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HOME BUYERS-Conventional
Reliable Property Inspections LLC is a trusted home inspection service that provides thorough and accurate inspections to ensure your peace of mind. Our team of experienced professionals are dedicated to providing exceptional service and detailed reports, with photos and videos, that cover all aspects of your property. We use the latest technology and techniques to identify any potential issues and provide recommendations for repairs or maintenance. With Reliable Property Inspections LLC, you can rest assured that your home inspection is in good hands.
WHAT TO EXPECT AT SETTLEMENT
What To Expect During Settlement Settlement Information Settlement documents You've decided to buy a new home -- congratulations! This article will help you take this big financial step by describing the home-buying, home-financing, and settlement process. Lenders and mortgage brokers are required by federal law under the Real Estate Settlement Procedures Act (“RESPA”) to give you this information. You should receive it when applying for a loan, or within three business days afterward. Real estate brokers frequently hand out a booklet, as well. You probably started the home-buying process in one of two ways: you saw a home you were interested in buying, or you consulted a lender to figure out how much money you could borrow before you found a home (sometimes called pre-qualifying). The next step is to sign an agreement of sale with the seller, followed by applying for a loan to purchase your new home. The final step is called “settlement” or “closing,” where the legal title to the property is transferred to you. At each of these steps, you often have the opportunity to negotiate the terms, conditions and costs to your advantage. You will also need to shop carefully to get the best value for your money. There is no standard home-buying process used in all localities. Your actual experience may vary from those described here. This article will take you through the general steps to buying a home in order to eliminate, as much as possible, the mysteries of the settlement process. Buying and Financing a Home The Role of the Real Estate Broker Frequently, the first person you consult about buying a home is a real estate agent or broker. Although real estate brokers provide helpful advice on many aspects of home-buying, they may serve the interests of the seller, and not your interests as the buyer. The most common practice is for the seller to hire the broker to find someone who will be willing to buy the home on terms and conditions that are acceptable to the seller. Therefore, the real estate broker you are dealing with may also represent the seller. However, you can hire your own real estate broker, known as a buyer’s broker, to represent your interests. Also, in some states, agents and brokers are allowed to represent both buyer and seller. Even if the real estate broker represents the seller, state real estate licensing laws usually require that the broker treat you fairly. If you have any questions concerning the behavior of an agent or broker, you should contact your state’s Real Estate Commission or licensing department. Sometimes, the real estate broker will offer to help you obtain a mortgage loan. He or she may also recommend that you deal with a particular lender, title company, attorney or settlement/closing agent. You are not required to follow the real estate broker’s recommendation. You should compare the costs and services offered by other providers with those recommended by the real estate broker. Selecting an Attorney Before you sign an agreement of sale, you might consider asking an attorney to look it over and tell you if it protects your interests. If you have already signed your agreement of sale, you might still consider having an attorney review it. An attorney can also help you prepare for the settlement. In some areas, attorneys act as settlement/closing agents or as escrow agents to handle the settlement. An attorney who does this will not solely represent your interests, since, as the settlement/closing agent, they may also be representing the seller, the lender, and others, as well. Please note that in many areas of the country, attorneys are not normally involved in the home sale. For example, escrow agents or escrow companies in western states handle the paperwork to transfer title without any attorney involvement. If choosing an attorney, you should shop around and ask what services will be performed for what fee. Find out whether the attorney is experienced in representing home buyers. You may wish to ask the attorney questions such as: •What is the charge for negotiating the agreement of sale, reviewing documents, and giving advice concerning those documents, as well as for being present at the settlement, or for reviewing instructions to the escrow agent or company? •Will the attorney represent anyone other than you in the transaction? •Will the attorney be paid by anyone other than you in the transaction? Terms of the Agreement of Sale Before you sign an agreement of sale, here are some important points to consider. The real estate broker probably will give you a pre-printed form of agreement of sale. You may make changes or additions to the form agreement, but the seller must agree to every change you make. You should also agree with the seller on when you will move in and what appliances and personal property will be sold with the home. Some important terms you should become familiar with include: sale price: For most home purchasers, the sales price is the most important term. Recognize that other non-monetary terms of the agreement are also important. title: The "title” refers to the legal ownership of your new home. The seller should provide the title, free and clear of all claims by others against your new home. Claims by others against your new home are sometimes known as “liens” or “encumbrances.” You may negotiate who will pay for the title search, which will tell you whether the title is "clear." mortgage clause: The agreement of sale should provide that your deposit will be refunded if the sale has to be canceled because you are unable to get a mortgage loan. For example, your agreement of sale could allow the purchase to be canceled if you cannot obtain mortgage financing at an interest rate at or below a rate you specify in the agreement. pests: Your lender will require a certificate from a qualified inspector stating that the home is free from termites and other pests and pest damage. You may want to reserve the right to cancel the agreement or seek immediate treatment and repairs by the seller if pest damage is found. home inspection: It is a good idea to have the home inspected. Never hire an inspector who is not a member of InterNACHI. Unqualified inspectors charge less but they will cost you in the long run. An inspection should determine the condition of the plumbing, heating, cooling and electrical systems. The structure should also be examined to assure it is sound, and to determine the condition of the roof, siding, windows and doors. The lot should be graded away from the house so that water does not drain toward the house and into the basement. Most buyers prefer to pay for these inspections so that the inspector is working for them, not the seller. You may wish to include in your agreement of sale the right to cancel, if you are not satisfied with the inspection results. In that case, you may want to re-negotiate for a lower sale price or require the seller to make repairs. lead-based paint hazards in housing built before 1978: If you buy a home built before 1978, you have certain rights concerning lead-based paint and lead-poisoning hazards. The seller or sales agent must give you the EPA pamphlet titled “Protect Your Family From Lead in Your Home,” or other EPA-approved lead-hazard information. The seller or sales agent must tell you what the seller actually knows about the home’s lead-based paint or lead-based paint hazards, and give you any relevant records or reports. You have at least 10 days to do an inspection or risk-assessment for lead-based paint or lead-based paint hazards. However, to have the right to cancel the sale based on the results of an inspection or risk-assessment, you will need to negotiate this condition with the seller. Finally, the seller must attach a disclosure form to the agreement of sale which will include a Lead Warning Statement. You, the seller, and the sales agent will sign an acknowledgment that these notification requirements have been satisfied. other environmental concerns: Your city or state may have laws requiring buyers or sellers to test for environmental hazards, such as leaking underground oil tanks, the presence of radon or asbestos, lead water pipes, and other such hazards, and to take the steps to clean up any such hazards. You may negotiate who will pay for the costs of any required testing and/or clean up. sharing of expenses: You need to agree