The recent cratering of the real estate market both in the residential and the commercial spheres has dramatically altered how buyers will approach mortgages and home loans at present and for the foreseeable future. The game has changed and the days of no-money-down mortgages, or “NINJA” mortgages, are long gone. Determining how much to put down on a house is more important than ever, as is almost every other aspect of mortgage financing at the moment. With a shaky economy, new home buyers should prepare themselves for the possibility that real estate prices may fall again in the future.

Making wise decisions and doing your homework before taking the plunge can mean the difference between a halfway pleasant mortgage experience and a nightmare. Many first time home buyers are often left asking themselves the following important question: How much should I put down on a house?

Obviously, the minimum required down payment will vary depending on your circumstances, such as credit and employment history, income, and where you plan on buying, as well the type of mortgage you want and loan you end up taking out.

FHA Loans Require Only a Small Down Payment, but that Doesn’t Mean You Can Afford the House

For buyers with limited means, an FHA loan may be the only option. The minimum down payment is 3.5% for those who qualify. FHA loans now have more stringent requirements for down payments that depend on the credit rating of the borrower. Borrowers with a credit rating under 580 have to come up with a 10% down payment, and pay the Mortgage Insurance Premium of 2.25%.

These loans feature possible funding for capital improvements, as well as no penalties for early payment. The downside is that FHA loans may not be enough to finance the home you want, and the MIP may cost more than Private Mortgage Insurance overall.

20% Down Payment Still the Standard for Conventional Mortgages

A conventional mortgage will usually require at least 20% of the purchase price down to get the best rates, though this varies widely depending on which lender you decide to go with. The advantage of putting up more than 20% on any type of loan is the avoidance of PMI, or Private Mortgage Insurance. This is basically a monthly or yearly fee paid by the borrower to insure the lender against the risk of default on the mortgage. Typically, this will run something like $55 a month per $100,000 of financed home value, and can be up to $1,500 a year and can tack on significant additional costs to your mortgage payment.

VA Loans Offer Lowest Downpayment Requirements for Veterans, but Beware of Fees

For veterans, the answer to the question of “How much should I put down on a house?” is more clear cut. VA loans have many benefits and advantages, such as not requiring a down payment and not charging penalties for early payments. The PMI is replaced by the funding fee, which is 2.15% of the loan on average. The smartest way for veterans to play this is to take out a loan with no down payment, and pay off the loan as quickly as possible. It gives you budgeting flexibility for rainy days and can save a lot when it comes to interest payed over the life of the loan. The only problem is that not having to put up a down payment may goad buyers into taking out loans on homes that are ultimately out of their price range.

Determining the dollar amount of a reasonable down payment on a house involves a bit of strategy, forward thinking and simple arithmetic. On the one hand, laying down more cash at the beginning of the mortgage reduces monthly payments and interest charges.

However, this also will significantly draw down savings leaving you more vulnerable to mishaps and misfortune in the future should you run into unforeseen expenses. Life is uncertain and things can happen that you weren’t planning on, so you don’t want to leave yourself too vulnerable to life’s uncertainties by trying to pay off the loan too quickly.

Mortgages are never easy and will most likely be one of the most difficult and important financial decisions you face during your lifetime. In an area such as this, it never hurts to do too much research or to be over prepared with questions about every facet of the agreement. It almost always makes sense to put up more than the required minimum down payment on a mortgage.

How much more is the tricky part. The best advice for first time home buyers is to do the math, carefully weigh your options and be sure of what you’re doing before locking yourself into any long-term contract.

If you are in the market for a home loan or a mortgage, it is important to understand what an escrow account is. Many lending institutions require their borrowers to maintain escrows on mortgages, and even those who don’t require it often encourage it.

This is because a mortgage escrow reduces the company’s chance of losing their investment in your home through fire or lapsed property taxes. Many people, however, are unsure of what to expect from this type of account. They wonder, “What is an escrow account? Why do I need one? How do they work?” Below, you will find the answer to these and other questions about escrow accounts.

What is an Escrow Account?

An escrow account is an account where funds are deposited for the purpose of paying a bill or meeting an obligation. It is held by a third party, who is responsible for fulfilling the terms of the obligation. In the case of a mortgage escrow, the funds are used to pay property taxes, fire insurance, and other types of homeowners insurance.

Why Should I Have an Escrow Account?

