I Want to Buy a Home...Now What? Pt. 3
Today's post comes courtesy of Melissa Imo-Moffitt, a mortgage loan officer at American Eagle Credit Union. It is part 3 in a series about homebuying.
Part 3: Inspections and Appraisal
You did it! You got pre-approved, you found a real good Real Estate Agent, and you put an offer on a home. What’s more? Your offer was accepted! Now it is time for the nitty gritty inspections and appraisal. As I write this blog, my husband and I are in the middle of the process so I know it can be daunting. Finding a house is kind of like finding a mate. He/she may not be perfect, but rather is perfect for you. A house may have some issues that you are willing to put up with but you want to know what they are up front. This is where the inspections come in. Your agent will give you a list of inspections that are available-home inspection, gas inspection, termite inspection, radon inspection, sewer, etc. Depending on your mortgage loan type, you may be required to get these inspections or you may not. I suggest you get them all!
My husband and I are buying a fairly new home and i thought, “Why would I need a radon inspection?” My agent said, “Melissa, you better get a radon inspection; you never know!” Good thing I listened. The radon levels were very high. Inspectors will look for major and minor problems associated with the home; they will give you a detailed report of the issues and usually ways to remedy them. If the foundation is cracking, it may be time to rethinking your purchase. If the roof is peeling, the seller might fix it. IT’s not the end of the world. There are always going to be things that show up on your inspection, but this is the time to ask yourself if you can live with it, will the sellers fix it, or can I fix it? In our case, we requested that the sellers fix the radon issue and they did. Yay for us!
The next step after resolving any inspection issues with your agent and the sellers is the appraisal. Your credit union Mortgage Loan Officer will order the appraisal. The appraiser will go to the home, take pictures of the property inside and out, then measure and collect comparable sales. Then, a fair market value will be determined. The value should be at least at purchase price because who wants to pay more than a home is worth? I know I don’t. This is a vital step in the homebuying process-everyone making sure the home is worth what you’re paying. If the home comes in above your purchase price, SCORE! You’re getting a great deal. The appraisal can come in lower than the purchase price; if this happens, then it’s time to put your rockstar agent to work at negotiating. Hopefully your seller will lower the price, but they’re not required to. If both parties can’t come to an agreement, then it’s time to look for another home. In the long run you’ll be happy that you didn’t overpay for a house; it’s a big investment!
Coming up next: Loan commitment/final approval