Can you buy a home with ZERO out of pocket?

by | Jan 15, 2017 | Real Estate | 0 comments

Upcoming Free (& non-promotional) Home Buyer Classes:

Saturday, January 21st , from 10am-1pm (ish)
Vancouver YMCA
11324 NE 51st Circle, Vancouver WA (SR-500 & 112th/Gher Rd)

Thursday night, February 2nd , from 5pm-8pm (ish)
       Marshall Community Center, conference room
       1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday February 4th, 2017 , from 9am-12pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
If these class dates and/or times don’t work for you, please let us know.  We understand that you have lives, and families, and work.  We will work something out that works better with your schedule.  Just let us know….
….we also have home seller classes available too…link on left on website

Remember…with reservation…we will throw in lunch, or dinner!  😀
Happy Snow Day….again!

Rain, rain, please come back soon!  The sunshine is gorgeous, but the snow and ice can absolutely go away now.  One of my favorite things about where we live is that if I want to go to the beach… I can drive there.  If I want to go to the desert…  I can drive there.  If I want to go to the forests… I can go there, and if I want SNOW…  I can DRIVE there!  I think it’s pretty for maybe a day, but then I’m done.  🙂  I have enjoyed the ‘snow’ days with my youngest though.  We snuggled, watched movies, caught up on laundry, and I have all my 2016 receipts entered into the spreadsheet.  At least it’s been productive?  While it has been nice, not many folks want to look at homes when the roads are so treacherous with ice, and many people have also been enjoying the family time.  If you are looking for a home in a very popular price point, this may be a very good time for you to actually be looking for a home….why?  For the very reasons I just stated.  Real estate is very slow right now because of the weather.  Once all this melts off though with the coming rain, and warmer temps (yay), we will all be going back out into the world.  🙂  Of course…then we just need to worry about potential flooding…  oy vey…  When is summer again?

This week we are going to talk about buying a home…and how much money is needed to do so.  All the time people call or email me about this, or come to the class and are surprised that yes, you do need ‘some’ money to buy a home.  They are told by someone, or hear on the radio, that you can buy a home with zero money out of your pocket.  I am so sorry….but this simply isn’t true.  You CAN buy a home with zero down payment, but there are fees during the home buying adventure that you, as the buyer, will have to cover.  So….let’s talk about those a bit…, and then later we will talk about the loans, and grants, that are out there to help you buy a home with ZERO down payment.  

So, what do you NEED to buy home? There are three fees associated with buying a home, and you need those.  There is no such thing as buying a home with no money out of your pocket.  So, what do you need???

Earnest Money
This is the first fee associated with buying a home. The earnest money is a good faith deposit. It isn’t your down payment and shouldn’t be confused with it. Once an offer is accepted and signed around the earnest money check is due. This can be a cashier’s check in some cases, as with most bank owned properties, or a personal check. The earnest money should be made out to the title company, and is due for deposit within 3 business days of the accepted offer. The purchase/sale will specify how much the buyer is putting up to secure the contract, to show ‘good faith’. An earnest money deposit says to the seller: “Yes, I am serious enough about buying your house that I’m willing to put my money where my mouth is.” 
Earnest money is refundable as long as the buyer backs out with a legal reason. If you back out of the accepted contract, without a legal reason, the earnest money is forfeit. In the coming weeks I will talk about the legal reasons for backing out of your offer and getting your earnest money refunded.  Your buyers agent is here to help you with that.  As YOUR real estate agent, we want to protect you, your investment, and your earnest money.
Depending upon your loan, the earnest money CAN go towards your down payment amount, or be refunded to you after closing. The average earnest money in our area is $1,000 -,$2000 and some banks can/are requesting anywhere around 1%-3% of the purchase amount for earnest money.  A builder can, and usually does, require more money for an earnest money since, for the builder, there is more risk involved.  With a builder it is pretty common to want anywhere from 1%-3% of the purchase price for earnest money.  Again though….this is money that would go towards your down payment when you close.

