What Is a Community Land Trust (CLT) and How Does It Work?
For many Floridians, the dream of homeownership feels increasingly out of reach. Rising prices, bidding wars, and investor competition have made it difficult for working families, retirees, and first-time buyers to find affordable homes—especially in desirable areas like Orlando, Kissimmee, and the surrounding region. But one lesser-known solution is gaining ground: the Community Land Trust (CLT).
In this post, we’ll break down what CLTs are, how they work, who can qualify, and what the process typically looks like—so you can make an informed decision about whether this model is right for you.
What is a Community Land Trust?
A Community Land Trust is a nonprofit organization that owns and manages land on behalf of a community. Its mission is to provide permanently affordable housing by separating ownership of the land from ownership of the home. Homebuyers purchase the house at a below-market rate, while the CLT retains ownership of the land underneath it. The buyer signs a long-term ground lease (typically 99 years), which gives them exclusive use of the land while ensuring the home remains affordable for future buyers. This model helps communities combat displacement, preserve affordability over generations, and empower families to build equity—even if not at full market pace.
How Does it Work?
The CLT acquires land, often through donation, public funding, or community partnerships.
Homes are built or rehabbed on the land, and offered to qualified buyers at affordable prices—significantly below market rate.
Buyers purchase the home (not the land) and sign a renewable 99-year ground lease with the CLT.
The ground lease includes terms that:
Ensure owner occupancy
Restrict resale price to keep the home affordable
Require maintenance and property upkeep
When the homeowner sells, they receive a portion of the home’s appreciation—but the next buyer also benefits from affordability.
Is This Like a Mobile Home on Leased Land?
Not at all. While both situations involve leasing land, a Community Land Trust offers long-term legal protections, equity-building, and resale rights that you do not get in a typical mobile home park or leased-lot scenario.
Here’s the key difference:
CLT vs. Mobile Home on Leased Land
| Feature | Community Land Trust | Mobile Home on Leased Land |
|---|---|---|
| Land Ownership | CLT nonprofit owns land permanently for community benefit | Private owner or corporation owns land for profit |
| Lease Term | Long-term (usually 99-year), renewable lease | Short-term or month-to-month lease |
| Equity | Owner builds equity and earns a share of appreciation | Little to no equity; depreciation is common |
| Resale Rights | Owner can sell with restrictions to maintain affordability | Must often move home or get park approval to sell |
| Stability | Legal protections in lease; stable housing model | Leases can be raised or terminated at owner’s discretion |
| Community Focus | Mission-driven, nonprofit governance | For-profit; less resident control |
Who can Qualify for a CLT Home?
CLTs are typically geared toward low- to moderate-income households, but the exact income limits and qualifications depend on the organization and funding sources.
Basic qualifications often include:
Household income within a certain percentage of Area Median Income (AMI)—commonly 60% to 120%
Commitment to owner-occupy the home (not use as a rental)
Demonstrated need (e.g., cost-burdened renter, first-time buyer)
Ability to qualify for a mortgage (more on that below)
What’s the Process Like?
Each CLT may have slight variations, but here’s a general outline of what to expect:
1. Application
Submit an application with household and income documentation.
Attend an orientation or info session hosted by the CLT.
2. Pre-Qualification
Get pre-approved by a mortgage lender that’s familiar with CLT guidelines.
Some CLTs have partnerships with specific lenders; others may allow buyer choice.
3. Homebuyer Education
Most CLTs require you to complete a HUD-approved homebuyer education course, which prepares you for long-term ownership responsibilities.
4. Property Match
Once approved, you’ll be shown available CLT homes and can select one that meets your needs.
5. Closing
The transaction works like a traditional real estate closing, with the CLT involved in the process.
You’ll close on the home (not the land) and sign the ground lease with the CLT.
Do I need a Special Lender?
Some CLTs partner with approved lenders who understand the ground lease structure and underwriting process. However, depending on the CLT, you may be able to use any lender as long as:
The lender agrees to the CLT’s lease and resale restrictions
The underwriter is comfortable with non-traditional land ownership
Tip: Local credit unions and community banks are often more familiar with these programs than national lenders.
What About Down Payments?
