What do you need to buy a house

Buying a home?  How much will you need?

The Down Payment: How much a buyer puts down depends on which financial avenue they wish to take. For example, conventional loans with no mortgage insurance requirement generally need a 20% down payment. Conventional loans with less than 20% down require mortgage insurance. Apply for an FHA loan and it could be as little as 3.5% down, and you will pay mortgage insurance. The VA also offers special loan programs, through lenders, to Veterans and their families who qualify. Find out from your lender if there are first time buyer programs or if State bond money is available. Also, there may be special programs offered by lenders that provide additional programs for teachers, police, new physicians, and more. Always ask Lenders for complete information.

Insurance: Lenders will ask buyers to pay for 1 year of home owners insurance, (wind & hail, and liability), up front. Make sure you use "A" rated Insurance providers. Prices will vary. Flood insurance, is a seperate insurance policy and highly recommended for any New Orleans area home owner, regardless of your flood zone classification. This insurance may be transferable from the seller’s policy, if not; buyers will need to purchase a flood policy as well. The price of flood insurance can vary greatly, from cheap (prox $350/yr), to expensive. Your Insurance Agent will be able to give you full price details on all insurance.

Lenders Fees: This can include administrative fees, cost of application, cost of credit reports, appraisal fees, and may include the discount points a buyer will pay to reduce the interest rate of the loan. You need to know what these costs will be; ask your lender for a rate quote and a copy of the Good Faith Estimate attached to the loan quote. Required by Federal lending practices, getting these amounts in writing will give you important information during the time you are evaluating your home purchase. Lenders are also asked to factor in insurance costs into the Good Faith Estimate. Lender fees vary but they should be reasonable. It is recommended that you do not pay any up-front costs to obtain a quote or obtain a Good Faith Estimate.

Title Insurance: This is a one time fee that is paid at the act of sale. The rate is set by the State. On a $ 300,000 home, current residential title insurance would run about $1590.00.

Pre-Paids: The escrow account used by the lender to pay your property taxes and insurance premiums. Some loans allow buyers to pay a small fee at closing which relieves them from funding an escrow account. Those buyers will be responsible for paying their own taxes and insurance.

Taxes: In Orleans Parish, if you buy a home on May 31st, you will need to reimburse the seller at the act of sale for the June – December taxes because the seller has already paid them, as required, at the beginning of the year. You’ll also need to add another five months of taxes to your lenders escrow account to enable them to have a full year’s worth of taxes on hand to pay the city. It works the opposite way in other parishes, where property taxes are paid at the end of the year. Here, buyers receive monies from the seller at the act of sale to pay the tax bill at the end of the year. Lenders will provide a close estimate for these costs on the good faith estimate.

Title Attorney Fees: These can be fairly consistent from one closing attorney to the next. They each refer to their costs in a different way. One might call it title search, another may call it abstracts. There can also be costs associated with overnighting documents/packages to and from your lender. In total try to keep this amount under $ 500, exclusive of title insurance.