Protection
Home Insurance
Most lenders require a homebuyer to provide at closing a one-year paid receipt for a Home Insurance Policy. These policies are available from leading insurance companies. Fire and hazard insurance provides protection for fire and other perils to your home and its contents.
An Expert House Inspector
What can homebuyers expect from a home inspector besides a bill for $150-$350 (depending on size of property and/or complexity of the inspector's report)?
- First of all, require proof of membership in the Society of Home Inspectors.
- Expect a quickly delivered (one or two day) written report
- Expect practical returns. While you can see for yourself many flaws in a house, the practiced eye of a professional inspector can probably spot more, especially in areas not easily accessible to a home buyer.
- Specific information could even reduce the price of a house if the seller will agree the price has not already been discounted for defects
- Possible Repairs:
- Serious problems (heating, roofing, plumbing).
- Medium problems (insulation, paint).
- Minor problems (electrical outlets, kitchen sink).
- If no serious problems are found, inspection can pay off indirectly in assurance that you are making a sound investment.
Title Insurance
Title insurance provides protection in the event any of a number of past actions threaten the title to your property. Most lenders will require title insurance to protect their interests.
As a home buyer, you may be able to save money with a "reissue rate" for title insurance, if the property changed hands within the last several years. The title insurance may allow a lower "reissue rate" premium because the recent title search is still valid. Consult your attorney and insurance company.
After Loan Approval
After the lender approves the mortgage, the buyer will receive a "loan commitment letter" stating the mortgage amount, interest rate and length of loan term. The buyer should check it carefully, and return a signed copy to the lender or follow other specific instructions.
Walk-Through Inspection
The purpose of the walk-through inspection several days prior to closing is to determine if all conditions in the contract are satisfied. The time for the buyer to inspect and note defects for correction by the seller is during the contract negotiations and prior to signing the sales agreement. Repair or replacement items should be noted in the contract or contingent on a house inspection, otherwise most resale homes are sold in "as is" condition.
It is up to the buyer to perform the walk-through inspection, not the seller, who may or may not be present. The buyer should be accompanied by the selling Sales Representative. The home seller should be sure utilities are on so that equipment can be operated.
Room By Room
The buyer should try all lights and switches; turn all faucets on and off, run the shower, flush toilets; turn on the furnace and central air conditioning (in the off-season, buyer should hire a professional to certify proper functioning of both heating and air conditioning); test all stove burners, oven at bake and broil; run some ice cubes through disposal to test blades; run dishwasher, washer, dryer through complete cycle; open and close all windows and doors. In short, try everything, even keys and fireplace flue.
All deficiencies should be noted, and funds may be withheld from the home seller by the attorney for repairs, if seller does not correct problems prior to closing. The selling broker will coordinate with the listing broker and seller to make repairs before closing, if possible. Upon receipt of bills and notification that repairs are complete, the attorney will release balance of funds to the seller, if money is “held back” for needed repairs.
>> Continue on to... Closing on the Purchase