with the seller about how expenses related to the property, such as taxes, water and sewer charges, condominium fees, and utility bills, are to be divided on the date of settlement. Unless you agree otherwise, you should only be responsible for the portion of these expenses owed after the date of sale. settlement agent/escrow agent or company: Depending on local practices, you may have an option to select the settlement agent or escrow agent or company. For states where an escrow agent or company will handle the settlement, the buyer, seller and lender will provide instructions. settlement costs: You can negotiate which settlement costs you will pay and which will be paid by the seller. Shopping for a Loan Your choice of lender and type of loan will influence not only your settlement costs, but also the monthly cost of your mortgage loan. There are many types of lenders and types of loans you can choose. You may be familiar with banks, savings associations, mortgage companies and credit unions, many of which provide home mortgage loans. You may find a listing of some mortgage lenders in the Yellow Pages or a listing of rates in your local newspaper. Mortgage Brokers Some companies known as “mortgage brokers” offer to find you a mortgage lender willing to make you a loan. A mortgage broker may operate as an independent business and may not be operating as your “agent” or representative. Your mortgage broker may be paid by the lender, you as the borrower, or both. You may wish to ask about the fees that the mortgage broker will receive for its services. Government Programs You may be eligible for a loan insured through the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs, or similar programs operated by cities and states. These programs usually require a smaller down payment. Ask lenders about these programs. You can get more information about these programs from the agencies that run them. CLOs Computer loan origination systems, or CLOs, are computer terminals sometimes available in real estate offices or other locations to help you sort through the various types of loans offered by different lenders. The CLO operator may charge a fee for the services the CLO offers. This fee may be paid by you or by the lender that you select. Types of Loans Loans can have a fixed interest rate or a variable interest rate. Fixed-rate loans have the same principal and interest payments during the loan term. Variable rate loans can have any one of a number of “indexes” and “margins” which determine how and when the rate and payment amount change. If you apply for a variable-rate loan, also known as an adjustable-rate mortgage (ARM), a disclosure and booklet required by the Truth in Lending Act will further describe the ARM. Most loans can be repaid over a term of 30 years or less. Most loans have equal monthly payments. The amounts can change from time to time on an ARM, depending on changes in the interest rate. Some loans have short terms and a large final payment called a “balloon” payment. You should shop for the type of home mortgage loan terms that best suit your needs. Interest Rate, Points and Other Fees Often, the price of a home mortgage loan is stated in terms of an interest rate, points, and other fees. A “point” is a fee that equals 1% of the loan amount. Points are usually paid to the lender, mortgage broker, or both, at the settlement or upon the completion of the escrow. Often, you can pay fewer points in exchange for a higher interest rate or more points for a lower rate. Ask your lender or mortgage broker about points and other fees. A document called the Truth in Lending Disclosure Statement will show you the “Annual Percentage Rate” (APR) and other payment information for the loan you have applied for. The APR takes into account not only the interest rate, but also the points, mortgage broker fees, and certain other fees that you have to pay. Ask for the APR before you apply to help you shop for the loan that is best for you. Also ask if your loan will have a charge or a fee for paying all or part of the loan before payment is due (a “pre-payment penalty”). You may be able to negotiate the terms of the pre-payment penalty. Lender-Required Settlement Costs Your lender may require you to obtain certain settlement services, such as a new survey, mortgage insurance, or title insurance. It may also order and charge you for other settlement-related services, such as the appraisal or a credit report. A lender may also charge other fees, such as fees for loan processing, document preparation, underwriting, flood certification, or an application fee. You may wish to ask for an estimate of fees and settlement costs before choosing a lender. Some lenders offer “no-cost” or “no-point” loans, but normally cover these fees or costs by charging a higher interest rate. Comparing Loan Costs Comparing APRs may be an effective way to shop for a loan. However, you must compare similar loan products for the same loan amount. For example, compare two 30-year fixed rate loans for $100,000. Loan A with an APR of 8.35% is less costly than Loan B with an APR of 8.65% over the loan term. However, before you decide on a loan, you should consider the up-front cash you will be required to pay for each of the two loans, as well. Another effective shopping technique is to compare identical loans with different up-front points and other fees. For example, if you are offered two 30-year fixed-rate loans for $100,000 at 8%, the monthly payments are the same, but the up-front costs are different: •Loan A: 2 points ($2,000) and lender-required costs of $1,800 = $3,800 in costs •Loan B: 2-1/4 points ($2,250) and lender-required costs of $1,200 = $3,450 in costs A comparison of the up-front costs shows that Loan B requires $350 less in up-front cash than Loan A. However, your individual situation (how long you plan to stay in your house) and your tax situation (points can usually be deducted for the tax year that you purchase a house) may affect your choice of loans. Lock-Ins “Locking in” your rate or points at the time of application or during the processing of your loan will keep the rate and/or points from changing until settlement or closing of the escrow process. Ask your lender if there is a fee to lock in the rate, and whether the fee reduces the amount you have to pay for points. Find out how long the lock-in is good for, what happens if it expires, and whether the lock-in fee is refundable if your application is rejected. Tax and Insurance Payments Your monthly mortgage payment will be used to repay the money you borrowed, plus interest. Part of your monthly payment may be deposited into an “escrow account” (also known as a “reserve” or “impound” account) so your lender or servicer can pay your real estate taxes, property insurance, mortgage insurance and/or flood insurance. Ask your lender or mortgage broker if you will be required to set up an escrow or impound account for taxes and insurance payments. Transfer of Your Loan While you may start the loan process with a lender or mortgage broker, you could find that, after settlement, another company may be collecting the payments on your loan. Collecting loan payments is often known as “servicing” the loan. Your lender or broker will disclose whether it expects to service your loan or to transfer the servicing to someone else. Mortgage Insurance Private mortgage insurance and government mortgage insurance protect the lender against default and enable the lender to make a loan which the lender considers a higher risk. Lenders often require mortgage insurance for loans where the down payment is less than 20% of the sales price. You may be billed monthly, annually, by an initial lump sum, or by some combination of these practices for your mortgage insurance premium. Ask your lender if mortgage insurance is required and how much it will cost. Mortgage insurance should not be confused with mortgage life, credit life or disability insurance, which are designed to pay off a mortgage in the event of the borrower’s death or disability. You may also be offered “lender-paid” mortgage insurance (LPMI). Under LPMI plans, the lender purchases the mortgage insurance and pays the premiums to the insurer. The lender will increase your interest rate to pay for the premiums -- but LPMI may reduce your settlement costs. You cannot cancel LPMI or government mortgage insurance during the life of your loan. However, it may be possible to cancel private mortgage insurance at some point, such as when your loan balance is reduced to a certain amount. Before you commit to paying for mortgage insurance, find out the specific requirements for cancellation. Flood Hazard Areas Most lenders will not lend you money to buy a home in a flood-hazard area unless you pay for flood insurance. Some government loan programs will not allow you to purchase a home that is located in a flood-hazard area. Your lender may charge you a fee to check for flood hazards. You should be notified if flood insurance is required. If