Part 6 of a series on finding and buying your new home.

When you started this process of buying a home, it seemed pretty simple, didn’t it?  Find a place you like, buy it, and move in. A walk in the park, you thought. At this point, though, you may be feeling that it’s turned into a marathon.  Don’t worry – you’re almost there. 

Now that your offer has been accepted and you’ve receive a loan commitment letter, it’s time to think about insurance and inspections. You probably wouldn’t buy a used car without having it looked over carefully first, and you certainly wouldn’t drive without insurance.  Multiply that by many times and you’ll understand why insurance and inspections are an important part of buying your new home.

Insurance – what kind do you need, and how much?

Title insurance is a one-time purchase that you pay for as part of closing.  It protects you in case the title to your home is ever found to be invalid. Your lender will require this, and you should have it for your own security. While it’s true that problems with the title are not common, the insurance is a small price to pay compared to the possibility of losing your home through no fault of your own. 

Homeowners’ insurance is also required by the lender, and is something you need to have in case of fire, theft, or an accident on your property (liability). It will cover the structure as well as the contents of your home. Be sure to ask what your policy covers and to what limits if you have large amounts of valuable property (jewelry, collectibles, art, etc.) or home office equipment.

Flood insurance may be required if you are in a high-risk flood area. Your REALTOR® will be able to tell you which locations require this insurance that is issued by the federal government. Most homeowners’ insurance policies do not cover flooding, so be sure to ask if you have any doubts.

Home warranties can apply to new or existing homes, and cover defects and breakdowns for a specific period of time.  In new construction, these policies are bought by the builders as protection against defects in workmanship, breakdowns in mechanical systems, and structural defects. They protect the new home buyer in case the builder will not or cannot make repairs.

For existing homes, a home warranty is usually a one-year policy purchased by the seller that provides for a warranty firm to make repairs or cover the cost of certain breakdowns.

And what about inspections?
There will be several inspections to arrange for your new home, and this is also something your real estate agent can help with. There could be a termite inspection, a survey to verify boundaries, an appraisal for the lender, title review, and structural inspections.

The structural inspection is especially important. An inspector will come to the property to determine if there are significant defects, and whether expensive repairs and replacements are likely to be required in the next few years. As a buyer, you and your agent should plan to attend the home inspection so that you can understand what you are buying and ask questions. There will be a final walk-through before settlement, but the inspection will allow you to see the important details of the building’s condition.

You’re almost home!  Next time…the settlement.

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