Before You Buy A Fixer-Upper, Answer These Questions First!

Just like buying a move-in ready home, a fixer-upper has its fair share of advantages and disadvantages. Buying a fixer-upper can be a great way to own a home you really love once you put some work into it, but it can also quickly swallow up your savings if you aren’t prepared. Just remember to do a reality check before plunging into this bargain.

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To figure out if you can and are ready to own a fixer-upper, here are seven questions to help determine whether the fixer-upper you’re eyeing is right for you.

1. Is the home’s location worth it?

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Before you get infatuated with a fixer-upper house and all its potential, first learn about the neighborhood. Experts recommend buying “the worst house on the best block.” Why? Because there’s no denying that homes located in a sought-after neighborhood will positively influence the price of the “ugly duckling” that you are interested in. Well, once it has been renovated, anyway.

Most buyers choose fixer-upper homes because they loved the area first and saw the potential of a thriving neighborhood. Unlike other home buyers, they can see past the external imperfections of the house, such as peeling paint or an unkempt yard, and realize that it is in an area with sustainable growth. So to choose wisely, do your research and love the neighborhood first. Is it close to public transit for easy commutes? Are there any parks and local attractions nearby? Is it in a good school district? If you answer “yes” to one or more of these questions, it might be worth it to get your hands dirty for that bargain.

 

2. What kinds of problems need to be fixed?

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Problems in houses can be divided into two categories: structural and cosmetic. Real estate agents warn against buying a house with structural damage, especially if there are major flaws in the foundation, septic/sewage system, roofing, siding, or other issues that affect the way a house works. You should think twice if the house has termite damage, water damage, needs serious upgrades to the electrical systems, or if there is a mold manifestation.

If you find problems like these after a home inspection, experts say it’s probably best to walk away. These flaws can actually make the house dangerous to live in. They are very expensive to fix and they have to be taken care of by a licensed contractor. Likewise, environmental problems such as termite damage or radon can be mitigated, but treatments may not always be successful.

On the contrary, they say the perfect fixer-uppers are the ones that only need cosmetic upgrades. Many home buyers would scoff at these houses and simply walk away. They don’t know that problems like cracked tiles, peeling paint, smelly odors, and unkempt lawns are only skin-deep and just make the house aesthetically and architecturally unappealing.

Cosmetic changes are generally less costly and can even add value to the home, especially for projects like kitchen and bathroom renovation, wallpaper removal, floor refinishing, and new lighting installation. Experts refer to fixer-uppers like these as “ugly homes”—they only need some freshening up before they’re transformed into a home that anyone would want. The best advantage to purchasing this type of fixer-upper: you can choose your preferred colors, furnishings, and fixtures to make the home perfectly suited to your own taste.

 

3. Does it have a desirable configuration and layout?

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After identifying how big the problems are, determine whether the home’s layout and interior specifications are desirable—both to you and future buyers. If the house has a bad layout, just as with structural damage, it can be expensive or impractical to demolish walls and build new ones.

If it’s located in a neighborhood where most of the homes only have two bedrooms, having an extra bedroom can give your home a huge advantage. A kitchen with more than one entrance is more likable, while the concept of an open floor plan is gaining popularity, especially among many millennial buyers. Those features can help make the home appealing to a large pool of potential buyers and thus can be more profitable when it’s time for you to sell.

 

4. Can your budget handle the total costs?

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There are three major things you need to include in your budget before doing any repairs: renovation costs (also include labor costs), supplies, and permits. Even before hiring a home inspector or a licensed structural engineer to evaluate the home, create a reference sheet or estimates for the costs of major repairs such as a new roof, HVAC, windows, or foundation. This way, you’ll be able to tell whether fixing the home will really fall within your budget.

For cosmetic upgrades and repairs you are planning to DIY, determine the materials you’ll need and how much they cost. You can get a rough estimate by checking home improvements stores and websites, such as Home Depot or Lowe’s.

You also need to factor in the cost of securing permits from your town or local municipality. Permits come with corresponding fees and can be pricey depending on the town. On the other hand, moving forward with your home renovations without securing the proper permits can have many negative consequences. Check first with local officials and see which of the repair jobs require a permit, and how much they cost.

 

5. Can you deal with the disruption?

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Do you have the time? Or, are you willing to devote a lot of time to this project? Compared to buying a move-in ready home, you have to commit a huge amount of your time to do all the work to make a fixer-upper your ideal home. For instance, the required licenses and permits may sometimes take a lot longer than expected. You also have to prepare for every aspect of the project to take longer than initially anticipated and build in as much extra time as possible in case things get delayed. Don’t forget to assess your patience and emotional energy as well. Each repair project may come with unexpected issues and delays that will really test your patience and endurance.

 

6. Aside from hiring professionals and/or contractors, can you also DIY?

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Before thinking of buying a fixer-upper, you need to consider your skills and willingness to tackle such a home. There are projects that you have to leave to the professionals and contractors—say, anything related to electricity, wiring, and plumbing. But there are minor cosmetic upgrades you can also learn and do on your own to help you save substantially on labor costs. If you’re skilled enough as a DIYer, you may put on a fresh coat of paint, change the lighting fixtures, lay the tile, fix the toilet, or tear down wallpaper all by yourself.  

A fixer-upper works best for those who would happily spend their time replacing cabinets and refinishing floors, and would want to get their hands dirty to make their home more habitable and profitable. Experts also call this concept “sweat equity.” By doing some part of the work yourself, you’re improving your home’s value and even adding greater value to your home. Likewise, the more you can do on your own (just as long as it’s still safe enough for an amateur), the less you need to spend on labor cost and instead allocate a part of your budget in buying high-quality materials.