a change in flood insurance maps brings your home within a flood-hazard area after your loan is made, your lender or servicer may require you to buy flood insurance at that time. Selecting a Settlement Agent Settlement practices vary from locality to locality, and even within the same county or city. Settlements may be conducted by lenders, title insurance companies, escrow companies, real estate brokers or attorneys for the buyer or seller. You may save money by shopping for the settlement agent. In some parts of the country (particularly western states), settlement may be conducted by an escrow agent. The parties sign an escrow agreement which requires them to provide certain documents and funds to the agent. Unlike other types of settlement, the parties do not meet around a table to sign documents. Ask how your settlement will be handled. Securing Title Services Title insurance is usually required by the lender to protect the lender against loss resulting from claims by others against your new home. In some states, attorneys offer title insurance as part of their services in examining title and providing a title opinion. The attorney's fee may include the title insurance premium. In other states, a title insurance company or title agent directly provides the title insurance. Owner’s Policy A lender’s title insurance policy does not protect you. Similarly, the prior owner’s policy does not protect you. If you want to protect yourself from claims by others against your new home, you will need an owner's policy. When a claim does occur, it can be financially devastating to an owner who is uninsured. If you buy an owner's policy, it is usually much less expensive if you buy it at the same time and with the same insurer as the lender's policy. Choice of Title Insurer Under RESPA, the seller may not require you, as a condition of the sale, to purchase title insurance from any particular title company. Generally, your lender will require title insurance from a company that is acceptable to it. In most cases you can shop for and choose a company that meets the lender’s standards. Review Initial Title Report In many areas, a few days or weeks before the settlement or closing of the escrow, the title insurance company will issue a “Commitment to Insure,” or preliminary report or “binder” containing a summary of any defects in title which have been identified by the title search, as well as any exceptions from the title insurance policy’s coverage. The commitment is usually sent to the lender for use until the title insurance policy is issued at or after the settlement. You can arrange to have a copy sent to you (or to your attorney) so that you can object if there are matters affecting the title which you did not agree to accept when you signed the agreement of sale. Coverage and Cost Savings To save money on title insurance, compare rates among various title insurance companies. Ask what services and limitations on coverage are provided under each policy so that you can decide whether coverage purchased at a higher rate may be better for your needs. However, in many states, title insurance premium rates are established by the state and may not be negotiable. If you are buying a home which has changed hands within the last several years, ask your title company about a "re-issue rate," which would be cheaper. If you are buying a newly constructed home, make certain your title insurance covers claims by contractors. These claims are known as “mechanics’ liens” in some parts of the country. Survey Lenders or title insurance companies often require a survey to mark the boundaries of the property. A survey is a drawing of the property showing the perimeter boundaries and marking the location of the house and other improvements. You may be able to avoid the cost of a complete survey if you can locate the person who previously surveyed the property, and simply request an update. Check with your lender or title insurance company on whether an updated survey is acceptable. RESPA Disclosures One of the purposes of RESPA is to help consumers become better shoppers for settlement services. RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices, and describe business relationships between settlement service providers. Good-Faith Estimate of Settlement Costs When you apply for a loan, RESPA requires that the lender or mortgage broker give you a "good-faith estimate" of settlement service charges you will likely have to pay. If you do not get this good-faith estimate when you apply, the lender or mortgage broker must mail or deliver it to you within the next three business days. Be aware that the amounts listed on the good-faith estimate are only estimates. Actual costs may vary. Changing market conditions can affect prices. Remember that the lender's estimate is not a guarantee. Keep your good-faith estimate so you can compare it with the final settlement costs, and ask the lender questions about any changes. Servicing Disclosure Statement RESPA requires the lender or mortgage broker to tell you, in writing, when you apply for a loan or within the next three business days, whether it expects that someone else will be servicing your loan (collecting your payments). Affiliated Business Arrangements Sometimes, several businesses that offer settlement services are owned or controlled by a common corporate parent. These businesses are known as “affiliates.” When a lender, real estate broker, or other participant in your settlement refers you to an affiliate for a settlement service (such as when a real estate broker refers you to a mortgage broker affiliate), RESPA requires the referring party to give you an Affiliated Business Arrangement Disclosure. This form will remind you that you are generally not required, with certain exceptions, to use the affiliate, and are free to shop for other providers. HUD-1 Settlement Statement One business day before the settlement, you have the right to inspect the HUD-1 Settlement Statement. This statement itemizes the services provided to you and the fees charged to you. This form is filled out by the settlement agent who will conduct the settlement. Be sure you have the name, address, and telephone number of the settlement agent if you wish to inspect this form. The fully completed HUD-1 Settlement Statement generally must be delivered or mailed to you at or before the settlement. In cases where there is no settlement meeting, the escrow agent will mail you the HUD-1 after settlement, and you have the right to inspect it one day before settlement. Escrow Account Operation and Disclosures Your lender may require you to establish an escrow or impound account to insure that your taxes and insurance premiums are paid on time. If so, you will probably have to pay an initial amount at the settlement to start the account, and an additional amount with each month’s regular payment. Your escrow account payments may include a “cushion” or an extra amount to ensure that the lender has enough money to make the payments when due. RESPA limits the amount of the cushion to a maximum of two months of escrow payments. At the settlement or within the next 45 days, the person servicing your loan must give you an initial escrow account statement. That form will show all of the payments which are expected to be deposited into the escrow account, and all of the disbursements which are expected to be made from the escrow account, during the year ahead. Your lender or servicer will review the escrow account annually and send you a disclosure each year, which shows the prior year’s activity, and any adjustments necessary in the escrow payments that you will make in the forthcoming year. Processing Your Loan Application Here are several federal laws which provide you with protection during the processing of your loan. The Equal Credit Opportunity Act (ECOA), the Fair Housing Act, and the Fair Credit Reporting Act (FCRA) prohibit discrimination and provide you with the right to certain credit information. No Discrimination The ECOA prohibits lenders from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, the fact that all or part of the applicant's income comes from any public assistance program, or the fact that the applicant has exercised any right under any federal consumer credit protection law. To help government agencies monitor ECOA compliance, your lender or mortgage broker must request certain information regarding your race, sex, marital status and age when taking your loan application. The Fair Housing Act also prohibits discrimination in residential real estate transactions on the basis of race, color, religion, sex, handicap, familial status or national origin. This prohibition applies to both the sale of a home to you and the decision by a lender to give you a loan to help pay for that home. Finally, your locality or state may also have a law which prohibits discrimination. Frequently, there are differences in the types and amounts of settlement costs charged to the borrower -- for example, some