- Secure and examine Seller’s Property
- Check all appliances–age, function ability,
- Check age of the property with county
- Check correct square footage with county
- Check lot lines “survey” with county
- Look for leaks, termites, rodents, Health Department structural damage. Check with a structural engineer.
- Check for existence of Home Builder’s
- Check for recommendations from home Warranty. Check with the builder inspection services.
- Check for availability of Homeowners Warranty programs.
- High power lines Disclosure
- Urea formaldehyde foam insulation
- Aluminum wiring and warranty
- Lead-based paint
- Underground storage tanks
- Sewer/septic tanks
- Check potability of well water with the
- Radon check
- Noise pollution
- Air pollution
- Check for flood plain
- Septic system check
- Waste pollution
- Schools–statistics, busing, test scores,
- Crime–call the local police department
- Future development plans–call the local
- Amenities–access to fire and police and sheriff’s departments, shops, schools, as-is” neighborhood recreation areas, and entertainment and arts
- Utility bills – Public Service future plans. Check with the local school
- Property Taxes – County Tax Assessor district
- Check for Special District obligations
- Request gap insurance on title policy
- Check comparable values in the area planning authority
- Have attorney review title commitment
- If the home is not new, then it is being sold and 8. Telephone service
Inspect Before You Buy!
It is a good idea to have your home inspected before you purchase it. A thorough inspection of the home by a professional from top to bottom reveals if there are any structural problems or if you will have to repair or maintain anything in the house as it now exists.
In addition, a home inspection can help insure a good buy – if you have it inspected BEFORE you sign the contract or you make certain your contract is contingent upon the inspection report’s findings, then if a serious problem is discovered, you are not locked into a bad risk. Instead, you can negotiate for a reduced sale price or you can ask the seller to repair the defect at his own expense or even back out of the purchase completely.
As a matter of fact, if a seller refuses to include a clause which allows you to cancel your contract and receive your deposit back in the event a major defect is uncovered, then refuse the deal because it was not worth your while in the first place. For instance, chronic seepage in the septic system, termite damage, sagging in the foundation, rotting of the roof, or other minor defects may cost you more than about $3,000 to repair. Here is a guide to having a prospective home inspected.
A good measure of an inspector’s competence is if he is a member of the American Society of Home Inspectors or ASHI, which certifies inspectors who can pass various professional and educational requirements. ASHI members have either engineering, architectural, or technical degrees or extensive experience in the field of construction. Sometimes you can get an inspection on 24 hours notice, but allow about five days at best. The inspection fee for a typical one-family home is between $200 and $350 and the inspection takes several hours, depending on the size of the house.
The following are some rules to guide you on the inspection:
- The inspection should be done during the day. A reputable service won’t schedule an inspection in the evening.
- If possible, go with the inspector just to make sure he goes through the whole house. Also, you will receive valuable advice on how various appliances function and should be kept up.
- Every house has problems, so be sure you understand whether a defect is a major or minor one. While you do not want to underestimate the cost or difficulty of making a repair, you also do not want to be scared away from the sale by a flaw that is easy and fairly inexpensive to repair. Just be cautious of inspectors who over dramatize defects because they are usually praised by purchasers when they find problems. Some become over-sensitive to defects and begin blowing them out of proportion. A good inspector does not gloss over weakness nor does he forget to point out a home’s positive aspects either. He aims to give a solid, clear overview of the pros and cons of the property.
- Obtain a detailed, written report within two or three days of the on-site inspection.
List of Possible Closing Costs
- Appraisal Fee: Approximately $300-400 depending on the type of mortgage and the amount of the loan. This is generally due when you apply for the loan.
- Assuming an Existing Loan: Buyer would pay at closing any interest due for the remainder of the month of closing, based on the daily interest charges.
- Brokers Fee: The commission charged by the Broker, usually paid at closing. Certificate of Taxes Due: $5.00 charged to either the Buyer or Seller, depending on the type of mortgage applied for – due at closing.
- Closing Fee: Charges from the title company for closing the loan package for the lender. Generally $75-125 and is usually paid by the buyer and is due at closing.
- Condo Escrow Fee: Usually two months Homeowners Association dues or monthly maintenance fees are paid in advance to keep the reserves at a high balance in case of needed repairs. Charged to buyer at closing.
- Credit Report: Usually $65-75 per person. A report on the buyers credit to determine their ability to repay a loan – ordered by the lender and generally due at time report is ordered.