 

7. Can you tap into any home improvement loans or programs?

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Financing a fixer-upper can be extremely difficult. But if you’re really interested in buying and restoring a house, do your research and see if you can qualify for any home improvement loans. Your most popular choices are the FHA 203(k) loan, the Fannie Mae HomeStyle loan, and the Section 504 Home Repair program. Just remember that all loans have their own strict standards and eligibility requirements.

For example, a 203(k) loan is backed by the Federal Housing Administration, which means you can put as little as a 3.5% down. Lenders can also accept lower interest rates than what a typical home renovation loan would require. Moreover, it is also open to borrowers who have a less-than-stellar credit rating and can cover big-ticket issues such as structural damage and plumbing replacement.

Before getting a renovation loan, make sure you’ve explored all your options and understand the pros and cons of each program. Also, keep in mind that you generally need to be pre-approved with these loans before you can make an offer on a house.


The work that it takes to renovate a fixer-upper should not be underestimated. A project like this can eat away at your time, effort, money, patience, and even your sanity.  And once you close on a fixer-upper, there is no turning back. The only way forward is to put in the necessary effort to transform it. For the right buyer, though, turning an “ugly duckling” into a beautiful swan—a beautiful home—is a challenge well worth the effort and can mean living in your dream home...making a significant profit when you sell.

The Annual Home Maintenance Checklist: A Guide For New Homeowners

Keeping up with home maintenance tasks can be daunting, especially for new homeowners. It may be hard to accept the fact that sometimes you have to cancel a weekend brunch so you can clean out the gutters and mow the lawn.

While these responsibilities could be frustrating, it’s what you have to do to protect your biggest investment. Staying on top of these tasks can save you from costly repairs later, and can keep your house running as good as new.

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While there are many tasks that homeowners should complete each season, this list outlines the chores you should take care of once a year. If you’re a homeowner who is or will be celebrating the anniversary of your home purchase, it’s a good idea to start off with this to-do list and give your home the TLC it deserves.

 

1. Check and update your smoke alarms, alert systems, and carbon monoxide detectors.

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Alarm systems and smoke detectors are crucial to minimizing damage and saving lives in the event of a fire. Change the batteries of your smoke and carbon monoxide detectors and ensure that the systems are in working condition.

Now is also a good time to check your fire extinguishers. Make sure you have at least one fire extinguisher and see if it is still within the expiration date.

 

2. Pressure wash.

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One of the best ways to make your home’s exterior look clean is through power washing. Doing so will also minimize the risk of mold growth and infestation, particularly if you do it once a year. Give your house a good scrub by using a garden hose, renting a power washer or hiring a professional cleaner to do the job. Don’t miss out on cleaning the siding, windows, and patio as well to get rid of any grit. For heavily soiled areas, spot-clean them using cleaning materials that won’t harm your plants.

 

3. See if your house needs a freshening up with paint.

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To check if your house’s exterior needs a fresh coat of color, look for signs of chipping paint. New paint will not only give your home a new look, but it will also protect it from water damage and rot. This job is best started in the spring.

 

4. Check your home’s humidity levels.

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The humidity level in your home should be kept at average levels: between 30% and 50% humidity. High humidity is dangerous because it can cause mildew and black mold, while low levels can cause damage such as chipping paint. Low humidity can also make you and your family uncomfortable, causing itchiness and even sore throats! Check your property’s humidity using a hygrometer at least once a year.

 

5. Clean your air filters and air ducts.

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You should clean your air conditioner parts at least once a year to ensure clean air is circulating in your home. You can clean the air filters and air ducts by yourself or hire a maintenance technician to do the job.

 

6. Check for termites and pests.

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For many homeowners, just the thought of having termites in their home can make them cringe, but facing reality is another thing. You should include a termite inspection, which costs no more than $100, in your annual checklist to make sure these pests are not taking over your property.

Likewise, don’t forget to book an appointment with a pest control service once a year. Unless you want your home to be infested with bugs and other critters, you have to include it on your cleaning schedule.

 

7. Clean your tile and grout.

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Cleaning the tile and sealing the grout lines need to be done at least once a year. Not only will it make your home look clean but will help prevent mold growth. While there are many firms that offer professional tile and grout cleaning, you can also do it yourself. You just have to carefully choose the products or materials you’ll use so you won’t damage your tile or prevent further damage.

 

8. Sort out your things and declutter.

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After spending a year or more living in your home, it might surprise you to realizehow much “stuff” has piled up, taking over your storage space. It’s a good thing to sort through your belongings and declutter unnecessary items after you’re finished doing the essential maintenance chores.

The 7-Step Decluttering Guide to Organizing Your Home this New Year

We often talk about starting a home improvement project, like a bathroom or kitchen remodel, because we’re dissatisfied with the house and are looking for ways to make it even better. But what if the first thing that’s hindering us from appreciating our biggest investment is the enormous amount of clutter that we’ve accumulated over the years?

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Decluttering is a difficult thing to do, especially for those who have been planning to downsize or simply move out of their current home. Deciding which items to keep, which to give up, donate, or throw out will never be easy. But too much clutter in our home can lead to chaos that can cost us money, time, and even limit our productivity and concentration.

According to the Ikea Life at Home 2017 survey Beating The Battles, having “too much stuff” was the single biggest cause of stress in the home. And the simple act of choosing which items to keep and which to discard can ultimately free people from guilt and worry and allow them to focus on what really matters most in their lives, even if taking that step is difficult.

New Year is a good time to have a fresh start, so right now is a great time to achieve a more peaceful home by decluttering and organizing your stuff. Here we’ve gathered some of the best techniques and principles to help you declutter so you can appreciate your home more.

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Before starting anything, think about what your goals are and your reasons for decluttering. If you don’t have a clear goal in mind, you’ll start enthusiastically after sorting through a few items, then find yourself losing momentum because you haven’t started with the right mindset. Experts suggest you create your vision first and think things through before you start organizing.