borrowers are charged greater fees for mortgages depending on their credit worthiness. These differences may be justified or they may be unlawfully discriminatory. It is important that you examine your settlement documents closely, and do not hesitate to compare your settlement costs with those of your friends and neighbors. If you feel you have been discriminated against by a lender or anyone else in the home-buying process, you may file a private legal action against that person, or complain to a state, local or federal administrative agency. You may want to talk to an attorney, or you may want to ask the federal agency that enforces ECOA (the Board of Governors of the Federal Reserve System) or the Fair Housing Act (HUD) about your rights under these laws. Prompt Action/Notification of Action Taken Your lender or mortgage broker must act on your application and inform you of the action taken no later than 30 days after it receives your completed application. Your application will not be considered complete, and the 30-day period will not begin, until you provide to your lender or mortgage broker all of the material and information requested. Statement of Reasons for Denial If your application is denied, the ECOA requires your lender or mortgage broker to give you a statement of the specific reasons why it denied your application, or tell you how you can obtain such a statement. The notice will also tell you which federal agency to contact if you think the lender or mortgage broker has illegally discriminated against you. Obtaining Your Credit Report The Fair Credit Reporting Act (FCRA) requires a lender or mortgage broker that denies your loan application to tell you whether it based its decision on information contained in your credit report. If that information was a reason for the denial, the notice will tell you where you can get a free copy of the credit report. You have the right to dispute the accuracy or completeness of any information in your credit report. If you dispute any information, the credit reporting agency that prepared the report must investigate, free of charge, and notify you of the results of the investigation. Obtaining an Appraisal The lender needs to know if the value of your home is enough to secure the loan. To get this information, the lender typically hires an appraiser, who gives a professional opinion about the value of your home. The ECOA requires your lender or mortgage broker to tell you that you have a right to get a copy of the appraisal report. The notice will also tell you how and when you can ask for a copy. RESPA Protection Against Illegal Referral Fees The ESPA was enacted because the U.S. Congress felt that consumers needed protection from "unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country." Some of the practices Congress was concerned about are discussed below. Most professionals in the settlement business provide good service and do not engage in these practices. Prohibited Fees It is illegal under RESPA for anyone to pay or receive a fee, kickback or anything of value because they agree to refer settlement service business to a particular person or organization. For example, your mortgage lender is not allowed to pay your real estate broker $250 for referring you to the lender. It is also illegal for anyone to accept a fee or part of a fee for services if that person has not actually performed settlement services for the fee. For example, a lender may not add to a third party’s fee, such as an appraisal fee, and keep the difference. Permitted Payments RESPA does not prevent title companies, mortgage brokers, appraisers, attorneys, settlement/closing agents and others who actually perform a service in connection with the mortgage loan or the settlement, from being paid for the reasonable value of their work. If a participant in your settlement appears to be taking a fee without having done any work, you should advise that person or company of the RESPA referral-fee prohibitions. You may also speak with your attorney or complain to a regulator. Penalties It is a crime for someone to pay or receive an illegal referral fee. The penalty can be a fine, imprisonment, or both. You may be entitled to recover three times the amount of the charge for any settlement service by bringing a private lawsuit. If you are successful, the court may also award you court costs and your attorney’s fees. Private Lawsuits If you have a problem, the best place to have it fixed is at its source (the lender, settlement agent, broker, etc.). If that approach fails and you think you have suffered because of a violation of RESPA, ECOA, or any other law, you may be entitled to sue in a federal or state court. This is a matter you should discuss with your attorney. Government Agencies Most settlement service providers are supervised by a governmental agency at the local, state and/or federal level. Your state’s Attorney General may have a consumer affairs division. If you feel that a provider of settlement services has violated RESPA or any other law, you can complain to that agency or association. You may also send a copy of your complaint to the HUD Office of Consumer and Regulatory Affairs. Servicing Errors If you have a question at any time during the life of your loan, RESPA requires the company collecting your loan payments (your “servicer”) to respond to you. Write to your servicer and call it a “qualified written request under Section 6 of RESPA.” A “qualified written request” should be a separate letter and not mailed with the payment coupon. Describe the problem and include your name and account number. The servicer must investigate and make appropriate corrections within 60 business days.
3 COMMON MISTAKES
Common Mistake #1: Thinking you can't afford it. Many people who thought that buying the home they wanted was simply out of their reach are now enjoying a new lifestyle in their very own homes. Buying a home is the smartest financial decision you will ever make. In fact, most homeowners would be broke at retirement if it wasn't for one saving grace -- the equity in their homes. Furthermore, tax allowances favor home ownership. Real estate values have always risen steadily. Of course, there are peaks and valleys, but the long-term trend is a consistent increase. This means that every month when you make a mortgage payment, the amount that you owe on the home goes down and the value typically increases. This "owe less, worth more" situation is called equity build-up and is the reason you can't afford not to buy. Even if you have little money for a down payment or credit problems, chances are that you can still buy that new home. It just comes down to knowing the right strategies, and working with the right people. See below. Common Mistake #2: Not hiring a buyer's agent to represent you. Buying property is a complex and stressful task. In fact, it is often the biggest, single investment you will make in your lifetime. At the same time, real estate transactions have become increasingly complicated. New technology, laws, procedures, and competition from other buyers require buyer agents to perform at an ever-increasing level of competence and professionalism. In addition, making the wrong decisions can end up costing you thousands of dollars. It doesn't have to be this way! Work with a buyer's agent who has a keen understanding of the real estate business and the local market. A buyer's agent has a fiduciary duty to you. That means that he or she is loyal only to you and is obligated to look out for your best interests. A buyer's agent can help you find the best home, the best lender, and the best home inspector in your area. That inspector should be an InterNACHI-certified home inspector because InterNACHI inspectors are the most qualified and best-trained inspectors in the world. Trying to buy a home without an agent or a qualified inspector is, well... unthinkable. Common Mistake #3: Getting a cheap inspection. Buying a home is probably the most expensive purchase you will ever make. This is no time to shop for a cheap inspection. The cost of a home inspection is small relative to the value of the home being inspected. The additional cost of hiring a certified inspector is almost insignificant by comparison. As a home buyer, you have recently been crunching the numbers, negotiating offers, adding up closing costs, shopping for mortgages, and trying to get the best deals. Don't stop now! Don't let your real estate agent, a "patty-cake" inspector, or anyone else talk you into skimping here. InterNACHI front-ends its membership requirements. InterNACHI turns down more than half the inspectors who want to join because they can't fulfill the membership requirements. InterNACHI-certified inspectors perform the best inspections, by far. InterNACHI-certified inspectors earn their fees many times over. They do more, they deserve more and -- yes -- they generally charge a little more. Do yourself a favor...and pay a little more for the quality inspection you deserve.
