Thursday, April 24, 2014

Big Flood Insurance Price Hikes Rescinded

Congress agrees Americans shouldn’t face flood insurance bills so big they threaten to cost consumers their homes.

Imagine getting an annual insurance bill in the mail that rose from a few thousand dollars to tens of thousands of dollars. That’s what happened to some homeowners across the country after Congress passed flood insurance reform legislation two years ago that raised premiums by more than 25% in a single year.

Thankfully, Congress and the President just rescinded big parts of that law and decided homeowners and businesses shouldn’t face annual flood insurance bills that rise more than 18%-25% a year. (Here’s what we wrote about that rate increase.)

What’s the Takeaway for Homeowners?

1. Relief for those who purchased a property under the 2012 law. These folks typically saw rates jump immediately to the much higher ones, sometimes reaching tens of thousands of dollars per year. Many buyers weren’t told of the rate spike before purchasing the property.

In addition, many of the new quoted rates turned out to be mistakes: Homeowners were asked to pay more than was needed to cover the true risk of flooding in their areas.

Premium increases were so high and sudden that it was preventing homeowners from selling in some areas.

Now: The rates for those who bought under the 2012 law will reset to pre-2012 levels. And if you paid the higher rates, you’ll be refunded the amount in excess of the 18%-25% capped increase.

2. The revision grandfathers owner-occupied homeowners whose flood insurance bills rose suddenly when the Feds adjusted flood maps, putting those homes into higher-risk areas. For example, your home might have been built to 10-foot elevation standards. But then the area was remapped to 13 feet, causing huge premium increases.

Now: You’ll keep your lower rate even if your property is remapped since your house was built to the standards or the time. And if you sell, that rate transfers to the buyers.

Premiums will Still Rise

Of course, everyone’s premiums can still go up 18%-25% a year until you’re paying enough to make the National Flood Insurance Program self-sustaining.

But buyers won’t see rate increases at the closing table. And owners won’t see sudden jumps because of remapping. Rather, capped increases will occur annually when your policy renews. That means catching up to the full-freight rates could take decades.

What About the Financial Viability of the Flood Insurance Program?

To pay for the changes in the new law, homeowners will incur an annual surcharge on top of their premium:
 – Owner occupants: $25 fee
 – Investors and second-home owners: $250 fee

Related:
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Dona DeZube wrote this copyrighted article that appeared on National Association of Realtors® web site and is used with permission. She has been writing about real estate for more than two decades. She lives in a suburban Baltimore Midcentury modest home on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound. Follow Dona on Google+.

Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

Andy Kalinowski is a REALTOR®, an Accredited Buyer’s Representative®, a Short Sales and Foreclosure Resource® and a Military Relocation Professional with CENTURY 21 Doris Hardy and Associates, LLC in Columbus, Mississippi. He has a Mississippi Real Estate license. Andy is also a member of the National Association of Realtors®. Contact him by cell (or text) phone – 662.549.3421 or by e-mail – andyk@dorishardy.com.  He is also available for web video chat.

Wednesday, April 23, 2014

Home Buying Tips

Buying a home is one of life’s major milestones. Most first time homebuyers cannot buy a home the same way they make a major electronic purchase or automobile. A home purchase requires some unique planning ahead of time. Let’s look at some of the things a home buyer needs to consider.

Have Realistic Expectations – Houses within each price point have certain features. As an example in some subdivisions many of the houses have a bonus room and a 2-car garage. The price point for these houses normally starts about $200,000. Don’t expect to find a bonus room and a 2-car garage in a house priced under $125,000. A previous owner might have converted the garage into a bonus room at the cost of covered parking.

Before looking at specific homes, make a prioritized list of features, consistent with the purchase price point. It is best to ask each household member to write down the top five things they want. Children might have a totally different viewpoint than mom or dad. Yet their opinions are just as important.

Combine all the lists into one list. The give and take of prioritization helps the adults better articulate their exact needs. This helps when it comes time to preview houses.

Interview Lenders – Buying a home requires borrowing a lot of money for a very long time. Start the search at the financial institution where you keep most of your money. The key word is start.  Talk to all local mortgage lenders. Learn as much as you can about your credit score, your debt to income (DTI) ratio, the amount of cash it takes to pay for services related to the purchase, and the different mortgage options.

Then make a decision on which lender to ask for mortgage pre-approval. Make that decision based on the right combination of experience, customer service, mortgage options and affordability.

