Are you beginning a new home search? First of all, congratulations! Buying a house can be one of the most exciting times in your life. After all, homeownership plays a central role in the American dream. But the buying process can be less of a dream without the right information and awareness to safeguard you against possible issues.
As a buyer, what red flags should you look for early on in the process, so you can avoid the expense and possible heartbreak later?
Every house has its quirks and challenges. Some, like that creaky stair, are probably no big deal. But others, like a missing certificate of occupancy for that amazing backyard pool, could prove more problematic.
Here are five things to look into before buying a home.
This information is easy to find at your town or city building inspector’s office. Common documents in a home’s building department file could include a property survey, blueprints for additions or major structural changes, mortgage and lien information, property transfer information and approvals, and certificates of occupancy.
Missing documents could be a red flag and indicate any number of problems, from illegal or unsafe structures to problems with ownership transfers. Your seller will need to track down required documents and secure necessary approvals before your home loan can close.
Keep in mind that your lender may not approve your mortgage if some of these issues — like a missing certificate of occupancy or ownership transfer problems — aren’t resolved.
A visual inspection may reveal a lot to you, even if you’re not a home inspector by profession. Bubbling ceilings and stained wallpaper could indicate leaks, and wall switches that don’t work could mean electrical problems. Musty basements with moldy walls, poor water pressure, and old heating and cooling equipment could also mean repairs should come sooner rather than later.
Read the seller’s disclosure carefully and see if your visual inspection matches up.
Spend time walking through the neighborhood. Do you feel safe? Is there heavy traffic on or near your street, an aggressive dog barking wildly, or a nearby firehouse with a loud, frequently wailing siren? How does the school system compare to neighboring districts and other schools statewide? Are there a lot of “for sale” signs around, and if so, why?
The answers to these questions may affect the home’s resale value, and your real estate agent may not legally be able to answer them. Don’t hesitate to reach out to the local police station or state education department to learn more.
Find out if the block next to yours was recently rezoned to commercial, or if the construction at the end of the street will become an on-ramp to the interstate. Watch local news and read local blogs and the county newspaper for information on how the neighborhood you like is changing.
Don’t assume that you’ll be able to install an eight-foot perimeter fence to block traffic noise or remediate the wetlands causing the drainage problem. If renovating is central to your fixer-upper plan, find out more about your neighborhood’s zoning rules now so you can avoid disappointment later.
Even if you’re working with a reputable agent, you’ll need to watch out for financial fraud or schemes from scammers keeping their eyes on real estate transactions.
Fraudsters who work online know how stressed out and busy people are when they’re in the middle of a real estate transaction. One method they may attempt is to monitor a buyer’s email account for information related to the transaction. Once it’s time for money to change hands, the fraudster contacts the buyer using an email address that’s similar to ones used by people the buyers trust, such as a banker or credit union representative.
Then, the fraudster sends false wiring instructions to the buyer, who promptly transfers thousands of dollars into the wrong account. In some unfortunate cases, the money can’t be recovered, ending the dream of homeownership, at least for the time being.
Before making any financial transaction related to your home purchase, make sure you contact your financial institution and/or trusted real estate agent directly to make sure the information you received is legitimate.
If you’ve found a house that you’re ready to call home, we’re here to help you through the mortgage application process. We offer a wide variety of mortgage loan products, customized service, and expert insight. You can complete your application online at your convenience, and if you have questions, our experienced mortgage consultants are here to help. Visit our website for more information.