On some types of loans, escrow accounts are required by law as a condition of receiving the money. Other times, mortgage companies refuse to finance mortgages without an escrow. Even if neither of these are the case, however, it is often in the best interest of a homeowner to keep an escrow account.

Property taxes can run into the thousands or tens of thousands of dollars, and insurance can cost as much as a thousand or more.

Often, the entire payment will be due at once. This is a huge burden for many people. By spreading the payments out over the course of a year, escrow accounts ensure that the money will be there when it is needed and these payments will be made on time. As a result, home owners can rest assured that they will not be faced with delinquent taxes or lapsed insurance.

How Does An Escrow Work?

As a general rule, the escrow account is created at the same time as the loan. The mortgage company estimates your taxes and insurance costs, divides the amount by twelve, and adds the amount to your monthly mortgage payment. Sometimes, they include a cushion to account for tax increases or missed payments.

However, by law this cushion can not amount to more than 1/6th of the total amount due. If either your taxes or insurance premiums go up, your escrow account payment will probably do the same.

How Much Does an Escrow Account Cost?

This depends on several factors. First, how much is your home worth? Both taxes and insurance are generally calculated based on the value of the home. Therefore, those who own a more valuable home can expect to have much higher escrow payments than those who own smaller homes.

Second, what are the taxes in your area? This will be a percentage of the value of your home, and it will often go up when new roads are constructed or new schools are built.

Finally, does your mortgage company add a cushion to your escrow payments? This can amount to as much as two full month’s worth of payments over the course of a year, so it is important to be aware of it in advance. As a general rule, however, you can expect your escrow account to add several hundred dollars a month onto your mortgage payment.

How Can I Be Sure that the Holder of My Escrow Account Is Making My Payment?

As long as your mortgage payments are not delinquent by more than thirty days, your lender is required by law to make your escrow payments on time. If they do not, they are responsible for paying all fees and penalties. However, there are times when this does not occur, either through negligence or fraud. There are several things you can do to avoid having this happen to you.

First, pay your mortgage on time. If you are more than thirty days late, your mortgage company’s requirements to make your payments may be waived. Second, pay close attention to your escrow statements. Lenders are obligated by law to list all deposits made and all payments disbursed.

Finally, make sure that your escrow account is being audited at least once a year. This can help you avoid the mistakes and fraud that often take place when escrow accounts are unmonitored.

If you’re planning on purchasing a home and claiming the first-time homebuyer tax credit, you’d better get a move on: the deadline to do so is April 30.

You must close on the home on or before April 30.  Verbally agreeing to purchase the home doesn’t count. Being in escrow doesn’t count. You must be in possession of the home’s title. In other words, you must own it.

A well-researched and easy-to-understand explanation of how to claim the tax credit is on an FAQ website put together by the National Association of Home Builders. It goes into much detail and answers a ton of questions.

Yet here in a nutshell is how to claim the first-time homebuyer tax credit:

Any type of home is eligible, house, condo, townhome, mobile home, even a houseboat. New or existing homes. All are eligible so long as the home will be your primary residence.

According to the FAQ page mentioned above, a first-time homebuyer is someone who “has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.”

What that means is that if you’re married and didn’t own a home in the last three years, but your spouse has, the two of you don’t qualify for the new-homeowner tax credit.

But if you and your partner are not married and one of you hasn’t owned a home in the past three years, you can qualify, even if you purchase it jointly.

In addition, if you own property that’s not your primary residence (rental property or a vacation home), you can still qualify for the tax credit.

As for the amount of the tax credit itself, it’s being touted here there and everywhere as the $8,000 tax credit. But you should be aware that if you purchase a small home for $60,000 (which are available in distressed areas of the country), you may not claim the entire $8K because the credit is “equal to 10 percent of the home’s purchase price up to a maximum of $8,000.” So if you by a house for $60K, you’ll be able to take a $6,000 credit.

The credit really works best for singles grossing less than $125K or married couples filing jointly grossing less than $225K a year. Make more than those figures and the amount of the credit you may claim lessens.

You must buy a home that costs less than $800K. You also can’t buy the home from a family member (siblings, parents, grandparents, children, in laws, cousins, aunts and uncles, etc.).

Perhaps the greatest thing about the tax credit is how it can put money back in your pocket. A tax credit differs from a tax deduction in that the credit reduces “dollar-for-dollar” what you owe in taxes. If you, for example, you owe the IRS $8K in taxes, the $8K tax credit wipes that obligation out. You owe the IRS nothing.

