Goodspeed: Be prepared when buying a home
QUESTION: I want to start looking for my first home, but am a little nervous. I have heard of people losing their deposit or buying a home with problems they discover later on. How can I protect myself?
ANSWER: It may sound overly simple, but the best way to protect yourself is to do your homework and be prepared from the very beginning.
Assemble your team. You will need a real estate agent, mortgage lender, home inspector and closing attorney. Shop around, interview and investigate prospects before selecting each. Start doing this before you start looking for a home.
Once you make an offer, things start moving quickly and you want each party in place. Get recommendations and referrals from friends and other acquaintances.
Check the Internet for reviews. Interview prospective providers, ask about their experience, market knowledge, recommendations. This is especially true when choosing a real estate agent.
For a mortgage lender, shop around for the best rates and terms. Get pre-approved before you start looking for a home so you know what price range to look in. When choosing a home inspector and attorney, get recommendations, then check the Internet for reviews and qualifications.
Once you find a home, have your attorney review the contract to make sure you are protected. Ask questions about anything you do not understand. Make sure you have “escape” clauses –- contingencies that allow you to get your money back in case of financing difficulties, problems the home inspection may uncover, and other appropriate escape hatches.
Make sure deadlines for each step are realistic. Getting the contract right at the start of the process is critical. Mark all the key dates, such as the deadline for the home inspection, financing, closing, etc. on your calendar.
Get the home inspection as quickly as possible. Be present during the inspection and ask questions. Go over the report carefully. Is it satisfactory? If yes, you are ready to go forward. If not, consider stopping the process.
Stay in touch with your mortgage lender and provide any information or documents requested immediately. If you do need to get out of the contract, make sure you provide the appropriate notice so you can get your deposit back without penalty.
Review the title commitment and lien search with your attorney. Make sure there are no open permits or other issues. Review the closing documents, including the settlement statement, carefully with your attorney before the actual closing date.
Buying a home does not have to be scary or difficult as long as you go into it prepared and knowing what to expect.
Linda Goodspeed is a longtime real estate writer and author of “In and out of Darkness.” Email her at: email@example.com.