Payments and Prices Explained
After looking at our homes, you probably noticed different monthly payments for the home and are wondering what the difference is and how we come up with these numbers. Below should explain everything and answer all your questions. If you still have any questions or concerns, please contact us so we can help you.
Q; How do I know the home is worth what your asking?
A; The price of every home we sell is based off of a recent independent, appraisal (available for your viewing upon request).
Every home we sell will be required, by your lender, to have a new appraisal done by an independent appraiser that your lender will choose through a randomized process. The home must appraise for the purchase price. If the home does not appraise for the purchase price we will do one of two things;
(1) We will lower the purchase price to the appraised value, or
(2) We will let you out of the purchase contract and return any deposit or down payment monies.
If the home appraises for more than the purchase price then we still sell it for our lower asking price. This way you benefit in either situation
We also encourage you to have anyone you like inspect the home prior to signing any paperwork. Lastly, with most of our homes we offer a one year home warranty for a little peace of mind.
Q: Why are the payments different between purchasing, renting, and owner financing the same home?
A: Our intentions are to sell you a home, the same as any other seller. If you are able to purchase the home today by obtaining a bank loan (with or without our help) you will have a relatively low house payment because of the low interest rates the banks are offering on owner occupant type home loans.
If you cannot obtain a new bank loan at this time (possibly due to some credit issues that will require time to cure), the owner (CHBS Inc.) of the home may still decide to work with you through some type of short term owner financing such as a land contract or lease option (rent to own). Your monthly payment during this owner financing stage will be slightly more. This is because the owner will have to collect a monthly payment from you and then pay their underlying bank loan, taxes and insurance from the money they received from you. The owner obviously has to cover their payments to the bank/county/insurer to be able to work with you while you are repairing your credit. Once your credit issues are solved (the quicker the better), you should then be able to obtain a low interest rate bank loan and your monthly payment will then be set depending on the interest rate at that time.
Note: All of our monthly payments are approximations based on the average current going interest rate (noted on the table) for a 30 year fixed rate loan. Interest rates vary daily and may cause a slight variation in your final payment.
Our last option is to strictly rent you the home. Our business is based on selling the homes, not renting them (We make little, if any, money renting you the home. It only covers our payment to the bank, taxes and insurer), so each home must have 4-6 months of market exposure prior to us considering it for rent. You must have the sum of first month's rent, last month's rent and a security deposit (security deposit is equal to one month's rent) to rent a home.
Q; What are real estate taxes? Am I required to pay this? Why is it figured monthly?
A; When you own a home (not renting), you have to pay taxes to the county every 6 months. The tax amount you pay is determined by the counties assessment of the value of your home. The more expensive the home, the more you pay. Those taxes are mainly used to pay for public schools, and other county services.
Most loan programs require you to pay 1/12th of your yearly real estate taxes to them (the lender) on a monthly basis. They will place this amount into a special savings account (called an escrow account) and then the lender will pay the bill for you when it is due (every 6 months) out of that account. This monthly amount is what is in the payment chart for the house. We quote the taxes for the most recent year.
Q; What is homeowners insurance? Am I required to have it? Why is it figured monthly?
A; When you own a home and have a loan on it, the lender requires you to pay for and carry a home insurance policy on the home. This will pay to replace the home if it burns, gets hit by a tornado, etc. Home owner insurance (like car insurance) prices vary by company, policy and individual. The estimated payment on our chart comes from our experience of insurance prices based on the home.
Although insurance is paid once per year, most loan programs require you to pay 1/12th of your yearly home owners insurance to them (the lender) on a monthly basis. They will place this amount into a special savings account (called an escrow account) and then the lender will pay the bill for you every year, when it is due, out of that account. This monthly amount is what is in the payment chart for the house.
Note: it pays to shop around for insurance prices because they can vary widely for the same coverage. You may receive a discount on your auto insurance once you own a house if they are with the same company. Call us before shopping for insurance because you do not want the insurance agent pulling your credit to give you a quote. Pulling your credit will lower your credit score, which may hurt your chances of obtaining a loan. Call and we will tell you how to avoid this trap.
Q; What is PMI? Am I required to pay this?
A; PMI stands for Private Mortgage Insurance (aka LMI or MIP) When you purchase a home and obtain a mortgage, If you do not have a down payment equal to or greater than 20 percent of the purchase price, your lender will require you to pay mortgage insurance. Mortgage insurance is an insurance policy that protects your lender in case you default on the payments. As a borrower, you pay the premiums every month, and the lender is the beneficiary. PMI fees vary, depending on the size of the down payment and the loan. On our payment tables, we figure PMI based on you borrowing 100% of the purchase price and putting no money down towards the purchase price of the home.
If you have 20% of the purchase price, or more, to pay towards the purchase of your home, you will not be required to pay this fee.