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I'm looking for advice on what sorts of questions I should ask at the first meeting with a broker who will arrange my USDA loan.
Also, does the lender generally dictate who does the appraisal? Do they work from a list of local people, or what? I've read the cost of an appraisal is about $400, does that sound right?
Am I to find my own inspector during the escrow process? What is the best way to find someone who is thorough and doesn't have any personal interest in the deal going through which would impair their ability to be objective (small town)?
I recently closed on a USDA loan, so I might have some insight to offer.
The biggest thing you need to look at are the closing costs contained in a GFE or Good Faith Estimate. This will give you an idea how much it is going to cost you to close and all of the associated fees. The next piece is the interest rate and APR that you are being offered. Shop around on these two to find the best deal for you. Also compare the application costs as these can vary wildly. Also, if using a broker make sure you pay special attention to the YSP or Yield Spread Premium on the GFE. This is what your broker is charging you for their services and can vary greatly, but is usually between 1%-3% of the cost of the home.
Secondly make sure that the broker/lender provides you with a PRE-APPROVAL letter. I capped that to emphasize it as a pre-approval is more involved than a pre-qualification. The pre-approval involves a more thorough look into your finances and while not guaranteed is a little more solid in a sellers eyes than a pre-qualification which is only a cursory review based on information that you verbally give them.
The lender will choose the appraiser, they work for the bank, but you get the priviledge of paying for them. Depending on your lender this will either be paid up front by you or included in your closing costs. $400 is in the ball park.
You will select and pay for your own home inspector. The inspector works for you and his only interest should be to you as the client. Most brokers/lenders/agents can all refer you to someone they know. Another method is to hit the web and ask for references for your area. If it is a small area with limited choices, you may have to settle for who you can get.
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