There are two reasons to use a local lender. Most local lenders have been in community for generations. That means they have an outstanding reputation. The other reason is even more important. Retain the ability to walk into the lender’s office, shake their hand, look them in the eye and study their body language. That personal rapport is important during the processing rough spots. Here is news. Every mortgage transaction has a few rough spots.

Get Pre-Approved – Think about the routine purchases you make. Each one has a budget. Think about going to a clothing store with no money in your pocket. What is the likelihood of taking some clothing items into a fitting room? What is the likelihood of taking those same clothing items into the fitting room, if you have a wallet full of money and need to buy that item?

It works the same way when buying a home. The pre-approval letter sets the upper purchase limit. It gives the buyer the assurance that when the time is right, the money will be there. The expiration date gives the buyer a sense of urgency. The pre-approval letter is a type of badge of honor.

Find A REALTOR® – Just like shopping for a mortgage lender, find a REALTOR®. In every real estate transaction there are always two people involved – the buyer and the seller. If there is a real estate sign in the front yard it means that particular property owner hired that agent and that company to represent them and their best interest in every phase of the transaction.

A buyer can hire an agent also. Most agents cooperate with each other for a transaction. The same agent can represent the buyer and the seller in the same transaction. If a buyer sees the same agent’s name on many signs, it could mean the agent really specializes in representing the seller.

A REALTOR® with the Accredited Buyer’s Representative® (ABR) certification successfully completed additional continuing education over and above standard licensing requirements. This continuing education helps agents to understand buyer needs. The courses offer viable solutions to common buyer situations. In addition to the education, the agent passed a written exam on the course material. The certification requires that the agent have a certain level of practical experience representing buyers.

Summary – Take the step in the home purchase market. Others did. Be the inspiration for other potential home buyers.
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Andy Kalinowski is a REALTOR®, an Accredited Buyer’s Representative®, a Short Sales and Foreclosure Resource® and a Military Relocation Professional with CENTURY 21 Doris Hardy and Associates, LLC in Columbus, Mississippi. He has a Mississippi Real Estate license. Andy is also a member of the National Association of Realtors®. Contact him by cell (or text) phone – 662.549.3421 or by e-mail – andyk@dorishardy.com.  He is also available for web video chat.

Tuesday, April 22, 2014

An Alternative To An FHA Mortgage

Yesterday we mentioned some of the features of are very popular mortgage option – a Federal Housing Administration (FHA) mortgage. The reason for the popularity of an FHA mortgage is a low credit score minimum and a low down payment. Today, let’s look an alternative mortgage option. Let’s talk about the Mississippi Home Corporation’s Smart Solution Mortgage.

What Is Smart Solution – Like an FHA mortgage, a Smart Solution mortgage is for a primary residence only. Like an FHA mortgage, a Smart Solution requires a small down payment. But there are a few differences.

A Smart Solution mortgage requires just a 3 percent down payment. An FHA mortgage requires a 3.5 percent down payment. Don’t be fooled by the down payment minimum. There are other differences.

A Smart Solution mortgage is a conventional mortgage, not a government mortgage. That is a huge difference. As noted yesterday, FHA changed the mortgage insurance rules about a year ago. Current FHA borrowers must pay for mortgage insurance for the life of the loan. On a $100,000 purchase, an FHA borrower pays an additional $45 a month for the life of the loan.  That is more than $16,000 over a 30-year period. A Smart Solution mortgage does not have that charge.

Eligibility Requirements – As with any mortgage options, there are eligibility requirements. The maximum annual household income is $80,000. Notice that the keyword is household. It’s not borrower. There may be household members who are not borrowers. These can include adult children or even parents. MHC considers their income as part of that $80,000 limit. They must provide financial statements for loan approval.

The minimum credit score for a Smart Solution mortgage is a 680. That is 60 points higher than FHA mortgage requirements. Also, the house must be inside the state of Mississippi. 

In order to obtain this mortgage the borrower must provide a nonrefundable administrative deposit. If there are unforeseen delays in closing a transaction on time, the buyer could waste a significant amount of money.

If someone wanting this type of mortgage must sell another house first, proceed with extreme caution. MHC expects every transaction to close on time. Having two closings to consider could be very risky considering the non-refundable processing fee.

