A home purchase is an investment. A home, yes, but also an investment as it will require initial inspections and on-going maintenance. It is different than renting, as if something breaks, you will need to do the repair, or pay to fix it. Once you sign a contract to purchase a home, you will have about 10 days to complete an inspection to make sure you want to complete the purchase or ask for repairs to be done by the seller for any major issues. Ideally, the day you have an agreement to buy a home, you need to schedule an inspection to be sure you are not buying a money pit. You should be present for at least the last half hour of the inspection to learn about your investment. This will be scheduled right away and your Real Estate Broker can help you find a good professional. We do not get a copy of the report but you can and should share it with your Realtor. Anything that you wish to have repaired before you move forward with your purchase should be requested of the sellers in writing; your Realtor will assist you with this process. Home Inspection/reports usually cost between $300-$500. The cost for this is not included in the Lenders fees.
The other out of pocket cost is the Earnest Money Deposit (EMD). This is a check you will write to indicate to the Seller your intent and ability to carry out the contract. This is deposited and held by a disinterested/third party – usually deposited by your Realtor at the Title Company where your final closing of the loan will be handled. The Title Company does not take sides, and is following the law and letter of the contract. These funds can be part of the down-payment and will be verified by the Bank/Lender closing the loan. Please take note of the Title company name and location, they are holding funds for the transaction and you will go there for your final signing and closing/funding of your loan. DO NOT UNDER ANY CIRCUMSTANCES USE CASH FOR THIS OR AT ANY TIME DEPOSIT CASH INTO YOUR BANK ACCOUNT FOR A HOME PURCHASE. The Lenders require seasoning and sourcing of ALL funds and you cannot source cash. The Earnest Money is usually in the form of a Cashier’s Check and the amount will be requested by your Realtor and will usually be about 1% of the purchase amount or 1,000.00.
Ordering the Appraisal is done through your Lender, and we will contact you to request a credit or debit card. It needs to be done at least once your inspection period is over, can take 10-60 days to receive the report back, but you will be charged right away. Fees can vary depending on the type of loan, rush fees, location of the home and if the property is unusual or complicated. CONTACT YOUR LOAN OFFICER FOR FEES & TURN TIMES FOR YOUR LOAN AS THE COST AND TURN TIME WILL VARY.
You will have to pay more than just principal and interest on your home whenever you don’t put 20% down. If you put less down, included in your monthly payment will be Homeowners Fire/Hazard Insurance, Taxes, and Mortgage Insurance (MI or PMI). If you have other expenses (such as medical) that would make the house payment difficult, it’s best to share this with your Loan Officer, we are here to help and we wouldn’t want you in over your head.
Student loans – Even if you do not make monthly payments on them, they do count as debt. Lenders will use a payment, usually fully amortized, whether you make a monthly payment or not and USDA uses 1% of the total debt in calculating debt to income ratios for qualifying.