Mortgage Tips!

 3 Important Factors

When buying a home for the first time, a mortgage can seem like a daunting thing that you don't understand. Here is some basic mortgage terminology that you need to know in order to make an informed decision.

• Term - A mortgage term is the length of time you have to pay off your loan. It could be anywhere from 10 years to 30 years. Like any loan, the longer you have to pay off your mortgage, the lower the payments will be. An important mortgage tip - in some cases, the shorter the term, the lower the interest rate.
• Rate - The "rate" is the interest rate, which basically defines how much you will be paying the bank to borrow money from them. The interest rate offered to you is dependent on your credit rating, how much money you are able to put down, how much money you make and the value of the home you're buying. Rates can also change depending on the loan program.
• Cost - Costs typically refer to closing costs, which are a part of every mortgage. You may see offers for "No Closing Costs" but these programs are rare. If you get a no closing cost loan, it usually means the mortgage company is making a large enough commission on your loan to cover the closing costs for you. Closing costs usually include an appraisal, recording fees on documents at the registry or deeds, attorney or notary fees and the like. Watch carefully for junk fees!

Choosing a Mortgage Term

The term of your mortgage is an important factor to consider when choosing your mortgage program. Obviously, the longer the term, the lower the payments - but low payments aren't on every person's mind. In fact, some people prefer to make larger payments towards their home loan because it will be paid off more quickly and because they are putting their money into an appreciating asset. Additionally, if you plan to rent or lease your property or a unit in your property, you'll make more money the faster you pay down your mortgage. The moral of the story is that larger payments are better as long as you can afford them. This doesn't mean you can't get a 30 year fixed mortgage and just be disciplined enough to make an extra payment or two throughout the year, but it does mean that the more money you put into your home, the better off you'll be.

Advantages to Using Mortgage Brokers

Finding the right home may seem like the hard part of a real estate transaction, but in reality, getting the best financing can be much harder. This is partially because we have so many options nowadays for mortgage loans and so many places to find them. A mortgage broker or your local bank can often lay out your options clearly. They will be armed with what you want in terms of loan term, ideal rate, targeted monthly payments and the like. If you're smart, you talk to them before you decide on your home so you really know your price range. Once you have your options from your local folks, go online and shop around. Some mortgage websites have so many lender partnerships that they are bound to find you a cheaper rate, shorter term or more competitive option - they just have greater resources! Don't feel bad either - this is your financial future and if your local folks can't offer the best mortgage options - that's life.

Adjustable Mortgages – Risk vs. Reward

Why do people take out ARM loans anyway? An ARM is an Adjustable Rate Mortgage and these can suit many people perfectly. The idea is that you have a term where your interest rate is fixed. This term can be as short as one month and as high as ten years. ARM loans are ideal for starter homes or condos, where you plan only to stay for 3-10 years and then you plan to sell. They can also be great for getting into the home of your dreams with a slightly lower payment. The risk is that when you refinance your mortgage, the interest rates may be higher, so although you are getting a great deal in the short term, your long term interests are not as clear. If you are in the financial industry and you follow interest rates, an adjustable mortgage is probably a great plan. The key is knowing when to refinance into a fixed rate mortgage to protect your long term property interests.

Paying Off Your Mortgage Loan Early

When you buy your first home and you see that 30 year term, it seems like you'll be paying for your home forever. There are ways to shorten your mortgage term without refinancing.

1. Pay a little extra every month towards your principal. You can usually add a dollar amount that specifically goes towards that and even if you can only afford $20.00, send it in. That is an extra $240.00 towards your principal each year.
2. Make one extra full payment a year. By doing this simple thing, you reduce your loan term by YEARS.
3. Don't spend money on frivolities. If you have extra cash on hand, invest it in your equity or in home improvements - especially the kitchen and bathrooms which will increase your home's value.