Mortgage Interest Rate – The rate for a 30-year fixed rate Smart Solution mortgage is 5 percent. That is about 1 point higher than an FHA mortgage. But by subtracting the monthly mortgage insurance premium, the payment is nearly identical.

Added Feature – The Smart solution mortgage requires a three percent down payment. MHC has a program called down payment assistance. It is possible to combine down payment assistance with a smart solution mortgage. In effect the home purchase has no down payment required.

For down payment assistance the borrower takes a second mortgage for the three percent payment. The repayment period for the second mortgage is ten years. The interest rate on the second mortgage is seven percent.

That adds about $20 a month to a mortgage payment on a $100,000 house, but only for the first ten years. There is no prepayment penalty on down payment assistance. Down payment assistance from MHC is available for an FHA mortgage.

Conclusion – A Smart Solution mortgage is an option. It’s not perfect for everyone. No mortgage option is perfect for everyone. That is the reason to have a face to face consultation a licensed mortgage originator. Let the originator suggest the option that best fits an individual financial situation and purchase plans.
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Andy Kalinowski is a REALTOR®, an Accredited Buyer’s Representative®, a Short Sales and Foreclosure Resource® and a Military Relocation Professional with CENTURY 21 Doris Hardy and Associates, LLC in Columbus, Mississippi. He has a Mississippi Real Estate license. Andy is also a member of the National Association of Realtors®. Contact him by cell (or text) phone – 662.549.3421 or by e-mail – andyk@dorishardy.com.  He is also available for web video chat.

Monday, April 21, 2014

Explaining An FHA Mortgage

A very popular mortgage option for many homebuyers is getting a Federal Housing Administration or FHA mortgage. The reason for the popularity is the low down payment and the credit score. Let’s provide some an example and the FHA eligibility criteria.

FHA Mortgage – A standard FHA mortgage requires the buyer to pay 3.5 percent of the purchase price down and finance the remaining 96.5 percent of the purchase price. Let’s use a $100,000 home as an example.

The buyer makes a $3,500 down payment and gets a mortgage for $96,500. Most buyers elect a 30-year fixed rate mortgage. We’ll stick with that. The mortgage interest rate on Friday was 4 percent. Here is a misleading number.

Most mortgage calculators provide a $461 payment. Lenders, including the FHA, add fees.

Mortgage Fees – Every lender adds administrative processing fees. The really important number is not the interest rate but rather the APR or annual percentage rate. Comparing the APR from different lenders helps makes a true “apples to apples” comparison.

Let’s assume a lender adds 0.75 percent APR to each loan. Suddenly the 4.0 loan is a 4.75 percent mortgage. The $461 just increased by $42 a month. Now the payment is $503.

Taxes and Insurance – Local governments derive their income by taxing property. The county sends the property owner a bill each year. To help the owner pay those taxes, the lender adds a prorated share of property taxes each month. When the tax bill comes due, the money is there to pay the taxes.

If the annual taxes are $1200, the lender adds $100 a month to the monthly mortgage payment. The lender puts that into escrow.

Property insurance works the same way. A home owner needs insurance in the event some gets hurt or injured while on the property. Let’s make this another $1200 annual payment. Suddenly the $461 grew to about $704. We’re not through adding yet.

Mortgage Insurance – Unless your are Rip Van Winkle and you’ve been asleep for 20 years, you know about all the recent foreclosures. Mortgage insurance protects lenders against losses that result from defaults on home mortgages.

The FHA Up-Front Mortgage Insurance Premium (UPMIP) is currently at 1.75 percent of the base loan amount. Multiply .0175 by $96,500 and the answer is $1688.75. That is the UPMIP. Most borrowers roll that into the loan because it only adds about $9 to the monthly payment. There is still one more monthly addition.

There is a monthly mortgage insurance payment for the life of the loan. Here you multiply .0055 to the total loan amount, which is about $98,650 ($96,500 purchase price plus the $1688 UPMIP). The monthly insurance premium is about $45.

Payment Recap – A mortgage calculator stated the monthly payment is about $461. By the time everyone adds in fees, taxes and insurance that amount grew to about $760 or by about two-thirds. That is the amount of the monthly mortgage payment. Compare $760 to rent. In most cases it is still a bargain. Here is the point.

When comparing different mortgage options, be sure to work the payment through until completion and with real numbers for taxes and property insurance. That is the best way to compare mortgage options.

