_{Presented by Astra Properties LLC}
Closing the Deal with Confidence: Measures to Minimize Closing Costs in Real Estate Transactions
_{By Nicholas Burrus · 01/22/`24
Thanks for tuning in to today’s read! Read time for today is roughly 8 mins.}

Happy Monday 🌅 

Welcome back, let’s start the week off strong as we approach the final full week in January.

Today we’re talking about closing costs, and how to reduce them (or possibly pay non at all 🤔)

Ready to save money on your next buy?

Good, so are we -

Let's dive in

Closing Costs and How to Reduce Them 😉 

^{How much will you spend on closing costs?}

For those buying a property for the first time, it's always a shock to learn that other charges need to be paid besides the purchase price.

We're talking about the closing costs - charges incurred during the process of transferring property ownership.

Unless you're paying the property in cash, you'll shoulder most of the closing costs because many of the charges are associated with the mortgage.

Other charges include underwriting fees, survey fees, stamp taxes, and mortgage points. 

How much money should you set aside for the closing costs?

Generally, closing costs add up between 3% to 6% of a property's purchase price. If the property costs $500,000 and the closing costs are 5%, you'll pay $25,000 at closing.

The closing costs will depend on many factors, including:

• Property’s location

• The purchase price

• The kind of mortgage you chose

• The lender

• Legal requirements and fees by state and counties

Some cities have high property transfer taxes or title insurance premiums. 

And even if you think you've covered all the charges, surprise expenses like flip taxes and HOA fees could crop up. 

Can you avoid paying the closing costs at all? 😁 

The quick answer is no, you can't avoid paying the closing costs 100%.

(Unless you get the seller to agree to pay ALL of your closing costs, which depending on the deal, can happen)

Some charges can be reduced, negotiated, and even waived.

Here are some feathers for your cap 🪶 

Get the timing right: The timing of the property sale matters.

If you close at the start of the month, you have to pay the per diem interest for the rest of the month. But if you close near the end of the month, you'll only pay for the last few days remaining. 

For example, closing on the 3rd of the month means paying the interest from the 2nd to the 30th. But if you pay on the 29th, you'll only pay interest for the 30th day. 

Take advantage of a loan program: Many lenders offer rewards programs for property financing. Find a lender willing to reduce or waive certain fees like origination fees. 

• Bank of America has a home loan program that offers 0% downpayment and no closing costs in selected cities

• Ally Bank and PenFed do not charge origination fees at all

• Some lenders provide no-closing-cost loans 

You can also go to your current bank and ask for discounts and rebates - see what options you have to minimize the closing costs. 

Ask the seller to contribute: Don't be shy - you’re in this together. Ask the seller to pay for:

• Closing fee

• Home sale taxes

• Legal services

• Title transfer fees

• Repairs

• Maintenance checks

Check with your seller and negotiate. Sellers are usually motivated to get the deal done ASAP, so many are willing to shoulder some closing costs. 

Some loans can have sellers to cover up to 6% of the property's sale price as a closing cost credit. 

But in hot markets, this doesn’t happen often.

Negotiate with the lender: There are two ways to avoid paying for the closing costs upfront. You can ask the lender to add the closing cost to the loan or reduce your down payment. Both strategies have their pros and cons. 

Negotiate with other players: Closing costs like attorney fees, real estate commissions, recording costs, and assignment fees can be negotiated. If you're lucky, some of these charges can be reduced. 

In the military? Military and union members have several home financing benefits. 

Military members and army veterans could qualify for a VA loan (and other other housing-related programs) to purchase a house. If you're a service member, you can check out what benefits you qualify for here. 

As for union members, many lenders offer discounts, rebates, and closing costs coverage in their home financing programs:

• Some union members may qualify for closing cost rebates and discounts via the Union Plus Mortgage program. 

• Some lenders have home financing programs for union members. Wells Fargo offers home financing with exclusive perks.

• Mid-Island Mortgage Corp. offers discounts on home loan financing for union members. 

• The Hero Home program offers a home loan plus discounts for union members.

You can use a VA loan to buy an investment property, but it has to be owner occupied to get 0% down

Take out an FHA Loan 

FHA loans are backed by the Federal Housing Administration (FHA).

Besides the lower down payment, which can go as low as 3.5% of the home's purchase price, FHA loans have flexible payment plans and relaxed credit score requirements. 

To avoid surprise expenses, review the itemized closing fees on your loan estimate and closing disclosure.

If some charges do not add up or you've got questions, talk to your lender, real estate agent, or attorney. 

Is 2024 the Best Time to Buy a Property?

^{Is this your year?}

2023 was an unpredictable year for the housing market; will 2024 be just as chaotic?

Things are definitely looking up for home buyers. There are signs that 2024 is shaping up to be a great year to buy properties:

• According to Zillow, home values will hold steady this year with a minimal 0.2% decrease by year-end. 

• The National Association of Realtors (NAR) predicts a modest 0.9% increase in the median home price.

• Wall Street's outlook suggests a generally positive market for investors in 2024

Is 2024 a good year to buy a property? 🤑 

Mortgage rates are dropping 

Mortgage rates were at an all-time high in 2023, and that's the reason why the housing market was in a slump last year. 

But barely a month into 2024, the rates have fallen 9 consecutive weeks.

Economists say the rates will either continue to drop or hold steady. 

Experts believe mortgage rates will average about 6.8% during 2024 and end the year closer to 6.5%.

Some economists predict a 6.3% dip in the 30-year fixed mortgage rate this year, followed by more cut rates from the Fed. This will ease inflationary conditions caused by slower economic activity. 

Home prices are affordable 💥 

Properties weren't exactly affordable last year, no thanks to surging mortgage rates and inflation. But as the rates go down, the market inventory number rises.

This leads to lower home prices - depending on where you live.

In states with extremely high demand, lowering rates will cause more buyers to come back into the market, lead to more bidding wars and more competition.

Home sales are on the rise

According to forecasts, 4.71 million homes will be sold in 2024. That's roughly a 13.5% increase from last year. 

Besides the sales of existing homes, new home construction will also increase in 2024 - about 1.48 million homes will be constructed in 2024. This includes 1.04 million single-family and 440,000 multifamily.

NAR also predicts that cities from these regions will outperform the national average:

• Texas

• North Carolina

• Pennsylvania

• Nashville

• Philadelphia

• Maine

• Washington DC

Combining low mortgages with more inventory leads to higher buyer confidence. Many investors are likely to buy properties this year. 

💫 What Else is Poppin? 💫

Apple Ends Samsung's Reign as Top Smartphone Seller in the World 📱 

The shift ended Samsung’s 12-year run

Apple has ended Samsung Electronics's 12-year reign as the top smartphone seller in the world with a 20% market share in 2023 versus Samsung's 19.4%. 

One of the reasons for the shift is the respective smartphone makers' strategies to attract customers.

While Samsung focused on the mid to high-end segment, Apply offered as much as 5% discounts in China to boost sales. As a result, Samsung lost the low-end segment to competitors 😲 

Samsung phone shipments were down 13.6%, while iPhone shipments went up 3.7% in 2023. 

It has been a tough year for mobile phone makers, and the slowing demand for upgrades, inflation, and economic uncertainties in many markets have led to the change in ranking.

Low demand and slow recovery in China - the world's largest smartphone market - also led to a decade-long decline in the market. 

Despite losing its 12-year run, Samsung remains a formidable force in the smartphone market.

All eyes are on the South Korean tech juggernaut with the recent release of its flagship smartphone, the AI-powered Galaxy S24.

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