Close It! for iPad ready for download

Free mobile app calculates cash to close for homebuyers and cash in pocket for home sellers with great accuracy

Close It! for iPad ready for download

Ever wonder what your total cash to close would be to buy your home? Or how much money you will pocket from the sale of your home? Now there's an app for that.

"Close It! is like Turbo Tax for real estate transactions," said Todd Ewing, president of Federal Title who first conceived of the app last summer. "And the results are accurate within one-tenth of 1 percent on average."

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Close It! is the first mobile app that produces a complete, picture of cash to close and monthly mortgage payments for homebuyers and cash in pocket for home sellers. It's free to download for iPad.

Title professionals across the country have used technology like this in-house for years now, but Close It! is the first app that makes it easy for homebuyers and sellers to produce a HUD-1 Settlement Statement – such as what would be reviewed and signed at the closing table – right from their mobile device.

Getting started with the app is as easy as entering a purchase or sales price. Then fine tune the results on a live, dynamic worksheet and instantly narrow down cash to close or cash in pocket with great accuracy.

Whether you're shopping for homes or getting ready to sell, calculate your costs right on the spot with Close It!

Loan payoff includes more than just principal balance

In about half of the settlements that I conduct a seller will stop me and comment, “The payoff is too high, I owe less than what’s listed.” This is because the seller is confusing the mortgage principal balance with the payoff amount.

The principal balance is the remaining principal due on the loan. This gets reported in monthly statements from the lender and is available if you call your lender or check online. With a fully amortizing loan, part of your monthly payment is going to paying down the principal every month. 

However, a payoff is the amount owed on the loan to pay it off on a specific day. Note that interest on a conventional mortgage accumulates daily*. Also keep in mind that a mortgage is paid in arrears – the monthly payment is for the prior month’s interest. 

So when you make the April 1 payment, you are paying the interest due on the loan from March 1 to March 31. Consequently, if you are closing on April 10 and have already made your April 1 payment, you still owe interest from April 1 to the date of payoff. 

Typically a cushion is selected so that there are sufficient funds to pay off the loan, so the amount submitted to the lender in the above scenario is likely: principal balance + per diem interest due from April 1 to April 13 equals the mortgage payoff. 

The reason for the cushion is not to cheat you out of some money, though I’m sure it feels that way. It is to make sure there is not a shortage when paying off the loan. In our scenario, assuming that everything was completed in a timely manner, the seller will receive back from the payoff lender two to three days of interest that were overpaid. 

So how do you determine your payoff amount?  

The title company is going to order a payoff letter from your mortgage lender to find out the precise payoff amount. 

What if you're trying to prepare an estimate and would like a figure?  

You can always call your lender and obtain a payoff from them over the phone. Some lenders will calculate a payoff amount for you online as well. Just remember to add a few days to the closing date so that you have allowed for a cushion. 

But for most estimates, using this trick will suffice: take your principal balance and add to it a monthly payment. Assuming that you are on time with your payments, this number should always be a bit higher than your actual payoff, but at least this way you will be overestimating instead of underestimating, which is typically the case when you use the principal balance as the payoff amount.


* Interest on an FHA mortgage accumulates monthly. Therefore, interest is always owed through the end of the month. However, to calculate an estimated payoff, the same concept applies: take the principal balance and add a monthly mortgage payment to obtain an estimated payoff. 

Q&A: Do I really need a land survey?

Q. What is a location survey?

A. A location survey is a sketch or drawing that shows the boundaries of a particular property. Also, the survey typically includes the dimensions of the house, patio or any additions as well as the locations of fences and any easements or rights of way. Mortgage lenders generally require a survey before lending on a purchase transaction. However, if you are paying cash and not obtaining a loan, you can choose whether or not to obtain a survey. 

Q. Why should I want to obtain a location survey?

A. A location survey defines exactly what it is that you are buying. Just because the back yard has a fence, doesn’t mean that you own everything inside the fence (or that you might not own something outside it). Over the years we have seen many buyers surprised to find out that: 

  • they did not own the driveway, 
  • their house was over the property line, 
  • the neighbor’s fence was inside their yard, 
  • their fence was outside the property lines, 
  • half of what they thought was their back yard belonged to a neighbor,  
  • and countless other complicated scenarios.

Q. Doesn’t the legal description on the deed list the property being conveyed?

A. Yes, but legal descriptions are sometimes wrong. We have seen legal descriptions that have included public alleys and incorrect property dimensions. The survey helps as a check to make sure that the correct legal description is listed. When it is incorrect, a new description is prepared, with the help of the surveyor. 

Q. When do I get to look at a survey?

A. Federal Title & Escrow Company sends out the location survey to the buyers and the buyer’s agent as soon as it becomes available. This way you will have a chance to review it and you can address any issues and/or concerns prior to settlement. The closing attorney will also review the location survey with you again at the closing. 

Round-up of recent changes to DC metro area transfer, recordation taxes

As Todd mentioned in his blog post earlier this month, the biggest ticket item for closing costs for a real estate purchase in DC can be the transfer and recordation taxes collected by the DC government.

The same holds true for Maryland and Virginia transactions – with the added complication that in Maryland and Virginia, you can also pay a county transfer tax, and the rules and rates vary depending on your county. (See Todd’s post earlier this month about how complicated calculating these taxes can be in Montgomery County.)

I thought I’d sum up some recent changes to the rules on how these taxes are calculated in DC, Maryland, and Virginia for purchases and refinances.

Click beyond the jump to continue reading

Closing costs complicated in Montgomery County, Maryland

County transfer taxes plus state transfer & recordation taxes make Montgomery County a tricky place to buy real estate

Closing costs in Montgomery County, Maryland – both in terms of the required complex calculations and the high rates – may be the most unfriendly jurisdiction to home buyers and sellers compared to all other jurisdictions in the country.

Most homebuyers and sellers can very easily determine their closing costs for government transfer taxes by simply multiplying a base factor of say 1% or .5% against their contract purchase price. However, in Montgomery County, Maryland, a multitude of factors come into play when calculating this biggest chunk of closing costs.

At the time of closing on a Montgomery County, Maryland purchase transaction, the three different taxes imposed and generally split evenly between the buyer and the seller are:

  1. County Transfer Tax
  2. State Transfer Tax
  3. State Recordation Tax

As a guide, I have identified each tax below with the respective rates and associated variables. Or if you want to make it easy on yourself, I suggest using our Quick Quote which accounts for all these factors and variables with a few easy questions.

 

County transfer tax

This tax is imposed at 1% of the purchase price (or total consideration) and customarily split 50/50 between buyer and seller. Thus, typically, the buyer pays .5% and the seller pays .5%.

 

State transfer tax

This tax is imposed at .5% of the purchase price and customarily split 50/50 between buyer and seller. Thus, typically, the buyer pays .25% and the seller pays .25%. However, if the homebuyer is a Maryland first-time homebuyer, then the buyer is exempt from paying her portion but the seller still must pay the .25%.

 

State recordation tax

This tax is imposed at .69% on the first $500,000 of the purchase price plus an additional .1% on the amount of purchase price exceeding $500,000. This tax is also customarily split 50/50 between the buyer and the seller.

However, if the homebuyer will be occupying the property as a principal residence, then the first $50,000 of the purchase price is exempt from this tax, which means the tax is imposed at .069% on the first $450,000 of the purchase price.

Further, an additional .69% is imposed on the loan amount of $500,000 or less (in most cases a construction loan) to the extent it exceeds the purchase price or 1% on the loan amount over $500,000.00 to the extent it exceeds the purchase price.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.