As with just about anything to do with taxes, the rules for claiming the first-time homebuyer tax credit aren’t simple; you may wish to consult with a tax professional as you wend your way through the process of claiming your credit.

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When completing your taxes for 2009, don’t forget about the property tax deduction for non-itemizers which was extended to the 2009 tax year. This deduction allows those not eligible for the standard deduction to deduct their property taxes paid.

In years past, property taxes were only able to be deducted from itemized returns. However, in 2008, filers were allowed to deduct real estate property taxes even if they took the standard deduction. Congress extended this tax benefit to 2009.

The amount you are able to deduct is equal to the amount of real estate taxes paid up to $500 for those filing single, and up to $1,000 for those filing joint returns. This is particularly good for older tax filers, or those who have held a mortgage for a long period of time. With little in the way of itemized expenses, often these tax payers must choose the standard deduction and get no further benefit such as deducting property taxes.

Fortunately, there are no income limits to claim the property tax deduction. You simply add the eligible amount of your deduction to the standard deduction on Form 1040 or 1040A.

For other great tax tips, check out the article 11 Most Commonly Missed Tax Deductions, which inspired me to remind homeowners of this often forgotten tax deduction.

Photo by chadmiller

If you are selling a petite house, don’t automatically fall into the mindset of “buyers won’t be interested in my property because it’s too small.” While it is true that a large number of potential buyers will be turned off by the size of your home, there is a specific type of home buyer that is attracted to small properties; a first time home buyer. First time home buyers are a niche market that you need to target in order to sell your tiny home, and you should plan for customized home improvement projects to benefit this target market.

According to a survey conducted by the U.S Census Bureau, “The average first time home buyer is 33 years old and has a household income of $64,100 per year.” What do these stats tell us? They tell us that we will need to cater to a market of young and hip professionals, and we will have to carry out our home improvement projects accordingly.

What does a young, hip and professional first time home buyer want in their starter home? Modern accents. Therefore, our goal is to transform the bathroom from cramped, busy and messy to modern, simple and streamlined. The good news is that this goal can be attained with just a small investment of $500 and a weekend of your time. What will you need? Don’t worry, we’ve got you covered. Below is a chart of the items you will need to purchase and their average cost.

According to HGTV (Home and Garden Television), “You will recoup a rate of 102% on a minor bathroom renovation. Since this small-scale, yet highly effective home improvement project will cost you just under $500, this project falls into the “minor bathroom renovation” category. Ok, it’s time to get the ball rolling. When choosing your wall color, stay as neutral as possible.

While it is true that colors that are associated with modernism tend to be on the bright and bold side of the spectrum, sticking to a modern paint palette that falls on the “safe side” is ideal for a minor bathroom renovation. After all, you are trying to sell a house here, right? A safe and modern color palette will appeal to the masses, in turn pulling in a wider range of interest from the first time home buyer set.

The next most important factor of your bathroom makeover is to build cohesiveness. In order for the bathroom to appeal to buyers, the eye needs to flow throughout the room without obstruction. The easiest way to build a visual obstruction is to place a black finish wrought iron towel rail into a bathroom with nothing but stainless steel finishes. The towel rail will stick out like a sore thumb, consequently breaking up the flow provided by the stainless steel finishes. Choose hardware and accents in the same finish. If your faucet has a stainless steel finish, make it a point to purchase matching hardware and accents.

Another thing to remember when transforming your bathroom is to choose a vanity that blends in with your modern theme. Nothing will turn off a buyer (especially a choosy first time home buyer) like a bulky vanity that looks as if it were catapulted from the late 70’s. Remember, modern is synonymous with up-to-the-minute and antonymous with ancient.

Jazmin Espinal is a professional freelance writer and the owner of Capital Web Writing, a web content solution for businesses and webmasters. To contact Jazmin or to see samples of her writing, please visit CapitalWebWriting.com.

Photo by recubejim

The majority of FSBO properties fail to sell because of ineffective real estate marketing strategies implemented by the seller. The main detriment to being an unrepresented seller is that the marketing responsibilities fall into your court; and frankly, if your home doesn’t sell there is no one to blame but yourself. Traditional methods of real estate marketing are expensive, have a low response rate and generally do not lead to a sale. Why, you ask? The answer is simple: Traditional methods of real estate marketing don’t target a specific demographic.

