Arizona homes for sale

Reducing closing costs May 06, 2002 Accumulating cash for a down payment can be challenging. In addition to the down payment, there are fees associated with a home purchase, called closing costs, which will put a dent in your cash resources. Closing costs vary from one area to the next. But, they typically include: title insurance (although in some areas the seller pays this fee); fees charged by the closing or escrow agent; inspection fees; mortgage insurance premium; appraisal fee; points and "garbage fees" charged by the mortgage lender; prorated interest; property tax proration; transfer taxes; and the hazard insurance premium. It's possible to whittle down the closing cost bill. One of the biggest expenses is the "points." "Points" is the term lenders use for their loan origination fee. One point is equal to one percent of the loan amount. On a $300,000 mortgage with a 1-point fee, you'll pay $3,000 to the lender at closing. However, if you were to choose a no-point $300,000 loan, you could lower your closing costs by $3,000. There are pros and cons to no-point mortgages. As far as the IRS is concerned, points paid on a purchase mortgage are prepaid interest. As such, points are tax deductible in the year they are paid. You must itemize deductions to take advantage of this tax break. There's an inverse relationship between points and the mortgage interest rate. The higher the points, the lower the interest rate, and vice versa. The longer you plan to stay in your home, the more sense it makes to pay points for a lower rate. Prorated interest is collected at closing to cover the interest you owe the lender for the month in which you close on your new home. For example, if you close on May 5th, the lender will collect interest at closing for the period from May 5th through May 31st. The later you close in the month, the less prorated interest you'll owe. Lenders charge miscellaneous fees, in addition to points. These are collectively called "garbage fees". They can amount to $1,000 or more, depending on the lender. When you shop for a mortgage, ask for an itemization of all the lender's fees. You may be able to save money by choosing a lender with fewer garbage fees. Some lenders require borrowers to pay Property Mortgage Insurance (PMI) if the mortgage amount exceeds 80 percent of the purchase price. In this case, a PMI premium may be collected at closing. To avoid PMI, use piggyback financing. This consists of a first mortgage for no more than 80 percent of the purchase price and a second mortgage to make up the balance you're financing. HOUSE HUNTING TIP: The seller may be willing to pay some of your closing costs. Most lenders permit this with certain restrictions. Many lenders will only allow a credit for the amount of the buyer's nonrecurring closing costs. These are costs that the buyer pays one time only at closing, like a transfer tax, points or title insurance. Most lenders also limit the credit amount to no more than 3 percent of the purchase price In a competitive seller's market, you could be at a disadvantage if your offer asks the seller for a credit. This is equivalent to asking the seller to accept a lower price. You can save on your hazard insurance premium by agreeing to a larger deductible. Check with you lender to make sure you satisfy the lender's requirements. THE CLOSING: Don't skip inspections in order to save money. The money you save could end up costing you if a significant defect went undiscovered. Dian Hy mer is author of "House Hunting, The Take-Along Workbook for Home Buyers", and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books. Copyright 2002 Dian Hy mer Distributed by In man News Features   More - Real Estate Columns   FREE reports on homes sold in your zip code Arizona Homes - All available zip code reports Chandler Homes Gilbert Homes Glendale AZ Homes Goodyear Homes Mesa Homes Phoenix Homes Scottsdale Homes Sun City AZ Homes Tempe Homes   FREE custom-made reports on homes for sale Metro Phoenix Southeast Valley. Homes for sale in Ahwatukee, Chandler, Gilbert, Mesa, Queen Creek and Tempe. Phoenix. Homes for sale in Anthem and Phoenix. Southwest Valley. Homes for sale in Avondale, Buckeye, Goodyear and Litchfield Park. Northeast Valley. Homes for sale in Carefree, Cave Creek, Fountain Hills, Paradise Valley, Rio Verde and Scottsdale. Northwest Valley. Homes for sale in Glendale AZ, Peoria AZ, Sun City AZ, Sun City Grand, Sun City West, Surprise and Youngtown. Wickenburg homes for sale. Metro Tucson Tucson area. Homes for sale in Marana, Oro Valley and Tucson. Green Valley area. Homes for sale in Green Valley and Sahaurita. Other Great Arizona Towns • Casa Grande homes for sale • Flagstaff homes for sale • Lake Havasu City homes for sale • Payson homes for sale • Prescott homes for sale • Showlow homes for sale • Yuma homes for sale