CHOOSE US!!
OWNER FINANCING
Pros and Cons
Buying a home with owner financing can have its advantages and disadvantages. On the one hand, it can be easier to qualify for financing since the owner is not a bank and may be more flexible with their terms. On the other hand, the interest rates may be higher and the may not be as favorable as a traditional mortgage. It's important to carefully consider all options and consult with a financial advisor before making a decision.
VA FINANCING
VA Loan Basics by Nick Gromicko, CMI® A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). Like FHA loans, VA loans are backed by the federal government in order to protect lenders against default, an assurance that removes barriers to home buying for prospective homeowners when they attempt to get a mortgage. This loan guarantee has its origins in the Servicemen's Readjustment Act (more commonly known as the G.I. Bill), passed by U.S. Congress in 1944 to provide a wide range of benefits for soldiers returning from WWII. Eligibility for VA loans – as well as unemployment compensation, vocational training, and other offerings of the G.I. Bill – have since been made available to veterans of subsequent wars and peacetime service. VA loans serve two primary purposes: •to finance loans for eligible veterans in regions where private financing is not available, which are generally rural areas, and small cities and towns far from metropolitan and commuting areas of large cities; and •to help eligible veterans who lack sufficient funds for a down payment to purchase properties. VA loans offer eligible veterans a number of benefits that are not available to recipients of conventional loans. Note that not all of the following features are available to those receiving FHA loans. VA loan benefits include: •100% financing on purchases and refinances. Loans are available up to $417,000 (as of 2009), although this amount is higher in some areas with a higher cost of living and/or inflated real estate markets, such as Hawaii, Alaska and California; •no Private Mortgage Insurance (PMI). PMI is money paid to a lender to offset losses in the event that the borrower defaults and the lender cannot recover its investment after foreclosure; •fixed, competitive interest rates; •the loan is assumable, meaning that borrowers can sell their homes to non-veterans and pass along the benefits of the VA loan to the buyers; •forbearance, in which the federal government can extend leniency to veterans experiencing temporary financial hardship; •no prepayment penalty. Penalties are applied to conventional loans when borrowers choose to pay off their mortgages early, which then gives them the option of refinancing at a lower interest rate; •easy credit and low income standards, compared with conventional loans; •the builder of a new home is required to give the purchasing veteran a one-year warranty, protecting the borrower against construction that conflicts with VA-approved specifications. Also, the VA will compensate the borrower for correction of structural defects in the home within four years of the loan guarantee if the defects seriously affect livability. An InterNACHI inspector should be hired to inspect for structural defects; •the borrower may be charged only the fees and other costs that the VA considers appropriate; •the down payment may be financed. Closing costs and funding fees still apply, however; and •in California, veterans may be eligible to receive additional benefits from a Cal-Vet Home Loan, such as reusability (you can receive a new Cal-Vet loan whenever you purchase a property as long as you have paid off previous Cal-Vet loans), and earthquake, fire and mudslide protection plans. In order to be eligible for a VA home loan, the borrower must obtain a Certificate of Eligibility by completing the VA Form 26-1880. Veterans, active-duty, guard, reserve, and military spouses potentially qualify for this certificate. Veterans and active military personnel need to have served for a designated duration, depending on war- or peacetime, in order to be considered eligible. The certificate states the entitlement amount, which is the portion of mortgage that the VA will guarantee for each serviceperson. Keep in mind that the Certificate of Eligibility, while necessary for the loan process, only allows an eligible individual to apply for a home loan, but it does not guarantee loan approval. In summary, VA loans offer eligible veterans a variety of benefits that are not available to recipients of conventional or even FHA loans.
USDA HOME LOANS
USDA Loans by Nick Gromicko, CMI® USDA loans are housing loans that are backed through the Rural Housing Division of the U.S. Department of Agriculture (USDA). Purpose In the wake of the mortgage crisis in 2008 and 2009, lenders have become more cautious, so it's harder for home buyers, especially first-timers, to secure financing, especially those with low incomes or little money for a down payment. In response, the USDA has enacted changes that made millions of borrowers eligible for their rural mortgage programs, which have been around for decades. These loans are primarily used to help low-income individuals and families purchase homes in rural areas, given the challenges faced in finding an affordable mortgage loan or deriving high income in sparsely populated areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities. If the borrower defaults on payments, loan funds are still guaranteed to the lender. Eligibility of Applicants The following factors affect eligibility for USDA loans: •Loans are restricted to borrowers in rural areas, although many of the zip codes that qualify for USDA loans are in relatively typical suburbs of major cities. The 2002 Farm Bill defines a rural area as "any area other than (1) a city or town that has a population of greater than 50,000 inhabitants, and (2) the urbanized areas contiguous and adjacent to such a city or town." •Applicants for loans may have an income of up to 115% of the median income for the area. If an income exceeds the maximum mark, you may be able to make certain adjustments that will help you qualify. •Applicant families must currently be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. Copies of IRS tax filings from years prior may be required, especially if the prospective borrower is self-employed or has worked many jobs over the past few years. •Applicants must have reasonable credit histories. Late payments will appear on the credit history, as will bankruptcies, repossessions and foreclosures. •The amount loaned will also depend on the number of dependents claimed by the applicant. Eligibility of Housing Housing must be modest in size, design and cost. Also, houses constructed, purchased or rehabilitated must meet the building code adopted by the state and the Housing and Community Facilities Programs' (HCFP) thermal and site standards. New manufactured housing must be permanently installed and meet the manufactured housing construction and safety standards of the U.S. Department of Housing and Urban Development (HUD), as well as the HCFP's thermal and site standards. Existing manufactured housing may not qualify unless it is already financed with an HCFP direct or guaranteed loan, or it is Real Estate-Owned (REO), formerly secured by an HCFP direct or guaranteed loan. USDA Loans vs. Federal Housing Authority (FHA) Loans While the USDA and FHA both insure loans made by private lenders, the policies and eligibility requirements for each are quite different. The following are the principle differences: •Unlike loans offered by the FHA, USDA loans have no monthly mortgage insurance premium. •The FHA requires that an applicant invest 3.5% of the purchase price as a down payment, although this fee may be donated by an employer, a blood relative, or a non-profit organization that is approved by HUD. The USDA does not require a down payment. •Both the USDA and FHA have similar appraisal requirements. Both feature mortgage options for a fixed rate mortgage, and repayment terms of 15 years and 30 years. •FHA loans may be as high as $729,750, while USDA loans are limited to $300,000. In summary, USDA loans are a good option for many prospective home buyers and borrowers living in (or moving to) rural areas.
