Home Buying Basics from PNC

Get a Home Appraisal and Title Search

Once the seller accepts your offer, you may strongly consider hiring a certified home inspector who can verify there are no structural problems, code violations or other undisclosed concerns.   When your contract is final, your lender will have the property appraised by an independent, third-party appraiser who will confirm the fair market value of the home.

In addition, a title search will typically be conducted to:

• Discover any record claims on the property
• Make sure you can get a clear title to your new home

Home Affordability

Buying your first home is a big financial step. You’ll want to consider the added financial responsibilities, including things like moving costs, home repairs, landscaping, property taxes and insurance. You should have a steady income, manageable debt and feel confident you will stay in one place for awhile.

Start by assessing your income. Then consider liabilities like student loans, credit card balances and auto loans. Ideally, the amount of your monthly debt payments, including your proposed mortgage payment, should be equal to or less than 36% of your gross monthly income. And remember to budget for a down payment (typically 5% to 20% of the purchase price) and closing costs (usually estimated at 3% to 5% of the purchase price).

Closing the Sale

At last – you’re ready to finalize the sale.

During the closing, you’ll meet with all parties involved in the sale to make it official by signing documents, receiving the deed and paying your closing costs, which may include:

• Attorney, broker, credit report and/or lender fees
• Title search and insurance
• Appraisal and inspection fees
• Points – a predetermined fee
  • Paid to the lender to receive a particular interest rate
  • 1 point equals 1% of the loan amount
• Other costs depending on your particular loan

Homeowner’s Insurance

Homeowner’s insurance provides financial coverage in the event of a covered loss to your home, other structures or contents. In addition, homeowners insurance provides personal liability coverage for third-party claims.

Disaster Insurance

Insurance designed to protect your home in the event a natural disaster such as fire, flood, earthquake, hurricane or tornado were to strike and cause your home to become unlivable.

Mortgage Life Insurance & Mortgage Accidental Death Insurance

Mortgage life insurance pays off or reduces your mortgage loan balance (up to the policy maximum) in the event of death before the debt is paid, enabling surviving family members to retain their home. Mortgage accidental death insurance pays off or reduces your mortgage loan balance (up to the policy maximum) if your death is the result of a covered accident.

Private Mortgage Insurance

Insurance written by a private company to protect the mortgage lender against financial loss if a borrower defaults on the mortgage.

FHA Mortgage Insurance

An undertaking by the Federal Housing Administration (FHA) to insure the lender against loss if the borrower defaults on the mortgage.

VA Funding Fee

This fee is paid by the Veteran and/or third party, directly to the Veterans Administration, to guarantee a specified portion of the loan, should the borrower go into default.

Flood Insurance

Protection against flood loss through the 1973 Flood Disaster Protection Act.