Buying and Selling Real estate

Homeowners should review their current mortgage loan documents to determine if a prepayment clause exists. Lenders often include prepayment penalties when borrowers sell their home within a certain number of years. In most cases, penalties are assessed if the loan has been in place for less than five years.

Others lenders include early payoff penalties which decrease over the course of the loan. Prepayment penalties can amount to several thousand dollars. If borrowers do not realize the prepayment clause exists they could lose money on the sale by not incorporating the penalty fee into the asking price.

Buyers and sellers of FSBO real estate must also calculate closing costs. Common costs involved with the sale of property include: loan origination and application fees, property appraisals, home inspections, legal fees, mortgage insurance, and homeowners insurance. Closing costs typically range between 4 and 6 percent of the purchase price.

When borrowers require bank financing to purchase for sale by owner properties they should spend time researching mortgage loan options. One good source for home loan comparison is BankRate.com. Visitors can use mortgage calculators to enter their state, loan duration, selling price, and down payment amounts to determine their monthly payment.
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