- Discount Fee or Points: Negotiated item between Buyer and Seller and is used to buy down the interest rate on the loan to lower the monthly payments. One point is generally equal to 1% of the loan amount. This is due at closing. With VA loans, points must be paid by someone other than the Buyer, so the Seller typically pays points on this type of financing. With FHA and Conventional loans, points can be negotiated between the Buyer and Seller. Document Preparation Fee: Usually $100-200 and can be on all types of loans – due at closing.
- Documentary Fee: This is one cent per hundred dollars of the purchase price and is due at closing.
- Down Payment: This usually depends on the type of loan applied for and is due at closing. Any earnest monies are deducted from the amount due at closing.
- Earnest Monies: A pledge of interest in the property given to the Seller as a partial down payment and is given along with the contract to purchase. It is generally equal to 2-10% of the purchase price.
- Funding Fees: Usually applies to VA loans only and is equal to 1% of the loan amount, due at closing.
- Hazard Insurance: One year is due in advance and charged at closing. Contact your insurance agent for rates specific to your new home.
- Hazard Insurance Escrow: Two months required in advance at closing. This is escrowed in your account with the lender.
- Inspection Fee: Done by an engineer or Home Inspection Service and is usually $200-300 depending on the house size, construction, location and purchase price. This is due at closing.
- Interest Proration: A daily charge on the interest portion of the monthly mortgage payment multiplied by the number of days of ownership during the month of closing.
- Loan Service Fee or Origination Fee: Usually 1% of the loan amount charged for making the loan available and for the work involved in processing the loan – due at closing.
- Loan Transfer Fee: Only applies if you are assuming an existing loan and is due at closing. Usually $500 for FHA or VA assumed loans and can be up to 3% of the existing loan balance on a Conventional loan.
- Mortgagees Title Policy: Usually a $70 fee to insure the lender under a deed of trust against loss caused by an invalid title in the purchaser or loss of priority in recording the mortgage. Due at closing. Additional coverage could be added to the mortgagees policy depending on the mortgage and the lender. Check with your lender for charges – can be $20-50 for a fixed rate mortgage of $40-200 for other types of mortgages.
- Mortgage Insurance Premium (MIP) or Private Mortgage Insurance (PMI): This is a percentage amount of the loan charged up front and added back into the loan amount or can be paid at closing. There is an additional percentage charged and added to the monthly payments -FHA amounts are generally � of 1% divided by 12 and added to the monthly payment. Check with your lender for percentages applicable to your loan. MIP is usually applicable to all loan (excluding VA) when less than 20% is put down.
- Mortgage Insurance Escrow: Usually two months of the portion of your monthly MIP, paid in advance and due at closing.
- Recording Fees: $5 per page, due at closing. Deed used for transferring ownership only is usually one page. Deed of trust for a fixed rate loan is usually 4-7 pages and for an adjustable loan is usually 6-20 pages.
- Rents: Are prorated based on the agreement between the Buyer and Seller and due at closing or prior to occupancy.
- Special Taxes: Any special assessment charges attached to the property. Generally prorated to closing and due at closing.
- Improvement Location Certificate or Survey: Usually $200-400 depending on the type of home and type of survey requested. An Improvement Location Certificate is usually $80-100 and are diagrams showing the lot measurement, boundaries, building location and any easements. Due at closing.
- Tax Reserve or Tax Escrowed: Two months worth of taxes escrowed in advance by the lender to pay for the Real Estate Taxes. Lenders may vary on the reserve requirement from 2 to 12 months depending on the time of year of the closing. Due at closing.
- Tax Service Fee: Can be charged to either party depending on the type of loan obtained by the Buyer. Usually $35-70. This verifies that the taxes are being paid annually, for the lenders protection and is due at closing.
- Title Insurance Fee: Charged to the Seller to give the Buyer protection in his interest in the real property. Due at closing.
- VA Funding Fee: Usually 3% of the loan amount added to the VA loan and financed into the loan payments.
Companies To Call Before Closing
- Please Don’t Forget To Call Your Homeowner’s Insurance Agent For New Homeowner’s Insurance! Your Lender Will Need This Information Prior To Closing!
- Gas and Electric Service: Excel Energy/Public Service Company of Colorado 1-800-895-4999 People’s Natural Gas 1-800-303-0752 Intermountain Rural Electric Association 303-688-3100
- Telephone Service:
- Qwest: 1-800-244-1111
- Comcast: 303-930-2000
- Cable Television:
- Qwest: 1-800-244-1111
- Comcast: 303-930-2000
- Direct TV: 1-888-238-7177
- Trash Collection:
- Eagle Waste Services: 303-761-8387
- Waste Management of Colorado: 303-371-6622
- BFI Waste Systems Inc: 303-287-8040
- Newspaper Subscription:
- The Denver Post/Rocky Mountain News: 303-832-3232