FHA
Choosing a home inspector 10 QUESTIONS TO ASK YOUR HOME INSPECTOR Before you make your final buying or selling decision, you should have the home inspected by a professional. An inspection can alert you to potential problems with a property and allow you to make an informed decision. Ask these questions to prospective home inspectors: 1. WILL YOUR INSPECTION MEET RECOGNIZED STANDARDS? Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group’s standards of practice and code of ethics online at www.ashi.org or www.nahi.org. ASHI’s Web site also provides a database of state regulations. 2. DO YOU BELONG TO A PROFESSIONAL HOME INSPECTOR ASSOCIATION? There are many state and national associations for home inspectors, including the two groups mentioned in No. 1. Unfortunately, some groups confer questionable credentials or certifications in return for nothing more than a fee. Insist on members of reputable, nonprofit trade organizations; request to see a membership ID. 3. HOW EXPERIENCED ARE YOU? Ask how long inspectors have been in the profession and how many inspections they’ve completed. They should provide customer referrals on request. New inspectors also may be highly qualified, but they should describe their training and let you know whether they plan to work with a more experienced partner. 4. HOW DO YOU KEEP YOUR EXPERTISE UP TO DATE? Inspectors’ commitment to continuing education is a good measure of their professionalism and service. Advanced knowledge is especially important in cases in which a home is older or includes unique elements requiring additional or updated training. 5. DO YOU FOCUS ON RESIDENTIAL INSPECTION? Make sure the inspector has training and experience in the unique discipline of home inspection, which is very different from inspecting commercial buildings or a construction site. If your customers are buying a unique property, such as a historic home, they may want to ask whether the inspector has experience with that type of property in particular. 6. WILL YOU OFFER TO DO REPAIRS OR IMPROVEMENTS? Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest. Contact your local ASHI chapter to learn about the rules in your state. 7. HOW LONG WILL THE INSPECTION TAKE? On average, an inspector working alone inspects a typical single-family house in two to three hours; anything significantly less may not be thorough. If your customers are purchasing an especially large property, they may want to ask whether additional inspectors will be brought in. 8. WHAT’S THE COST? Costs can vary dramatically, depending on your region, the size and age of the house, and the scope of services. The national average for single-family homes is about $320, but customers with large homes can expect to pay more. Customers should be wary of deals that seem too good to be true. 9. WHAT TYPE OF INSPECTION REPORT DO YOU PROVIDE? Ask to see samples to determine whether you will understand the inspector’s reporting style. Also, most inspectors provide their full report within 24 hours of the inspection. 10. WILL I BE ABLE TO ATTEND THE INSPECTION? The answer should be yes. A home inspection is a valuable educational opportunity for the buyer. An inspector’s refusal to let the buyer attend should raise a red flag. Source: Rob Paterkiewicz, executive director, American Society of Home Inspectors, Des Plaines, Ill., www.ashi.org. Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group’s standards of practice and code of ethics online
Home Insurance Tips Why You Need Homeowner's Insurance The largest, single investment most consumers make is in their homes. The consumer can protect their home, possessions, and liability with a homeowner's insurance policy. The homeowner's insurance policy is a package policy that combines more than one type of insurance coverage in a single policy. There are four types of coverages that are contained in the homeowner's policy: dwelling and personal property; personal liability; medical payment; and additional living expenses. Property Damage Coverage Property damage coverage helps pay for damage to your home and personal property. Other structures, such as a detached garage, a tool shed, and any other building on your property are usually covered for 10% of the amount of coverage on your house. Personal property coverage will pay for personal property, including household furniture, clothing, and other personal belongings. The amount of insurance coverage is usually 50% of the policy limit on your dwelling. The coverage is also limited by the types of loss listed in the policy. The coverage only pays the current cash value of the item destroyed, unless you purchase "replacement cost" coverage. Your homeowner's policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home. Personal Liability Coverage Homeowners' policies provide personal liability coverage that applies to non-auto accidents on and off your property if the injury or damage is caused by you, a member of your family, or your pet. The liability coverage in your policy pays both for the cost of defending you and paying for any damages that a court rules you must pay. Liability insurance does not have a deductible that you must meet before your insurer begins to pay losses. The basic liability coverage is usually $100,000 for each occurence. You can request higher limits that are available for an additional cost. Medical Payment Coverage Medical payment coverage pays if someone outside your family is injured at your home, regardless of fault. This includes payment for reasonable medical expenses incurred within one year from the date of loss for a person who is injured in an accident in your home. The coverage does not apply to you and members of your household. The medical-payments portion of your homeowner's policy will also pay if you are involved in the injury of another person away from your home in some limited circumstances. Medical payments coverage limits are generally $1,000 for each person. Additional Living Expenses If it is necessary for you to move into a motel or apartment temporarily because of damage caused by a peril covered in your policy, your insurance company will pay an amount up to 20% of the policy limit on your dwelling for these expenses. If you move in temporarily with a friend or relative and do not have any extra expenses, you will not be paid any addditional living expenses by your insurance company. Home Business If you operate a home business full- or part-time, you might be uninsured and not realize it. Many home business owners believe that their homeowner's insurance policy covers all of their home business needs. You should not assume that your homeowner's insurance policy will cover your home business. Your homeowner's policy may provide coverage, but probably only a maximum of $2,500 for business equipment in the home, and $250 away from the premises. The price you pay for your homeowner's insurance can vary by hundreds of dollars, depending on the insurance company you buy your policy from. Here are some things to consider when buying homeowner's insurance. 1. Shop around. It will take some time, but could save you a good sum of money. Ask your friends, check the Yellow Pages, and contact your state insurance commission. The National Association of Insurance Commissioners has information to help you choose an insurer in your state, including complaints that are filed by consumers. States often make information available on typical rates charged by major insurers, and many states provide the frequency of consumer complaints by company. Also check consumer guides, insurance agents, companies, and online insurance quote services. This will give you an idea of price ranges and tell you which companies have the lowest prices. But don't consider price alone. The insurer you select should offer a fair price and deliver the quality of service you would expect if you needed assistance in filing a claim. So, in assessing service quality, use the complaint information from state regulatory agencies and talk to a number of insurers to get a feeling for the type of service they provide. Ask them what they would do to lower your costs. When you've narrowed the field to three insurers, get price quotes. 2. Raise your deductible. Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums. Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25%. Remember, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage. If you live near the coast in the East, you may have a separate windstorm deductible; if you live in a state vulnerable to hailstorms, you may have a separate deductible for hail; and if you live in an earthquake-prone area, your earthquake policy has a deductible. 3. Don’t confuse what you paid for your house with rebuilding costs. The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowner's policy. So don't include its value in deciding how much homeowner's insurance to buy. If you do, you will pay a higher premium than you should. 4. Buy your home and auto policies from the same insurer. Some companies that sell homeowner's, auto and liability coverage will take 5% to 15% off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies. 5. Make your home more disaster-resistant. Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. You may be able to save on your premiums by adding storm shutters, reinforcing your roof, and buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage. Even small measures, such as keeping a fire extinguisher in your kitchen, will often qualify you for a discount on your premiums and save you money in the long run. 6. Improve your home security. You can usually get discounts of at least 5% for a smoke detector, burglar alarm and dead-bolt locks. Some companies offer to cut your premium by as much as 15% to 20% if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. These systems aren't cheap, and not every system qualifies for a discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost, and how much you'd save on premiums. 7. Seek out other discounts. Companies offer several types of discounts, but they don't all offer the same discount or the same amount of discount in all states. For example, since retired people are at home more than working people, they are less likely to be burglarized and may spot fires sooner, too. Retired people also have more time for maintaining their homes. If you're at least 55 years old and retired, you may qualify for a discount of up to 10% at some companies. Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere. 8. Maintain a good credit record. Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price homeowners' insurance policies. In most states, your insurer must advise you of any adverse action, such as a higher rate, at which time you should verify the accuracy of the information on which the insurer relied. To protect your credit standing, pay your bills on time, don't obtain more credit than you need, and keep your credit balances as low as possible. Check your credit record on a regular basis, and rectify any errors promptly so that your record remains accurate. 9. Stay with the same insurer. If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. Some insurers will reduce their premiums by 5% if you stay with them for three to five years, and by 10% if you remain a policyholder for six years or more. But make certain to periodically compare this price with that of other policies. 10. Review the limits in your policy and the value of your possessions at least once a year. You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you'll want to reduce or cancel your floater -- defined as extra insurance for items whose full value is not covered by standard homeowners' policies, such as expensive jewelry, high-end computers and valuable art work -- and pocket the difference. 11. If you are in a government plan, look for private insurance. If you live in a high-risk area -- say, one that is especially vulnerable to coastal storms, fires or crime -- and have been buying your homeowner's insurance through a government plan, you should check with an insurance agent or company representative, or contact your state commission of insurance for the names of companies that might be interested in your business. You may find that there are steps you can take that would allow you to buy insurance at a lower price in the private market. 12. When you’re buying a home, consider the cost of homeowner's insurance. You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home’s electrical, heating and plumbing systems are less than 10 years old. If you live in the East, consider a brick home because it's more wind-resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. Choosing wisely could cut your premiums by 5% to 15%. Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home you are thinking of buying. These reports contain the insurance-claim history of the property and can help you judge some of the problems the house may have. Remember that flood insurance and earthquake damage are not covered by a standard homeowner's policy. If you buy a house in a flood-prone area, you'll have to pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency (FEMA) provides useful information on flood insurance on its Web site at www.fema.gov/nfip. A separate earthquake policy is available from most insurance companies. The cost of the coverage will depend on the likelihood of earthquakes in your area. If you have questions about insurance for any of your possessions, be sure to ask your agent or company representative when you're shopping around for a policy. For example, if you run a business out of your home, be sure to discuss coverage for that business. Most homeowners' policies cover business equipment in the home, but only up to $2,500, and they offer no business liability coverage. Although you want to lower your homeowner's insurance cost, you also want to make certain you have all the coverage you need. Common Questions Asked by Homeowners About Insurance If a fire, flood, earthquake, or some other natural disaster were to damage or destroy your home, would you have the right insurance coverage to rebuild your house? Based on the questions consumers ask most frequently, this list explains what is and is not covered in a standard homeowner's policy. Where gaps in coverage exist, it tells you how to fill them. To simplify explanations, assume that you have a policy known as Homeowners-3 (HO-3), the most common type of homeowner's policy in the United States. Find out what type of homeowner's policy you have. If you have a different policy, you should review your options in question #17. 1. Am I covered for direct losses due to fire, lightning, tornadoes, windstorms, hail, explosions, smoke, vandalism and theft? Yes. The HO-3 provides broad coverage for these and other disasters or “perils,” as they are called in the policy, including all those listed in the question. You should check the dollar limits of insurance in your policy, and make sure you are comfortable with the amount of insurance you have for specific items. Also, if you live near the Atlantic or Gulf Coasts, there may be some restrictions on your coverage for wind damage. Ask your agent about windstorm/hurricane deductibles. In areas prone to hailstorms, you may have a specific hail-damage deductible. 2. Are my jewelry and other valuables covered? The standard policy provides only from $1,000 to $2,000 for theft of jewelry. If your jewelry is worth a lot more, you should purchase higher limits. You may wish to add a floater to your policy to cover specific pieces of jewelry and other expensive possessions, such as paintings, electronic equipment, stamp collections and silverware, for example. The floater will provide both higher limits and protect you from additional risks not covered in your standard policy. 3. If my house is totally destroyed in a fire and I have $150,000 worth of insurance to cover the structure, will this be enough to rebuild my home? If the cost of rebuilding your home is less than or equal to $150,000, you would have enough coverage. The HO-3 policy pays for structural damage on a replacement-cost basis. If the cost of replacing your home is, say, $120,000, then that is all the insurance you need. On the other hand, if the cost of rebuilding your home is $180,000, then you will be short $30,000. If you live in an area that is frequently hit by major storms, ask your insurance company about an extended or guaranteed replacement-cost policy. This will provide a certain amount over the policy limit to rebuild your home, so that if building costs go up unexpectedly due to high demand for contractors and materials, you will have the extra funds to cover the bill. If you choose not to rebuild your home, you will receive the replacement cost of your home, less depreciation. This is called "actual cash value." You should make sure that the amount of insurance you have will cover the cost of rebuilding your house. You can find out what this cost is by talking to your real estate agent or builders in your area. Do not use the price of your house as the basis for the amount of insurance you purchase. The market price of your house includes the value of the land on which the house sits. In almost all cases, the land will still be there after a disaster, so you do not need to insure it. You only need to insure the structure. 