Your lender will require an appraisal to make sure the house will be
adequate security for the amount of the loan requested. Generally, when
you apply for a mortgage, you pay for the appraisal up front, and the
lender selects the appraiser. The charge is based on local price ranges
and typically runs upward from about $300 - $375.
Although the real estate associates involved in the purchase will disclose
to you any defects or adverse matters of material significance affecting
the property of which they are aware of through visual inspection and
otherwise, they are not expert in these matters. The inspection
accomplishes two important goals. First, it gives you a chance to
determine the condition of the structure and the mechanical systems that
are not visible or understandable to the average purchaser. You can then
either bring these conditions to the attention of the seller in the form
of further negotiations, or go ahead with the purchase with a better idea
of what may require future maintenance. You will be able to plan ahead and
budget for large purchases as a part of your home maintenance planning.
A reputable inspection
firm will provide you with an evaluation of the major systems in the
house, including foundation and general structure, condition of the roof,
condition of the heating and cooling systems, condition of the plumbing
and electrical systems, and any other specific inspection that you may
require. In addition, the inspection may provide you with the age,
anticipated life expectancy, and estimated replacement costs. You should
be present during the inspection. Come prepared with a list of questions
and concerns that you have about the property. It usually takes about two
to three hours, and the conversation between the buyer and the inspector
can be invaluable. If your questions are limited to specific areas of a
house, most inspection firms will be happy to assist you in evaluating
only one or two systems.
In addition to the oral
report that will be given during the inspection, you should also receive a
detailed, typewritten report within a few days.
The fee for an inspection
varies from area to area and usually depends on the size of the building.
Inspections typically cost between $200 and $375. It is a good idea to
shop for a competitive price and determine what kind of reports will be
provided to you. The inspector should be licensed in a building-related
field: architects, contractors, and structural engineers are good
examples. Ask how long they have been in business, and ask for references
from previous customers.
You may need to make changes to your new home to make it suit your
family's lifestyle. If you are planning to hire professional assistance
for any remodeling projects, choose your contractor carefully. Ask for
recommendations from several sources; then check each company out with the
Better Business Bureau and other references.
In order to obtain a mortgage, home purchasers are required to have hazard
insurance, or fire and extended coverage, as well as title insurance. You
may also be required to have private mortgage insurance, depending on the
size of your down payment. These types of insurance are not required for
your protection, but for the lender's. Private mortgage insurance, which
is necessary for risky, low-down payment loans, covers the lender's loss
if you should default on your loan. If there's a defect in the title to
the house, the title policy covers the lender's losses and legal fees.
And if your place burns to the ground and you don't rebuild, the fire
policy will pay the lender first. Of course, you may want to have this
type of coverage for personal protection also.
Your lender will inform you of whether or not you need mortgage insurance
and how much it will cost. The closing/settlement agent will tell you
what the lender's title policy will cost and give you the option of buying
the same policy for yourself. Except private mortgage insurance, you're
free to consult your own insurance agent for the proper coverage.
This is a universal term for any organization that makes home loans. Such
entities include banks, savings and loans, commercial banks, credit
unions, and Mortgage Brokers. A good lender will be able to help you
decide which type of mortgage is the best for you.
In addition, a good real estate agent will be capable to helping you find
a lender, a good rate, or the right loan - or all three.
Also know as an escrow or title agent, this person is usually a title
officer who not only handles the paperwork of the transaction but also
searches the property's title to make sure it's unencumbered and can be
transferred without problems.
Although both you and the seller will pay the Escrow/Title Company fee, he
represents neither of you in the transaction. He represents the lender
and must follow the lender's instructions, as well as the terms of the
sales contract between you and the seller.
A homeowner’s insurance policy (or a “Binder”) will be required at
closing, with a one-year premium paid in advance. This is true in
absolutely all cases when financing of any type is involved. Insurance is
not required if you are paying cash, however it would be wise to protect
There are many
considerations when choosing an insurer and the best policy to meet your
individual needs and preferences. These issues should be carefully
discussed with your insurance agent before selecting your policy.
Home Warranty Insurance
Either the buyer or the seller may purchase a home warranty policy that
will protect against certain repairs or replacement of appliances,
heating, plumbing and electrical items. Coverage can vary from policy to
policy. Read your policy carefully to determine what is covered and what
the costs are.