The inspection should be completed within 9 days of the accepted contract. Legally your inspection period is 10 calendar days, but you never want to wait until the last minute as something could always come up, that you might want . The average inspection cost is about $400. The inspection is done by a licensed inspector who can provide a dry rot & pest report. The inspector is paid at time of service. The inspector will provide a written report and receipt for the service. This is a non-refundable fee as you are paying for a service that the inspector is rendering to you. If you chose to back out of the contract due to the inspection, this is a legal reason and you will NOT forfeit your earnest money. Inspections are non-invasive, but refer back to the inspection blog for questions to ask your inspector.  Remember that you, as the buyer and your buyer’s agent should both attend the inspection….and that you get what you pay for. **this fee can is not typically refunded back to you after closing.

The last fee that can be expected prior to closing is the appraisal fee. After the inspection (and any repairs) is negotiated, and agreed upon, you, as the buyer, will contact your lender to give the go-ahead to order the appraisal. The average appraisal fee is anywhere from $600 – $800. This fee is paid to the lender.  An appraiser is hired by the lender to confirm the market value of the property. You can be willing to pay whatever you want for the home, but the bank will only loan as much as the appraiser says it’s worth. The laws that came out after the market crash prevent buyers, buyer’s agents, and seller’s agents from having contact with the appraiser so we won’t know it is done until the paperwork comes in. The appraisal is typically done within a week of ordering, and can take up to two weeks to have the paperwork to your lender AFTER the appraiser has come out.  Sometimes the appraiser comes out relatively quickly, but this past fall saw a backlog in the appraisals, and some appraisals were taking 4 weeks or more just come out after it was ordered…it was crazy, and caused a lot of delays.
The appraisal is a non-refundable fee. If the appraisal comes in lower than purchase price then the seller has the right to either lower the price of the home, or back out of the agreement. If the seller was to pay any of the buyers closing costs then this can also affect those numbers as well.  The home can be sold for no more than the appraisal price. If this happens, the earnest money will be returned to the buyer, but the inspection and appraisal fee is lost. If you are purchasing a property from an investor you may be required to have TWO appraisals done…remember to talk with your lender as s/he is here to help you!   Depending upon your loan, this fee can be returned to you after closing like the earnest money.  Some of the zero down payment loans that will refund all, or part of your earnest money to you (and maybe your appraisal fee as well) is USDA (rural development) loans, VA loans (awesome programs for our veterans!!), the state down payment assistance loan, and the NHF grant.  Don’t forget to holler at me with any questions….

What is the timeline?
Offer accepted (inspection period begins)
– home is pending sale
Earnest money is due (refundable, based on 4 legal reasons to back out of the agreement)
– within 3 days
– within 10 calendar days
– Approximately $350-$450 (non-refundable)
– within 7 days of agreed upon inspection response
– $600-$800 (non-refundable)

These are the 3 fees you can expect as you are starting the process to purchase a home. These 3 fees have nothing to do with closing costs, or down payment….that is an email for a different week. 🙂

Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  AND If you are looking for a real estate agent, I would love to be able to help you.  
As always….this is just a quick overview…. again…and I can’t say this enough…please remember that your agent is NOT a salesperson, and should not be acting like one.  Real Estate is not really about houses, it is about relationships.  Your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your home adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.

If you have any questions about this, or something you have heard…or if you would like me to help you with your home adventure, please call, email,  text, or facebook me anytime.  I am, as always, happy to help!

Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers.

.   ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…

Upcoming Topics: What are the ‘Hidden’ Costs of Buying a Home? ….. 
What are ‘Closing Costs’? …. 
What if I don’t have a Down Payment? …..  &….
What happens after an offer is made?
Last Week:  winter market, interest rates, & best time to buy?

Have a great day, and I will talk to you soon,

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA

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