Prepayment Penalties on Adjustable Rate Mortgages

No matter which mortgage you choose, make sure you ask about prepayment. If you want to refinance down the road, you don't want the obstacle of a prepayment penalty to get in your way. Prepayment penalties are not the norm - they are usually associated with higher risk loans with higher interest rates. Basically, if you decide to pay off the loan, they will demand an amount of money as a penalty. This can be a fixed amount or a percentage of your loan. No matter which program your mortgage broker or mortgage website is suggesting, ask about prepayment penalties before you sign. This can mean thousands of dollars in savings down the line.

Funding the Costs of Your Reverse Mortgage

Many older people are taking advantage of reverse mortgages to help with living expenses. If your house is paid for, this may be a viable option for you. A reverse mortgage means you are taking a monthly draw from the equity in your home. It can mean the difference between being able to stay in your home as you get older, or having to sell it and move someplace else. A great mortgage tip - ask that your closing costs be paid out of your loan proceeds. This means you can secure a reverse mortgage for no out of pocket costs.

Choosing an Interest Only Mortgage Option

If you are looking to make a significantly lower payment for the first several years of your mortgage, an interest only mortgage may be the right program for you. The program is just as it sounds. You will be making payments only on the accruing interest of your home. You don't have to make payments towards your principal, which is why the payments stay so low. If you're smart, you won't use this program as an opportunity to buy a lot more house than you can afford. Calculate the affordability of the home according to making payments towards both the interest and the principal so that when the loan requires those payments, you are prepared. Don't be put off by this though - an interest only mortgage program can be great for select home buyers so talk to your mortgage broker about the option.

Choosing a Mortgage Broker

Today, finding a mortgage broker is easier than ever. Because of the internet, you are no longer forced to use local mortgage brokers - you can find great mortgage brokers and lenders on the internet that can offer better programs for better rates than ever. The key to choosing a mortgage broker is comfort. Are you comfortable with the person? Do they make you feel confident that they are guiding you to the right mortgage option? Remember, this is not a popularity contest. People often make buying decisions based on whether they like the person with whom they are dealing. Let that go and play the numbers game with your mortgage.

The Fastest Way to Obtain a Mortgage Loan

Getting a mortgage online has never been easier and offers many benefits. Online mortgage brokers usually have access to more lenders and programs and they can turn things around quickly. Because credit checks, loan applications and income verification have been automated so thoroughly, an online mortgage company can help you if you have a short closing date or need a fast refinance. Start with the major search engines when you want to find mortgage broker options. Better yet, try to find online reviews or get a referral. Make sure the site you choose has the Better Business Bureau seal and all of the information security precautions possible.

Things to Know About Your Adjustable Rate Mortgage

When you choose an ARM loan, make sure you know some of the following facts, so that you are prepared when your fixed rate term ends.

1. When will your rate adjust the first time, and by how much? This could be any term from 1 month to 7 years, so make sure you know the date and you are prepared for the adjustment.
2. Be aware that the rate of your ARM will not shift only once. It's likely to shift regularly according to any changes in interest rates. Your rate can be determined by the US Treasury or the LIBOR index, do familiarize yourself with the right index and follow interest rates so you are well educated.
3. Be aware of your refinancing options. ARM loans can be great to start off in a home or condo, but you can easily refinance to a fixed rate loan. The key is to get a great interest rate on your fixed loan, so watch rates, keep in contact with your mortgage broker and make the move before you get into trouble with your ARM loan.

Getting a 'Flexible' Interest Only Mortgage

Interest only mortgage loans can be a smart option for you if you are self disciplined. They offer a flexible payment schedule where you are only required to make a payment towards the interest of your loan, but you also have the option to pay toward the principal. In most cases, your interest only mortgage coupon will even lay out pre-calculated options for payments towards principal. If you have an interest only loan, make it work for you - be disciplined and pay off as much as you can. By all means, take advantage of the payment flexibility when you need to, but put money towards your equity whenever possible.

Buying an Affordable House: Top Tips

Finding the right door into the housing market

Are you experiencing sticker shock? Even when the market is down, the number of zeros on a house's price tag makes buying a challenge for most people. Still, with some effort and patience, there are ways to find a good house at a comparatively reasonable price. Here are some proven strategies, from the likely to the "don't try this if it's your first time buying a house:"

Buy a stigmatized or overlooked property. In any market, a few houses get passed over, sometimes because they were simply overpriced to begin with and then got forgotten by buyers, other times because there's something wrong with them -- maybe they smell like cigarette smoke, or were the site of a violent crime. If you can live with or correct the problem and can negotiate a lower price, you may have yourself a deal.

