April 7, 2023
It’s easy to miss an important detail or two when planning and saving up to buy a home. Some obvious expenses include your down payment, FHA loan lender’s fee, property taxes, and escrow.
But some things sneak up on first-time home buyers. You’ll want to be ready for both the cost of the services (see below) and the need to pay for the services themselves. For example, did you know that the appraisal and the home inspection are two totally separate costs?
Some do, some don’t, at least not at first.
Inspections Fees and Appraisal Fees
Lenders and real estate agents tend to use the word “inspection” when they really mean “appraisal.” Remember, an appraisal is NOT a home inspection no matter how often the lender calls it one. And your costs for each will be separate and unrelated.
Some feel the home inspection is truly “optional,” but you should never buy a home without having it inspected first.
To avoid nasty surprises after your closing day, consider using a common practice to protect yourself. Make an agreement to buy with the seller that is contingent on the home passing the inspection.
Sellers ask borrowers to skip the inspection in a competitive housing market–there is so much competition for some properties that it may actually be tempting to do so.
But it is a VERY bad idea. It is best to save money for both the appraisal and the inspection. The hundreds you pay today may save you thousands later on.
Pest Inspection Fees
A pest inspection may or may not be required for your home loan, but you should save up for this expense regardless.
If the appraisal turns up any evidence that a pest inspection may be needed you could be required to pay for this service. Pest inspections are separate in both cost and procedure from home inspections.
Compliance Inspection Fees
A compliance inspection is required when the appraiser finds issues that require corrections or repairs to the property as a condition of loan approval.
Loan approval will depend on the outcome of the compliance inspection, it’s not just a formality. These inspections are separate, both in terms of cost and procedure from the appraisal and home inspection processes.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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