October 12, 2023
If you are new to house hunting or new to the FHA loan process and feel intimidated shopping around for a lender, realtor, or contractor, you may wonder whether certain third-party home loan services are worth the effort and expense.
Borrowers need certain services like inspections and home appraisals, but for others, you may want to think a bit before committing.
Realtors and Real Estate Agents
Some mistakenly believe you MUST use an agent to buy a home. But what’s the reality? Hiring a realtor is 100% optional.
That said, do you feel more comfortable with one instead of without? Using a realtor is not a waste of money if you are unfamiliar with the neighborhood, the city, or the state. It’s also a good move if you aren’t quite sure what you want just yet.
Borrower’s Lawyer
Nobody is required to have a lawyer when applying for a mortgage or buying a home. But using a lawyer may be a good idea when the purchase agreement is non-standard or if there are clauses in the contract you do not understand or agree with.
Are there unusual circumstances surrounding the purchase? If your transaction must be done remotely or in some other non-standard way, a lawyer is not required to close the deal but you may have some added peace of mind using one.
Lender’s Lawyer
For FHA home loans, the borrower cannot be legally charged for the lender’s legal counsel fees. That’s good to know when comparing lenders for a home loan since the same prohibition may not be present for certain conventional mortgages.
Home Inspection Fees
A home inspection may be “optional,” but nobody should buy a home without one. If you buy a house without having it inspected and you find problems later after you have already accepted the keys and taken possession of the home, the FHA cannot help you.
Appraisal Costs
There is typically always an appraisal fee when buying a home with an FHA mortgage. You should expect to pay for an appraisal, and its also smart to expect to pay for a compliance inspection should the appraisal turn up issues that need to be corrected as a condition of loan approval.
Pest Inspections
Pest inspections are not mandatory for FHA loans unless the FHA fee appraiser finds evidence of “wood-destroying pests” or related issues. In such cases, an FHA borrower may be required to get a pest inspection as a condition of loan approval.
Mortgage Insurance
Mortgage insurance should never be confused with homeowner’s insurance. Mortgage insurance protects the lender should you default on the mortgage, while homeowner’s insurance protects the home’s contents.
If you are approved for an FHA loan, your lender will require mortgage insurance for either 11 years or the entire term of the loan, depending on the mortgage amount and the duration of the loan term.
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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