7 Reasons Not to Skip A Home Inspection

If you’re in the market for a new home, don’t forget to include an inspection contingency in your contract. A professional home inspection can save you a ton of aggravation and thousands of dollars in the long run. The inspector will carefully examine the entire house, checking its systems, structure and equipment for functionality and potential problems.

Here are 7 reasons to not skip a home inspection:

1. Find deal-breakers

A house may look fantastic, yet have major issues with wiring, roof, HVAC, plumbing and more. A quality home inspection will give you the inside scoop. If the inspection reveals any large problems that may take heavy work or expensive repairs, you might want to back out of the deal.

2. Safety concerns

An inspection can reveal the presence of harmful substances like radon, carbon monoxide and mold. Look for these hazards before it’s officially yours. You don’t want any unpleasant surprises when it’s too late to back out.

3. Anticipate future costly repairs

A home’s systems and equipment may appear to be working fine when they’re actually on their last legs. A professional inspector can determine the age and condition of the systems and equipment, and then forecast when they’ll need to be repaired or replaced. This can help you budget for a major repair several years down the line.

4. Reveal illegal additions

The awesome rec room you love in your potential new home might have been illegally built. An inspection will check for rooms, garages and basements that were added or finished without following legal codes or obtaining the proper permits. Having an illegal addition in your home means owning property that does not officially exist. This can get you into big trouble with home insurance and property taxes.

If a home inspection reveals any illegal additions, you can ask the seller to obtain the proper permits now, use this information as a bargaining chip or choose to back out of the deal.

5. Obtain insurance easily

Lots of home insurance companies will not insure a home if it has not undergone a certified inspection.

6. Learn how to protect your investment

The inspector will be an invaluable source of information for you, providing tips and knowledge on how best to maintain your home. Knowing how to properly care for your home can save you thousands of dollars over the years.

7. Negotiate

Most home inspections will reveal problems. If they are minor enough to keep you interested in buying the house in its present condition, use them as bargaining tools and renegotiate the purchase price of the home.

Are you in the market for a new home? Call, click or stop by Olean Area Federal Credit Union today to ask about our fantastic home loan options!

All You Need to Know About Closing Costs

If you’re in the market for a new home, don’t forget to budget for closing costs! This includes all fees and charges incurred while officially transferring a property from one owner to another.

Here’s all you need to know about closing costs:

How high will my closing costs be?

Closing costs usually amount to 2-5 percent of the home’s price. For example, if you’re purchasing a $130,000 home, your closing costs can be anywhere from $2,600 to $6,500.

What kind of charges can I expect as part of my closing costs?

Application/Underwriting/Origination fees: Compensation for the administrative costs associated with processing a mortgage loan.
Appraisal: Covers the fee of a professional appraiser to provide your lender with an estimate of your home’s true value.
Attorney fee: In some states, the closing documents must be reviewed by an attorney before they become binding. This charge covers the attorney’s fee.
Closing fee or escrow fee: The cost of the title company, escrow company or attorney for facilitating the closing.
Credit check: Some lenders charge a fee to examine your credit history.
Escrow deposit: You may be asked to make your initial escrow deposit at closing, to ensure the financial institution has the funds to pay property taxes and/or mortgage insurance for the first twelve months.
Home inspection: The cost of a professional inspection of your entire home and property.
Homeowners’ insurance: Many lenders require you to pay the first year’s worth of homeowners insurance premiums prior to closing.
Lender’s title insurance: Title insurance insures the outstanding balance of a mortgage in the event there is a financial loss due to a defect in the title to the property.
Prepaid interest: Most lenders require buyers to prepay the interest that will accrue from the day of closing until the date of the first mortgage payment.
Primary Mortgage Insurance (PMI): If you need to pay PMI on your loan, the first month’s premium is due at closing.
Title fees: This covers the cost of a title search, in which your lender hires a title company to look for possible legal claims on your property.

Should I choose the “no-closing-costs” option?

Before signing up for a no-closing-cost loan, it’s important to understand that there’s no such thing as a mortgage without closing costs. In a no-closing-costs loan, these fees will could be rolled into the mortgage. In this scenario, you would be paying interest on your closing costs throughout the life of the loan. Also, lenders usually raise the interest rates on no-closing-costs mortgages.

Am I Really Ready to Buy a House?

Q: I’ve saved up for a down payment and drawn up a wish list of what I’m looking for in a new home, but I’m getting cold feet. How do I know if I’m really ready to buy a house?

A: It’s normal to feel hesitant about going through with what may be the biggest purchase of your life. To help put you at ease, we’ve compiled a list of questions to ask yourself before buying a new home.

Can I afford to buy a house?

Before viewing properties, remember that purchasing a home will cost more than just the down payment. You’ll also need to cover closing costs, which typically run at 2-4 percent of the total purchase, as well as moving costs and possibly new furniture and renovations for your new home.

Can I afford the monthly mortgage?

Most lending companies will grant a loan to a homebuyer if the monthly mortgage payments do not push the buyer’s debt-to-income ratio above the recommended 43 percent. Work out the total for your pre-mortgage debt before applying for a loan so you have an idea of how much house you can afford.

Am I ready to settle down?

Buyers who don’t plan on staying in their homes long-term may end up incurring a loss. Consider factors like your career, family planning and evolving demographics of a neighborhood when trying to answer this question.

Does buying a house in my neighborhood make sense?

In some neighborhoods, rentals are relatively cheap while houses sell for far more than they are worth. In these neighborhoods, buying a home may not be the logical choice.

Is my credit score high enough?

Most lenders will only grant a mortgage to borrowers with a credit score of 650 or higher. If your score doesn’t make the cut, you can boost it by being super-careful about paying your bills on time, paying credit card bills in full each month and keeping credit utilization low.

Do I have a plan in place for repairs?

When a renter has a leaky faucet, they call the landlord and the problem becomes theirs. When a homeowner has a leaky faucet, it’s their own problem. They can either fix it or hire someone to do the job, but it’s a good idea to have a plan in place before the first thing in a new home needs fixing. If you’re handy enough to make repairs on your own, you’ll need to be willing to give up some free time to tend to such things. Otherwise, it’s best to have a tidy sum put away to pay for necessary repairs before purchasing a home.

If you’re ready to get started on your home loan application, contact Olean Area Federal Credit Union today to hear about our fantastic home loan options.