It's no secret that times are tough - money is tight and people are cutting back on expenses and spending.
And yet, there are still people out there buying homes. In fact, the federal government's new extended and expanded homebuyer tax credit is making buying a home rather attractive to a large number of potential homeowners out there, who are racing against the clock to get under contract by April 30, 2010, and close by June 30, 2010.
But for many first-time homebuyers, money can be tight - perhaps they have spent months or years saving enough for a down payment for their first home and additional expenses eat further into their savings and liquid assets. There are, however, a number of places NOT to cut costs on your real estate transaction. Yes, buying a home is expensive - probably your single largest investment - but cutting costs on these 5 items can cost you even bigger in the long run.
(This is by no means an exhaustive list - this is simply my opinion of some of the most important expenditures in your real estate transaction. Keep in mind- I am a REALTOR® in Georgia and the laws and requirements may differ widely in other states. Do not consider this post to be legal or financial advice - always consult an attorney or financial planner for legal or financial advice.)
1. Home Inspection - Possibly the single most important expenditure. A home inspection can determine whether there are serious defects with the home that may not be visible to the naked eye or obvious to you or your REALTOR®, such as faulty wiring, unsafe appliances, . You should choose your home inspector wisely, as all home inspectors are not created equal. Seek referrals from your REALTOR® or from friends or family who have recently bought a house and were pleased with their inspector.
2. Owner's Title Insurance - Your REALTOR®, lender and/or your closing attorney or title agent may talk to you about lender's title insurance prior to your closing, or it may just show up on your Settlement Statement, which might leave you bewildered by the charge. Though it is optional, it is an extremely important expenditure, especially in these times of rampant foreclosures, short sales, mortgage fraud, etc. Your homeowners' insurance will protect your physical home and its contents, but it won't protect you against financial loss due to defects in the title of the property, liens on the property, or other aspects of your financial investment. You can be sure that your lender will purchase lender's title insurance, so shouldn't you protect your own interests? You may have options when purchasing your title insurance - you can - and should - discuss those with your closing attorney or closing agent prior to closing.
3. Home Warranty - A home warranty is definitely an optional feature in your home purchase, but it can save you big down the road. In many cases, your REALTOR® may be able to negotiate a home warranty into your purchase contract, asking for the seller to purchase a one-year policy on your behalf. However, if the seller does not agree to purchase a home warranty for you, you can still purchase one for yourself. There are a number of reputable home warranty companies with various policies for you to choose from - from basic policies to those with expanded coverage. After the first year, you will have the option to renew your home warranty each year. Your warranty can cover many defects in the home, such as your hot water heater, air conditioner, furnace - but be sure to read the fine print in your contract so that you understand exactly what your policy covers and doesn't.
4. Radon Inspection - In various parts of the country, radon levels can be high and can seep into homes. Many home inspection companies offer radon inspections, as well, and may give you a package deal if you order it when you order your home inspection. The U. S. Environmental Protection Agency's (EPA) website has extensive information on radon testing and even provides a map of radon levels across the country. If for no other reason, get a radon test to give yourself and your family peace of mind.
5. Survey - A survey is an official diagram or drawing of your property, including lot lines, public utilities on the property, easements, etc. While some lenders may require a survey, it is often optional. The seller of the home may have a seller from when they bought the house or from much earlier than that, depending on the age of the home. It is always a good idea to get an updated one, whether the seller provides you with one or not. An updated survey can tell you if a neighbor's fence has intruded over your property line or if that dead tree is your liability or the neighbor's, saving you the trouble and hassle of dealing with those issues down the road - and there can be costly issues associated with disputes over property lines and ownership. It's best to get those out of the way before you are the property owner.
Of course, there are many other costs associated with buying a home - you should consult your local REALTOR® with questions about what is the norm in your area. And if you have questions about buying a home in North Georgia and the North Metro Atlanta area in particular, call The Gebhardt Group today. We're happy to answer your questions for you and help you navigate the homebuying process!
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Maura Neill, ABR, CRS, MA
The Gebhardt Group
RE/MAX Greater Atlanta
10220 Medlock Bridge Road
Johns Creek, GA 30097
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