Down-payment

Most homebuyers are aware of the required down-payment fee but some are not as well informed. Generally the down-payment is 3.5 to 5 percent of the home’s total sales price, however there are some loan types that require lower to zero down-payment. A common belief is that at least a 20 percent down-payment is required for buying a home, but the reality of it is that there are other loan programs available to home-buyers that will require less of a down-payment. Of course buyer and property must qualify and meet specific guidelines in order to obtain one of these type loans. We recommend that you schedule a meeting with your mortgage lender to discuss which loan type is best for you and to help you calculate your down-payment amount. If you are ready to get started with the home loan process, you can get started right now by filling out the form on our mortgage loan pre-approval page. One of our preferred lenders will contact you shortly after you have submitted your information.

Earnest Money

Although this isn’t exactly a fee, earnest money still means your funds need to be available at the time of making an offer for a home because it will be deposited with the Title Company. The Earnest Money reassures the seller that you are serious about buying their house. By presenting Earnest Money Funds along with the Contract Offer, the seller’s will get a sense of security while having their property removed from the market. Typically, the Earnest Money in Houston TX and Missouri City TX, is based on 1% of the purchase price. Example: The required amount of Earnest Money required for a home that costs $440,000 would be $4,400 based on 1%. The Earnest Money will be credited back to the bottom line on the buyer side at closing.

Moving costs have steadily been increasing and it is wise to be prepared for this expense. The distance and number of items you’ll be moving will determine the moving company’s charges. Those who move from one part of the country to another often find themselves spending thousands in the process. On the other hand, those that are moving near-by or across the city are more likely to rent a moving truck and handle the responsibility of moving their possessions themselves which typically lowers overall moving expenses.

It is important not to overlook these fees as they are often the second largest expense that a homebuyer pays out of pocket. Closing costs largely consist of mortgage preparation fees and will be discussed in detail below. I always recommend that homebuyers speak with their mortgage lender and request a Good Faith Estimate of what fees you will be expected to pay. Remember: it is important to maintain good communication between you, your mortgage lender and your Realtor®. You should check with these professionals every couple of days should you not hear from them first.

Home inspections are not mandatory, but they are an important part of the home buying process and should not be skipped. You will want to have a home inspection during the Option Period. The Option Period is a specified number of days allotted to the buyer, which allows the homebuyer to perform any/all due diligence deemed necessary during this time. A professional home inspector will then inspect the home on the homebuyers behalf and search to discover any defects or issues that need to be addressed and resolved prior to finalizing the home purchase. A home inspection generally costs between $350 and $1,000 in Houston TX and Missouri City TX.  A home inspection may cost more for larger estates. In addition to a home inspection you may also want to select specialist inspectors whose focus is on specific areas or items of the house. Example: termite inspector, HVAC, electrical etc…

Application Fee

Processing a loan application can be a time-consuming process, particularly if the mortgage company is handling hundreds of loan applications at the time of receiving your application. For this reason, some lenders choose to charge an application fee to compensate for the amount of time involved. Out of many applicants, many times a large percentage may not qualify for a loan yet, especially if the loan requirements are strict at the time of applying. If the requirements for lending are strict at the time of your application, they may have many pending applications that are not quite ready to qualify.

The highest mortgage fee that needs to be paid is what you pay to the lender for your mortgage generation, or “origination fee”. Your lender receives this fee for the preparation of the mortgage before closing.

Buyers have the option to pay this fee for buying down the interest rate on the loan. Your lender should discuss all the available options before you make this decision, as discount points can be used to plan a loan structure in several different ways. Ask your lender about this.

A property appraisal is ordered by the lender to confirm that the agreed purchase price of the home and the amount the mortgage company is lending are aligned. The appraisal is required for the loan, therefore this fee is paid by the homebuyer. The fair market value of the property will be ascertained by a professional appraiser. If it is found that the property is valued lower than the sales price in the contract, the two parties must renegotiate and resolve the issue or the purchase will most likely not go through.

A fee for checking your credit report may be charged to you by some lenders. Typically, the lender utilizes the services of a third party vendor to check your credit and passes the expense of the credit report onto the homebuyer.

Private Mortgage Insurance

If the loan amount makes up a large percentage of the sales price, mortgage companies will charge a private mortgage insurance (PMI) fee for their protection. Once the loan amount is reduced to less than 80% of the property’s market value, this fee will no longer be charged. Until then, PMI is a monthly mortgage expense that should be accounted for before getting a loan. Speak with your lender about PMI.

The mortgage lender will require that the property you are buying will need to be surveyed so that they may verify the property’s bounds and specifications prior to approving the loan. Many times sellers have an existing survey that may or may not be accepted by the lender and Title Company.