Step 3: Looking under the hood… I mean roof!
Once the negotiations have been completed and both parties have signed the contract, it’s time to schedule a general property inspection by a licensed professional. The general home inspector might recommend that you hire another inspector who specializes in foundations, plumbing or roofs for further evaluation. As your realtor, we can help you coordinate with these service providers. Based on these recommendations, WPM helps you decide which items, if any, need to be repaired by the seller. Most homes require some repair work, especially older homes.
APPRAISAL, SURVEy AND TITLE COMMITMENT
After the inspection has been completed and the repairs have been negotiated, your lender or mortgage broker will order an appraisal. Appraisers compare the features and condition of a home to similar properties in order to arrive at a dollar figure for the home value. One of the primary purposes of the appraisal is to provide assurance to your lender that the home is worth what you’re paying for it.
A survey determines the boundaries of the property, its location and the size and shape of any buildings on the lot. The survey also identifies any existing easements or encroachments. Most sellers will have an existing survey, which they will provide to the buyer. As long as your lender approves it, you can use this existing survey and save yourself the expense of buying a new one. It’s always prudent to have your own survey done.
Shortly after the option period, the title company will issue a title commitment. In general, the title commitment is a promise by the title company to insure the sale of the property and issue a title policy after closing, once the requirements of the contract and the commitment have been filled. The title commitment will contain Schedules A, B, C & D.
HOMEOWNER’S INSURANCE
As soon as all contingencies have been removed, you should consult with an insurance agent regarding homeowner’s insurance. Homeowner’s insurance is designed to protect one’s property, both the home as well as the contents from disaster. It also covers legal liability in the event of damage or injury to others while on one’s property. Most disasters are covered, with the exception of flood and earthquakes, which have their own special insurance coverage, and must be purchased separately.
Since there are many different types of policies, you’ll want to work with an agent who will tailor one for your needs. Most people begin by getting a quote from the agent from whom they have purchased their car or life insurance, since it’s generally more economical to bundle services, though it certainly doesn’t hurt to comparison shop. We at WPM can provide some suggestions, if needed. Since this a lender requirement for financing a loan, you will need to provide proof of homeowner’s insurance to your mortgage broker or lender, prior to closing.