Buy a fixer-upper, cheap. Houses that need work always sell for less, although you'll need to estimate the repair costs carefully to make sure it's a true bargain. Fixer-uppers that need only cosmetic work tend  to get snapped up quickly. Get a contractor to check the place out if there's any chance you'll do a major remodel or it will need foundation or structural work.

Buy a small house with remodeling potential, and add on later. Sometimes a house that suits your needs now can be remodeled later if your situation changes. Before buying, get a contractor's estimate and check local zoning laws to be sure your dreams are feasible.

Buy a shared equity house, pooling resources with someone other than a spouse or partner. This may mean either having an outside person invest in your house and gain a share of the profits when you sell, or simply sharing a purchase with someone who will live with you. It's a trend!  

Rent out a room or two in the house, or buy a duplex, triplex, or house with a rentable in-law unit. Depending on your local rental market, the added income from rent may offset a good portion of your Mortgage. And talk to your accountant: Renting out property is a sort of business, so you'll need to add a Schedule E to your taxes. On the plus side, you can deduct a prorated portion of your home expenses and depreciation from the rental income.

Buy a house at an estate or probate sale. A house that belonged to someone who passed away can be a bargain, usually because the deceased person's family members are eager to get the cash out of the property. However, you may have to attend some court proceedings.

Buy a house subject to foreclosure (when a homeowner defaults on the mortgage). Houses subject to foreclosure or that have been foreclosed on are often cheaper because the homeowner needs to sell quickly, or the bank has stepped in to sell the property, possibly at auction. However, it's a risky way to buy a house, because you can't always do physical inspections, and the current owner may have a right to pay off the debts and reclaim the house within a certain time. For more information, read Nolo's article, Buying a Foreclosed Home: Your Way Into the Real Estate Market?

Buy a house at an auction. House auctions, both live and online, are gaining in popularity. Just make sure you're given an opportunity to inspect what you're buying before you get caught up in auction fever.
For the details on all of these strategies, see Nolo's Essential Guide to Buying Your First Home, by Ilona Bray, Alayna Schroeder, and Marcia Stewart.

by: Ilona Bray, J.D.

Bank of Uganda to monitor real estate sector, amend financial regulations

The assistant director financial stability at the central bank, Robert Mwebazize has revealed the banks plan to amend the Financial Institutions Act 2004 in a bid to create a regulatory frame work to monitor micro finance deposit institutions (MDI) just like other financial institutions.

Mwebabazize states that the proposed changes were forwarded to the finance ministry for thorough cross checks which later will be sent to parliament for debate

The amendments seek to have MDIs in the first tire elevate to the second tire and have the brand of the word bank on them and act on behalf of BOU in delivering financial services to the public.

While producing the annual supervision and financial stability report of the year end 2010, the BOU reveals that all financial institutions in the country are of sound  economic stability.

He also adds that BOU together with UBOS are to start a system of evaluating the real estate sectors as a way to monitor the economy more effectively.

By Isaac Senabulya, Ultimate Media

Need a Loan? Think Twice About Using Your Home as Collateral

If you need money to pay bills or make home improvements, and think the answer is in refinancing, a second mortgage, or a home equity loan, consider your options carefully. If you can't make the required payments, you could lose your home as well as the equity you've built up. That's why it's important not to let anyone talk you into using your home to borrow money you may not be able to afford to pay back. Not all loans or lenders are created equal. Some unscrupulous lenders target older or low-income homeowners and those with credit problems. These lenders may offer loans based on the equity in your home, not on your ability to repay the loan. High interest rates and credit costs can make it very expensive to borrow money, even if you use your home as collateral.
Talk to an attorney, financial advisor, or someone else you trust before you make any decisions about borrowing money. Non-profit credit and housing counseling services also can be useful in helping you manage your credit and make smart decisions about loans.

