The Price of NOT Agreeing on Terms for a Florida Home Loan
As everyone is aware of, buying a home is expensive. It’s the largest investment you’ll ever make. But what about NOT doing so? If you begin the Florida home loan process, only to watch the deal fall through, expenses can significantly add up, as well.
“How high depends on where the buyers and sellers are in the negotiating process,” says Bob Moulton, a mortgage broker with Americana Mortgage Group. “Many of the expenses can’t be transferred to another purchase.”
When buyers make an offer, the bids come with the understanding that contingencies written into the contracts will be satisfied. A house must pass an inspection, for example, or a buyer’s financing package must come through. Between the time the offer is accepted, however, and the point when the deal falls apart, many actions may have taken place and they have to be paid for.
Here are examples of fees you don’t get back, even if your Florida home mortgage loan never goes through:
Inspection fees: One of the prime reasons home sales break down is that inspections turn up unforeseen problems. The foundation might be badly cracked or the roof needs replacement. Usually, a seller will try to accommodate a buyer in order to get the house sold, but sometimes the problems can’t be negotiated away.
Title search: All Florida home loan lenders require that a property’s ownership is not in dispute. This means someone has to examine legal documents and records to make sure no one else can claim to own it and that there are no mortgage or mechanic’s liens on it.
Generally speaking, title searches are undertaken by title insurers and they often absorb the search cost if a home purchase is canceled. There can, however, be cancellation fees that the buyer has to pay. Whether these fees apply and how high they can run varies from state to state.
Survey: In some cases buyers, or their lenders, may want the land surveyed before closing. Surveys can find encroachments on the property or other problems that buyers may want to know about before they take possession.
If any discrepancies that arise cannot be corrected or the deal falls apart for other reasons, the surveyor must still be paid. That can amount to somewhere in the neighborhood of $500 to $1,500.
Attorney fees: Many real estate attorneys work on a flat rate and sometimes those fees can be applied to another Florida mortgage loan, provided it is made within a designated time period. Other attorneys charge an hourly rate, which means any labor spent on a deal that fails still has to be paid for by the buyer. That can easily run into the hundreds of dollars and if there is any hassle about terminating the contract, the fees can quickly hit four-figure territory.
Appraisal fee: Many lenders insist an independent property appraisal be done before they approve the final Florida home loan. It may be to protect the lender, but it’s the buyer who pays for it.
Financing costs: Application fees can usually be applied to another purchase but the delay can cost buyers dearly in added interest on their mortgages.
Moulton says, “Buyers locked into a low rate can buy an extension. It costs about a half percent of the amount of the loan for an extra 30 days.”
That translates into $1,000 for a $200,000 mortgage, an expensive solution. Moreover, it means the buyer has to find another property quickly, before the extension runs out or get stuck with a more expensive Florida home mortgage loan.
Document preparation fees: Mortgage lenders and title companies charge these to put together all the papers they need to go forward with the loan. They may not add up to too much but, on top of all the other expenses, well, who needs it?
Consider this one more tip to consider when looking into Florida home loans. Make sure it’s a process you’re willing to go through - or else you’ll be throwing money away without any property to show for it.
