Bob Northern & Company
12540 Patterson Ave
Richmond, VA 23238
Tel: 804-708-9463 • Fax: 804-708-9467
Financial Information
How much money do I need and when?

How much when and to whom do I need to give money?

You will need money for your transaction at the following times:
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.
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.
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.
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)
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.
Your lender may require that you pay off specific debts in order to qualify for the loan.
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.
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.
Utility companies may charge you connection and/or transfer fees.
Moving company deposit?
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)