Early Warning Signs Avoid any lender who: tells you to falsify information on the loan application. For example, stay away from a lender who tells you to say that your income is higher than it is. pressures you into applying for a loan or applying for more money than you need. pressures you into accepting monthly payments you can't make or could have trouble making. fails to provide required loan disclosures or tells you not to read them. misrepresents the kind of credit you're getting, like calling a one-time loan a line of credit. promises one set of terms when you apply, and gives you another set of terms to sign — with no legitimate explanation for the change. tells you to sign blank forms — and says they'll fill in the blanks later. says you can't have copies of the documents that you've signed.

You can take some steps to protect your home and the equity you've built up in it. Here's how.

1. Shop Around. Costs can vary greatly.

Contact several lenders — including banks, savings and loans, credit unions, and mortgage companies. Ask each lender about the best loan you would qualify for. Compare:

• The annual percentage rate (APR). The APR is the single most important thing to compare when you shop for a loan. It takes into account not only the interest rate, but also points (one point equals one percent of the loan amount), mortgage broker fees, and certain other credit charges the lender requires the borrower to pay, expressed as a yearly rate. Generally, the lower the APR, the lower the cost of your loan. Ask if the APR is fixed or adjustable — that is, will it change? If so, how often and how much?
• Points and fees. Ask about points and other fees that you'll be charged. These charges may not be refundable if you refinance or pay off the loan early. And if you refinance, you may pay more points. Points usually are paid in cash at closing, but may be financed. If you finance the points, you'll have to pay additional interest, increasing the total cost of your loan.
• The term of the loan. How many years will you make payments on the loan? If you're getting a home equity loan that consolidates credit card debt and other shorter-term loans, remember that the new loan may require you to make payments for a longer time.
• The monthly payment. What's the amount? Will it stay the same or change? Find out if your monthly payment will include escrows for taxes and insurance.
• Balloon payments. This is a large payment usually at the end of the loan term, often after a series of lower monthly payments. When the balloon payment is due, you must come up with the money. If you can't, you may need another loan, which means new closing costs, as well as points and fees.
• Prepayment penalties. Prepayment penalties are extra fees that may be due if you pay off the loan early by refinancing or selling your home. These fees may force you to keep a high-rate loan by making it too expensive to get out of the loan. If your loan includes a prepayment penalty, understand the penalty you would have to pay. Ask the lender if you can get a loan without a prepayment penalty, and what that loan would cost. Then decide what's right for you.
• Whether the interest rate for the loan will increase if you default. An increased interest rate provision says that if you miss a payment or pay late, you may have to pay a higher interest rate for the rest of the loan term. Try to negotiate this provision out of your loan agreement.
• Whether the loan includes charge for any type of voluntary credit insurance, like credit life, disability, or unemployment insurance. Will the insurance premiums be financed as part of the loan? If so, you'll pay additional interest and points, further increasing the total cost of the loan. How much lower would your monthly loan payment be without the credit insurance? Will the insurance cover the length of your loan and the full loan amount? Before you decide to buy voluntary credit insurance from a lender, think about whether you really need the insurance and check with other insurance providers about their rates.

You'll also want to ask each lender to provide, as soon as possible, a written Good Faith Estimate that lists all charges and fees you must pay at closing. Ask for a Truth in Lending Disclosure, too. It states the monthly payment, the APR and other loan terms. Although lenders are not always required to provide these estimates, they're very helpful because they make it easier to compare terms from different lenders.

2. After Choosing a Lender

• Negotiate. It never hurts to ask if the lender will lower the APR, take out a charge you don't want to pay, or remove a loan term that you don't like.
• Ask the lender for a blank copy of the form(s) you will sign at closing. While they don't have to give you blank forms, most legitimate lenders will. Take the forms home and review them with someone you trust. Ask the lender about items you don't understand.
• Ask the lender to give you copies of the actual documents that you'll be asked to sign as soon as possible. While a lender may not be required to give you all of the actual filled-in documents before closing, it doesn't hurt to ask.
• Be sure you can afford the loan. Figure out whether your monthly income is enough to cover each monthly payment, in addition to your other monthly bills and expenses. If it isn't, you could lose your home — and your equity — through foreclosure or a forced sale.
• If you are refinancing a first mortgage, ask about escrow services. Ask if the loan's monthly payment includes an escrow amount for property taxes and homeowner's insurance. If not, be sure to budget for those amounts, too.

