Protecting your Investment
Fire And Hazard Insurance
Most lenders require a home buyer to provide at settlement a one-year paid receipt for a fire and hazard insurance policy, often called homeowner’s insurance.
Home Buyer’s Warranty
Owning a home of your own is the American Dream. But with that dream comes worries- what if there’s a major repair needed on the home you’re buying of selling? You can avoid this stress by purchasing a home warranty. Home warranties repair or replace a home’s major mechanical systems and appliances for specific length of time, a year in most cases. This is a home buyer’s and sellers best defense against expensive repairs, or complete replacement of major items, which may include a roof, furnace, or washer and dryer.
Following home inspection, some problems might be detected, buyers can ask sellers to fix certain defects depending how serious they are or can declare contract void and deposit shall be returned to buyers in full after all parties sign a release form.
- Serious problems (heating, roofing, plumbing)
- Medium problems (insulation, paint)
- Minor problems (electrical outlets, kitchen sink)
Many states now require that sellers provide buyers with either a Residential Property Disclosure or Disclaimer Statement
Title Insurance provides protection in the event any of a number of past actions threatens title to your property. Most lenders will require title insurance to protect their interests. Be sure to ask about an “owner’s” policy as well, to protect your title. You may save money if you buy owner’s title insurance at the same time as mortgage title insurance, rather than buying it separately later. Cost of Title Insurance is a one time fee at settlement and part of your closing costs.
As a home buyer, you may be able to save money with a “re-issue rate” for title insurance, if the property changed hands within the last several years. The title insurance may allow a lower “re-issue rate” premium because the recent title search is still valid. Consult your title attorney and insurance company.
After Loan Approval
After the lender approves the mortgage based on appraisal and title search, 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.
Next, the selling and listing brokers will coordinate a settlement date. You should be sent a letter confirming the date, place, time, and a checklist of everything you, as the home buyer need to bring.
The purpose of the walk-through inspection on the day of settlement or several days prior to settlement 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 noted in the contract or contingent on a home inspection, otherwise, most resale homes 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 agent. 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 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 cycles; open and close all windows and doors. In short, try everything, even keys and the fireplace flue.
All deficiencies should be noted, and funds may be withheld from the home seller by the settlement attorney for repairs, if seller does not correct problems prior to settlement. The selling broker will coordinate with the listing broker and seller to maker repairs before settlement 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 escrowed for needed repairs.