Don’t just say to yourself that you’re going to organize your closet or sort through your cupboard. Instead, think about how you want to maximize your storage space, how you want to store your clothes, or how you can easily get to your preferred herbs and spices when you’re cooking your meals. Take the time to assess your space and understand how you want to organize a particular area in your home.

 
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If you’re still having a hard time deciding where to start, begin with something easy. Get rid of any broken or expired items, especially hair, makeup, and other cosmetic products, old prescriptions, and medicines. The same goes for any food or canned goods in your pantry that are already past their expiration date.

 
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Make it easier for you to focus on your goals by organizing one room or area at a time. Break the job into smaller parts so you won’t get overwhelmed with the task at hand. Try choosing a space that makes you feel uncomfortable — whether it’s your makeup and beauty products taking over your vanity drawer, the shelves crammed with books you don’t have time to read, the pile of messy clothes in your dresser, or the unruly cords and cables in your home office. Taking it item by item will help you get things done in a short amount of time.

 
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Things like gifts, souvenirs, and inherited items can be the hardest things to part with. Putting a great deal of sentimental value on every item we’ve ever received as a gift or every item we’ve ever purchased on a vacation is a trap that we all fall into, and it can be impossible for you to get rid of unnecessary clutter if you don’t learn to let go. Even though these things can be connected to a specific memory in our lives, the fact remains that these are still objects, and while some may be worth keeping forever, it’s worthwhile to examine whether all of those items are still creating a positive effect on your life, or if they’re contributing to your stress.

It’s important to remember that you are not required to keep all the gifts you’ve received in your lifetime. When evaluating an item, determine whether it is really worth keeping. If you can retain the precious memory without keeping the physical object, then it might be wise to let go. You can check these tips by The Spruce to help you get rid of sentimental clutter without feeling guilty.

 
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As you set out to declutter a space in your home, adapt the four-box technique suggested by Becker in BecomingMinimalist.com to help you with this process. Prepare four boxes that will be titled trash, give away, keep, and relocate. As you consider and evaluate each item, try to place them into one of these four categories so it will be easier for you to sort things out later on.

After you’ve finished, you can return and double check all the items in the boxes and then put them back in their proper locations, or think of ways to discard them. You can always donate them, pass them on, give them away to friends and relatives, or sell them for some extra cash.

 
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The biggest pitfalls when organizing are the unending distractions and diversions that will come your way. When you start the task, do your best to ignore any texts, email alerts, or notifications from your social media accounts. Also, avoid the temptation to finish that book you found in a drawer you were cleaning, or review the full menu of a restaurant in that flyer you were supposed to throw out. These little distractions could send you down another path and make you lose focus on your goal. So outsmart these temptations at all costs and remember the tips given above to achieve an organized home.

 
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Many of us just don’t have the time to focus on getting rid of unnecessary items, but we can still manage the issue if we acquire less stuff to begin with. Before bringing a new item into your home, take a hard look at the things you already own. Disorganization could cost you money when you bring home a new item only to realize you already own something similar. When there’s less clutter, you’ll spend less time trying to find things, less time wondering if you already have something, and less money overall when you’re able to find things quickly and know you don’t need a duplicate.


After you’re finished, take a step back and look around. Have you missed any area that still needs attention? Once you’re happy with what you’ve accomplished in your newly organized home, it’s now easier for you to dream of your next home improvement project.

Understanding Your Homeowner’s Insurance Policy in Case of a Wildfire

The recent catastrophic wildfires in California have been beyond devastating. These violent infernos destroyed thousands of properties and structures and displaced hundreds of thousands of people living in the affected areas.

But if there’s one takeaway from this widespread fire damage, it’s that homeowners and renters alike should be sure their insurance policies are up to date, and that they can get enough coverage to rebuild their home after a catastrophe.

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So whether you live in the Golden State, on the West Coast, or anywhere else in the country, here are some key points about your policy in case you need to make an insurance claim after wildfire damage:

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Your standard homeowner’s insurance policy will cover damages to your home from a wildfire, especially those caused by fire and smoke. It may also include the repair and cleaning of smoke-damaged furniture, water damage from firefighting efforts, as well as debris removal.

Depending on the kind of policy you have and whether you live in a high-risk zone or not, you may have coverage for:

  • Dwelling or main property

  • Detached structures like garage and fence

  • Landscaping and other backyard items

  • Personal property

  • Debris removal, and;

  • Living expenses

Keep in mind that for personal belongings like jewelry, you may need to purchase additional coverage to protect them since your standard policy may offer lower coverage limits. If your car has also been damaged or destroyed by wildfire, it is typically covered under the optional “comprehensive” portion of your automobile insurance policy.

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Based on your insurance policy, your house and its contents may be insured for either their cash value or their replacement value. The actual cash value is the depreciated value of your possessions at the time of the loss. In this settlement, your items will be replaced by their current, depreciated value.

On the other hand, replacement value will provide you with enough money to replace your lost items. And although you will pay more in premiums, it’s often worth it because it can help you go back on the same position you were before the loss.

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Remember that you shouldn’t only focus on the replacement costs of your home and its contents. You should also check your homeowner’s policy for your Loss of Use coverage limits. Loss of Use coverage provides living expenses if your home is deemed uninhabitable as the result of a disaster such as fire or water.

Because it will take time to rebuild or repair your home, loss of use covers expenses for temporary residence, moving costs, transportation, and commuting expenses, among others. This key provision is sometimes called Coverage D and in most policies or insurers, it is usually limited to a certain amount and for a specific time period.

In case of disasters such as a wildfire, homeowners need to be sure that their policies have strong loss of use provisions. It’s a common mistake for many because they purchase their coverage based on cost and not the actual coverage. So once a disaster strikes, they’re surprised to find out that their temporary living costs are only partially covered. Experts suggest that homeowners review their Loss of Use coverage limits before they suffer a loss so they can be comfortable while they’re on their way to recovery.

