Yes, for sure. A million homes foreclosed last year, representing I
guess about 4 million people, over 1% of the population, in just one
year. Millions more expected in years to come. Of course that is
because this is the first big? downturn in the economny or interest
rate increase since they started writing in this case, I think most
were adjustable rate mortgages. ARM's with no fixed interest rates.
Didn't interest only come later, so we will soon see many foreclosures
(and evictions of course) on those. Because those people are paying
even less. Even ARM's applied something to the principal every month,
although it is almost all interest for the first years.
I'm almost always an optimist, but imagining that interest rates won't
go up is not just optimism, it's foolish dreaming,
On 24 Mar 2007 22:05:12 -0700, firstname.lastname@example.org wrote:
If there is only one real estate guy, he represents the seller, NOT
YOU. Never forget that. You can get a buyer's agent, but I think you
need a written contract with hir to make certain that he will be
functioning as your agent, or liable for not. Not that you have to
have this, but just remember that the listing agent is the SELLER'S
AGENT, not yours.
You should never buy a house on installments. What you want is a
deed, and since you don't have enough money to pay for the whole house
at once, a mortgage. Unless that's what you mean by monthly
installments, that you are paying that to a bank or another lender to
which you give a mortgage.
Which do you mean?
I have a lot more to say depending on your answer.
When you are done with the closing, you should be the owner, and the
bank or mortgage company will have a mortgage. The borrower (which is
the buyer) is the mortgagor, and the lender (the bank, for example) is
It is even possible for the seller to take back a mortgage when he
sells, but the terms should be the same as with a bank. No seller
should do this, unless he is desperate to sell, because he's not set
up for the headache of collecting from people who don't pay well, but
somettimes they do. Even people who do pay well can be a pain, one
more check he has to collect, record, deposit, every month.
Good. I was afraid you already made the arrangement you refer to
The real estate agency usually has a fairly standard form, with some
blanks that need to be filled in. You don't have settle for that
form, but if not you'll have to have another one or read the thing
carefully and figure out what changes you want to that one.
At this stage, I behaved like a jackass. They had filled in 45 days,
and I wanted to settle and move in in 30 days, so the real estate
woman changed 45 to 30, but I had complained about the wrong number.
45 days was the amount of time **I** had to come up with the money,
before the contract expired. By changing it to 30, I damaged my own
interests, and indeed for some unusual reasons (but it could easily
have happened for usual reasons) I couldn't get the mortgage in 30
days, and I had to borrow the money from my brother. I don't think
many people have a fairly rich, generous, trusting brother, who
happened to have 65,000 dollars in what was basically a checking
account. Even he only had it because he was hoping to find and buy a
medical practice. I'll tell you the whole story if you want, but I'm
happy to say neither I nor my brother lost anything during it.
BTW, since there was no mortgagee, there was no one there insisting I
get title insurance or fire insurance, and somehow, when I borrowed
the money to pay back my brother, the mortgage company didn't ask
about fire insurance then either, even though I had bought it. I
don't think they knew that, but I think they just assumed assumed I'd
gotten it at the first closing.
BTW, I paid twice for tax stamps that in Maryland are proportional to
the sale price. I don't remember how much that was, and because I
ended up changing mortgage companies, I also paid another mortgage
processing fee, but because interest rates were going down at the
time,I still ended up 100's of dollars ahead, maybe more. But this
decline was fairly rapid and it's very hard to delay getting a
mortgage to get the best rate. But you can go to different banks etc.
looking for the best rate.
The owner pays the commission. Although you are right that one can
negotiate a decrease in the price while the buyer might pay half of
the commission. Why if it is good for all concerned to have the buyer
pay half, it's not better for him to pay all, I don't know.
But a lender won't want to lend you the full, what 7? % in some
places, because that doesn't represent equity in the house. They
won't loan you a million dollars on a house that is worth 100
thousand, and they won't lend you 107 thousand on a house that is
worth 100 thousand.
Why the buyer would want to do this, I forget. Maybe something to do
with taxes? Maybe he woudl pay the points (7 points equals the 7%
commission that is charged in some places) because he really wants the
house and he is competing with other buyers. Why he wouldn't just
offer more money and have the seller pay the points, I don't remember.