4. Am I automatically covered for flood damage? No. If you live in a flood-prone area, it may be wise to purchase flood insurance. Flood insurance is provided by the federal government under a program run by the Federal Insurance Administration. In some parts of the country, homes can be damaged or destroyed by mudslides. This risk is also covered under flood policies. Contact your agent or company representative to get this insurance, or call the FEMA at 1-800-427-4661 or visit www.fema.gov. 5. If a pipe bursts and water flows all over my floors, am I covered? Yes. The HO-3 covers you for accidental discharge of water from a plumbing system. You should check your plumbing and heating systems once a year. While you are covered for damage, who needs the mess and hassle? 6. What if water seeps into my basement from the ground -- am I still covered? No. Water seepage is excluded under the HO-3. And if the water seepage is not due to a flood, you will not be covered under a flood policy. Seepage is viewed as a maintenance issue and is not covered by insurance. You should see a contractor about waterproofing your basement. 7. Am I automatically covered for earthquake damage? No. Earthquake coverage is sold as additional coverage to the homeowner's policy. To find out whether you should buy this insurance, talk to your agent or company representative. The cost of this coverage can vary significantly from one area to another, depending on the likelihood of a major earthquake. 8. A neighbor slips on my sidewalk or falls down my porch steps and threatens to take me to court for damages. Does my policy protect me? Yes. The policy will pay for damages if a fall or other accident on your property is the result of your negligence. It will also pay for the legal costs of defending you against a claim. Also, the medical-payments part of your homeowner's policy will cover medical expenses if a neighbor or guest is injured on your property. You should check to see how much liability protection you have. The standard amount is $100,000. If you feel you need more, consider purchasing higher limits. 9. A tree falls and damages my roof during a storm. Am I covered? Yes. You are covered for the damage to your roof. You are also covered for the removal of the tree, generally up to a limit of $500. You should cut down dead or dying trees close to your house and prune branches that are near your house. It's true that your insurance covers damage, but falling trees and branches can also injure your family. Ask your InterNACHI inspector about problem trees during your next inspection. 10. During a storm, a tree falls but does no damage to my property. Am I covered for the cost of removing the tree? Your trees and shrubs are covered for losses due to risks such as vandalism, theft and fire, but not wind damage. However, if a fallen tree blocks access to your home, you may be covered for its removal. Decide if you need extra insurance for the trees, plants and shrubs on your property. You may be able to purchase extra insurance which will not only cover the cost of removing fallen trees, but will also cover the cost of replacing trees and other plants. 11. If a storm causes a power outage and all the food in my refrigerator and freezer is spoiled and must be thrown out, can I make a claim? The general answer is no. However, there are a number of exceptions. In some states, food spoilage is covered under the homeowner's policy. In addition, if the power loss is due to a break in a power line on or close to your property, you may be covered. You should check with your agent to find out whether you are covered for food spoilage in your state. If not, you can add food-spoilage coverage to your policy for an additional premium. 12. My children are away at college. Are they covered by my homeowner's insurance? If they’re full-time college students and part of your household, your insurance generally provides some coverage in a dorm, typically 10% of the contents' limit. If they live off-campus, some companies may not provide this limited coverage if the apartment is rented in the student’s name. 13. My golf clubs were stolen from the trunk of my car. Does my homeowner's policy cover the loss? Yes. The HO-3 covers your personal property while it is anywhere in the world. However, if your golf clubs are old, you will get only their current value, which may not be enough to purchase a new set. Consider buying a replacement-cost endorsement for your personal property. This way, you will get what it costs to replace the golf clubs, less your deductible. 14. I have a small power boat. If it is stolen, am I covered? What if there is a boating accident and I get sued? Am I covered for that? Whether or not you are covered for either theft or liability depends on the size of the boat, the horsepower of the engine, and your insurance company. Coverage for small boats under homeowners' policies varies significantly. Ask your insurance representative whether you need a boat owner's policy. 15. My house is close to the ocean. I’ve heard that if it is destroyed by the wind, the town's new building code requires me to rebuild the house on stilts. This will add $30,000 to the cost of rebuilding my house. Am I covered for this extra cost? No. The HO-3 excludes costs mandated by ordinances and laws that regulate the construction of buildings. You can purchase an ordinance or law endorsement. This will cover the extra costs involved in meeting new building codes. 16. Am I covered for “acts of God”? Sometimes. The term “acts of God” is not specifically mentioned in homeowners' insurance policies. It usually refers to natural disasters, such as hurricanes and tornadoes, as opposed to man-made acts, such as theft and auto accidents. Some natural disasters, such as damage from windstorms, hail, lightning, and volcanic eruptions, are covered under homeowner's insurance. Damage from floods and earthquakes is not. 17. What should I do if my policy provides less coverage than the HO-3? Review your coverage with your agent. Some older policies provide less coverage than the HO-3. They may not provide coverage for water damage, theft or liability. They may also provide coverage for the house on an actual cash-value basis, rather than a replacement-cost basis. "Actual cash value" means replacement cost less depreciation. For example, if your roof is destroyed in a storm, the insurance will pay only for the cost of a new roof less the amount of depreciation of the old roof. If your roof was in great shape, this deduction will not be large. However, if the roof was old and worn out, the deduction for depreciation may be significant. You should try to get an HO-3.
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Why do I need a home inspection?
That's easy! There is NO "Return Policy" or "Money Back Guarantee"! Once you purchase it , it is yours to love!
A home inspection is an important part of the home buying process as it can provide valuable insight into the condition of a home before you commit to purchasing it. A qualified home inspector will inspect the home from top to bottom, and provide you with a complete report on the condition of the home. This can help you identify any potential issues or problems that may be present, allowing you to make an informed decision about whether the home is right for you. A home inspection can also help you negotiate a better price for the home, as you can point out any issues that need to be addressed. Additionally, a home inspection can also help you plan for future renovations or repairs that may be needed. Therefore, the goal of Our Home Inspection is to know about the quality, condition and potential problems before you make the commitment to purchase your home. To achieve this your Inspector conducts a thorough Visual Inspection of the home and all of its systems.
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