3. At Closing

Before you sign anything, ask for an explanation of any dollar amount, term or condition that you don't understand.
Ask if any of the loan terms you were promised before closing have changed. Don't sign a loan agreement if the terms differ from what you understood them to be. For example, a lender should not promise a specific APR and then — without good reason — increase it at closing. If the terms are different, negotiate for what you were promised. If you can't get it, be prepared to walk away and take your business elsewhere.
Before leaving the lender, make sure you get a copy of the documents you signed. They contain important information about your rights and obligations.
Don't initial or sign anything saying you're buying voluntary credit insurance unless you really want to buy it.

4. After Closing

Having second thoughts about the loan? The Truth in Lending Act gives most home equity borrowers at least three business days after closing to cancel the deal. This is known as your right of "rescission." In some situations (ask your attorney), you may have up to three years to cancel. To rescind, you must notify the creditor in writing. Make sure you document your rescission. Send your letter by certified mail, and request a return receipt. That will allow you to document what the creditor received and when. Keep copies of your correspondence and any enclosures. After you rescind, the lender has 20 days to return the money or property you paid to anyone as part of the credit transaction and release any security interest in your home. Remember that you must then offer to return the creditor's money or property, which may mean getting a new loan from another lender.

High-Rate, High-Fee Loans The Home Ownership and Equity Protection Act (HOEPA) may give you additional rights if your loan is a home equity loan, second mortgage or refinance secured by your principal residence and if: the loan's APR exceeds by more than 8 percent the rate on a Treasury note of comparable maturity on a first mortgage, or the loan's APR exceeds by more than 10 percent the rate on a Treasury note of comparable maturity on a second mortgage. the total fees and points at or before closing exceed $499 or 8 percent of the total loan amount, whichever is larger. (The $499 figure is for 2004 and is adjusted annually.) Credit insurance premiums written in connection with the loan count as fees for this purpose. If HOEPA applies: A lender may not engage in a pattern or practice of lending based on home equity without regard to the borrower's ability to repay the loan. You must get certain disclosures from the lender at least three business days before closing. Your lender cannot make a direct payment to a home improvement contractor. Certain loan terms are illegal — such as most prepayment penalties and increased interest rates at default. In most situations, your loan cannot have a balloon payment due in less than five years. Due-on-demand clauses may not be used unless the consumer defaults. A lender that has made a HOEPA loan to a borrower generally may not refinance that loan into another HOEPA loan within the first year. Your lender may not call a one-time loan a line of credit. A high-rate or high-fee loan might be right for you, but be aware that it has risks. It is an   extremely expensive way to borrow money. You could lose your home if you can't make the payments.

Where to Complain

If you think your lender has violated the law, you may wish to contact the lender or loan servicer to register your concerns. At the same time, you may want to contact an attorney, your state Attorney General's office or banking regulatory agency, or the Federal Trade Commission.

How to Identify the Qualities of a Good Roommate

By Lane Cummings, eHow Contributor

updated: January 12, 2011

Identifying the qualities in a good roommate depends on your own personal needs.

Finding a roommate can often pose a challenge; finding a roommate that you're compatible with can pose an even bigger challenge. That's often because people are individuals with unique living habits and needs: some people abhor dirty dishes in the sink, other people like the ease of doing dishes when they feel like it. Finding a roommate that you're compatible with means finding someone who is compatible with your own set of idiosyncrasies. However, your search for a roommate will be easier if you identify early on the qualities of a good roommate for your particular character and habits.

Instructions 

Interview people you know who already have roommates or who have had the experience living with a roommate. Ask them about their likes and dislikes, things they enjoyed an that bothered them about the experience and note down answers that you find relevant to yourself. 

Visualize your ideal roommate. Write down the qualities that this person would have. For some people, a quiet, tidy person is most important. For others, a social, outgoing roommate would be ideal. Write down at least 10 characteristics.