There should be a title search before you buy the house, so that the
title company is ready to sell you the insurance the same day as the
sale. When you sign the contract, someone? should arrange for the
Because of problems with the real estate agent (they refused to relay
my first offer to the seller, which I later found out is a violation
of law in Maryland, and maybe eeverywhere) I hired a lawyer. I got a
reference from a friend here, but I don't know how much he referrer
really knew about his work. Maybe he just did a good job for him once.
I think I asked my friend and he wasn't going merely by knowing him
But... he never mentioned title insurance, and I thought the money I
paid him would include his arranging that, or at least insuring that
it was arranged. When the purchase was over, I asked him why he
didn't. He said "Because it's a new property, you don't need title
insurance", Actually, because it's new, 4 years since the house was
built, I need it all the more. If the surveyor made a mistake, or the
builder did, then my lot wouldn't be what the deed says it is, and
since there had only been four years and one neighbor on each side to
challenge it, new people might come and challenge. Plus the county
owns on one side and they might challenge. And my little lot is oddly
shaped, 8 sided I think, with a narrow waist in the middle. Plenty of
places to make a mistake.
In fact the whole n'hood was laid out wrong, and it turned out we were
using land that belonged to the next n'hhod. I think before the
houses were even sold, the builders worked out a swap of land with the
next big property. Before these houses were built in 1970, I think
it was a combination of woods and an auto junk yard.
If your lot is rectangular, and has been the same size and shape for
100 years, your need for title insurance won't be based I guess on
disputes about the size or shape of the lot, but there are other
reasons. I don't think it is very expensive, but I forget. I was
taught that everyone needs title insurance.
I don't know about that.
No. The people who tax you will find you.
You have to connect the utilities, but that would be true if you
CAll in advance and arrange for them just to be put in your name so
there is no interruption in service. It's best if you can get the
seller's cooperation, becasue he'll want the bils out of his name as
soon as he doesn't live there. My seller was a nice guy and trusted
me, or called them and told them whatever. I did that and it worked
for electricity and gas, but I had no phone when I got there until the
next day. It was their fault, but no big deal, even before cell
phones. I had no one to call, so I didn't miss the phone. The owner
had moved out the morning of the closing. In fact he fertilized his
bushes and took his final few things before we met him at the closing,
but don't expect that kind of devotion from most sellers.
Title search. Aha, I knew there were reeasonss. I always figurted
title insurance would pay for that, but that's why the title company
does a search first, so there will be nothing to pay for.
If they find back taxes due, I don't think they have to get paid, but
you can also have the amount subtracted from the sale price at the
I'm sure. Even though I actually took Real Property in a real law
school (before I dropped out) I can't remember if you forgot
I felt chewed up by the process, and I have said many times, How can
people whose parents didn't own their own homes and who never learned
this stuff from their parents or bought property before get away in
one piece. Yet millions do. And even I didn't lose any money. And
most of my complaints were with the process of getting the mortgage,
and a few with the lawyer for not doing much. And the real estate
agent(s), a pair of women fwiw, for breaking the law. Although they
asked the boss as he walked by how to handle it, and hte boss agreed
He wasn't that old but 5 years later I noticed that the real estate
agency had closed and I no longer saw ads for the two agents where I
used to see them. So this might well have been a below-par company
that others didn't like either.
I also was in a hurry and in a new town and didn't ask anyone for
help, thinking the lawyer was enough. You're doing the right thing by
One thing you forgot is mortgage insurance. If your downpayment is
less than 20% in most places, mortgage companies will insist that
youget mortgage insurance, which will make your mortgage payments if
you don't. Their doing so doesn't get you off the hoook, even if you
are out of work or dead. You have to reimburse the mortgage insurance
company. The only place that benefits is the mortgagor, or
mortgagee?, the bank that lent you the money. But I think it's not
More importantly, when you get to 20% equity, which I think means that
your down payment plus the amount you've paid on the principal equals
20% of the purchase price, you can cancel the mortgage insurance and
stop paying for it. NO ONE will remind you to cancel. The mortgagee
is happy if the insurance continues because he is guaranteed to get
his money without fighting with you. And the insurance company is
happy because the borrower (you) is paying premiums.
