Lehigh Valley Real Estate Blog, Home Buying & Selling Information

Getting a Mortgage to Buy a Home in Lehigh Valley

The first step in Buying a Home in the Lehigh Valley is to get pre-approved for a Mortgage. That way you are an educated home buyer that knows their finances and what they can afford.

In addition, if you wish to make an offer on a home the seller is going to expect to see that you have been Pre-Approved for a Mortgage. If the offer is for cash, the seller is going to want to see proof of funds (something in writing showing you have the cash). If the offer has a mortgage contingency they are going to want to see the pre-approval from your mortgage company.

A pre-approval typically means you have spoken to a mortgage company, they have pulled your credit, reviewed your income/debt and determined you should be able to borrow "x" amount of dollars towards a home purchase.

There are multiple Mortgage types available to Purchase a Home in the Lehigh Valley.

FHA Mortgage - 3.5% down payment

Conventional Mortgage - 3, 5, 10, 15, 20% down payment (options vary per buyer)

USDA Mortgage - 100% financing but house must be in a "rural" area - no down payment required - income limits apply

VA Mortgage - 100% financing - no down payment required - buyer must be an eligible veteran of the US Military

PHFHA Mortgage - similar to FHA but includes option to help offset the 3.5% required down payment

Once the home buyer gets pre-approved for a mortgage, they are considered a grade A home buyer that is ready to view homes and make an offer to purchase a home.

If you need a mortgage rep with expertise in all of the above mortgage types let me know.

For all of your Lehigh Valley Real Estate information, visit www.lehighvalleyhomesonline.com

Buying a Home in Lehigh Valley with Well Water

As a Lehigh Valley Home Buyer pursues a home, they may be interested in one that has Well Water as the water source (versus public water).

There are many homes in the Lehigh Valley that have a Well as the source of the Water for a home. The further you go from the major cities (Allentown, Bethlehem, Easton) the more prominent Wells become as the on-site water source. 

Having a Well for your water source may not be a bad thing. It is possible that the water may actually be better than public water.

When you purchase a home with a well, the PA Agreement of Sale has a contingency a buyer can elect to have the water tested. This option and the purchase should be contingent on testing of the water.

Some concerns with a Well:

Is the water potable (drinkable)?

Has the Well ever run dry?

How deep is the well?

How old is the pump?

How old is the ballister tank (typically in the basement of the home)? This can affect the water pressure in the home.

How far is the Well from the septic system (if the property is not on public sewer)? 

When you purchase a Lehigh Valley Home with a Well the water should be sampled and sent to a lab for testing. There are multiple tests that can be done on water but the minimum is Ecoli and Coliform. Is sewerage getting into the water? In addition, Nitrates, Metals and even Pesticides can be checked. Is there lead? Was the land used for farming and pesticides are present? Depending on your mortgage type you may have to test for some of these even if "you" don't care. For instance,a VA mortgage wants a test for "metals" (i.e. lead).

The PA Property Disclosure asks the seller if the well has ever run dry. Hopefully, the seller answers this truthfully. You don't want to purchase a property and run out of water when 3 people take a shower on a Saturday morning.

If the Home Buyer is doing an FHA, VA, or USDA mortgage and there is a septic system on the property there could be an issue if the well and septic aren't the proper distances apart from each other. The Well and the Septic Tank should be at least 50 feet apart and the Well and Sand Mound or Absorption Field should be at least 100 feet apart. When the appraisal is done on the home these distances WILL be looked at.

Although this may seem like a lot to take in, many Lehigh Valley Homes are purchased with wells and septic systems with no issues. 

For all of your Lehigh Valley Real Estate information, visit www.lehighvalleyhomesonline.com

Buying a Lehigh Valley Home with a Septic System

If you are considering Buying a Home in the Lehigh Valley there is a possibility that it may have a Septic System instead of public sewer. 

A septic system is an on-site sewage disposal system. Rather than the home sewage going into a public system it goes into a system that is contained on the property.

The sinks, toilets, laundry...etc all empty into a tank on the property. The solids stay in the tank and the fluids go out to a sand mound or absorption field where they are filtered and go into the ground.

Every few years, the septic tank should be pumped to remove the solids.

If the system is working correctly, the fluids are getting filtered and going into the ground. 

Some Lehigh Valley Home Buyers don't want anything to do with a Septic System. Although you won't get a sewer bill, if the septic has issues it can get expensive. 

If the home buyer wants a house "not" in the city or on a larger lot or in the country it may have a septic system.

As part of the purchase, the Lehigh Valley Home Buyer should elect to get a Septic Inspection done. This inspection is scheduled and paid for by the future home buyer.

The septic system should get flooded with water and the absorption field/sand mound checked to make sure the "earth" is accepting the fluids and the tank is correctly releasing the fluids.

The baffles (filters) in the septic tank should be checked.

The septic tank should be emptied (paid for by the home owner) and checked for cracks and integrity.

If the house has been vacant for more than 30 days a Hydraulic Load Test should be done. This is typically a 2-day test.

Many buyers purchase a home with a septic system but you should definitely make sure the purchase is contingent on the inspection.

For all of your Lehigh Valley Real Estate information, visit www.lehighvalleyhomesonline.com

Down Payment versus Escrow or Deposit on a Lehigh Valley Home Purchase

A topic that is sometimes confusing to a Lehigh Valley Home Buyer is the Down Payment versus the Escrow or Deposit required to Purchase a Home.

There are various mortgages available for a home purchase. Two common ones are 20% down conventional or 3.5% down FHA.

What this means is that for instance on a $200,000 home with a 20% conventional mortgage the buyer is going to have to put $40,000 down and for an FHA mortgage $7,000.

The down payment has absolutely nothing to do with the home or the home seller but is dependent on the mortgage type. This Down Payment is NOT required when you make an offer to purchase the home but is required on closing day when you get the mortgage and successfully close on your new home.

What is required when you make an offer to Purchase a home is a Deposit also called the Escrow. A show of good faith that you intend to purchase the home. This is the money the home seller will attempt to keep if the home buyer without any reason decides not to buy the home.

For instance, on the $200,000 example above you submit the following offer. Mr Seller I will offer you $190,000 for your home and will give you a deposit of $2,000. At this point, the seller can say "I want $195,000 and a $5,000 deposit". 

The price as well as the deposit are negotiable (there are many other negotiable items but for now we are discussing the deposit). 

The home buyer can say "Ok, we accept the $195,000 but will give a $3,000 deposit".

The buyer and seller agree on the deposit and the offer.

Once the contract is executed, the home buyer will have to provide a check made out to the listing company for the deposit. This check will be cashed and the money will be placed in Escrow towards the purchase of the home. On closing day, the listing office will bring that money to the closing and it will get applied to the buyers final costs for the purchase. If the buyer needs $10,000 and the deposit is $3,000 then the buyer will need to bring $7,000.

What happens to the deposit/escrow if the buyer doesn't buy the home?

This depends on "Why" the home buyer doesn't pursue the purchase and what contingencies are in the contract.

If the contract on the home includes inspection contingencies and the buyer and seller can't come to an agreement over repairs the buyer can terminate and ask for their deposit back.

Mortgage and appraisal contingencies are another reason a buyer can terminate and get their deposit back.

A Deposit on a Lehigh Valley Home becomes totally at risk when a buyer decides NOT to purchase a home with no contractual reason. "I changed my mind"

Since the Deposit is held in Escrow it requires the signature of the home buyer and seller to release it and to whom it goes. In certain cases, it may have to be left up to a judge to decide who deserves the money.

For all of your Lehigh Valley Real Estate information, visit www.lehighvalleyhomesonline.com.