Negotiation Strategy for Home Seller and Buyer ..... by Cheryl Miller-Eld

Negotiating Strategies when Buying/Selling Real Estate[Strategy #1 Selling a Home]   The home I am selling is roughly figured to sell at the price of $189,900. but factored in is the unknown (negotiation room) and commissions for agents that may surface and feel their contribution was winning nudge tying the deal together and thus you want to count them into the deal paying 3 percent per side (both buying agent and selling agent reaping 3% of the Sales Price, each).
   Seller sets the advertised price at $222,000. Before long some smooth negotiators come by and see the home. Showing no emotion and no passion about the home, they view and list the updating they feel is necessary to bring the home up to par.
   Seller gets a call from the buyers and the buyers offer (with "NO real estate agent" involved) the following:
$198,000.00     Price to be paid for the home.
    10,000.00      Buyers own money down
  188,000.00      Buyers to Finance the Net diff.
     6,000.00       Seller equity to be awarded the Buyers for their own rehab
 of the home and updating, etc.
     4,000.00        Seller equity contributed toward
the buy-down of the Interest Rate to be paid on the 30-year Financing.
       500.00         Seller negotiates w/the Appraisor to be paid from the Settlement of Escrow by the Title Company.
       200. 00        Home Inspection paid by the Buyers outside of Closing.

   This ensures the Buyers will have the lowest possible house-payment since extra cash was thrown toward Discounting the Rate of Interest and beefing the Origination Points to butter up the Mortgage Broker so he/she has not the temptation to raise rates to fund backside points to which their Commission comes from. Plenty of front side points for the Broker ensures the absolute lowest Interest Rate of the Loan Program can be utilized to calculate the house-payment. {MoneyTip!!!}
   The Buyers are $300.00 ahead on the entire transaction with $6000.00 cash coming to them at the Close of Escrow to refurbish the home as they see fit.
The Sellers net $187,500.00 from Sale of their Home.

Figured accordingly:

$222,000. Initial Price of Home Advertised.
24,000. 6% commissions NOT PAID to real estate agents. None were involved, remember. Inflated price was reduced by the unknown factor. Good Faith gesture on the part of the Sellers thus price was reduced.
10,000. Paid toward Closing Costs of the Buyer and/or Refurbishing capital to update the home as seen fit (after the closing).
500. Appraisal Fee netted out of the Settlement at Closing and paid out to the Appraisor by the Title Company after Closing.
[That is STRATEGY NUMBER ONE of the two-strategy series Article on Home Selling in Today's Real Estate Market.]
(Written July 5, 2011)
by
*********************************************************************************************Cheryl Ann Eld (MillerEld) Copy Editor for: WSWwebdevelopment

Sunday, May 22, 2011

Adjustable Rate Mortgages also known as ARM Loans for homes-by MillerEld
May 22,2011,by: Cheryl MillerEld, webmaster/web content writer/blogs

Adjustable Rate Mortgages also known as ARM Home Loans

The loan everybody said !!NOT!! to get, said the home loan prospect and first-time-home buyer,
I was sitting down with in my office at Landmark Mortgage in Boise, Idaho. The appointment with me (his mortgage broker) was the initial paperwork and consultation interview for pre-qualifying to buy a home.

A home loan is the objective of the relationship with me, finding the right money sources and loan under writting policies that the prospect qualifies for, and terms that will be a perfect fit for the prospect - as 'new' owner of a home and mortgage loan.
Why do some new home buyers end up in an adjustable rate mortgage (ARM) loan?
Plainly advertised at very low start rates, these loans help the debt heavy borrower, or bulky payment candidates whose eyes are bigger that their wallets.
To debt-ratio the folks with some debt and or larger than normal house payment estimate, the mortgage broker has little room to play when money sources' guidelines dictate the ratio acceptable to their loan programs. Therewith, this leaves another avenue of approach, the intitial interest rate a loan begins it amortization journey with may be lowered intentionally to attract mortgage brokers in the field to notice a "teaser-rate" opportunity to shrink the house payment a while, ease them into owning. As well, the ratio figures line up now that the incredibly low interest rate starts of the series of house payments.

The "teaser-rate" has an unfortunate ending at the contract specified date usually one-year after closing, sometimes only 6-months and rolls to an adjustable rate mortgage on the home.

Now, the home loan is in an ARM. No biggy if the details are discovered early enough to do a little homework on the ARM home loans. Usually excited nervous home buyers don't sweat any of the financing details. The color choice of the wallpaper and curtains maybe, but not the financing.

The little details of importance are: the marging, the index, the ceiling the hikes to the rate, the timing of adjustment (every 6-months, every year?). What these are will soon be known to you.
The margin is a fixed integer number with decimal and some percentage of a whole number. I offer the example of: 5.55 or 2.50 or 6.75. This little goodie is obviously advertised to your mortgage broker and he/she should know what a margin on an ARM is, but may skip over telling you about what a margin on an ARM can or can't do for you the home buying prospect.
Margins are important because they attach to the index-rate. Together the form "the rate" that your home loan is based on. One changes the other does not ever change on this loan once it is closed and funded. Guess which does not ever change? The margin does not ever change. The index floats and has been historically tracked and its history is openly documented. An index currently down is bound to float up. The tallest spike in the index histogram is achievable again and when,,,,well most of us wouldn't know. So a Libor index on a 6.00 margin at a cap of 16.50 with a teaser rate of 5.25 for the first year of the loan, looks attractive for the entry and powerfully dismal thereafter. If the Libor index is floating at about 5.125 then the rate at time of adjustment will roll to 11.125, then in 6-months or one-year (depending on the loan program), Libor index is hovering around 3.75, what will the rate be this time when it rolls (adjusts) - 9.75 - correct. What could the loan rate jump up to as it rises and rises and rises? 16.50 is where it should cap. Does that make you a little nervous about this loan. Does me.
Indexes used come in a variety of national and international economies. The European trends usually are more non-casual and fast changing. The London Interbank Offering Rate is termed Libor. It ossillates from 4 to 6 percent most of the time. The COFI index is a nice slow moving trend adjuster. The Cost of Funds Index is really small and conservative as its history trends will show you. The COFI hovers between 2.5 and 4.5 and never leaps much at one time when it does move. They float they are macoeconomically sensitive to the US economy and the International economies. They will constitute the variable half of the ARM interest rate. Whereas the "margin" constitutes the fixed half of the ARM interest rate on a home loan.
For REVIEW: A new mortgage loan presented as an ARM with a marging = 3.00 and floating on the COFI Index, with a rate cap of 9.00, and a 'teaser rate" of 5.75% for the first 12-months of the loan, with no points needed to buy down the initial startrate; sounds like a pretty fair deal. Doesn't it.
Happy Home Buying,
yours truly,
Cheryl A MillerEld
Web Content Editor/Blogmaster