In maryland and I'm sure some other states, every mortgagor can prepay
on his mortgage with no penalty, so that if he gets a raise or has
more money, he can pay off his mortgage early (although I was told you
have to specify that pre-payments are menat for pincipal). This is
probably not true everywhere. So in Maryland, one can turn a 30-year
mortgage into a 20 or 15 year mortgage just by paying early. And save
a lot of interest.
If you don't live in a place where you can prepay with no penalty, and
If you can afford it and it won't make it more likely that you default
(which is bad in many ways) and if the bank or mortgage company will
do it, you could find and get a shorter-term mortgage, which will save
you a lot of interest. OTOH, some people would take that extra money
and invest it, and might end up making more money on the investment
than they are losing on the extra interest, especially since your
intersest is dedecutible from your income tax. so if you are in the
25% marginal income tax bracket, and you are paying for simple
mathematics sake, 8% interest on the mortgage, you get back 25$ of the
8% = 2% on your taxes, if you remember to deduct the interest. Then,
if you can actually, reliably make more than 6% in the stock market or
some other investment, the 2% plus more than 6% will be more than the
8% interest you are paying. And you'll be a little ahead. This is
the kind of thing that I just hate. It makes my brain hurt. But I
can't really recommend a short-term mortgage withoout mentioning this
possible advantage to a long term mortgage.
This won't work with credit card debt, or personal loans, because the
interest on those are not tax-deductible iirc, and because you won't
get nearly as good a rate on them as you will on a mortgage, where
there is something tangible for the lender to foreclose on.
In fact, if you already have credit card debt, the more you have the
harder it will be to get a mortgage and the greater downpayment the
mortgage company will insist that you make, but otoh, you should
borrow enough money or make the payments low enough that you can pay
off all your credit card and personal loan debt at the lower mortgage
interest, instead of the 24% a year or more credit card interest rate.
To enlarge on this, the only place i know where a lot of people bought
houses on installments was in Chicago, until the '70's, and the only
people who had to do this were Black people. The lenders would not
take mortgages from Black home buyers, even if they had good jobs, had
been at their jobs a long time, and had good credit history. That's
what made it racism and not economic disparity.
So they were forced to buy a house like one buys a car, and if they
missed a payment, like a car, the home could be repossessed, which
takes little time, unlike foreclosure where people have months to get
a new job or scrounge the owed money from someone.
On 24 Mar 2007 22:05:12 -0700, email@example.com wrote:
I should probably say that the townhouse I was buying was only 4 years
old, so there was no concern that anything had worn out, and little
concern that something was built wrong.
And I also talked to the next door neigbhor about the townhouse
She assured me that it was nice, but forgot to mention that her own
dog was a barker.
I also did things like go their late evening or night to make sure
there was adequate parking when everyone was home.
I was supposed to go out to the main street to the xway during morning
and evening rush hour to see the level of traffic, but I only made it
to one of those periods, and I might have been late to that. I also
asked the gas station attendant and though he turned out to be right
when he said it wasn't bad, etc., it would have been better to see for
myself. OTOH, traffic is lighter all around this city in the summer,
and a gas station guy is there, outside some of the time, all year
long. So both looking oneself and asking someone are best.
On 24 Mar 2007 22:05:12 -0700, firstname.lastname@example.org wrote:
1. Remember that the Agent ONLY represents the Seller, not you. His
job is to be nice to you and then screw you over as much as legally
2. In my city, the title insurance companies do the cheapest jobs of
transferring title. The title insurance protects your and they
arrange the closings for you - often by mail.
However, if you get a loan from any bank or savings and loan or
credit union, then they are the best at arranging the closing for you
and they have rules they must play by that keeps them honest.
