses. Earnest money is used in conjunction with the completed listing agreement to open the transaction with escrow. It is a good faith payment on the seller’s behalf, an intention to follow through on the transaction. Option money is a safety net for the buyer. It allows them a window of time to essentially back out of the transaction without losing the earnest money. In the listing agreement, the amount of days and the total per day is determined. On average, an option is ten days. If the seller decides not to follow through with the transaction, they will received a full refund on their earnest money only subtracting the total option money. Home inspections are an optional expense although one that is highly recommended. Appraisals are not optional and a part of the initial expenses.
Beginning a purchase with Charlotte NC real estate is a milestone and with it comes a bit of risk. Knowing what to expect when making such an important purchase can not only make the process smoother but also help reduced the financial risk. Having a clear understanding of the costs associated will help guide the seller in the right direction.
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This entry was posted on Thursday, April 28th, 2011 at 3:22 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.