Posted by WSWwebdevelopment (WebSitesWestII) at 2:40 PM

Adjustable Rate Mortgages - The Mystery unfolds about them right now.

May 22,2011,by:  Cheryl MillerEld, webmaster/web content writer/blogmaster

----------Adjustable Rate Mortgages also known as ARM Loans for homes---------

     The loan everybody said !!NOT!! to get, said the home loan prospect and first-time-home

buyer.

      I was sitting down with in my office at Landmark Mortgage in Boise, Idaho.   The appointment

with me (his mortgage broker) was the initial paperwork and consultation interview for pre-

qualifying to buy a home.

      A home loan is the objective of the relationship with home buyer and me: finding the right

money sources and loan under writting policies that  the prospect qualifies for,  and terms that

will fit the prospect's needs - as 'new' owner of a home and mortgage loan was the job I was to

do (as his mortgage broker).

      Why do some new home buyers end up in an adjustable rate mortgage (ARM) loan?

Plainly advertised at very low start rates, these loans help the debt heavy borrower, or bulky

payment candidates whose eyes are bigger that their wallets.

      To debt-ratio the folks with some debt and or larger than normal house payment estimate,

the mortgage broker has little room to play when money sources' guidelines dictate the ratio

acceptable to their loan programs.  Therewith, this leaves another avenue of approach,  the

intitial interest rate a loan begins it amortization journey with may be lowered intentionally to

attract mortgage brokers in the field to notice a "teaser-rate" opportunity to shrink the house

payment a while, ease them into owning.  As well, the ratio figures line up now that the incredibly

low interest rate starts of the series of house payments.

     The "teaser-rate" has an unfortunate ending at the contract specified date usually one-year

after closing, sometimes only 6-months and rolls to an adjustable rate mortgage on the home.

      Now, the home loan is in an ARM.    No biggy if the details are discovered early enough to do a

little homework on the ARM home loans.   Usually excited nervous home buyers don't sweat any

of the financing details.   The color choice of the wallpaper and curtains maybe, but not the

financing.

      The little details of importance are:  the marging, the index, the ceiling the hikes to the rate,

the timing of adjustment (every 6-months, every year?).     What these are will soon be known to

you.

      The margin is a fixed integer number with decimal and some percentage of a whole number.

I offer the example of:   5.55  or  2.50 or 6.75.   This little goodie is obviously advertised to your

mortgage broker and he/she should know what a margin on an ARM is, but may skip over telling

you about what a margin on an ARM can or can't do for you the home buying prospect.

       Margins are important because they attach to the index-rate.  Together the form "the rate"

that your home loan is based on.   One changes the other does not ever change on this loan once

it is closed and funded.    Guess which does not ever change?  The margin does not ever change.

The index floats and has been historically tracked and its history is openly documented.   An index

currently down is bound to float up.  The tallest spike in the index histogram is achievable again

and when,,,,well most of us wouldn't know.    So a Libor index on a 6.00 margin at a cap of 16.50

with a teaser rate of 5.25 for the first year of the loan, looks attractive for the entry and

powerfully dismal thereafter.   If the Libor index is floating at about 5.125 then the rate at time of

adjustment will roll to 11.125, then in 6-months or one-year (depending on the loan program),

Libor index is hovering around 3.75, what will the rate be this time when it rolls (adjusts) - 9.75 -

correct.    What could the loan rate jump up to as it rises and rises and rises?   16.50 is where it

should cap.   Does that make you a little nervous about this loan.   Does me.

       Indexes used come in a variety of national and international economies.  The European

trends usually are more non-casual and fast changing.    The London Interbank Offering Rate is

termed Libor.   It ossillates from 4 to 6 percent most of the time.   The COFI index is a nice slow

moving trend adjuster.  The Cost of Funds Index is really small and conservative as its history

trends will show you.  The COFI hovers between 2.5 and 4.5 and never leaps much at one time

when it does move.   They float they are macoeconomically sensitive to the US economy and the

International economies.  They will constitute the variable half of the ARM interest rate.  Whereas

the "margin" constitutes the fixed half of the ARM interest rate on a home loan.

     For REVIEW:   A new mortgage loan presented as an ARM with a marging  = 3.00 and floating

on the COFI Index, with a rate cap of 9.00, and a 'teaser rate"  of  5.75% for the first 12-months of

the loan, with no points needed to buy down the initial startrate; sounds like a pretty fair deal.

Doesn't it?

Happy Home Buying,
yours truly,
Cheryl A MillerEld
Web Content Editor/Blogmaster