One of the biggest advantages of buying through a CLT is a significantly lower down payment. Because the land is owned by the nonprofit trust, the purchase price is typically much lower than comparable homes on the open market. Most buyers only need to bring 3% to 5% down, and some qualify for down payment assistance or low-interest programs through city, county, or lender partnerships.
This makes CLT homes especially attractive for first-time buyers or those with limited savings—but strong, steady income.
What Might Disqualify a Buyer?
While the process is designed to be inclusive, some factors that might limit eligibility include:
Income above the program limit
Poor credit or inability to secure financing
Intent to use the home as a rental or investment
History of foreclosure or eviction (varies by CLT)
Incomplete documentation or failure to complete homebuyer education
Every CLT is a little different—some may be more flexible than others, especially if funding comes from local sources rather than federal HUD programs.
What are the Pros and Cons?
What Are the Pros and Cons?
Pros:
Significantly lower purchase price
Long-term housing stability
Builds equity (though limited)
Protection from rising land costs and speculation
Community-based governance and support
Cons:
Limits on resale price = less profit when selling
Resale process must go through CLT
May not qualify for all loan types
Not available in every area or for every buyer
Buying through a Community Land Trust is a powerful path to affordable homeownership—but it’s not always easy to navigate alone. From understanding eligibility to working with the right lender and submitting a strong application, every step matters. As a licensed Florida agent who actively tracks these opportunities, I can help you find the right program, understand the fine print, and move forward with confidence.
Reach out today to explore your options—or just to ask questions. I’m here to help you take the next step toward ownership, without the guesswork.
Aging Homes, Serious Risks: Understanding Asbestos and Other Hazards in the Gulf States
Photo by Alex Boyd
Homes built before the 1980s often carry more than architectural character—they may harbor serious health risks tied to outdated construction practices. Warm, humid climates can accelerate material deterioration and create conditions for mold, asbestos exposure, and other issues. Organizations such as Louisiana Mesothelioma Advocates play a critical role in spreading awareness and offering support. Their mission centers on educating families affected by mesothelioma, equipping them with resources to make informed decisions about treatment options, physicians, legal considerations, and other concerns that may arise during such a difficult time. In states like Louisiana and Florida, where aging homes and historical industries increase the risk of asbestos exposure, these efforts remain vital in protecting public health and guiding those impacted by these long-term hazards.
Why Older Homes Pose Health Hazards
In the decades before strict federal safety regulations were implemented, materials now known to be dangerous were widely used. Among them, asbestos-containing materials (ACMs) were common in insulation, roofing felt, vinyl flooring, cement, and “popcorn” ceilings. Valued at the time for their durability and fire resistance, these materials have since been linked to serious health issues, particularly when disturbed through renovations, storm damage, or the natural aging of the home.
Friable asbestos—materials that crumble easily and release fibers into the air—pose the greatest risk. Once inhaled, these fibers can lodge in lung tissue and lead to conditions such as mesothelioma, lung cancer, or asbestosis. The risk is especially relevant in homes that have not undergone professional asbestos remediation or testing.
Louisiana's Unique Exposure Profile
Louisiana’s industrial background—particularly in oil refineries, shipyards, and chemical plants—has made the state one of the nation’s hotspots for asbestos-related illnesses. The widespread historical use of asbestos in both residential and industrial structures, combined with the destruction caused by hurricanes like Katrina, has led to prolonged airborne exposure for thousands of residents and emergency responders.
Florida’s Older Housing Stock and Compliance Gaps
Florida, known for its rapid population growth, has many homes constructed during periods when safety oversight was limited. Although lead-based paint was banned in 1978, it remains in older properties, especially in plumbing and interior finishes. Lead exposure is linked to neurological and developmental issues, especially in children. Disclosure is required under federal law, but many homes still pose hidden risks if not professionally evaluated.
Mold is another common issue. It can develop in drywall, wallpaper, carpets, ceiling tiles, and anywhere with persistent moisture. In states like Florida and Louisiana, where humidity is high and storm damage is frequent, mold growth is especially problematic. Even newer homes can develop mold if leaks or ventilation issues are present.
Precautionary Measures for Prospective Buyers
Individuals considering homes built before 1980 should:
Schedule an asbestos inspection prior to initiating any renovations or DIY projects.
Confirm that any lead-based paint disclosures are reviewed.
Seek mold evaluations, especially in homes with prior water damage or signs of high humidity.
Work with real estate agents familiar with the risks and required disclosures in older homes.