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The Loss of Use provision is only limited to a specific time period, which can pose a new challenge for affected homeowners since it takes time to rebuild. The length of coverage also varies by state. In California, the current law allows for 24 months of loss of use. The good news is that it will increase to 36 months starting January 2019. Some other states, however, limit the loss of use to only 12 months.

For many displaced homeowners, the 24 months of coverage may not be enough to cover the actual time needed to rebuild. Most insurance policies also do not consider outside influences that can make it difficult for these homeowners to be efficient with rebuilding.

 
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Here are some of the things you can do to make sure your property is protected:

1. Double-check your insurance policy and be sure you have adequate coverage. Homeowners and renters alike, especially those who live in areas at risk of wildfires, should make sure their coverage is adequate and up to date. Review the fine print of your insurance policy and make sure  nothing sneaky has made its way into your policy.

You can also purchase additional coverage for code upgrades, which will help cover the cost of bringing your new home up to the latest building standards. This will protect you in case rules have changed for electrical systems or insulation since the year your house was built.

2. Document your home and keep an inventory of your belongings. Take pictures and videos of your home and your possessions through your smartphone, then keep them on a cloud-based storage platform so you can access them anywhere. In case your possessions were ruined by fire, you can use the images as evidence if your insurer disputes something in your claim.

In case your area has been affected by wildfires and you have to evacuate, save receipts from hotel rooms, food, or rentals. These additional living expenses could be covered by your insurance policy.

3. Work with the right insurance agent or broker. Working with the right professionals can make a big difference even before a disaster strikes. They can walk you through the provisions of your insurance policy and explain why you may need to pay additional premiums, especially if you’re living in a high-risk area.

An Easy Guide to the Different Types of Mortgage Lenders (Before Choosing the Right One for You)

We’ve helped you understand the roles of different real estate experts in previous posts. After securing everything needed for your dream home with your agent’s help, you’ll be needing a mortgage lender who will provide the mortgage loan that will be used to purchase the property.

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Mortgage lenders set their mortgage interest rates and other loan terms according to different factors. Likewise, borrowers need to meet certain criteria in terms of creditworthiness and financial resources in order to qualify for a mortgage. Generally, there are three main types of mortgage lenders: retail banks, credit unions, and mortgage banks.

Just like with real estate agents, choosing the right lender can also save you time, money, and lessen your worries while you’re in a complicated real estate transaction. You need to fully understand your options so you can feel more comfortable sharing your financial and personal profile with your lender and subsequently, get the best loan product that fits your needs.

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Retail Banks

These companies range from the biggest institutions, such as Bank of America, down to smaller local banks. They do their own underwriting and approve and close loans for consumers. Smaller retail banks can also offer lower fees and less-stringent credit requirements. They are often more flexible on loan approvals because they can choose whether to keep the loans on their books or sell the loans to investment firms like Fannie Mae and Freddie Mac, who then bundle the loans into mortgage bonds. They also usually offer lower mortgage rates if you use them for additional services like a checking account.

If you get your mortgage from one of these organizations, you’ll be assigned a loan officer, who will receive a commission or bonus for writing your loan. He or she will remain your primary point of contact for all future inquiries.

Credit Unions

They are not-for-profit, and customer or member-owned cooperatives that have been boosting their presence in the mortgage lending market since 2015. Because of their not-for-profit tax status, they’re not indebted to shareholders like banks and typically offer more personal service and lower fees because instead of keeping the profit, they pass on the savings to their members.

By getting a loan at a credit union, there’s a greater chance that you’ll stick with the same servicer. That means you can save money from late fees that could arise due to confusion over where you need to send your payments. Credit unions also appeal more to borrowers with less-than-perfect credit or potential borrowers who don’t fit in the traditional profile.

Cons: They can be less convenient because they usually have fewer branches (or a brick and mortar office), as well as ATMs.

If you get your mortgage from a credit union, you’ll also be assigned a loan officer who will handle your mortgage transaction.

Mortgage Banks and/or Mortgage Bankers

Many mortgage lenders in the US are mortgage bankers. They can be an individual, a company, or an institution that originates mortgages. They may use their own funds or borrow funds from warehouse lenders at short-term rates to cover the mortgages. Once the mortgage is provided to the home buyer, a mortgage banker may choose to retain the mortgage in their portfolio, or sell it to investors (such as Fannie Mae and Freddie Mac) and repay the short-term note.

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Understanding the different kinds of lenders and terms you may encounter

Aside from getting the best loan product with reasonable terms, you need to know what kind of lender you’ll be dealing with. It can be quite confusing to figure out all the different kinds of lenders that deal in home loans and refinancing, but familiarizing yourself with the terms and their roles can be a big help. Just remember that many lenders are involved in more than one type of lending, and their roles can overlap among various categories. Here we introduce you to their different roles and goals.


Mortgage Brokers

While a mortgage broker does not actually make the loans, he or she works with multiple lenders to find the one that will offer you the best rate and terms. He or she simply acts as a middleman or an agent who may represent the mortgage loan products of many lenders. You can count on a broker to match you with the loan product that best fits your needs at the best price.

They usually obtain loans for consumers through retail or mortgage banks and wholesale lenders. The loan is also funded and serviced by the retail or mortgage bank that the broker takes your loan to.

Once you get approved on your loan, you will deal directly with the loan originator or their mortgage service provider. The broker may then add his or her own fee.

Here are some of the advantages of using a mortgage broker:

  • They can rate shop for you across many banks, thus saving you time shopping for a loan.

  • You may get a more favorable mortgage rate.

  • A mortgage broker can best lead you to national or regional lenders that are most likely to accept your application based on your financial and personal information.


Wholesale Lenders

Wholesale lenders pertain to those banks and/or institutions that do not deal directly with consumers but offer their loans through third parties such as other banks, mortgage brokers, credit unions, etc. In this kind of lending, the wholesale lender is the one that is actually making the loan and whose name typically appears on mortgage documents. The third party is only acting as an agent in return for a fee. Many large banks have both wholesale and retail operations, such as Bank of America and Wells Fargo.


