Home Buying in Portland>Question Details

Reni, Home Buyer in Portland, OR

How much out-of-pocket $ needed to buy a house with a USDA 100% guaranteed loan if seller pays closing costs?

Asked by Reni, Portland, OR Tue May 19, 2009

I'm trying to determine if this is even realistic for me - I've heard that these loans have closed for as little as $500 (the cost of the inspection) but that seems too good to be true, considering the fees/prepaid insurance/extra costs pile up to $5k - $10k. I would wait to buy and save more $, but I have less than 60 days to find a new place and could only come up with a fraction of that....

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Hi Reni - I am dual licensed as both a Realtor & Loan Officer and this is an awesome program! Everyone that's answered your question already has done a good job. First thing you will need is your Earnest Monedy deposit - and in a case like this, I always put a provision in the contract that says any unused portion of your Earnest Money deposit gets returned to you at closing. As long as the seller is paying all your closing costs, you should be able to get all your deposit back.

As mentioned - other up front fees generally include any home inspections and your appraisal fees.

If you'd like some help - my team would be happy to work with you. We can meet with you to get your loan approval started and then find you a home!

Kelly Gebler
Real Estate Broker & Loan Officer
Keller Williams Realty & Sunset Mortgage Co.
Email: LetUsGuideYouHome@comcast.net
0 votes Thank Flag Link Tue May 19, 2009
The USDA loans are a great way to purchase a home in a small town. You will need some cash to cover expenses like inspections $500-$1000, depending on whether the home is on city water & sewer, which typically does not need an inspection. Plus, the lender will probably have you pay for the appraisal upfront - which you can generally recoup as a part of closing.

I just learned yesterday that the USDA is going to be available in Wilsonville, the downside is that the closer in you move to the metro area, the higher the prices seem to be. This is also a good time to negotiate closing costs with the seller.

Depending on the area you are looking to purchase there are a couple of other options that I have recently used quite effectively with my buyer clients. There are signs the economy is stabilizing, so you are wise to beat the rush. Plus, if you are a first time buyer there is that $8000 Tax Credit incentive.

I think you are wise to consider moving forward and evaluating the possibilities of home ownership via the USDA loan. Onpoint Credit Union also has a 100% purchase option.

Let me know if you would like the help of a great Buyers Agent to work through all the scenarios and help you find a fantastic place to call home.

Linda Heinrichs, Broker
RE/MAX Equity Group, Inc.
503-502-5227
0 votes Thank Flag Link Tue May 19, 2009
In short, you will need to write a check for the earnest money deposit at the time of contract. How much of a deposit depends on what you write in your offer and what the Seller is willing to accept. Second, the home inspection will take place prior to closing and need to be paid at the time of service. Budget around $400. When the Seller pays closing costs a specific amount is usually written into the contract. No one can estimate exactly what the costs will be, so it is possible that the total will be more than the amount specified in the contract. In that situation, the Buyer is usually expected to come to closing with the difference.
0 votes Thank Flag Link Tue May 19, 2009
A 100% loan with seller paid closing costs do cost you very little out of pocket. You need to have $500 or so for inspections, and then you may need to prepay items like a credit report and the appraisal upfront (even though they are part of your closing costs). In addition, though you get a "bye" for the first month's payment (since interest is paid in arrears) you would be responsible for homeowner's insurance, property taxes, and utilities.

The more you do save, the better you'd do in terms of the price point you want since you can bring in a down payment and reduce your monthly payment.

Where it may be too good to be true is that the areas these 100% loans are available are typically rural and if schools or commute to where you currently live are a factor, you might want to wait til you can afford the location you know well vs. just going for the "deal" of 100% loan financing.

The best thing to do is talk with a lender and choose a buyer's agent who can work with you to achieve success. Even with 60 days, there is a lot out there. It'll happen!

Regards,
Sarita Dua
503-522-0090 cell
Web Reference: http://www.asksarita.com
0 votes Thank Flag Link Tue May 19, 2009
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