Can you buy a home with zero out of pocket??

by | Jun 23, 2020 | Real Estate | 0 comments

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

Please remember that, currently, ALL classes are being held virtually.  We look forward to teaching at the community centers again, once they open. 

For the virtual classes, they are TWO hours long, and will start at the scheduled starting time.  Please email traciedemars@aol.com for link & password

Saturday, July 11th, from 9am-12pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Monday, July 13th, from 5pm – 8pm (ish)
Marshall Community Center, Conference room
1009 E McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
Saturday, July 18th, from 11am-1pm … VIRTUAL CLASS

Saturday, July 25th, from 11am-2pm (ish)
​       Vancouver YMCA, conference room
       11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave)

..Home Seller Classes are also virtual right now, and again TWO hours long.  Classes will start at scheduled time.  Please email TracieDeMars@aol.com for link & PasswordSaturday, June 27th, from 9:30am-11:30am
Thursday, July 9th, from 5:30pm-8pm
Saturday, July 25th, from 9am-11:30am
Monday, July 27th, from 5:30pm-8pm

~~~~~~~~~
Happy Summer Day!

It definitely feels like summer today, and that is ok.  I love the rain…I really do, but something about a summer morning… it’s pretty awesome.  I know that there is a lot going on in our world right now, and I do want to take a moment to acknowledge one thing… love…  Love for your neighbors, your friends, your family, YOURSELF, & others… ALL OTHERS.  I was always taught to show the same respect to the janitor, as I would to a CEO.  The same respect & care to someone different from me as I would to someone same as me.  ‘A mind is a like a parachute..it functions best when it is open’.  A heart is the same way…   Just my two cents, for what it is worth…  

Quick reminder… be on the look out in the next week or so for the CLIENT APPRECIATION cards!!  They are coming!!!  Thank you to everyone who refers us to their friends, family, and co-workers.  You mean so much to us, and we love when you call … to talk, to ask questions, to ask us with your next home buying (& selling) adventure.  

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 – $2,000, or more.. 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.

Inspection

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 – $450. 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.  The inspection is a visual inspection of the homes current condition at the time of the inspection.  It is not an invasive inspection… this is not ‘Holmes on Homes’.  A home inspection is a lot like having a used car checked out by a mechanic prior to buying it.  The mechanic (or Home Inspector) is going to take the car (or home) for a ‘quick spin’, and check out its current condition.  A buyer & seller can negotiate repairs, or a different remedy, to move forward to closing.  If the buyer/seller can not come to an agreement, then the deal dies.  Earnest money will be refunded as this is a legal reason to back out. Inspection fee is not refunded as the buyer is paying an inspector for their time & service…at time of service.  Remember that you, as the buyer, and your Realtor 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.

There are other inspections that you, as the buyer, might want to consider.  A sewer scope is one of these, and cost is about $150-$200.  A sewer scope is done by a sewer professional, and they will stick a camera down the sewer line to inspect the condition of these to make sure there are no underlying issues there. Even if the home is on a septic tank, and the seller has had the septic inspected, or I should say, ESPECIALLY with a septic tank… get a sewer scope.  The tank is being inspected but not the lines going to the tank.  This has led to some pretty nasty surprises in the past.
Another inspection that a buyer may want to consider…especially if any part of the living space is in the ground (split levels, daylight ranches, basement homes are a good example of a few), or if the home is near a body of water, is a radon inspection.  Radon is a ground occurring gas that can lead to health complications.  Most inspectors can offer these inspections, and there a few companies that offer these specifically.  It takes a few days and requires the home to be pretty much closed up.  In some cases, and with some homes, this can be difficult.  

Appraisal

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 how quick, or slow the appraisal comes back depends on how busy the appraisers are.  

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, as the seller may choose to negotiate those.  If the home purchase was with a VA or FHA loan then that appraisal sticks to the home for six months.  If the seller & buyer can’t come to agreement because of the low appraisal, then the earnest money will be returned to the buyer, but the inspection and appraisal fee is lost. The seller only receives a copy of the appraisal IF the appraisal comes in under the previously agreed upon purchase price.  If the appraisal comes in at the previously agreed upon purchase price, or above that price, the seller does not receive a copy of the appraisal.  

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 type, the appraisal fee coud 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 chenoa grant.  

The appraiser can call out repairs as well.  Most of the time, these have to do with paint peeling, missing visquean under the home, roof condition, missing carbon monoxide detectors, or missing earthquake straps. The appraiser does not do a home inspection on the home, so they are just looking for those items required by the loan type of the buyer.  If the appraiser calls out a repair, this is now a lender required item and has to be fixed to be financed.  The appraiser does not receive a copy of the home inspection.  The home inspection is strictly for the buyer & buyers agent.  The buyers inspector is hired to inspect condition of the home.  The appraiser is hired to inspect value of the home for the bank/loan.  I hope all of this helps, but 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 5 legal reasons –homeowners insurance/title, inspection, appraisal, financing– to back out of the agreement)
– within 3 days

Inspection
– within 10 calendar days
– Approximately $400-$450 (non-refundable)

Appraisal
– 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.  We talked about Closing Costs last month. If you need to see that one again, go to the blog page on www.learningtobuyahome.com.  
 
 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 other fees may be a part of buying a home?  
What if I don’t have a Down Payment? 
How do I get a Realtor, and do I have to sign anything??

Last Week:  What are Closing Costs?

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

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA
360-903-3504

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