In the last section we spoke a bit more about asset documentation and credit documentation needed by the first time home buyer for USDA Loans. We also gave a few tips in regards to what the underwriter for lenders will need for these items. For this section, we will be talking about more documents that are required for the first time home buyer’s loan process while also attempting to provide some tips in regards to these documents.
- 1 Minute | No Hard Credit Check
The first time home buyer can always expect to have to purchase an Appraisal Report. The Appraisal Report gives the underwriter a lot of information in regards to the home being purchased, including the layout, the year the home was last sold or purchased, and value information in comparison to homes in the immediate area. In fact, the Appraisal Report itself can have a first time home buyer’s loan application result in a denial if the home does not meet the USDA guidelines. The appraisal report can cost anywhere between $300 and $600 depending on the Appraisal Management Company used, or AMC. The appraiser that is then tasked to go to a home strictly makes observations. In other words, this should not be confused with a home inspection. The first time home buyer should rest assured that the home will meet guidelines and address all safety concerns, because the appraiser (and underwriter if the Appraiser misses some issues) will request the seller remedy these concerns before the appraisal can be accepted. The first time home buyer should not have to worry about the repair of these items requested by the underwriter or appraiser, unless specifically mentioned in the purchase contract that the first time home buyer assumes responsibility for these items in question. This typically will not happen for USDA loans, however.
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The Appraisal Report for the first buyer can lead into additional expenses that may be rolled into the cost of the home. For example, if the first time home buyer has a home that is on private well water, the underwriter will require a water inspection to insure that the water is safe to drink. There are rules for who may obtain the water sample collected for the water test as well. Most companies will send one of their own to procure a sample. However, if the company does not have someone that will do it, the first time home buyer, the seller, or agents can not collect the sample. They can only order the water test. The sample must be collected by a third party who will not benefit in the purchase of the home. Other inspections that can result from a first time home buyer’s Appraisal Report can be roof inspections, septic inspections, mold inspections, and termite inspections. These inspections will need proof that the home does or does not need repairs and must also provide the copy of the invoice. If the first time home buyer purchases these inspections, these may be rolled into the cost of the loan if the purchase contract indicates that this will be the arrangement.
For the next section, we will be talking about loan application documents for the USDA loan.
