Buyer Contributions and Georgia Down Payment Assistance

Credit and income eligible home buyers considering properties priced up to $250,000 often find down payment assistance to be quite helpful toward achieving their dream of home ownership.  There does seem to be a common misconception among them and others, however, that down payment assistance programs will eliminate the need for any financial contribution from their resources toward the transaction.  As a result, uninformed buyers move on to the next steps in the process only to learn that they are not prepared for the multiple expenses often associated with the purchase that are that are not covered by down payment assistance.  Limit frustration when entering the housing market by preparing for some of the out-of-pocket expenses associated with a home purchase.

Earnest Money

This good-faith deposit (plan for one-percent of the purchase price) is expected to accompany serious offers to purchase, but is not required for acceptance.  It is, however, a good indicator of how committed a buyer is toward seeing the transaction through to settlement.  Earnest money is credited toward the buyer’s expenses in the transaction that closes such as the required down payment, pre-paid expenses and closing costs.  It can be returned to the buyer under terms stipulated in the contract should it terminate or awarded to the seller as liquidated damages in the event of buyer default.   

Appraisal Fee

Expect the lender to request this fee often of up to $500 so that an appraiser can provide a property value report, even if an appraisal has already been completed.  The appraisal fee is refundable until the work has begun and a portion of it may be credited back to the buyer at settlement in some instances.   

Utility Connection Fees

The utilities are often already connected at many of the properties to be considered, but a number of them will require the buyer to have them connected in order for home inspections to be completed.  Plan for a fee of up to $200 to have the property re-winterized in addition to any connection fees charged by the utility companies.

Home Inspection Fees (including termite inspections)

Property inspections should be completed early in the process to comply with certain timing contingency provisions of the contract.  The fees for an optional standard home inspection can range from $200 up to $500 depending on the property while a termite inspection fee, if required by the lender, can reach $100.       

Making up Differences

Multiple offers on properties are now becoming more commonplace and winning those bids often requires an offer above list price.  Be prepared to fund the difference between the listed price and the offer amount at closing in these instances.    

When Down Payment Assistance Isn’t Enough

Some of the most widely used down payment assistance programs offer between $5,000 and $8,000, amounts that are sufficient for many transactions but could fall short of the total down payment required by the lender on higher priced properties.  Work with the lender to have a sound understanding of the investment required and review the down payment assistance programs for opportunities to bridge the gap between the funds available and the amount required by the lender.

These are only a few examples of some of the most common out-of-pocket fees that are typically not covered by down payment assistance.  Ease the path to home ownership by carefully reviewing the good-faith estimate provided by the lender with the loan officer before paying any non-refundable fees.  Doing so will provide some level of confidence that buying a home is affordable, manageable and is the best decision at this time.

Call (678) 775-2677 or write today for more information on down payment assistance.  Like Metro Atlanta Down Payment Assistance on Facebook.

Solomon Greene
Georgia Real Estate Brokers Associate, CDPE, REALTOR®
Keller Williams Realty Atlanta Partners
http://www.AtlantaDownpaymentAssistance.com