Retail Lenders

They are lenders who issue mortgages directly to homeowners, either by lending their own money or acting as an agent. They provide financing on the retail level with retail rates. Similar to wholesale lending, retail lending may simply be one function offered by a larger financial institution that also provides a range of other financial services.


Direct Lenders

If you encounter the term “direct lender,” no need to be confused. Direct lenders are those who originate their own loans through their own funds or borrowed funds. Direct lenders can be banks, mortgage banks, or portfolio lenders (which will be discussed below). Their employees will review your application and make the decision to lend you money. They can be classified as retail lenders as well because they do not involve any third parties or middlemen in making loans to borrowers.


Portfolio Lenders

Portfolio lenders are those who use their own money when making home loans, which they maintain on their own books or “portfolio.” Most portfolio lenders tend to be direct lenders as well, so they don’t have to satisfy the demands of outside investors. Because of this, they can set their own terms for the loans they provide.

If you’re a “niche” borrower, a portfolio lender can be a good choice for you. These “niche” borrowers who don’t fit the typical lender profile may seek the service of portfolio lenders, especially if they want to get a jumbo loan, if they have a flawed credit, or they are looking at a unique property. Their rates are sometimes quite low so they tend to be very careful about who they lend to.


Hard-money Lenders

A hard-money lender can be your last resort if you can’t qualify through any other lenders or a portfolio lender. Usually, they are private individuals with money to lend, though they may be set up as business operations. Don’t be surprised if they have higher interest rates and down payments. Borrowers typically use hard-money lenders to fund short-term loans that are expected to be repaid quickly, such as for investment property. They are not usually used to fund a home purchase.


Bottom Line

Understanding the loan process and not being afraid to ask questions can be your two most powerful weapons while you’re in the process of choosing a mortgage lender. If you need a second opinion, ask your real estate agent because they’ve likely had plenty of experience working with reputable local or regional lenders that may cater to your needs.

Should You Sell or Buy A Home in Winter? Here’s Why the Colder Climate Might Work in Your Favor

During the spring and summer months, bidding wars are rampant, there’s fierce competition, and a large pool of buyers are looking to move before the school year begins.

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But in winter, especially in colder climates when everything is covered in snow, sellers and buyers alike can also take advantage of the season to score a good deal on real estate. Experts say that the idea that homes are very tough to sell or buy in the winter might be a myth. When temperatures drop, the market could be full of eager sellers and serious buyers who are both looking to score a cold, sweet deal.

Advantages for Sellers

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You have less competition

Since there are fewer homes on the market, you have less competition from other sellers. The low inventory creates increased competition among buyers, which generally result in higher sale prices. This is why winter can also be an ideal time to sell your home.

You will show your home to a pool of serious buyers

When you put your home in the market during the winter months, there’s a greater chance you’ll attract a pool of real buyers looking to purchase and not those window shoppers who are just curious about the house. These serious buyers want to take advantage of the less competitive market and don’t want to wait until spring to get their hands on their ideal home.

You can highlight that your home is winter-ready

Aside from cozy fireplaces, hot tubs, and steaming mugs of hot chocolate with freshly baked cookies that await buyers when they tour your home, you can feature your house’s winter-readiness when you sell in the colder months. Show off the design and features that will make their life easier during winter, like an easy-to-shovel driveway, new roof and furnace, south-facing windows, and well-insulated pipes, among other things. These features, however simple, will show that your home can handle the harsh elements.

Many buyers are looking to relocate

People often look to relocate at the start of the year, especially those with new job opportunities, or young parents who want to start the new year somewhere in a more spacious family home. These buyers are serious about the sale and want to secure the property before Christmas or New Year. They are more likely to sign on the dotted line once they find the home they are looking for, which could potentially mean a swift sale with fewer contingencies.


Advantages for Buyers

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Take advantage of this season to score a bargain

Because more buyers are likely to house hunt during warmer weather, home prices are generally lower in the winter. You can then take advantage of this season and have more buying power since sellers are motivated to sell their home and move before the year ends.

However, don’t assume that you can automatically score a sweet deal. What you can do is use the seller’s motivation to negotiate a bargain. This is particularly in markets where there’s generally less interest and the seller already feels some pressure. They might be more willing to accept an already good offer rather than waste time waiting for a better one. Work closely with your real estate agent to give a good offer and secure a quick settlement.

You can use your end-of-year financial bonus to enter the housing market

The end of the year also means many employees or workers will get their performance reviews, which could mean receiving financial bonuses and large payouts. If you’re a first-time home buyer, you can use this opportunity to enter the housing market and invest that money in purchasing your ideal home, especially if your credit is already in good standing. Buyers can also use the incentives to upgrade their living situations.

 

Before starting your house-hunting this season, just remember to avoid too much holiday debt while shopping for gifts for your loved ones. Any new debt can change your debt-to-income ratio and affect your mortgage pre-approval. Keep in mind that buying a home can be your biggest investment, so take note of your priorities especially this holiday season.

Why You Must Have Flood Insurance Even If You Don’t Live In A Flood Zone

This year, Hurricane Florence brought tragic damage to the Carolinas and the Eastern Seaboard. And like recent major storms such as Harvey and Irma, Florence has caused massive flooding throughout the region.

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According to the Federal Emergency Management Agency (FEMA), no home is completely safe from potential flooding. And without flood insurance, homeowners have to pay out of pocket or take out loans to repair their home and replace its contents. Flood insurance can mean the difference between recovering and being financially devastated. So why risk it when your largest financial investment is at stake? It can take you less than a month to make an offer and close on your dream home, but rebuilding it after flood damage could take months or even years.