Anyone can place an ad in a newspaper, anyone can buy radio time and anyone can place a flyer in front of the post office. But, guess what? Anyone can turn to the next page in the newspaper to avoid your annoying real estate ad, anyone can tune in to a different radio station in order to avoid your annoying real estate ad, and anyone can ignore your flyer when walking into the post office to pick up their package. Notice a pattern here? These people are annoyed by your ad; it’s an inconvenience.

Let’s Talk Demographics

You need to start marketing your property to people who actually are interested in what you have to share.  Real estate marketing, and all marketing for that matter, come down to one thing: targeting the right demographic and presenting them with an opportunity that they can’t refuse. Make your home the opportunity they can’t refuse. This may sound simple, but it’s not. Narrowing down your target demographic is going to be the hard part. So, let’s get to work.

What’s Your Unique Selling Proposition?

In order to cater to your target demographic, you need to know figure out your home’s unique selling proposition. What do you have to offer that is different from all of the other houses on your street? What do you have to offer that will be beneficial to a select group of home buyers? Does your home have ample square footage and a generous amount of spacious bedrooms? If so, you can market your property as a potential bed and breakfast. Market your home to retired couples who may be looking for a little excitement and profit in life. Does your home host a professional grade kitchen that has been approved by the state for commercial use? If so, you can market your property as home-based bakery business ready. Market your home to stay at home moms who may be looking to bring in some extra income. Both of these are unique selling propositions. And most homes have them. If you feel that your home doesn’t have a built in unique selling proposition, create one. Creating a USP can be as simple as mirroring the walls of an entire room and adding a ballet bar. It’s truly as simple as that, now you’re unique selling proposition is an in-home ballet studio.

Let’s Get Down to Business

So, you’ve got a unique selling proposition, now what? The next step is to purchase direct mail leads to a list building provider. You can purchase direct mail leads from Experian.com. Experian allows you to narrow down your local direct mail leads by specialty, life style, occupation, consumerism and business, so you can create a pretty targeted direct mail lead list for your real estate marketing campaign. Expect to pay anywhere from $1.50 to $3.75 for a single lead.

You’ve figured out your unique selling proposition and have purchased a local direct mail lead list, are you done yet? No, now it’s time to create the marketing collateral. In this real estate marketing campaign, your marketing collateral will be postcards. Take high quality pictures of the front of your home, the backyard, the unique selling proposition and the kitchen. After you have taken a batch of photos that you are happy with, you need to create your property description. Click here, for a step by step guide to writing compelling property descriptions.

Once you’ve created the property description you need to hire a graphic designer to create your marketing collateral. You can find an experienced graphic designer for a reasonable price on Elance.com. When you have chosen a designer you would like to hire, send him your property description and photos and let him get to work. The designer should be done with your postcards within a four weeks and deliver your postcards via snail-mail within six weeks of the project’s start date. The next step is the easiest and most rewarding step of the process. Place a stamp on each postcard and address them to each recipient. Now, all you’ve got to do is walk over to the post office, mail your postcards and wait for the inquiries to start rolling in. Isn’t real estate marketing fun?!

Jazmin Espinal is a professional freelance writer and the owner of Capital Web Writing, a web content solution for businesses and webmasters. To contact Jazmin or to see samples of her writing, please visit CapitalWebWriting.com.

Before the economic crisis hit, the majority of home buyers wholeheartedly supported no money down home loans. However, it seems that following the economic crisis no money down home loans have been taking metaphorical beatings from all angles. Frankly, the condemnation of the no money down home loan is uncalled for. The problem is that many people fail to build their own opinions on the matter off of personal observation and would rather rely on the opinion of a “financial guru.”

The financial guru worshipper flicks on the television and overhears Rachel Maddow and Suze Orman expressing their disapproval on the matter and claiming that home buyers who opt for no money down home loans will lead a foreclosure ridden homeownership, immediately they assume that the gurus are in the right. What most people fail to understand is that these are not factual statements. These statements are not based on extensive studies or scientific analysis. These statements are mere opinions, based off of personal observation and theories.

Admittedly, there is merit to their claims. Home buyers who cannot afford to keep up with monthly mortgage payments should not squeeze their way into premature homeownership with a no money down home loan. That is why so many people with no money down are facing foreclosure; premature homeownership. However, classifying all who opt for a no money down home loan into a foreclosure ridden home ownership is an inaccurate overgeneralization.

