Home inspection hints to help you make a good investment
When you find the home of your dreams, it's important to move fast. But don't get too hasty - remember, you'll need to have the home inspected before everything is finalized and you take out a residential mortgage.
Many first-time homebuyers are surprised they need to schedule the inspection themselves. Indeed, it's the buyer's responsibility to ensure they're making a sound investment.
However, this step of the process is often clouded in confusion. It's very easy to make a simple mistake with the home inspection that could wind up costing you more money in the long run.
Here are some helpful hints at how you can avoid common home inspection missteps:
Research your inspector
Hiring the first inspector to answer your call or going with the first recommendation you receive from your friend or real estate agent isn't always the best move. You'll want to be sure the person looking for faults in your potential investment actually knows where and how to seek them out.
Find out whether the inspector has any certifications or has gone through recent training. These are good signs they know the latest best practices, Bankrate pointed out.
Ask about his or her professional background, too. If your inspector is a former construction worker or had another similar career path in building, it's a sign he or she knows what good construction looks like and how to tell if something is off.
Be present and engaged at the inspection
Throughout the inspection, the professional will take notes. At the end, he or she will write up a report for your review. Though this report is ideally easy to understand, highly thorough and includes all the information you'll need, there's always a chance that this won't be the case. You may not understand a certain term or problem described, and the inspector might not be the most articulate writer.
When you go to the inspection, you can look over the professional's shoulder to see what's going on. The best part is you can ask questions and have a one-on-one conversation to clarify anything you might feel is unclear.
Don't worry about bothering the inspector. First of all, it's your home - you should gather all information possible about potential work that you'll need to do and about how the home systems work.
Secondly, chances are your inspector won't mind, Angie's List contributor Edie Sherwood explained. Sherwood performs home inspections in Texas and wrote that teaching future homeowners about their house and its systems is one of the best parts of her job.
Seeking out specialized inspectors
Many times, the general home inspector you hire will only look at what's immediately available, The Balance pointed out. Sure, he or she will go down into the basement to check your home's systems, keep an eye out for signs of pests and look around for issues with the foundation. But, for the most part, what's out of sight or out of reach isn't included.
To that end, it would behoove some buyers to hire a specialist to take a closer look at things like:
- The roof.
- The septic system.
- Potentially dangerous substances, like asbestos or lead paint.
- Wood-destroying pests.
- Any sort of structural or foundational concerns.
Not every home will require every type of inspection. For example, if you know that the home's roof was replaced last year, you may be able to skip this inspection.
Or, if you know the house was built after 1990, you probably won't have asbestos in your home; it was banned in 1989, and the rule became more extensive the year after, according to the Environmental Protection Agency.
Doing some research on the construction of the home, its renovation history and common problems in the geographic area you're shopping in can help you determine which home inspections are right for you.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2015 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.
Your credit score questions, answered
Before you take out a residential mortgage, your lender will need to review some financial information with you, one piece of which is your credit report.
If you've never pulled your credit report or considered what your credit score might be, this part of the process might make you nervous. It shouldn't, though; your credit report and credit score will simply tell the lender how good you are at paying off debt and how much debt you currently have. The higher your score, the better, but that doesn't mean you won't be able to secure a good home loan with an unimpressive score.
Here's what you need to know about credit scores, credit reports and how they affect the mortgage origination process:
What's a credit score?
Your credit score is a three-digit number on a scale of 300-850. Everyone has multiple credit scores because different credit bureaus calculate them independently. To come up with the three-digit score, the companies use complicated proprietary equations.
Even though they don't share the equations with the public, FICO, the most well-known score-calculating company, explains how different factors impact your score:
- 35 percent of your score relates to payment history.
- 30 percent relates to amounts owed currently.
- 15 percent relates to how old your oldest form of credit is.
- 10 percent relates to the diversity of debt you own.
- 10 percent relates to how new your newest form of credit is.
What is a "good" or "bad" score?
Generally, scores that are 700 or above are considered good, and scores over 750-800 are considered excellent. These scores indicate you pay your bills on time and know how to manage multiple forms of debt, making you an excellent candidate for a home loan.
Scores of 550-580 or below are considered very poor. It would be difficult to get a loan of any kind with a score like this. If you discover that your score falls into this category, though, don't worry; there are plenty of strategies you can adopt to bring your score up.
Does everyone have a credit score?
No. If you've never opened a credit card or taken out a loan, you may not have a score, meaning you're "credit invisible." This can make taking out a loan challenging, but not impossible.
What score do I need to get a mortgage?
There's no clear-cut answer to this question because different programs have different requirements. People with credit scores as low as 580 may be able to get an FHA loan, and there's no minimum credit score for VA loans. The best thing to do is to reach out to your mortgage lender and talk about your options - you may have more than you think!
What's a credit report?
While many people talk about credit scores, your lender will want to see your entire credit report. There's a difference here; your score is just that three-digit number. The credit report details what factors went into the equation that resulted in your score.
Your lender will likely pull your credit report directly from one or more of the three main credit bureaus: Experian, Equifax and TransUnion. But don't wait for your lender to pull the report to discover what's included in it for yourself. Everyone has access to their own reports through the government-mandated website, annualcreditreport.com. You can get one free credit report each year from each of the three bureaus.
If you've never pulled your credit report, try it today. There's always a chance that there's an error included in it that could affect your score, and it's best to sort that out sooner rather than later. Plus, it's always nice to know what your lender will see ahead of time, so there's no surprises when you inquire about your eligibility for a home loan.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2016 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.
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