Look at your list and circle the qualities that you absolutely cannot live without. It's unlikely that you'll find a roommate that meets all of these qualities, and that's why you need to pinpoint that qualities that will make a roommate good for you. For example, some people will insist on a nonsmoking roommate. Others might require that a roommate have steady work.

Write down a list of your personal likes and dislikes. Circle the likes and dislikes that you are most passionate about. Bear in mind that a roommate that is best for you will most likely share some of your likes and dislikes. For example, you'll probably want a roommate who loves animals if you're a member of PETA.

Write down basic characteristics that all of your friends share. If you take time to think about it, all or most of your friends probably share some of the same aspects. These aspects are most likely qualities that, whether you're aware of it or not, are extremely important to you. For example, perhaps most of your friends follow the golden rule, or all of your friends are very communicative.

Land Buying Tips

Buying Land to Build a New Home?

By Elizabeth Weintraub, About.com Guide

Do your due diligence before buying land.
Whenever I think about buying land, I can't help but hear the theme song for that 1960's TV show running through my head: "Green acres is the place for me." Laugh as you may, urban dwellers often idealize what it's like to live on acreage outside city limits. So before you decide to dump it all for "give me that countryside" and buy land on which to build your dream home, consider first the realities.

Benefits to Buying Land

Land costs drop in the country. The further away from the city, the cheaper the acreage. Many people buy land because they want to build a custom home to their own specifications. They also want cleaner air and more space. Wide open areas without trees shading the house are perfect settings in which to install solar panels, which is a concern for many environmentally concerned buyers who use green building materials.

Drawbacks to Buying Land

Finding skilled craftsman willing to travel might be difficult. Some might not show up as promised and may want higher wages to compensate for the distance. Transporting building materials and paying for delivery will likely cost more over building a home in the city.

Although modern conveniences are available, they aren't always reliable in the middle of nowhere, which is why many home owners in the country use generators as a back up when utilities fail. Going into town for groceries and other shopping needs generally requires planning and long trips. If it snows, and the roads aren't promptly plowed, you could be snowed in for days.

Renting Before Buying Land

If you are unfamiliar with an area, it might be a good idea to rent a home first before buying the land and beginning construction. As a new resident, you can get to know the community first hand and hear stories from local owners that you won't hear if you pull up in an SUV with a fat wallet in your pocket asking about MLS listings.

Resale value is often softer in the country than the city. That's because the pool of potential buyers is smaller. If demand is low and supply is high, home prices will be more negotiable. As a tenant, you can try to time the real estate market and be ready to buy that parcel of land when it first becomes available.

Factors to Consider Before Buying Land

    Zoning Requirements

    Check with local authorities (city, county and state) to determine zoning ordinances and whether you can build the type of home you want before committing to buying the land. A community within 20 minutes of Sacramento city limits, for example, does not permit construction of any structure on parcels smaller than 20 acres. Ask about future zoning, whether there are plans to put in shopping centers or airports, or to change nearby land uses that could also devalue your land.

    Smells and Sounds

    Realize that you might be trading exhaust fumes from city buses for the lovely odors produced by pig farms. Some farm animals such as geese and donkeys produce squawks and brays that travel for miles. Horses along country roads drop steaming piles of waste. It's not like anybody carries along a plastic bag and picks up after their horses.

    Natural Hazards

    Obtain a natural hazard disclosure and look for soil problems. Some parts of El Dorado County near the Sierra, for example, have naturally occurring asbestos in the rocks and soil. A disclosure will tell you if the land is a protected habitat, which would prohibit building. Is the area a known fire hazard? Is the fire department supported solely by volunteers? Many owners in the country maintain private ponds for fire emergencies.

    Elevation

    If the land is located near hills, how likely is the land to move? Some slab foundations can crack if the land is unstable. Find out if your parcel lies within the path of a potential landslide. For construction near bodies of water, you might want to consider building a raised foundation and make sure to buy flood insurance. If the land was once a swamp, ask neighbors about the condition of their foundations.