Recently married young couples who are fresh out of college with promising careers are ideal candidates for no money down home loans. First time home buyers who fit the above description have the funds to keep up with their monthly mortgage repayments, but they simply do not have the capital to pay for a traditional 20% down payment. Would you peg this young professional couple as “foreclosure ridden?” More often than not the answer would be no.

Those who are foreclosure ridden are heading in that path due to personal lack of money; it has nothing to do with the amount of money they coughed up for a down payment. Granted, the number of foreclosures would likely drastically decrease if unqualified home buyers weren’t given the opportunity to default on their loans, but the ones responsible are the lenders. If lenders would tighten up their lending strings, our economy would most likely be in a much healthier state than it is in now.

Why do I blame the lenders? I blame the lenders because of sheer irresponsibility. Handing out home loans to people who can not afford it to keep up with payments is like selling alcohol to a 15 year old boy; nothing good can come from it because he is not equipped to handle alcohol.

Home refinancing is when a home owner takes out a second mortgage in order to pay off their initial mortgage. A fairly popular reason home owners choose to refinance their existing mortgage is because of lower monthly mortgage payments. Homeowners who are in the process of paying off their existing home mortgage, have a good credit score and have kept the property in good condition, are typically eligible to refinance their home.

If you fall into the large pool of homeowners who have less than stellar credit, there’s no need to panic, you can still refinance your home. However, the home refinancing process is far more tedious for home owners with bad credit because the home refinancing programs tailored to those with bad credit aren’t heavily advertised.

Lowering Monthly Mortgage Repayments

The most popular reason home owners choose to refinance their homes is to lower their monthly mortgage repayments. Wouldn’t it ease your wallet if you could lower your monthly mortgage repayment by $500? Home refinancing makes it possible to lower your monthly mortgage payments by such a substantial amount. If you strategically time when you will refinance your home, you can drop up to 4% of your current interest rate. Do note that costs will be incurred during the home refinancing process. Closing costs are necessary and you will often be charged a prepayment penalty fee by your current loan holder for paying off your mortgage before its full term.

Generally, prepayment penalties are for no more than six months of your current monthly mortgage repayment amount. For example, if your mortgage is $1,500 your prepayment penalty would amount to $9,000. However, prepayment penalties, if applicable, vary according to your mortgage holder.

Making the Swap: ARM to FRM

Ever since the financial crisis created a wounded real estate market, home owners with adjustable rate mortgages started to feel the burn. Unstable mortgage rates mean that a home owner doesn’t know what their payment will be 60 days from now. Home owners with adjustable rate mortgages choose to put their repayments at ease with a more stable option, a fixed refinance rate mortgage. Home owners who decide to make the mortgage swap lower their monthly mortgage repayment rates substantially.

Switching to a Shorter Mortgage

The longer a mortgage term is the more money that is drawn out of a home owner’s pocket in order to pay steep interest payments. Often, a home owner will end up paying more than twice of what their home is worth in interest payments alone during a 30 year or over fixed rate mortgage.

Making the switch from a 30 year term to a 10 or 15 year term can literally save a home owner over $100,000. However, this option is only ideal for home owners that don’t mind paying a little extra towards their principal through every mortgage repayment. Unlike the two benefits of home refinancing mentioned above, this benefit may have a high price monthly price tag if the home owner hasn’t already paid off a substantial part of their initial mortgage.

Jazmin Espinal is a professional freelance writer and the owner of Capital Web Writing, a web content solution for businesses and webmasters. To contact Jazmin or to see samples of her writing, please visit CapitalWebWriting.com.

Home owners who are in the pre-foreclosure process are in dire need to short sell their homes. Home owners do not stand to gain any direct monetary profit from the short sale, however if the property sells during the short sale, the homeowner is given the opportunity to walk free without having a foreclosure written into their financial statements. Short selling is intended to be swift; therefore it is customary for lenders to only allow a short sale property to be on the market for four to 12 weeks.

Before carrying out a short sale on a pre-foreclosure property, a home owner should contact their lender’s office and ask to speak to the lender in charge of the short sale department. It may take a couple of days for the lender to get back to you; typically, their phone calls are heavily screened by secretaries. But, when the lender does get back to you, ask whether or not they would be willing to give you a bit more time in order to carry out a short sale. More often than not, the lender will respond positively to the inquiry.