Staying informed and proactive is essential. For additional guidance, review materials offered by reputable health organizations or legal advocacy groups specializing in environmental hazards and housing safety.
For those exploring homeownership in Florida or Louisiana, especially with an eye on charming older properties, professional assessments are critical. Connect with local agents and inspectors who understand the unique risks associated with the region’s housing stock and can guide the process safely and confidently.
Buying an older home in Florida? Let’s make sure it’s as safe as it is beautiful. Contact me for trusted local inspectors and real estate guidance that protects your investment—and your health.
Why Florida’s Booming Economy Makes Now the Perfect Time to Buy Real Estate
Photo by Bridger Bowcutt
Florida has recently been recognized as having the strongest economy in the United States, according to a comprehensive ranking that evaluates states based on multiple factors including health care, education, environment, opportunity, crime and corrections, infrastructure, fiscal stability, and economic strength. Climbing three places from the previous year, Florida now stands as the sixth-best state overall in this national assessment.
This remarkable achievement reflects Florida’s rapid economic growth fueled by a diverse range of industries. Tourism remains a cornerstone of the state’s economy, attracting millions annually to its world-renowned beaches, Orlando’s major theme parks, and bustling cruise ports on both the Atlantic and Gulf coasts. Beyond tourism, Florida’s agriculture sector is a vital contributor, with its citrus groves and year-round vegetable production playing a significant role in the state’s economic output.
Florida’s business-friendly environment is also bolstered by the absence of a personal income tax, a factor that continues to draw retirees, entrepreneurs, and investors alike. This, combined with strong educational rankings—where Florida ranks second nationally—makes the state an attractive place to live, work, and invest.
Among southern states, Florida is unique in its consistent top-10 standing, joining other leading states across the country that are recognized for their balanced approach to economic opportunity, quality of life, and fiscal responsibility. This upward momentum indicates that Florida is not only a premier destination for residents and businesses but also a state poised for sustained growth and development.
If you’re considering making a move or investing in Florida’s thriving real estate market, now is the perfect time. With opportunities ranging from vibrant urban neighborhoods to peaceful waterfront communities, I’m here to help you find the ideal property that fits your lifestyle and goals. Contact me today to explore the best that Florida has to offer!
HOME INSPECTIONS
BUYER SIDE / SELLER SIDE
A home inspection is a professional, objective assessment of a property's physical structure and major systems. It's a vital step in the home buying process, helping to uncover potential issues before closing, so buyers can make informed decisions.
As the buyer, you have the right to choose your own home inspection company. You're not required to use one recommended by the agent or seller—feel free to select a licensed inspector you trust to thoroughly evaluate the property and protect your interests.
Once the inspection and payment is made, you'll receive access to your personalized buyer portal, where you can view your inspection report, photos, and any recommended next steps
INSPECTION “ADD-ONs”
A 4-point inspection is often required by insurance companies in Florida, especially for homes over 20 years old. It focuses specifically on the roof, electrical, plumbing, and HVAC systems to determine insurability. While it's not part of a standard home inspection, it can usually be added on during the same visit and is essential for securing homeowners insurance.
For a cash buyer, a 4-point inspection is not required, since there's no lender or insurer mandating it—unless the buyer still plans to get homeowners insurance.
A wind mitigation inspection evaluates how well a home can withstand strong winds and hurricanes—a key factor in Florida insurance costs. It looks at roof shape, coverings, attachments, and protection for openings like windows and doors. This report can often qualify buyers for valuable insurance discounts.
A well inspection checks the condition and safety of a property's private well system, including the pump, pressure tank, and water quality. It ensures the water is safe for use and that the system is functioning properly—an important step for homes not connected to municipal water.
A septic tank inspection evaluates the condition and functionality of a home's private wastewater system. It includes checking the tank, drain field, and related components to ensure proper operation and identify any signs of leaks, backups, or needed maintenance—crucial for homes not connected to public sewer lines.
A water test analyzes the quality and safety of a home's water supply, checking for contaminants like bacteria, lead, nitrates, and other pollutants. This is especially important for properties with a well, ensuring the water is safe for drinking, cooking, and daily use.
A termite inspection checks for signs of active or past termite activity, as well as other wood-destroying organisms that can damage a home's structure. It’s a vital step in protecting your investment, especially in Florida’s warm, humid climate where termites are common.
