One of the lead stories in the Washington Post’s real estate coverage yesterday was the jump in DC metro area home prices – up a whopping 7.7 percent, the biggest increase in seven years.
For those who own homes in the District and nearby suburbs like Arlington, VA or Bethesda, MD, this is fantastic news. Property values have returned to their 2003 levels and are steadily increasing!
But for the would-be homebuyer, an increase in home prices means the hurdles to becoming a homeowner also increase since the cash required of a buyer to close on a real estate transaction hinges on purchase price. Generally speaking, a higher purchase price requires a larger down payment, a more expensive the title insurance policy, a larger share of taxes to be paid, etc.
In short, higher home prices mean added cash to close.
For homebuyers in the DC metro area, who are thinking about buying a house or condo, there’s a free iOS app that very clearly outlines cash to close and presents the expenses (and credits) on an easy to understand and editable HUD-1 Settlement Statement that looks similar to what title companies prepare for closing.
Close It! is like the Turbo Tax of real estate closings. The homebuyer simply specifies a jurisdiction and enters a purchase price on the app’s input screen, and the app immediately gets to work determining cash to close as well as monthly mortgage payments. Each homebuying scenario can be saved within the app for later editing or sharing.
So let’s say a homebuyer crunched the numbers at a purchase price of $460,000, which was the reported DC median home price in April. Cash to close was estimated at approximately $105,000.
This month, the prices may be a bit higher. Using the purchase price slider feature, the homebuyer can see how her cash to close changes as the slider increases (or decreases) the purchase price value by a thousand bucks at a time. Cash to close at a purchase price of $463,000, for example, inches up a little over $106,000 with everything else still the same.
Close It! can help homebuyers and their agents negotiate the best deal possible in a market that is shifting more in favor of home sellers. Use the app to weigh various homebuying scenarios and come up with the strongest offer possible, all the while knowing exactly how it will impact cash to close.