Buying Real Estate in North Carolina 25 – Due Diligence Period: The Cost of Research

So, you are a first time home buyer and you think you will be getting an FHA loan which will require a 3.5% down payment. You know from your lender that you will qualify for a mortgage loan of up to $200,000. And you know that 3.5% of $200,000 is $7,000.

You have scrimped and saved for an extended period of time and finally, you have your $7,000. In fact, you have gotten a Good Faith Estimate from your lender and, feeling very proud of yourself, you have even set aside money for your loan application, your credit report and the appraisal. Not to mention any loan origination fees and/or points you might need to pay.

You take a deep breath and contact me, your Realtor of choice, of course, and tell me that you are ready to start your home search. You are so excited!

And here is where I have started to talk about the OTHER COSTS of buying a home with my first time home buyers…literally almost as soon as they first contact me. Why? Because… in all of those conversations with your lender, some of the costs associated with buying a home have not really been reviewed with you. Why not? Your lender only needs to review with you the costs associated with actually getting a loan. They don’t know what research you are going to want to do. Nor do they know how much any of that research costs.

Remember that list of typical services you might want/need to have completed from our last post?

All of those services cost money. And most of those service providers want to be paid at the time of the service, i.e. you pay the inspector on the day of the inspection. And of those that will wait and send their bill to be paid at Closing, if you leave the contract, you will still have to pay them for the work that they have done for you. In fact, your Realtor is the only person who does not get paid until you successfully close on your home. Everyone else is paid for the work that they do, whether you end up buying the home or not. It is my hope that these posts will help reduce the “surprises” associated with buying your home. To that end, we are going to discuss planning for these expenses next time.

Next time: General Estimates of the Cost of Services

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