Earnest Money Deposit (EMD) / Binder The EMD is used to indicate to the seller how serious you are about buying their house. The amount of the binder is important and is one component of making a strong offer. The EMD is usually given to your Realtor when you submit your offer and is held in escrow (usually by a title company) and eventually applied to the purchase of the house.
Home inspection The home inspector will test everything – roof, HVAC, major appliances, electricity, plumbing, etc. - and uncover any major and minor defects to help you determine the condition of the home. The home inspector’s job is to find as many defects as possible, so don’t be surprised if the report comes up with a long list. Some items may be urgent and others can be done at your leisure after you own the home. The seller may agree to fix some of the major items, depending on how the contract is written.
Appraisal The appraisal is ordered by the lender to determine the value of the property you select and is required in order for them to decide whether to grant a loan on the property. The cost varies from lender to lender. Be sure to ask your lender whether they will use a local appraiser. Using an out of town appraiser who is unfamiliar with the local market or one who is not qualified can cause delays and possibly stop the sale. Homeowner’s Insurance (1 yr) The lender will require that you get a 1 year policy for homeowner’s insurance prior to closing. Some lenders include this expense as part of the monthly payment and others expect you to make the payments on your own.
Down Payment Every lender will require a down payment before they will give you a loan. There are two exceptions: A VA loan allows 100% financing, but still requires a funding fee. USDA rural development loans provide 100% financing. FHA loans require 3.5% down payment.
First Time Homebuyer Assistance There are programs available to assist first time homebuyers with down payment and closing costs. If this is of interest, consult with a lender that works with these agencies.
The Tallahassee Lender’s Consortium (TLC) offers first time home buyer programs that may pay up to $10,000 in closing cost/down payment assistance to qualified buyers. You are required to take a first time homebuyer’s class. Call 850 222-6609 to register. Income restrictions apply.
Florida Housing also has a program that assists first time homebuyers. In addition, some properties outside the city limits qualify for Rural Housing Development loans that don’t require a down payment.
Closing Costs vary and usually include (but are not limited to) all the costs associated with the loan, title search & insurance, local taxes and fees to record and transfer the title, survey fee, home warranty (if purchased), pro-rated property taxes, pro-rated interest, pro-rated HOA dues, and fees required by FHA or VA, if applicable.
Your lender should give you an estimate of your total closing costs (called a good faith estimate), once you have a contract on a house. Both buyers and sellers have closing costs and it may be possible to get the seller to pay some or all of the buyer’s closing costs depending on the situation.
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