Knoxville No Money Down Mortgages: Don’t Forget About These Costs
If you didn’t already know, you can buy your first Knoxville home with absolutely no money down.
Unfortunately, many buyers forget about some of the other costs associated with buying a home. In this post, we’ll cover some of the costs you shouldn’t forget about when you buy a home.
Even when you put no money down on a Knoxville home, you’ll still have to worry about closing costs, which can be a hefty price if you’re not properly prepared for it. At closing, you’ll pay for your closing costs as well as your down payment (if you have one).
Typically, you’ll pay the following closing costs at closing:
- Origination Charges
- Homeowner’s Insurance
- Title Insurance
- Title Company Fees
The good news is, though, you can probably get the seller to cover most, if not all of your closings costs. The important part is to be prepared when you write the contract. If you know that you’re going to need to get your closing costs covered by the seller, then you can be sure that you need to write your offer accordingly.
Earnest money is another item that you should be prepared to pay when you buy your first home with no money down. Even when you’re not getting a mortgage on your first home, you still need to put some kind of money down to show a seller you’re serious about purchasing the home.
Earnest money doesn’t have to be a large sum of money. Typically, it’s somewhere between $500 and $1,000. Sometimes it’s a bit more but if you want to show a seller you’re serious about a home, you may put a bit more down. Earnest money is what protects a seller from a buyer walking away for any reason other than what is outlined in the contract.
Keep in mind, there are situations where you get your earnest money back, like a bad home inspection. You will also be credited on the closing disclosure for your earnest money, which is why many first-time buyers who get zero down mortgages get some money back at the closing table.
A home inspection is another item that you should be prepared to pay for when you buy your first Knoxville home. It should also be an item that you’re more than happy to pay for since it can save you a boatload of money in the long run.
The home inspection is one item that you should be fully prepared to pay for out of pocket. Typically, a home inspection will cost anywhere from $300 to $500, depending on the inspection company and what type of inspection that you do.
While a home inspection is an expense out of pocket, it is well worth it. Home inspections are able to find any underlying issues in the house before you buy it. So, if a roof needs to be replaced or if there are foundation issues, you’ll be aware of these issues before you by the house. That way, you can either negotiate the repairs or walk away from the transaction.
Appraisal Or Credit Report
Finally, when you apply for a loan you may be required to pay for your credit report or appraisal upfront. Typically, this is done when you apply for a loan and make your loan application. Once again, it’s showing your lender that you’re serious about going through with the loan and pays for two items that they pay for out of pocket once your application is made.
An appraisal is the biggest item that you’ll have to pay out of pocket. They usually range anywhere from $300 to $500, depending on the loan type and the mortgage lender. A credit report is significantly less and can range anywhere from $12 to $50.
Sometimes when a buyer is getting a no money down loan, your lender can provide you with a credit on your closing disclosure for these items, so you’ll walk away with a check at closing. But, be sure to check with your lender to confirm.
Bottom Line: There Are Some Costs To No Money Down Mortgages
Knoxville no money down mortgages do come with some cost to them. As a buyer who is buying a home with no money down, you should know what these costs are so that you’re prepared. As we mentioned, there are certain costs, like the appraisal or credit report, that you may be able to receive a credit back for at closing.
Buying your first Knoxville home is an exciting and overwhelming experience. If you’re like most first-time buyers, you may not be sure where to start. If there is anything we can do to help you in your home search, please do not hesitate to contact us. We’ve helped countless homeowners buy their first home and we’d love to do the same for you. Rick can be reached at 865-696-9002 or via email at [email protected]. Kati can be reached at 865-696-1888 or via email at [email protected].
Are you ready to start your home search? Visit our home search page to get started today. Or, be sure to keep up with our Knoxville First Time Home Buyer’s Blog to keep up with the latest information about buying your first home.