Here are five crucial reasons why homeowners should carefully consider getting flood insurance:

1. Your standard homeowner's insurance policy does not typically cover flood damage.

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Many American homeowners are unaware that flooding is one type of natural disaster that isn’t covered by their standard home insurance policies. In fact, at least 43% of homeowners incorrectly believe the damage from heavy rain flooding is covered under their standard insurance, according to the 2016 Consumer Insurance Survey by the Insurance Information Institute.

Most homes in the counties that were hardest hit by Hurricane Florence in September 2018 were underprepared for the aftermath of the storm. A Washington Post analysis revealed only one in 10 homes has flood insurance.

Since your regular home insurance doesn’t typically cover flood damage, you will need a policy offered through the government’s National Flood Insurance Program (NFIP). The average annual premium for a policy through the NFIP was $866, although it is expected to rise about 8% this year. The program's maximum coverage is $250,000 for your home and $100,000 for its contents.

 

2. Your home can be miles away from a floodplain or any bodies of water and you can still be a victim of flooding.

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It takes just one inch of water to cause $25,000 of damage to your home, as reported by FEMA. You can live miles away from water and your area may be low-risk, but it doesn’t mean there’s no risk involved. Surprisingly, over 20% of flood insurance claims come from properties outside high-risk flood zones.

While homeowners in high-risk areas are likely required by lenders to get flood insurance, it’s also recommended that those who live in low- to medium-risk areas also consider buying a policy.

 

3. Flood maps can change!

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Here’s a sad truth: floods can happen anywhere. Floodplains and floodplain maps change and evolve. When you bought your home, you may have thought, “There’s no need for a flood insurance policy because I don’t live on a floodplain.” But that doesn’t mean your area will always be low risk.

You can check the site FloodSmart.gov to learn more about the flood risks in your area. It’s also a good tool if you want to get more information about the risks, premiums, and agents near you. Your insurance agent can also be your go-to person during your research.

 

4. Floods are the most common weather emergency.

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Anywhere it rains, there’s the possibility of flooding. And according to FEMA, flooding can occur from hurricanes, tropical storms, cyclones, plain old heavy rains, winter storms, spring thaws, overburdened or clogged drainage systems, or occasionally from nearby construction. It doesn’t even have to be caused by a major weather emergency for your property to be affected.

Likewise, flood insurance can pay whether or not there is a Presidential Disaster Declaration.

 

5. There is a 30-day wait period before the policy goes into effect.

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You can’t wait until a hurricane is bearing down on your area for you to get flood insurance. Most policies have a 30-day waiting period between when you buy the coverage and when the coverage takes effect. So you need to purchase a flood insurance policy at least a month in advance to be eligible for reimbursement.

The only exception to this is when the policy you got was required upon closing on a new home purchase. When an extreme storm hits your area within the 30-day period, you’ll have peace of mind that your new home and its contents are insured.

 

Bottom Line

Flood insurance premiums vary depending on the home’s elevation, the date of construction, and the relative risk of the area. And while the NFIP program has a maximum of $350,000 in coverage for your home and its contents, you may opt to buy excess flood insurance through a private carrier that would cover an amount above the national program’s limits.

It may be expensive, but don’t skimp on a flood policy and protect your largest financial investment. If you’ve been a victim of flood damage and your home is uninsured, you may get a grant from FEMA or a loan from the Small Business Administration. However, the money you’ll get may not be enough to cover the damage. According to this Realtor.com article, those federal grants are not designed to bring homeowners back to a pre-disaster condition. Insurance can help you get to where you were before the disaster occurred.

Getting A Mortgage After Retirement

It may seem like a nearly impossible task to get a mortgage after retirement, but there are ways you can do it even if you are not employed. If you’re planning to apply for a mortgage, here are 5 common questions you might ask that we’ve answered for you:

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1. What will lenders consider as my income?

  • Income from a regular or part-time job

  • A brokerage account or retirement savings

  • Transfer payments like Social Security and your pension

  • Invested assets

  • Household income (income from non-borrowing household members)

2. How will lenders calculate my income?

If you are not employed, there are two methods that lenders will use to calculate your income. Take note that if you receive transfer payments, those will be included in the computation for your income in both of these methods.

  • Asset depletion method: If you have a lot of invested assets, the lender will calculate their current aggregate value and will subtract the amount for the down payment and closing costs. 70% of what remains will then be divided by 360, which is the number of months’ payment on a 30-year mortgage.

  • Drawdown from retirement method: If you’re at least 59 ½ years old, you can use documents or receipts that verify your recent withdrawals from retirement accounts.

3. What are the factors that can affect the approval of my mortgage application?

Aside from the above, some of your other financial details will also be subject to the lender's scrutiny.

  • Credit score: The typical requirement of lenders for a credit score is usually 780; a score that's higher than that can increase your chances of getting approved. And if you ever fall short on other factors, such as debt to income ratio, a good credit score just might save your application. Also, if your score is higher than that, you could also get a better interest rate.

  • Debt to income ratio: Your debt is comprised of car payments, credit card minimum payments and your total projected house payment which includes interest, principal, property taxes and insurance. Other things like alimony and child support are also included in it. The debt to income ratio is expressed as a percentage, and is computed by dividing your total monthly debt by your gross monthly income. The safe percentage among lenders is generally considered to be 43% or lower, but maximum DTI still varies per lender. The ideal is 36%, and with no more than 28% going into paying the mortgage.

  • House expense ratio: Your housing expense ratio is the sum of your housing payments such as the potential mortgage principal and interest payments, property taxes, mortgage insurance, hazard insurance, and association fees. It’s computed by dividing the sum of those by your pre-tax income. Just like the DTI, it is expressed as a percentage and is ideally not to exceed 36% of your income.

  • Post-closing liquidity: Your lender would also want to see your available liquid assets after closing, and they usually require that you have assets that could cover at least 6 months’ worth of housing expenses. This is calculated by adding up all of your verified financial assets and then subtracting the closing costs and equity for the loan.

