Ready to buy your Dream Home...
...but can you afford it? To qualify for a mortgage, lenders typically require that you have a debt-to-income ratio of 28/36. This means that no more than 28% of your total monthly income can go toward housing. We have many programs available that may be able to expand that range and help you in your unique situation. Let’s take a look and see what we can do.
Mortgage Terms
The mortgage process can be confusing. All the more reason to take the journey with a qualified expert that has your best interest first and foremost in their thoughts. Below is a link to mortgage terms and below that is a section explaining anticipated closing costs. But please, contact me if you have any questions.
Anticipated Closing Costs
Home Inspection
Before you buy a home you should have it checked out by a professional home inspector. I know, buying a home is expensive enough as it is; so why would you spend hundreds more if it isn’t required? Simple, to protect the hundreds of thousands of dollars you are about to spend! It might also save you money on your home insurance.
Almost every contract I write for a home buyer in Florida includes a home inspection contingency. This provides the buyer with an opportunity to conduct an inspection to identify issues with the home prior to purchasing. This contingency allows you the opportunity to cancel the purchase without penalty within the timeframe specified in the offer. It may also present an opportunity to renegotiate the price on the house or require the seller to make specific repairs before you finalize the purchase. Check my reviews, I’ve saved many home buyers significant money during the home inspection phase.
In some situations, you can include home inspection clauses in contracts for a newly built residence. In new home construction, inspections are generally done over phases – foundation, pre-drywall, and final.
There is some overlap in what a home inspection and a VA appraisal covers, a home inspection should provide homebuyers with a holistic look at the quality of the entire home. Your home inspection should include a 4-point (HVAC/electrical/plumbing/roof), water heater, appliances, Wood Destroying Organisms (commonly called a termite inspection, but it checks for more than just termites), roof wind mitigation (can save you money on insurance), plus well, septic, pool, and/or spa (if applicable).sist in finding the right mortgage options and lenders tailored to your needs.
Appraisal
The lender will order an appraisal of the home to determine the estimated market value. The VA appraisal is unique in that it not only determines the property’s value, but the appraiser will also ensure the property meets the minimum property standards set by the VA. These are designed to ensure the home is safe, sound, and free of hazards.
Depending on the lender, you will pay for this appraisal at or before closing. I recommend coordinating with the lender to order the appraisal after the inspection period. This prevents the cost of an appraisal if you are not moving forward with the purchase after the inspection.
The appraised amount is the maximum loan amount. If you offered more than the appraised value you will need to pay the difference out-of-pocket, renegotiate with the seller for a lower price, or cancel the contract. Every offer I write for you generally has an Appraisal contingency. This leaves that decision up to you — pay out of pocket, renegotiate, or walk away.
Earnest money
After the offer is accepted by the seller you are required to submit earnest money, usually within 3 business days.
Earnest money is an amount of money you put down to show you’re serious about purchasing the home. It’s also
known as a good faith deposit. It’s typically around .5% - 2% of the sale price and is held in an escrow account
until closing. If all goes smoothly, the earnest money is applied to the buyer’s down payment or closing costs. If
the deal falls through due to a failed home inspection or any other contingencies listed in the contract, the buyer
usually gets their earnest money back.
Home Insurance
Buying a home is probably the largest purchase you will make in your lifetime. Good home insurance is important. Make sure you shop around for the best coverage. Unfortunately, some insurance companies will not provide coverage in all areas. If you don’t know where to start for this, please ask me. I can guide you through this.
You must set up home insurance coverage prior to closing. Your lender will require the details of your coverage to ensure it meets their minimum requirement. The first 15-months of coverage is included in your closing costs.
After closing, the lender will require insurance payments and real-estate taxes paid into an escrow account. Each month you will pay slightly more than 1/12th of the annual insurance bill and real-estate taxes with each monthly mortgage payment. This is referred to as PITI (Principle, Interest, Taxes and Insurance) The lender will then use the amount collected in the escrow account to pay your insurance bill and real-estate taxes each year.
Check the property’s flood zone code. In some flood zones the lender may require additional flood insurance. In Florida you want flood zones X or X500 to avoid flood insurance. If required, make sure it fits in your budget.
Home Warranty
Unlike home insurance, a home warranty is optional, but it may help ease your concern for large, unexpected expenses that may come with home ownership. A home warranty is not the same thing as home insurance, which covers major perils such as fires, hail, property crimes, and certain types of water damage that could affect the entire structure and/or the homeowner’s personal possessions. A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair or replacement service on a home’s major components, such as the HVAC, plumbing, and electrical systems. A home warranty may also cover major appliances, such as washers and dryers, refrigerators, and even swimming pools.
Some home warranties can only be purchased at the same time as the home. I can discuss this with you in more depth during your home buying journey.
Loan Origination Points
Loan origination points are a percentage of the loan value that borrowers pay in order to secure their loan. These points may cover the loan origination fee (a flat amount or a 1-2% of loan value) as well as an application fee that some lenders charge. Points may also cover other fees charged by lenders, loan broker fees and other costs.
Discount Points
Some lenders offer borrowers the option of lowering their interest rate in exchange for prepaying a portion of the interest due over the term of their loan. This is called “buying down” an interest rate. For every 1% of interest that borrowers prepay, they can usually lower the interest rate for the term of their loan by about 0.25%.
Isn't a VA Loan 0% down at closing?
Every mortgage comes with closing costs (even those advertised as "no closing cost" loans). The amount of closing costs you’ll pay on a VA loan will vary by person, but expect to pay anywhere from 3% to 5% of your total loan cost. Much of this information is available in my pamphlet below or on the Veterans United website.