Buyers' Costs/Mortgage Options

COSTS

It’s super important to know how much money you are going to spend during the home buying process.

We don’t want any surprises!

Here’s an outline of the three costs you will encounter prior to the settlement:

1. Good Faith Deposit – this is typically 1% of the purchase price but can vary by situation, ask your Realtor for a realistic amount.

2. Inspection Costs - the costs associated with an inspection can vary a great deal according to how large the home is and how many inspections you are performing. Expect the following costs:

For most everyone…

• Termite $70 - $100

• General Home Inspection $350 - $700

• Radon $125 - $150

  And if you have well and septic…

• Well Yield $350 - $400

• Water Quality (Well) $100 - $200 (add lead in for $85)

• Septic $250 - $500

3. Appraisal - This is ordered by the bank, but they give you the privilege of paying for it and it usually runs $500 - $600.

In Summary… If you are buying a $150,000 home you should expect the following upfront costs:

• Deposit - $1000

• Inspections - $550

• Appraisal - $550

• Total Cost upfront - $2,100

When you get to the settlement you will pay the following two expenses:

• Down Payment – typically 3.5 to 5 % of the purchase price, depending on which type of loan you are using. You are always free to put down more as well (up to 100%!)

• Closing Costs – Some of these expenses are fixed and some can vary according to the amount and type of loan you are using. If you are purchasing a $150,000 home, you could expect the Closing costs to be about $7500. A $300,000 home purchase wouldn’t be $15,000 – instead, it might be around $12,000. VERY IMPORTANT!!! In certain markets – sellers may be willing to pay closing costs for their buyer, they may even expect to. Two things to remember with this…

• Be sure to speak with your agent about what market we are in so you can plan accordingly.

• These closing costs are from the seller’s pocket, and they have closing costs as well, so don’t expect closing costs and a huge discount as well.

• The chart below illustrates what a seller can contribute to your closing costs, not necessarily what they will.

MORTGAGE

There are many mortgage options, here is a high-level overview.

Conventional - Generally for those with money to put down and higher credit scores. Is not a government backed loan and as such has higher standards.

FHA - Often times called the first time buyer’s mortgage, although anyone can get one. It is backed by the government. This gives you a mortgage with the least amount down and is more relaxed on credit requirements.

FHA 203K - IF you are buying a home that is not livable at the moment, but investment wise could make a great home with some repairs, then this is the loan for you. Let’s talk though because this isn’t the obvious choice and is a complicated product.

VA - VA helps Service members, Veterans, and eligible surviving spouses become homeowners, and requires 0% down payment.

USDA - Go to USDA.gov and see which areas offer this loan. Generally, in very rural area. Like a VA loan it has a 0% down payment.

WHO YOU WORK WITH MATTERS!