4. How much is the usual down payment?

The amount of down payment you would have to give is dependent on the method used for determining your income.

5. What are my other options aside from getting the usual loans in the market?

  • VA loans: If you’re a veteran or a military spouse, VA loans offer 0 down payment and low interest rates.

  • Reverse mortgage: Also known as the Home Equity Conversion Mortgage (HECM) for purchase program, it is a kind of loan that can delay repaying the mortgage (principal or interest) until the house is sold or until the death of the borrower.


Here are some tips for when you’re getting a mortgage after retirement:

1. Getting a mortgage for your primary residence will result in a lower interest rate,
while a mortgage on a home that will be used for vacation or investment
purposes will have higher interest rates.

2. If you can, make extra mortgage payments. If you can afford to pay more than what the lender calculated, you can arrange to have the monthly payment increased. This can shorten the time you would have to pay for the mortgage and could decrease your monthly payments over time, and decrease the amount of interest you need to pay on the
mortgage overall.

3. If you plan to take out a hefty amount of cash for the down payment from an IRA or another tax-deferred retirement plan, take note that you might also be placed in a higher tax bracket.

4. Know about the consequences to inflation hits or a great increase in your property taxes. You also have to consider having a financial contingency plan should there ever be medical emergencies, or a price increase in your health insurance. Take these into account and get an estimate if you can still cover these events on top of your mortgage.

Here’s What Life Is Like After Paying Off Your Mortgage

How great does a mortgage payoff sound? After making your final payment, there’s nothing sweeter than seeing in your account that you are already “PAID IN FULL” after a substantial period of 15 or 30 years. Congratulations! Paying off your mortgage is a huge and remarkable milestone—you now own your home free and clear. However, there are still a few things you need to do to ensure that you have a clear ownership of your property. Here are some of those extra steps:

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Expect to receive some important documents

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When your mortgage is paid in full, your lender should return the mortgage promissory note you signed when you first took out the loan. The canceled promissory note proves you have fulfilled the terms of the loan and that you no longer owe the lender any money. If you don’t receive yours back, the lender should at least send you a payoff notice to show you now have a zero balance on your home.

The lender may also send you the canceled trust deed, which secured your loan with title to your house and which conveys the home to a lender if the borrower defaults. You also need to check your credit report to make sure your mortgage account now shows a zero balance. It may take a few weeks to receive your paperwork, which should include a Satisfaction of Mortgage statement—a document stating that you’ve paid off your home. If you received nothing after a couple of weeks of making your last payment, call your lender to check on your paperwork and make sure it will soon be on its way.

 

Release of lien

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Once you’ve paid off your loan in full, your lender will send a document to the county or city registry office notifying them that your title is now clean. That means the lien the lender attached to the property when you got your mortgage is no longer valid. He/she will prepare a Release of Deed of Trust or Satisfaction of Mortgage that will discharge your property from any claim. When there is no longer a lien on your property, it means all the equity is now yours especially if you decide to sell your home.

 

Cancel your automatic mortgage payments

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If you’re like most homeowners who’ve set up automatic payments through their banks, you now need to contact your bank and tell them to turn off the automatic deduction for your mortgage payments.

 

Update your payment for property taxes and homeowner’s insurance

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For most homeowners, their property taxes and homeowner’s insurance were likely escrowed by their lender and rolled into their monthly mortgage payments. Once you’ve paid off your loan, you’re now in charge of making those payments. For property taxes, contact your local taxing authorities to make sure you’ll receive the bills and avoid a hefty fine if you were late with your payments.

Likewise, for your homeowner’s insurance, contact your insurance company or insurance carrier to have the lender removed from the policy. The lender will no longer have any claim to your house, so they should not have the legal right to any insurance payout in the case of fire and other damage. If your house suffered significant damage and your lender’s name remains in the homeowner’s policy, it can make filing and collecting of an insurance claim more complicated because you’d have to deal with the lender first before you could even get your insurance check.

Now that you’re taking over those payments, you must set aside enough cash to pay for both. Experts highly recommend homeowners to create their own escrow account or open a bank account where they can deposit the funds needed to cover those each month. The good news is that your lender is likely to have kept extra funds above and beyond what you actually owed in taxes (when your payments were held in escrow). You should get that reserved collection a couple of weeks after making your final payment in the form of a check from your lender. You can put that into your account and you can also deposit the same amount as your mortgage each month until you have enough to cover your property taxes and homeowner’s insurance premium.

 

Keep your documents in a safe place

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Well, you’re not exactly at risk of losing your house if you lose your deed. But it can be quite a hassle to replace it. If you do lose it, you can claim a new deed in the county that your house is in by paying a small fee. It’s an important document that signifies your ownership of your home, so better keep it in an actual safe or even in a safety deposit box. It’s also for security reasons just in case things go badly down the road, such as if someone questions your ownership of the property (it isn’t impossible!), or if someone comes claiming you didn’t pay the loan off in full.


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Because a mortgage can be your largest financial commitment in life, it’s the last thing you need to pay off before you can consider yourself debt-free. You can finally kiss that debt goodbye for good after making that last payment and allocate the money you were using to pay it down each month towards other financial goals.

You now have some serious cash you can spend whenever you want. But on the wiser side, it’s important to not feel overwhelmed by all these extra cash and miss the opportunities to achieve other concrete goals you are looking forward to, such as a car, a vacation home, and other big purchases. You can also keep part of that money in your bank account or in your retirement fund. If perhaps there are renovations you’ve been dying to do in your home, you can now achieve them and boost its resale value. Or you can make modifications to help you age in place and enjoy the latter years of your life in your beloved home.

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Allocating your monthly mortgage payments elsewhere after making your final payment can give you more financial freedom to invest in your home and in yourself. You no longer have to worry that you owe anyone any money. For retirees or those who are nearing their retirement years, it can be one of the best feelings in the world.

