While the lender and other third parties are preparing
your real estate transaction for closing, you have a short to-do
list to complete. This includes having the home inspected and buying
homeowners' insurance.
The home inspection
The home inspection is not the same thing as an
appraisal. The appraisal looks at the value of the home,
the inspection focuses on the condition of the home. The inspection
is not always a required part of the mortgage by the lender, but it
is still a vital component of the purchase process. The inspection
determines the structural and mechanical condition of the home,
including the roof, heating, plumbing, air conditioning and
electrical wiring. The inspection report will reveal the needed
repairs and potential areas of concern for the home.
It is advised that you should have the home inspected
after agreeing on a purchase price but before signing the contract
and handing over a deposit. If you are in a hurry to make the deal
concrete, make sure that your contract includes an inspection
contingency. This protects you from any potentially hidden problems
or defects of the home. The cost of the home inspection is usually
between $250 and $500.
Homeowners' Insurance
After the home has been appraised, you will be able to
start looking for adequate insurance. The lender will usually
require you to carry insurance in the full value of the home.
Homeowners' coverage comes in two types: replacement
cost or cash value.
A replacement cost policy gives you an equivalent new
model of what is destroyed or stolen. The cash value policy gives
you the cash value of the property minus the depreciation caused by
age.
If you are looking at purchasing an older dwelling you
may want to look fro a replacement cost policy. This type of policy
costs about 10% more. Owners of new homes can save money with a
cash-value policy.
Whichever policy you decide is best for you, make sure
that you ask about the home improvements that can reduce your
premium. Safety features, such as security alarms and storm
shutters, can reduce the cost of your insurance.
Equal Housing Opportunity (c) Copyright 2008 RateTake.com