You’re excited. You’ve made a deal on your first home: The loan is approved, your down payment is in the bank, and the closing is scheduled for late afternoon Friday. You arrive full of excitement, ready to walk away with the keys and watch the sunset from your own backyard. Papers are ready and all seems to proceed smoothly. Then the closing agent asks for your Cashier’s Check. Oops. After a pause and a black stare, you explain that nobody told you a personal check would not be acceptable.
That champagne toast will have to wait
This may be an extreme example, but delayed closings are not uncommon, and they are problematic for both buyer and seller. Many of the hurdles will be handled by your real estate agent, mortgage lender and title company, but you should be familiar with the process as well. You cannot, of course, afford to overlook the dollar amount you will need for closing. Check on the check as well, just to be sure.
Other considerations should be handled well before closing is scheduled. In some instances, you would be wise to delay making an offer until you have the necessary answers. At the very least, use all the time allowed you by contact to perform due diligence on the house and property you are considering.
Here are four items you might want to check on:
- Open Space — If there is vacant land nearby, you can check current zoning. If what you thought would be parkland could possibly be a carwash or a veterinary clinic, you might want to reconsider your offer. Check the larger vicinity as well. If there is a lot of open space, currently zoned or not, weigh that into your decision to purchase. Homeowners have been surprised by installation of such things as water towers, fire stations, shopping centers and even airports.
- Tax history — Property taxes traditionally go up, not down, and it would be wise to know how much they can be raised in a single year, how the rate is determined and if there are any bond issues or new facilities planned by the city or school district. In new and growing communities, the need for services often necessitates a heavy tax burden on homeowners. That can make a huge difference in your monthly payment.
- Look beyond the house and study the neighborhood — Visit the house at several different times of day, on weekdays and over the weekend. If possible, do a “test drive” to judge your commute to work or the route the kids will have to take to school. Time the distance to the shopping center, the gas station and the freeway. Talk to neighbors. Check the local crime rate. Confirm local emergency response times. If there is a Homeowners Association, read the documents thoroughly. Be certain you can abide by all restrictions.
- Don’t forget insurance costs — Is the house in a flood plain? Are you in a storm zone? Have there been previous major claims on the property? Be realistic about the value of your personal belongings and your vehicles. In addition to required mortgage insurance, consider the cost of liability insurance and possible home warranty coverage. They can add up quickly. Visit HomeInsurance.com and don’t leave this important aspect of the home buying process until the last minute.
Whether it’s your first ever real estate purchase or you’re buying a luxury home in an unfamiliar area, you can never have too much information when you’re doing your research and due diligence. You need to make sure that you have taken into account all the legitimate buying considerations so that you do not run into any unforeseen circumstances that could possibly derail your purchase expectations.
