Home Loan Advice: Get it in Writing
But there are pitfalls out there, waiting for the unsuspecting, even when buying a home that looks pristine. Do you know how to avoid them?
Get it in Writing
Are you interested in buying a home? Building one? Your lender will ask for commitments from you in writing in the form of a sales contract and loan agreement. But you should be getting commitments from the lender, too.
For example, when it’s time to negotiate the interest rate, ask your loan officer about the terms and timing of an interest rate lock.
That protects the borrower against rate changes between the start and end of the agreement, typically meant to coincide with loan closing day. You and the lender should have this agreement in writing.
Don’t Skip The Permits
Another thing you’ll want in writing? As in, made official? Any required permits for corrections or repairs needed because of a recommendation in the appraisal.
An article by HouseLogic.com reminds us, “On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you that authorities won’t notice. On large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for a homeowner’s permit, an option available to do-it-yourselfers.”
But appraisal-required repairs or corrections must be done by the book. A permit required by the state or local authority is required for your corrections unless the local ordinances specify an exception you qualify for.
Don’t risk your mortgage loan by letting a contractor pressure you into doing things differently than the law prescribes in your housing market.
What do we mean here? Simply that some types of insurance claims are NOT payable unless your policy specifically refers to the circumstances that caused them.
How many homeowners have been burned by mistakenly assuming that they are covered for flood damage when they are ONLY covered for “water damage,” which does not include “rising water?”
Make sure the specific risks you want to insure against are listed in your policy in writing. If they are not, you may not be covered. Don’t sign a policy you don’t fully understand, and don’t sign a policy that implies but does not specifically mention the conditions you need to insure your home against.
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