Real estate agents play a crucial role in recommending home inspections and helping clients understand the results. They guide buyers and sellers through the implications of the findings, advise on necessary repairs, and help protect both the property's value and the client's interests.
For sellers, a pre-listing home inspection gives sellers valuable insight into their property's condition. By identifying and addressing issues early, sellers can increase market value, build buyer confidence, and help ensure a smoother, faster sale.
Sample section of inspection results:
Once the home inspection report is in hand, it can feel overwhelming for buyers—especially first-timers. That’s where a knowledgeable real estate agent steps in. As your advocate, a Realtor doesn’t just review the report; they help you interpret it strategically.
Not every item on an inspection report is worth negotiating over. Your agent will help you identify which issues are safety concerns, code violations, or major system failures—and which ones are cosmetic or expected for the home’s age. From there, your agent will work with you to draft a clear, reasonable repair request or ask for seller concessions if appropriate.
This negotiation process requires a balance of firmness and finesse. An experienced agent knows how to present your request professionally, keeping the deal moving forward while protecting your best interests.
PRE-LISTING INSPECTION
Sellers benefit from home inspections by gaining transparency about their property's condition. Pre-inspection enables sellers to address issues ahead of time, enhancing market value and speeding up the sale.
Top 10 Things Sellers Should do to Prepare for an Inspection:
Change the AC filter and clean vents. A dirty filter or dusty vents suggests poor maintenance. A fresh filter and clean ducts show the HVAC system is being properly cared for.
Check for plumbing leaks. Inspect under sinks, around toilets, and behind appliances for any signs of leaks or water damage. Fix drips, loos connections, and water stains.
Test all smoke and carbon monoxide detectors. Replace batteries and ensure all detectors are property installed and working.
4. Service the HVAC system. Have the AC and heating system serviced by a licensed technician if it hasn’t been done in the past year. Leave documentation of the service for the inspector.
5. Ensure all lights, outlets and fixtures work. Replace any burnt-out bulbs, and test each outlet. This avoids the assumption that electrical work may faulty.
6. Clean gutters and dowspouts. Clear out debris and ensure water is draining away from the foundation properly.
7. Repair minor wall and ceiling cracks or nail pops. There are often cosmetic but can be misinterpreted as foundation or structural issues.
8. Check doors and windows for proper operation. Make sure they open, close and lock properly. Fix any sticking, squeaking, or loose hardware.
9. Seal gaps around windows for proper operation. Prevent drafts, moisture intrusion and pest access. Use caulking or weaither stripping where needed.
10. Label the electrical panel and ensure clear access. Inspectors need to see the panel clearly labeled and unobstructed. Replace any missing covers or breakers if needed.
“THANK YOU!”
Hazards in pre-1990 Homes
Hazards to watch out for in homes built before 1990.
Photo by Michael & Diane Weidner on Unsplash
Governments and regulatory bodies establish and enforce new safety regulations and standards across industries every year. Construction companies, specifically home builders, have seen several compliance requirements be established in the last thirty years. However, the homes built before those mandates were in place can pose significant health risks for their owners.
Here are dangers to watch out for when buying older properties:
Lead
Government banned the consumer use of lead-based paint in 1978. It can be found in plumbing fixtures and paint, and can affect brain development in children, as well as cause headaches and abdominal pain. Sellers must disclose the presence of lead-based paint in the home.
Asbestos
Exposure to asbestos can cause cancer and mesothelioma. It was commonly used in insulation, sheathing, vinyl floors, “popcorn” ceilings and roofing felt. The EPA issued a ban in 1989 on most of these products. Consult a professional to analyze samples, and plan accordingly depending on the results. Exposure is riskiest when fibers are damaged and can become airborne.
Mold
Mold can present itself in homes of any kind, new and old. Homes that lack ventilation or that have been affected by water damage in the past are at most risk. It can grow in windows or pipes, drywall, carpet, ceiling tiles and wallpaper. It can cause itchy eyes and skin rashes. Sometimes insurance companies may cover remediation, specially if the mold was caused by a leak.
Always remember to consult your real estate agent about the presence of these hazards in older homes.