 

Now that the hardest part is over, go treat yourself. You deserve it more than anything. That house is now yours—free and clear of any liens and issues about ownership. It’s an outstanding achievement worthy of a big celebration. In Scotland for an instance, homeowners paint their front door red to signify that they have paid off their mortgage. Go on, paint your door red if you like to. It’s worth proclaiming that you’re now mortgage-free after all these years!

Top Things You Should Do Before Buying A Rural Home

If you’re planning to move away from the city and live a more simple life in the country, take note that it does not come without its unique set of challenges. Here are a few tips to help you when you decide to buy a rural home.

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1. Specify your needs and wants.

Before you plan to buy a home in a rural area, it’s best for you to check with yourself what your reasons for buying are. What are you going to make out of this property? Are you using it as a vacation home or a primary residence? Are you going to use the land for agricultural purposes? Do you need your lot to be arable? One way to do this is to make a list of what you need and want your living conditions to be. Include your non-negotiable conditions and nice-to-haves. What you put into this list will help you narrow down the rural areas and properties that would suit you, and would also be of useful information to your real estate agent.

 

2. Familiarize yourself with the area.

Unless you’ve lived in this area before and decided to move back, the ideal action when you’re moving to an unfamiliar location is to rent in the area first. However, time and other resources can sometimes make that impossible—leaving you with the option to simply do your research on the area. If the agent you hired happens to be from there, you can ask them to give you information but make sure to still do YOUR homework. Here are some items to cover:

  • Climate and weather

  • Prevalence of natural disasters

  • Accessibility to hospitals, fire station, police station, veterinary clinic

  • Proximity to the town proper or urban center

  • Food resources native to the area

  • Local customs of the people

 

3. Consider the costs of maintaining the property.

The cost of maintaining the property depends largely on the size of the house and the land. The more acres you have, the more you'd have to spend. You're also going to need bigger tools in place of the ones you have, or you may need ones you may not have while living in the city such as a 4-wheeler truck or a tractor. And remember that the costs are not just limited to the monetary one; you also have to include the cost of your labor in cleaning waste, mowing the lawn, etc. Under certain circumstances, you may also need to consider if you could afford an extra hand in the maintenance. Take all of these into account and deliberate if you could afford and sustain all those expenses for the next 5 years and more.

 

4. Review utilities.

Utilities in a rural area will differ greatly from those used in suburban areas. An important thing to note is that rural utilities are not tied to commercial systems. Check for each of these utilities and if anything happens to not be within your preference, negotiate with the seller (and the community) how it could be made to suit your needs.

  • Septic systems - rural areas depend on septic systems for waste disposal. If the house you’re planning to buy is hooked to a septic system, it lowers your taxes because municipalities would only bill those who are connected to a public sewer system. The catch from this is that you may have to replace the system should it break down, and that would be costly. A way to address this is to include a contingency on the septic system requirement of inspections and a septic pump on your contract with the seller.

  • Power supply - power lines in rural areas tend to be flaky due to weather disturbances

  • Well water systems - some rural homes could only utilize well water systems instead of  a public water source. The advantage to this is that you could cut down on your water bill as water from this is free, and you would only have to pay for electricity that keeps it running. But the downside to this is that it comes from groundwater, and would require tests and routine maintenance in order to make sure that the water is safe for use.

  • Heating systems - Homes in suburban areas are heated by natural gas, while those in rural areas use either oil or propane. If the house uses oil, the BTU is higher than with gas, and it usually costs less than a gas-fired furnace. But take note that it’s more costly to purchase oil instead of natural gas, and it requires more routine maintenance. Alternatively, if the house uses propane, the average life expectancy is higher than with a gas fired furnace. The drawback to it is minimal compared to the others in that its tank is a sight for eyesore. But that could easily be remedied if you opt to have the tank buried.

 

5. Clarify what’s included in the sale.

Specify in the contract what feature, building, and structure of the home you think are included in the sale because it could be taken down or away by the seller. At the minimum, and if applicable, the sale should include these:

  • Existing farm or hunting leases that give (or restrict) other people legal access to be on, farm, graze, hunt on, or camp on your property

  • Fencing and fence posts

  • Benches

  • Bridges

  • Feeders

  • Livestock panels

  • Sheds, which could either be movable or portable

  • Miscellaneous equipment such as shovels, plows, tractor, etc.

 

6. Acquaint yourself with local resources.

Ask assistance from local offices regarding issues that you need help on such as property maintenance, ecosystem conservation, etc. Here is a list that could help you with your specific needs:

  • County USDA Farm Service Agency (FSA) office - After purchasing the property, you have to take the deed to the FSA office to register it and be informed and consequently transfer any Conservation Reserve Program (CRP) or base acre payments to you. They educate rural homeowners through a variety of programs on matters regarding conservation such as erosion control, wildlife habitat, pond construction, and the likes.

  • Southern States - It’s an established farm co-operative that may help you with guiding you through your concerns regarding agriculture -- what the best feeds are, what fertilizers to use, etc. Check if Southern States has a cooperative in your location, or find another supplier if they are not within your vicinity.

  • Local rural lender - Primarily, they can give you contacts to local lawyers and other service providers such as farming managers and dozer operators. They are also equipped with vital local knowledge that may help you with your concerns.

 

7. Know your boundary lines.

The step to guarantee how many acres of land you’re buying (and will be taxed on) is to visit the county’s assessor office. They could present you information on the property with a description of its metes and bounds. Check if there is a difference from the original listing and ask the assessor to explain.

 

8. Check the title insurance.

Inspecting the title insurance lets you know of the issues associated with the property that may not have been disclosed such as the property being recorded as a toxic dump site. There are also other issues that could be attached to it such as unknown or unresolved liens. The county’s recorder can pull up this document for you as it is available to the public.