Expert: Lisa Webber - 2/22/2009

Question
Hello, I am about to buy a house with a VA loan, however the VA Loan say no down payment. I gave a 2500 check for good faith estimate and on top of that  i have to pay 400 for the Appraisal and 250 for the inspection. For no down payment these are alot of fees. The home owners are paying closing cost. I am expecting to get back 600 at closing. They also asked me for 400 for HOA packet. All this is in Las Vegas NV. Do this seem correct to you?

Answer
Hi Malik,  I answered this question a couple days ago and it looks like it did not register in the system - sorry for the delay!

Yes, the $2500 is for what is called an "earnest money" deposit, which shows the seller that you are serious about purchasing the home.  That money goes towards any closing costs or charges that may be left over after the seller contribution towards your closing costs.

I'm a Realtor in Maryland and here it is customary for the appraisal fee to be included in the closing costs on the HUD-1, but I do know that some appraisers require the money to be paid up front.  If for some reason the sale does not go through, they might not get their payment, which isn't fair to them because they have already done all of the work on the appraisal.  The appraisal charge is required by your lender to make sure the home is good collateral for the loan they are providing you; to make sure the value is there.

The home inspection is voluntary but I highly recommend it.  That is to protect you so that you know of any problems with the house before you purchase it.  The couple hundred dollars that you pay to hire a licensed home inspector is money well spent in my opinion.  The home inspector can alert you to problems like a roof that needs to be replaced, or a faulty air conditioning system.  If major repairs come up in the home inspection, you can negotiate with the sellers to have them repair the problems or give you money to compensate for them.  You could potentially save thousands of dollars by being alerted to these things ahead of time before making the purchase, or be told of any potential structural issues, which may make you decide not to purchase the home.

As far as HOA packages, the costs for those will vary.  I'm not familiar with the Las Vegas area because I'm in Maryland, but if they are charging $400 for the package, that must be the going rate.

I hope this helps.  It sounds like you're getting into the house with less than $2000 down - not bad for buying a home and a potential long term investment.  Plus now you get to write the interest on your mortgage loan off on your taxes!

Congratulations!