3. If owner financing is involved then the owner is probably going to
provide everything for you. This is the case where you need an
attorney or knowledgable friend to help you - and title insurance. In
my state, we honor a 'contract to sell' where you pay for 20 years and
then get title. Definitely not a good thing to do if you are the
On Mar 25, 1:05 am, email@example.com wrote:
Is he your real estate agent, or the seller's? A real estate agent's
role is to represent their client's best interests. You should not be
dealing directly with the seller's agent unless you feel capable of
negotiating the best deal possible and know the ins and outs of real
estate law in your state. The fact you're asking questions in this
forum says you're not even remotely familiar with the real estate
process and have your work cut out for you.
But that's OK! Your situation is why we have real estate agents. Real
estate law is a confusing tangle of rules, laws, traditions, etc., and
is more complicated than any of us can really deal with on our own.
Real estate agents are not fast-talking slicky-boys out to bilk
clients (OK, some are, but they're the exception!); rather they are
people who have studied the laws and strategies, have passed exams and
are licensed by the state to represent you and your best interests in
either selling or buying a house.
You need your own real estate agent. If the agent of which you speak
is your agent, you have to ask yourself why you haven't asked these
questions of him. Do you not trust him to represent your interests? Do
you not like his personality? Do you not trust yourself? You have some
serious systemic misgivings here, and I would advise you to find
someone you trust to help you through this process.
Yeah, buying a home the first time is a frightening process not only
because of the size of the purchase but because of the mountains of
details and legal obligations. I know; I went through it last year.
Thank God this was the third time for my wife, so she kept me sane.
But it also helped we found a real estate agent we felt was working
hard to help us, who wasn't pushing us to buy larger than we could
afford, who gave us good advice in what we were looking to buy, and
who had a good eye.
Because you have myriad questions whose answers are not universal or
even national, you really do need to talk with a professional in your
area. You can't get your questions answered here because real estate
laws vary from state to state. For example, in Delaware you cannot do
a residential real estate settlement through a title company; you must
use a lawyer. Not so in Maryland. In Maryland a real estate agent is
allowed to represent both seller and buyer; Delaware sees that as a
conflict of interest and requires separate real estate agents for both
Talk with people you know and trust about who they have used as real
estate agents and would they use them again. Don't just call someone
out of the phone book or based on their ad in the real estate section
of your newspaper. Many real estate agents now have websites where you
can take a look at who they are and how they present themselves and
see if you're comfortable approaching them. There are lots of
possibilities out there, but you have some serious thinking and
homework to do before you're even ready to consider buying a house.
Admittedly it has been a few years since I bought a house, but at
the time it was told to me that the Real Estate agent BY LAW was the
agent of the seller no matter if he was working with buyer or not and
thus was legally beholden to the seller and couldn't suggest to you
things that might be in your best interests if was not in the best
interests of the seller.
Has this changed nationally, or at least how would someone find
out if this is a concern in their state? Is this something the neophyte
we are talking to should find out about?
I can't help thinking that the unspoken words here were "in the
absence of a written agency agreement between the prospective buyer
and the agent."
That even if the agent says "I'll be helping you.... Mr. Scott said I
should work with you... BY LAW the agent is NOT the buyer's agent.
But I'm sure the general concept of agent and agency has existed in
English law for longer than laws like the one you refer to, and I
would be surprised if any real estate law excluded it here. I'd be
surprised if it prevented anyone from hiring an agent to represent
him, in any dealing, and if that agent knew something about real
estate, that would be fine too.
Unlike most contracts, contracts for the purchase of real estate must
be in writing. So the notion exists that certain contracts have to be
in writing, and a seller's hiring a real estate agent could be one of
Many banks and Savings & Loans offer free classes on buying a home.
Obviously, they want you to borrow money from them but there's no
obligation to do so. Classes like these will give you the most
basic info on how to get started and who is responsible for doing
If you haven't already, you might ask your bank how much they'll lend
you - then you've got some idea of what you can afford.
Google How to buy a home + state name.
If you've decided that the house you refer to is the one for you and you
need to act quickly, get a lawyer, though as many have remarked, in many
states all the legal papers are routinely drawn up by the RE agents.
HomeOwnersHub.com is a website for homeowners and building and maintenance pros. It is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.