“THE MONEY YOU NEED TO BUY A HOUSE- PART TWO”

So, what other money  do you need on hand prior to closing?  Although you pay the down payment at closing, you will need to show a seller that your offer is in earnest by offering an earnest money check at the time the offer is made.  In Georgia, the typical earnest money offered  is one percent of the purchase price.  That money is held by your agent’s Broker, and then is credited to you at closing.  If you terminate within the due diligence period (the subject of another blog post!) you get your earnest money refunded.  If you do not terminate within that period, and fail to close, the earnest money is at stake, and could be claimed by the Seller.

The other costs involved in purchasing a home are the INSPECTION, which varies according to how big the property is and how high the purchase price, but which cost $350 and up.  Some buyers choose to also test for RADON – which will run $150 and up.  Radon is an odorless gas that is emitted from the ground and which has been shown to be a factor in some illnesses, such as cancer.  In my experience, most radon tests in Georgia come up negative for radon, although there appear to be pocket areas where radon IS found – around and near Chastain Park, and on the east end of town (towards Stone Mountain).  If the radon is found to be above EPA recommended levels, then it should be remediated – and the Buyer will usually ask the SELLER to pay for that.

Your lender may require you pay for the credit check, appraisal, that sort of thing prior to closing to be sure you are actually going to close with them.  I’d budget $500-$1,000 for that.   If you pay for those prior to closing, but they will reduce your closing costs AT closing.

SO, this gets us to the final costs – closing costs.  One lender gave me the formula 1.7 percent of the loan amount plus $1700 in fixed costs.  That’s a VERY rough estimate of what your closing costs will be.  Obviously, the closing costs will vary depending on many factors.  You *can* (and many buyers do) ask the Seller to pay all or a portion of your closing costs.  The loan you have will determine HOW MUCH of your closing costs the Seller can pay – they will often be limited to three percent of the loan amount, and you’ll need to pay the rest.

I hope this helps!!!  If you need more specific guidance, please do not hesitate to contact me and let me know how I can help you!!!

HOW MUCH MONEY DO I NEED BEFORE I BEGIN LOOKING FOR A HOUSE?

I try to find some fun, interesting topics for blog posts – this one is a little dry, but important!  I will sneak in a few of these here and there, just for variety – and because, like vegetables, they’re good for us. 

I find that new homebuyers are confused about how much money they should have in hand BEFORE they begin looking for their dream home.  A quick answer is – call your lender !  They can give you a good idea of what price home you can buy, and how much in reserve you should have before you begin looking.  My favorite mortgage lender – the one I use most often and who will do my loan when I purchase a home – is Carlisle Dent of Fidelity Bank Mortgage.  Tell him I told you to call and he’ll be happy to discuss it with you. 

But if you’re just “thinking about it” at this point,  or just want a general idea, here we go:

Generally, the largest chunk of dough you should have in advance is your DOWN PAYMENT.  The down payment varies depending on the type of financing you are using, your monthly payment and the price of the home you are purchasing.   It is a percentage of the purchase price, and that percentage depends on the financing you receive. It is possible to pay as little as 5% down, but in a more traditional situation, you would be putting about 20% down.  Government loans require a smaller down payment – I have seen (even in this tough lending environment!) no money down (from the buyer) loans.  But since the mortgage meltdown, those are very few and far between.  The more you put down, the more lenient your lender can be on underwriting issues.  Plan on no more than twenty percent of the purchase price – but most of my buyers these days put twenty percent down.

Saving enough money for a down payment can seem like an unreachable goal for some. Remember though, if you already own a house, you can use your home equity toward a down payment on a new house. If you are a first time home buyer, start a savings program if you have not already. Also, a lot of first time home buyers receive help from parents and relatives for the purchase of their first time. Consider asking!  It’s a good, effective mode of wealth transfer at a time when you most need it.  If you DO go this route, know that there are special rules relating to when that money needs to come to you.  Some loans will require that the funds are in YOUR account for a certain amount of time.  Check into that FIRST if this is your plan, so that you know you are conforming to those rules.

Also, some builders of new homes will consider “sweat equity” in their selling price. This means that they will reduce the price and let you do some of the work (like painting) yourself.  There are even more strategies to get your down payment lower, such as using a co-borrower or seller take-backs.

The Most “Artistic” Home in Atlanta

All right, so it’s not a home anyone actually LIVES in, but it’s immediately recognizable.  This house sits on the grounds of the High Art Museum.   The High Art Museum, of course, is one of Atlanta’s great treasures, and the sculpture is “House III” by Roy Lichtenstein (1997), the famous pop artist who also constructed such classics as Crying Girl (1964), seen here (and brought to life in the film Night at the Museum). 

House III looks like an ordinary home, but as you walk past it, and look at it, it appears to move as you move – sort of like the eyes in a portrait following a character in an old-time horror film.  I really ought to post a video, shouldn’t I?  Or maybe this will inspire you to go see for yourself.  It’s really quite amazing.  The house appears to undulate and move with you, and the optical illusion also has the perspective fooling your eye - like an Escher sketch.  The sculpture was completed in 1997, the same year that Lichtenstein died, so I presume that it was one of his last works (he died in September of that year).

Being a Realtor, I love that one of the major attractions one sees in the outdoor pavilion at the High is a *house*.  The piece has me reflect on the thought that many operate under the illusion that home never changes – when, in fact, whatever you call home is constantly in flux, and it is rarely how you remember it.   

I must also mention that the exhibit currently at the High, Picasso to Warhol, the Modern Masters, is AMAZING.  I had high expectations and it exceeded them all.  The exhibit runs through April of 2012, so you have plenty of time to see it (and marvel at the most artistic home in Atlanta on your way in).