It's a good time to buy in greater New York area

REAL ESTATE MATTERS

November 16, 2007|By ILYCE GLINK

Do you think now is a good time to buy a new home outside New York?

I think the greater New York area appears to be one of the few places in the country where the market continues to be strong. That doesn't mean that every neighborhood is appreciating at double-digit rates. But you're seeing houses sell at a fairly rapid clip, and that's the sign of a strong housing market.

As for your particular neighborhood, I don't know if it's the right time to buy because I'm not there, standing on your corner. You have to spend time checking out the neighborhood, visiting open houses and local retail stores to see what's really going on.

When it comes to buying a house, a lot of the timing issues have to do with how long you plan to stay in your home. If you're planning to be there five to seven years, you'll probably do just fine.

On the other hand, if you're asking me whether you can buy a house today and flip it for double the price next year, I'd have to say you're unlikely to see that kind of return unless you have a very special property - and you get very lucky.

Do you think that paying a lender 6 percent in closing costs on a $260,000 house is reasonable?

I have a question for you: Why are you paying 6 percent to your lender in closing costs?

When it comes to buying a home, you may have quite a number of fees associated with your closing. You need to determine which fees are associated with your lender and which fees are associated with buying the home. Then you can review the fees to see if you are paying too much.

Generally you can plan to pay about 1 percent in fees and points to your mortgage lender (unless you're buying down the interest rate on your mortgage).

Other big fees that will generally be the same from one lender to the next are title charges and prepaid interest on the loan. At the most, these should not exceed 3 percent to 4 percent of the loan amount. (The later you close in the month, the less you'll pay in prepaid interest on the mortgage.)

If you are in a state that has transfer taxes for the purchase of a home or a tax on recording a mortgage, those fees can add up.

In some cases, if the lender is going to hold back money in an escrow for your real estate taxes, that sum of money can be quite high.

If your lender is telling you that you have to pay 6 percent to get the loan, you may wish to go elsewhere for the loan. A straight 6 percent fee to get a loan is way above what most everybody pays when they buy a home.

You should talk to the lender about the closing costs and then visit several other lenders in the area to ask them what their closing costs would be on your loan. You'll want to compare the cost of a national mortgage lender, local bank, local mortgage broker, credit union and perhaps a national bank.

Once you get their bids, you can compare the loan programs, costs and fees on an apples-to-apples basis. Hopefully, after you've gone through the process of shopping for a loan, you'll wind up paying a lot less than 6 percent.

I was under contract to purchase a new home, but while I was waiting for the home to be built, my financial situation changed (due to illness). Consequently, I told the builder I didn't think I could still afford the home.

Instead of trying to work with me, the builder threatened me with lofty breach of contract fines. The builder then sent me a cancellation letter but I didn't sign it because I was trying to seek alternative sources of funding.

Several weeks elapsed and I found alternative financing. When I returned to follow through with the purchase I was informed the home had been sold to another buyer and that my earnest money would be retained.

Do I have any grounds for recourse?

So much of the answer to your query will come down to what your contract says. That's why you need to find a real estate attorney who can read through the contract you signed and figure out whether the builder was right to take the house from you and keep your earnest money.

It's possible that simply by calling the builder to tell him you had a financial problem and couldn't close, your actions were deemed to be a breach of your contract obligations. Or, it's possible that the builder was nervous that you'd run, and not wanting to be stuck with an empty house, he jumped the gun and sold it out from under you. You'll need to consult with a real estate attorney to determine what your rights are under these circumstances.

Your contract should provide language regarding the termination of the contract and what the builder can and cannot do with the earnest money. Please look at your contract and then discuss it with a qualified real estate attorney or litigator who specializes in new construction.

If you used an attorney to help you negotiate the contract with the builder, then you should call that person.

Contact Ilyce Glink through her Web site, www.thinkglink.com, by mail at Real Estate Matters Syndicate, P.O. Box 366, Glencoe, IL 60022 or calling her radio show at 800-972-8255 from 11 a.m. to noon Sundays.

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