The new Lead of Luxury Markets: Millennials
There’s been a new and significant shift in the luxury real estate market: Millennials are now responsible for nearly 60 percent of purchases for homes 3 million dollars and above, according to a new report by Engel & Völkers, a multinational real estate firm. This change has seen those born between 1981 and 1996 take the top spot from baby boomers (born from 1946 to 1964). Most of these luxury millennials are buying their second home and prefer locations near recreational attractions, like bars, restaurants, theaters, spas and gyms. They also prefer neighborhoods with amenities, including pools, dog parks and children’s playgrounds. Although baby boomers will continue to influence the economy, they are now empowering the younger generations, like Millennials and Gen-Xers, with the financial means to lead the future of the luxury segment of real estate.
It comes without question that many will wonder how, exactly, these many Millennials are able to afford 3+ million dollar properties. Talking with several real estate agents in my network, the question mostly traced back to the same answer: inheritance. The wealth left behind by the decreasing population of Baby Boomers is without a doubt being inherited by their children and grandchildren, one agent said. “Many of them [baby boomers'] own large acres of land, which has seen exponential price increases not only in the last four years, but in the last fifty.” An interesting study would thereby look into this observation to ascertain whether this is the case. It’s no secret that Millennials are not seeing the same economic growth previous generations did. A Bloomberg article from 2021 reported that 40 year old Millennials at the time were only 80 percent as wealthy as their parents at the same age. “Millennials in the U.S. at 40 are doing worse financially than the generations that came before them,” the article stated. “Fewer millennials own homes than their parents did at their age. They have more debt — especially student debt. They simply aren’t as wealthy.” So there’s more to this shift than the Engel & Völkers report is able to look into. Nonetheless, real estate agents need to adapt to this new shift and tackle the opportunities it presents.
A Walk Through Kissimmee Bay
In this video Daniel Araque walks us through the great attractions of the Kissimmee Bay community. This upscale and well-established enclave features direct access to lake Toho, and an eighteen-hole championship golf course.
Casa Finca for Sale in Medellín
Para más información no dude en escribirnos / For more information don’t hesitate to contact us.
5.5% Interest and What it Means
Before starting my day each morning I open my Mortgage News Daily app and check the current interest rate for thirty-year fixed loans. Changes in inflation and the volatility of nearly all markets in the last sixteen months forced the Federal Reserve to introduce robust policy changes, which recently impacted homebuyers more intensely. These interest changes have been almost as volatile as the global markets themselves, oscillating between 5.2 percent at the end of May, to 6.28 percent the fourteenth of June, and now sitting comfortably at 5.5 percent as of this morning. Many homebuyers expected, somewhat correctly, the increased rates to curve the real estate climate from the competitive (and mostly toxic) seller’s market of the last two years to a more accessible buyer’s market, where bidding wars and appraisal gaps would no longer be the norm. And although this has been the case to some extent, we’re still seeing the most attractive listings receive upwards of five offers and sellers still unwilling to budge in any of their strict, irrational demands. So what have the rate changes truly achieved, and will there be a plummet of home prices in the future?
“We’re going to wait a few months before looking again,” one of my clients said to me recently. “Homes are still too expensive and we think they’ll drop to normal levels again.” In my years as a real estate agent I've learned to pick my battles. My number one job is to protect my client’s interests, whether they're buyers or sellers, and get them the best deal while traversing the often thorny path towards closing. So when a client makes a decision more akin to a personal life choice, I step back and allow them that right. (Many agents will roll their eyes at this, proclaiming we are salesmen and must sell at all costs.) But I'm tempted to ask, what are normal levels? If the annual inflation rate in the United States in 2021 was seven percent, why would you think this will get reversed out of thin air? Inflation devalues money, and it’s reflected in higher prices everywhere. We must also account for out-of-state buyers, mainly from New York and California, who think the current home prices in Florida, while high for locals, are a steal in comparison. They're buying cash and over-purchase price, waiving inspections and appraisals, setting new home values for entire neighborhoods while doing so.
