| 1. |
When
you sign the offer to purchase your
new home, you will need an earnest
money deposit. This amount
is open to negotiation between the purchaser
and seller. It can range from one dollar
to several thousand dollars. The seller
often looks at the deposit amount to
get a feel of your seriousness and financial
ability to finally close the transaction.
A rule of thumb for an acceptable
earnest money deposit is about 1% of
the sales price of the property.
If the transaction closes, this amount
is shown as a credit to you on the Closing
Statement, commonly referred to as the
"HUD 1." In the event a contingency
in the contract is not or cannot be
satisfied and the transaction falls
through, the earnest money deposit is
returned to the purchaser with no penalty.
Please note: Before any deposit
that is being held by a Realtor in an
Escrow Account can be released back
to the purchaser, all parties to the
contract must sign the contract release
which gives the Realtor the authority
to release the deposit. |
| 2. |
Your
loan officer will ask you for an amount
of money to cover your credit
report and appraisal
fee. These fees may be in the
$350.00 to $450.00
range. Credit reports may range from
$6.00 to $50.00. The appraisal fee (depending
on the type of appraisal e.g. Conventional,
VA, FHA) will be in the $350-$450 range.
|
| 3. |
Some
lenders may attempt to charge you an
“Application Fee”.
This practice is unusual and it is not
in your best interest to pay this fee
at this time. Most professional lenders
will be glad to let you pay this fee
when you close, not at loan application.
The lender charges this fee "up
front" so you will be less likely
to leave him if you find a better loan
interest rate. |
| 4. |
You
will pay your House Inspector at the
time of your home inspection.
A rule of thumb guess regarding charges
by House Inspectors is the charge may
equal approximately 10%-15%
of the gross square footage of the house.
(e.g. a 2000 square foot house should
be in the $200-$300 range) |
| 5. |
The
amount you need for your down payment,
closing costs and prepaid items (taxes,
insurance, private mortgage insurance,
association fees and interest) need
to be in a liquid form before your loan
can be approved. You don’t
need to give it to anybody, but your
loan cannot be approved until this cash
is verified by the lender. Your loan
will not be approved subject to you
being able to save the money. |
| 6. |
Your
lender may require that you pay
off specific debts in order to qualify
for the loan. |
| 7. |
Your
lender may attempt to collect “a
point” from you at the
time your loan is approved to guarantee
your interest rate for 30-60 days. This
point is credited to your closing costs
at time of closing. The purpose of this
point is to lock you into the lender
so you will not go to another. This
becomes especially prevalent when interest
rates are going down and purchasers
continue to shop lenders for a better
rate. |
| 8. |
You
will need to provide a prepaid
for one year homeowners or fire insurance
policy on your home. This prepaid
insurance premium is generally collected
at closing by the closing attorney.
Sometimes, the closing attorney will
require you to furnish the prepaid documentation
prior to closing. |
| 9. |
Utility
companies may charge you connection
and/or transfer fees. |
| 10. |
Moving
company deposit? |
11. |
In
some situations, your lender may require
you to have 2 months of "reserves."
This amount is equal to your mortgage
payment for two months. This money is
not spent, but you must show you have
access to this much money in the event
of an emergency. This amount is in addition
to your down payment, closing costs
and prepaid items. |
| |
(Please
note all amounts listed as approximates
are estimates only and may vary up or
down) |