    Easements

    If access to your land is provided by driving across an adjoining parcel, you should obtain an easement and make sure it is recorded. Find out who maintains the roads and what your prorata share might cost for upkeep. What rights do neighbors have to cross your land? Are the boundaries clearly marked? Obtain title insurance, which will disclose easements and restrictive covenants or conditions. You might want to order a survey of the land.

    Utilities

    Water is important. Not all water is potable. Sometimes water rights don't "run with the land," which would mean you could not dig a well. Find out the depth of your water table and determine the difficulty of digging. Is the ground mostly rock? It can be costly to bring electricity, telephone or cable services to the property if they are not already established nearby. Will you need to install a propane tank? Consider a generator for back-up during power outages. If you cannot hook up to a sewer, what will it cost to install a septic system?

    Appraisal

    It's common to pay cash for land. If you're not planning to finance the land purchase through a conventional lender, which will require a lender appraisal, then obtain your own appraisal to determine an appropriate price before making an offer. Comparable sales are sometimes difficult to find when buying land.

How to Negotiate With the Land Seller...

By Robyn Nelson, eHow Contributor

Negotiating with a land seller is part of the give and take in buying a piece of property. The seller asks a particular price and the buyer wants to pay less. To purchase the land at a lesser price, negotiations must take place. The asking price is rarely the agreed-upon purchase price. A wise buyer will offer a lesser amount of money after reviewing the current title of the land for sale and visiting the property. A good land negotiation takes place when both the buyer and seller believe they have received a good deal.

Instructions

Reviewing the Property
Obtain a vesting deed for the land for sale. This is available at the county courthouse from the county clerk's office. The vesting deed is the ownership deed for the current land owner. Review this deed to see if there are any easements or rights of way that have been granted and for what purpose. This information could be a negotiating point to justify a lower offer. This will also provide the legal description of the property.

Review the appraisal. This may have been done by the seller before the property was listed. If it is being done by you, the buyer, ask the appraiser for a list of like properties that have sold in the area. Compare those prices and see if the asking price is within reason of those that have sold. An appraisal will have to be done if you are seeking financing, but during the negotiation phase, like property analysis will do.

Obtain a copy of covenants and restrictions, if any, for the property. This document will detail any requirements from the community for building and include any restrictions, such as building setbacks or housing styles allowed. These could provide reasons for offering a lower price.

Inspect the land that is for sale. Notice aspects dealing with water, sewer and electricity. Is there a phone line to the property? Will you need to drill a water well? Will you need to put in a septic system? If a septic system will be needed, is there appropriate land for a leach field? Will you need to pay to have the power company build an electric line? Is the access a right of way through the neighbor's property? How many gates will you need to open? The answers to these questions will dictate whether a lower offer should be tendered.

Making an Offer

Calculate all of the costs to bring the land up to the condition you would like. It is possible that the land is already prime and no additional costs will be incurred. Calculate the price of like properties that have sold. Calculate the need of the seller. Find out why the land is being sold. If the seller is in a hurry due to a move or money issues, calculate the offer you believe will interest the seller. Calculate the most you are willing to pay the seller.

Offer a lower amount of money than the asking price. Make sure it is significantly lower than the highest price you are willing to pay. The land seller will likely counter with a higher offer than your lowest amount. Judge the amount of time that was taken for the counter offer to be tendered. If it was close to your offer, try one more amount, in between your initial offer and the counter. It is likely that a price will be settled upon. If it was quick, but not much lower than the asking price, wait.

After waiting up to 2 weeks without any word from the land seller, make another counteroffer. The length of time is dependent upon how badly the seller needs to sell. If the seller is willing to wait, the need is not too great. Your next offer will need to be more.

After making a counteroffer, conditions or contingencies may be placed on the offer. You may offer a higher amount, but examples of contingencies or conditions may be that the seller pay closing fees or pay for the appraisal. These items can negate the higher dollar amount that you are offering.

Continue the back and forth of offers until an amount is reached that is agreeable to both parties. Do not exceed the price you initially set as your maximum amount to pay. No property is worth paying more than you can afford. If both you and the land seller believe a good deal was made, negotiations were successful.