Buying A Home? Third-Party Services You Do and Don't Need
October 17, 2023
If you are buying a home with an FHA loan and you don’t have much experience shopping around for a lender, realtor, or contractor, you might wonder whether the services you are pricing are worth the money.
In some cases, you absolutely need certain services, in others you may find some are optional and not worth the expense.
Real Estate Agents
You don’t have to use a real estate agent to buy a home. Using a realtor is 100% optional, though some borrowers may feel more comfortable with the assistance. Using a realtor is not a waste of money if you are unfamiliar with the neighborhood or with house hunting in general.
Borrower’s Legal Counsel
No, you are not required to have a lawyer when buying a house. A lawyer is a good idea when the purchase agreement seems non-standard or if there are clauses in the contract you do not fully understand even after the lender has explained them.
Sometimes, a lawyer is a good idea because the sale must be done remotely or in some other non-standard way. That said, a lawyer is not required to close the deal. Some borrowers hire them, some don’t.
Lender’s Legal Counsel
For FHA home loans, the borrower cannot be legally charged for the lender’s legal counsel fees. That’s good to know when comparing lenders for a home loan since the same prohibition may not be present for certain conventional mortgages.
Appraiser Fees
You will ALWAYS have to pay an appraisal fee when buying a home. Whether or not that expense is covered under a seller concession agreement depends on your arrangement with the house seller.
Inspection Fees
A home inspection is technically optional, but no borrower should agree to purchase a home without an inspection. Disappointment typically follows in such cases, but typically, that doesn’t happen until the borrower has already accepted the keys and taken possession of the home. Then, it’s too late.
Pest Inspection Fees
Pest inspections are not mandatory for all FHA loans, but if an appraiser notes evidence of certain pest infestations, you may be required to get an inspection as a condition of loan approval.
Mortgage Insurance
Mortgage insurance (not to be confused with homeowner’s insurance, which is for the borrower) protects the lender should you default on the mortgage. FHA loans require mortgage insurance for either 11 years or the full term of the loan, depending on variables including the mortgage amount and how long the loan term is.
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In some cases, you absolutely need certain services, in others you may find some are optional and not worth the expense.
Real Estate Agents
You don’t have to use a real estate agent to buy a home. Using a realtor is 100% optional, though some borrowers may feel more comfortable with the assistance. Using a realtor is not a waste of money if you are unfamiliar with the neighborhood or with house hunting in general.
Borrower’s Legal Counsel
No, you are not required to have a lawyer when buying a house. A lawyer is a good idea when the purchase agreement seems non-standard or if there are clauses in the contract you do not fully understand even after the lender has explained them.
Sometimes, a lawyer is a good idea because the sale must be done remotely or in some other non-standard way. That said, a lawyer is not required to close the deal. Some borrowers hire them, some don’t.
Lender’s Legal Counsel
For FHA home loans, the borrower cannot be legally charged for the lender’s legal counsel fees. That’s good to know when comparing lenders for a home loan since the same prohibition may not be present for certain conventional mortgages.
Appraiser Fees
You will ALWAYS have to pay an appraisal fee when buying a home. Whether or not that expense is covered under a seller concession agreement depends on your arrangement with the house seller.
Inspection Fees
A home inspection is technically optional, but no borrower should agree to purchase a home without an inspection. Disappointment typically follows in such cases, but typically, that doesn’t happen until the borrower has already accepted the keys and taken possession of the home. Then, it’s too late.
Pest Inspection Fees
Pest inspections are not mandatory for all FHA loans, but if an appraiser notes evidence of certain pest infestations, you may be required to get an inspection as a condition of loan approval.
Mortgage Insurance
Mortgage insurance (not to be confused with homeowner’s insurance, which is for the borrower) protects the lender should you default on the mortgage. FHA loans require mortgage insurance for either 11 years or the full term of the loan, depending on variables including the mortgage amount and how long the loan term is.
------------------------------
RELATED VIDEOS:
The ARM is an FHA Adjustable Rate Mortgage
A Few Tips About Your Fixed Rate Mortgage
Monthly Payments Establish Good Credit
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