Although the Federal Reserve’s policy changes caused a slight leveling of home prices, we’ve observed a sharper decline in the number of overall qualified buyers. Those who qualified for a 500 thousand dollar home three months ago suddenly have to be more mindful about their budget. Several agents have seen their deals go sour as their clients couldn't get a reasonable rate locked in — reminding buyers that a pre-approval is only a snapshot in time of their financing potential, always at the mercy of any national and global trends. And while some continue to wait for a better time to buy, companies like Disney are taking advantage of new developments and setting up regional hubs that will change the average income per capita of the area by relocating workers from California. “I saw two-bedroom apartments they’e planning to rent for thirty-five hundred dollars,” said one my coworkers about a neighborhood in Lake Nona. “To us it’s crazy but to people from that state it’s normal, or even cheap.” If the average wage for these Disney employees is 120 thousand dollars annually, according to the Orlando Economic Partnership, they can easily buy any home in Lake Nona and Orlando — why would home prices drop?
There’s one way I see home values declining a considerate amount — a way that supersedes inflation, appraisals and the solidified market value of sold homes, and the price influence from out of state money: global economic collapse. Consumer-spending data is fueling worries about a recession. Gas continues to break record highs. Russia is unrelenting in its attack on Ukraine. China waits. If something happens at a global scale all markets will take a hit, but, for now, expecting that 400 thousand dollar home to go back to 280 is a dream better left in the past.
Thoughts From Realtors: The Current Market
“We received 29 offers on this property and after sorting through all of them the sellers have decided to accept a different offer.”
Home buyers across the United States who are trying to take advantage of record low mortgage rates are often met with the bad news that the home was sold to someone else. Low inventory and an onslaught of new buyers gave rise to the current sellers’ market, which, from the books of ECON 101, means prices are going up, up, up. I'm not looking to explain what’s happening, as many other articles, YouTube videos and think-pieces have done so already, but, rather, I want to discuss what could be coming next. Despite the number of active buyers making this market as competitive as it is, there’s another set of qualified buyers who’ve chosen not to buy, yet. “I think there’s a crash coming,” said one of my out-of-state clients last week. “There’s something weird going on — I don't know what, exactly, so I rather wait and see what happens.” This is a fair and increasingly common assessment of the current situation — after a year of lockdowns and massive unemployment caused by COVID-19, why is everyone suddenly able to buy a home? Buyers, sellers, realtors, and everyone else are asking themselves this same question, ultimately leading to the mother of all questions: what’s the future of this market? I presented this and other questions to two of my coworkers during our last work meeting to get a quick answer for an otherwise difficult situation to evaluate.
Is this a good time to buy?
Cristian: This is still a good time to buy because of the low interest rates but I think this will be be short lived and the market will normalize itself in the next 24 months.
Juliette: It depends whose perspective you’re looking at it from. If I sell my house in another state and move to Florida I’m looking at a better lifestyle. So for them it’s probably a good time; If you’re moving from somewhere else in Florida, I would say wait.
What will the market look like afterwards?
Juliette: I’m not 100% sure but the way it’s looking referencing specs from last year versus this year I project a continual increase.
Cristian: In the next 12-24 months we will see the interest rates start to go up and prices going down and we will welcome a buyers market.
As expected, my coworkers thoughts were somewhat split through the middle. What the Orlando market (and perhaps others around the United States) will look like a year from now is a question no one has the answer to. But like the saying goes, there are two types of people in this world… those who think the market will crash, and those who think homes will retain their value or even go up more over time. A crash — or correction — is easy to explain and imagine, but a continual increase in home value is a scenario that also enjoys a set of circumstances that back it up.
It’s no surprise that the influx of new buyers to Orlando are coming mostly from states like California and New York. Those from the latter used to come in search of better weather; now they're escaping failed policies that left their economy in shambles. And it’s not only people who are leaving — large companies are relocating to friendlier states, like Tesla’s recent move to Texas. As companies and people move, their money moves with them. And as that money gets invested into real estate, you start to see the value of the market change. “What decides the value of a home is the market, nothing else,” my broker reminded the team in our last meeting. “If a home in a specific neighborhood sells at a record high, every other home in that neighborhood benefits from it.” So the new money from other states making its way into Orlando is inadvertently reflected in home prices all over, as we’re seeing lately. And those with the buying power to pay a premium price for a home are squeezing out those first-time homebuyers who were hoping to buy a piece of America. This is what eventually leads us to those 29 offers for a single home, only one lucky winner, and 28 sad real estate agents pouring themselves another drink.