Lenders lose a tremendous amount of money when they are forced to repossess a home. The opportunity of being paid what they are owed and never hearing from you again may seem very attractive to the lender. So, eight times out of ten, you will get approval for a short sale.

Marketing a Real Estate Short Sale

Hiring an experienced real estate agent who has proven to be successful at finding buyers for short sales properties will greatly increase the chance of a seller in distress successfully unloading a short sale home. Due to the gravity of this sale, home owners should put their own real estate marketing tips into action as well as allowing the real estate agent to embark on their own real estate marketing campaign. This will increase the possibility of sale of the house as well because a larger number of people are being targeted.

Buyers of a Short Sale

Short sales aren’t only beneficial to home owners in the pre-foreclosure process; this real estate transaction has the possibility to be beneficial to buyers as well. If the home owner has paid off the majority of their mortgage, the buyer who snags the property is in for a bargain. Typically, lenders will accept an offer which meets or exceeds to amount owed to date on the mortgage by the current homeowner. Buyers are allowed and encouraged to tour the property before deciding whether to place a bid on the home.

However, there is a downside for buyers; the response time. For some reason, lenders tend to take a fairly long amount of time to inform the prospective buyers whether their bid was accepted. Buyers should expect to wait anywhere from three to six weeks to hear back from the lenders.  If the home sells great, this means that you are liability free. However, if your property doesn’t sell, at least you know that you did everything in your power to come out of this situation on top.  

Jazmin Espinal is a professional freelance writer and the owner of Capital Web Writing, a web content solution for businesses and webmasters. To contact Jazmin or to see samples of her writing, please visit CapitalWebWriting.com.

Real estate auctions are an alternative home-selling method. The main reason sellers opt to sell their home through real estate auctions rather than through traditional methods is the potential of a quick and painless sale. Real estate auctions are becoming an increasingly popular home purchasing method for the first time home buyer crowd for two reasons: the opportunity to purchase a quality home for a substantial discount and the lowered closing costs. Contrary to common belief, real estate auctions differ greatly from foreclosure auctions. The most evident difference is the result of a favorable real estate transaction for both buyer and seller.

Photo courtesy of infrogmation

The Difference

Unlike foreclosure auctions, real estate auctions allow prospective buyers to take a physical tour of the home and perform a home inspection before placing a bid. The image portrayed by movies about home auctions is incredibly inaccurate. Sellers aren’t forced to sell their homes for dismal amounts of money unless that is their prerogative.

Real estate auctions allow sellers to set a minimum bid amount that they are willing to accept in exchange for the property. Buyers who go into real estate auctions with the intentions of purchasing a top-notch three bedroom home for less than $5,000 need to hop off of the clouds and reenter the real world; this thought process is common amongst inexperienced home buyers such as a first time home buyer or someone who hasn’t purchased a home within 30 years or so.

Seller’s Advantage

Evidently, both parties involved stand to gain great monetary advantages. But, the seller stands to gain far more advantage than ones that pertain to money. A seller gains the advantage of time and ease-of-sale. Quality auction houses (such as Williams and Williams) take the hassle out of home selling for sellers. The real estate auction house will assign a team of qualified auctioneers to a seller’s auction and take full reign of the process. The only task a seller is responsible for is being present at the auction, the initial consultation with auctioneers and being available for open houses (typically held on a Sunday).

The difficult tasks, such as marketing the auction and dealing with the financial issues of potential buyers is handled by the auctioneers. The top-ranked real estate auction houses also take the initiative of prequalifying prospective buyers in attempts to rule out the occasional first time home buyer that isn’t good for the money and problematic attendees who never plan on paying.

Buyer’s Advantage

An attractive feature for buyers that purchase a home through a real estate auctions are the reduced closing costs. Because a buyer is not required to employ the services of a real estate agent in order to participate in a real estate auction (though he may if he chooses), the closing costs are drastically lowered.

Additionally, all closing costs are split 50/50 with the seller of the property. The reduced closing costs are a definite benefit for the first time buyer who is short on cash and the home buyer who only has enough money to put towards their future home’s down payment. However, closing costs will never total less than $1,500 and on occasion, the real estate auction house may charge home buyers a 5% buyer’s premium.

Jazmin Espinal is a professional freelance writer and the owner of Capital Web Writing, a web content solution for businesses and webmasters. To contact Jazmin or to see samples of her writing, please visit CapitalWebWriting.com.