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Assuming that any issues found on the inspection
were resolved, here's what happens next:
Tell the lender that
you've selected a house, and negotiate your final
terms with them. Now that you
know which house you want and how much it will cost
your lender needs to know that too, so they can
work out the details on their end. Give them a call
or go to the office and let them know. Also, get an
agreement with your lender on:
- 15-year vs. 30-year (if you take 30-year,
make sure the lender allows you to pay it off in
15 without penalty)
- FRM vs. ARM (take FRM if the interest rate
is less than 10%)
- Closing costs rolled into the mortgage, if
possible, and if that's what you want to do
Appraisal.
Your lender has an appraiser inspect the home
and prepare an appraisal, which is a report
estimating how much the house is worth. Your lender
wants to make sure the house is priced right --
they don't want to loan you $180,000 to buy a house
that's worth only $135,000. The appraiser bases
his/her appraisal on the amount that similar houses
in the same area have sold for, and the potential
rental income if the house is a duplex. You can
often have the cost of the appraisal added to the
closing costs, but your lender might require that
you pay for it up front.
Survey. The
lender hires a surveyor to survey the
property, which will cost around $350. Usually
you'll get to pay this as part of your closing
costs rather than paying it up front. The surveyor
prepares an official diagram indicating property
lines, sidewalks, public utilities on the property,
etc. This isn't optional. You'll get a copy of the
survey with the all the papers you receive at the
closing.
Insurance.
Select an insurance agent to handle your
homeowner's insurance, and give the agent's contact
information to the title company. Your lender will
take care of paying your annual insurance bill for
you, by adding a small amount to your monthly
mortgage payment. You'll make an initial payment
for insurance at closing as part of your closing
costs, not now. (If you prefer, you can pay your
insurance bill yourself, annually -- just let your
lender know that's what you prefer.)
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