“People are saying Orlando is the new L.A.,” a coworker said as we neared the end of the meeting. If this is the case then what we’re seeing now, despite the rate of change in home values over the last year, can still be considered homes for cheap. Otherwise it’s nothing more than a frenzy. Truth is, many things can influence the market, and at the end of the day buyers and sellers have to decide for themselves whether it makes sense for their family to buy or sell. Decisions should be made according to specific goals beyond the current monetary value of a home, and whether a correction or further spike is something said family can live with or afford.
For any real estate related questions don’t hesitate to call or write to us. We’ll be happy to help!
Understanding Closing Costs
Photo by Gabrielle Henderson
One of the main obstacles buyers often seem to overlook are the costs associated with the purchase of a new home. Naturally, a buyer’s main concern — beyond securing financing — is simplified to finding the perfect home. But before that home’s title gets transferred to the new owner, there are closing costs that both seller and buyer need to pay. Some of these are shared and split “down the middle,” like prorated property taxes and HOA dues, but others are specific only to the seller and the buyer. In real estate this is simply known as “cash to close,” and, for buyers, it could be anywhere between three to five percent of the purchase price of the home. However, in order to obtain the most accurate estimate, a real estate agent can share the information of a specific home with the buyer’s lender, who will thereby calculate what the final costs could look like.
The simplest way to understand closing costs is to think about the parties associated with the sale of a home. These costs, then, are broken down between fees from the state, fees from the title company and lender, and fees to the realtor. (As a buyer, your real estate agent is “free” to you. There’s only one small brokerage fee paid to their company.) Each of these parties costs are reflected as a percentage of the purchase price or a set amount per transaction. There could be small variations depending on the title company or lender, and whether you’re a cash buyer, or are using a conventional or FHA loan. The list below shows and explains some of the costs you’re likely to see in your final settlement statement.
Closing Costs
Origination Fee
Payment to lender to evaluate your credit, and to underwrite and process loan.
Discount Points
Paid to lender at closing to reduce interest rate over life of mortgage.
PMI or Mortgage Insurance (Conventional Loan)
Required if down payment is less than 20%. Protects lender if you default.
Appraisal Fee
Paid to appraiser to confirm home’s fair market value.
Title Search
Covers cost to confirm seller owns property, and that title is free from liens.
Title Insurance
Protects lender and (optionally) you if title claim surfaces later.
Termite Inspection Fee (Free for VA loans)
Inspection required to certify home is free of termite damage.
Survey Fee
Charge to verify property boundaries.
Buyer Trans-Fee
Paid to cooperating buyer’s agent brokerage.
Flood Certification Fee
Covers costs to determine if home is in federally designated flood zone. If it is, lender will require you to purchase flood insurance. Some lenders also charge separate flood monitoring fee to check for flood map updates.
Prepaid Interest
Covers mortgage interest due between date of closing and first mortgage payment.
Prorated Property Tax
Covers property taxes from date of closing to end of tax year.
Homeowner’s Insurance
Typically you'll pay full first-year costs upfront at closing.
Homeowner’s Association Transfer Fee
Paid on properties governed by associations to transfer ownership documents to you.
Initial Escrow
Lender may require first two months of next year’s homeowner’s insurance, flood insurance and property taxes to build up reserve.
Closing or Settlement Fee
Paid to title company, attorney or escrow company that conducts closing.
Recording Fee
Paid to state to record transfer of property from one owner to another.
Transfer Tax
Paid to state, based on the amount of the mortgage.
If you have any questions pertaining to this topic or any other regarding real estate, please reach out to me. I’ll be happy to further discuss your goals and what are the best steps forward.
Guide for First-Time Home Buyers
Photo by Avi Waxman
I’ve decided to buy — now what? Reasons to buy a house are different for everybody but the process to close is relatively the same for all. Certain steps may not be present in some deals — a cash buyer can sidestep things a buyer with a loan cannot — and the completion of the purchase could fluctuate between thirty to forty days. But in the best interest of the buyer, the road to ownership presents many opportunities to get the best deal. The chart below is a visual representation of the buying process, and breaks down the steps the buyer can expect during the window before closing.
The buyers’ best guide is their real estate agent, so it’s important to be transparent every step of the way and have a clear set of goals.
If you have any questions pertaining to this topic or any other regarding real estate, please reach out to me. I’ll be happy to further discuss your goals and what are the best steps forward.
Buyer Step # 1: Financing
Photo by Micheile Henderson