Credit Score – Another popular feature in the FHA mortgage is the minimum credit score requirement. Many lenders require a minimum of a 620 median credit score for the lowest borrower on the loan. Some have lower requirements. Others have higher standards. Generally the minimum credit score on a FHA loan is lower than on other mortgage options.

The median credit score is not the highest or the lowest. It’s the one in the middle.  If a borrower has a 720, 715 and 700 credit scores, the median score is 715 because it’s in the middle.  If there is a second borrower (e.g. husband and wife) and the scores for the second borrower are 710, 705 and 680 then the lender uses the 705 because it is lower than 715.

Debt To Income Ratio – Ask a lender about the debt to income ratio requirements for a loan. As an example, assume a borrower has a $4,000 monthly income. He has about $2,000 a month in bills. This is for car loans, credit card payments, rent and so forth. This is a 50 debt to income ratio. About 50¢ of every dollar pays recurring debt. Lenders want that number lower.
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Andy Kalinowski is a REALTOR®, an Accredited Buyer’s Representative®, a Short Sales and Foreclosure Resource® and a Military Relocation Professional with CENTURY 21 Doris Hardy and Associates, LLC in Columbus, Mississippi. He has a Mississippi Real Estate license. Andy is also a member of the National Association of Realtors®. Contact him by cell (or text) phone – 662.549.3421 or by e-mail – andyk@dorishardy.com.  He is also available for web video chat.

Friday, April 18, 2014

Easter 2014 In Columbus, Mississippi

It is Easter weekend in Columbus, Mississippi.  That means there a wide variety of recreational events for the entire family. Wide variety and entire family are key words for anyone considering relocating to this area. One event may be interesting while another is not. Since everyone has different interests, variety means something for just about everybody. Let’s see what is going on in Columbus this weekend.

Friday at 7:00 p.m. is the Masquerade Ball benefiting the Columbus Police Department at the Trotter Convention Center on 5th Street North between Main Street and Second Avenue.  Proceeds from this event help fund such activities the National Night Out on Crime meetings in early August and the Children’s Toy Drive at Christmas time. Enjoy dinner, live music and dancing at this annual semi-formal event. United Way of Lowndes County has an immediate need for volunteers willing to serve food and other things at this event.

What about the children? Where can they go while mom and dad are enjoying the Masquerade Ball? Here is the simple solution.  Skate Zone on Lehmberg Road in East Columbus has an all-night roller skating lock-in starting at 6:00 p.m.

Start Saturday morning with a trip to the Farmer’s Market at the Hitching Lot on the corner of Second Street and Second Avenue North, just west of the Lowndes County Courthouse. Local farmers sell such produce as locally grown peaches, tomatoes, squash, radishes, potatoes, onions, eggs, honey, corn, peas, eggplant, cabbages, melons, blueberries, blackberries, turnips, kale or fresh flowers. Every bit of the produce comes from within a 50-mile radius of Columbus. That’s fresh!  That’s local!

There are numerous community wide Easter egg hunts and festivals this weekend. Let’s talk about a new one. This one is Saturday starting at 11:00 a.m. at the Columbus Fairgrounds on Highway 69 in East Columbus. Bring children as young as 2 and as old as 12.

Activities range from egg hunt, face painting, tug of war, sack races, egg tosses, balloon toss and many more events. The food menu is simple too – hotdogs, chips, cookies, and drinks. There are three age categories for the Egg Hunt. One is for youngest children – ages 2 through 5.  Children ages 6-9 have a separate egg hunt. The oldest children, ages 10-12 have theirs. Within each age division are great prizes including two bicycles per division. Some of the eggs contain money.

Saturday starting at 6:00 p.m. on the main level of the Trotter is the 2014 Golden Triangle Gospel Music Awards.  Sierra Ward Pope is the guest hostess. Listen to the music that fills the soul from Chrishon B. Smith, the Anointed Brown Sisters, Darius Brown, Tamara Triplett, Krashaun Hendricks, Vatreecia Young, Venora Brown, Armando Adams, Angela Clark, Sheryl Zinn and more.

There is even a sneak preview in the Ballroom of the Ramada Inn at the intersection of US-45 and US-82 on Friday at 6:00 p.m.

Dirt track racing returns to the black ice of the Magnolia Motor Speedway on US-45 South, near the US-82 West exit to Meridian this weekend. The National Dirt Racing League Kings of Dirt Series has two huge shows with a $20,000 possible to win for Super Late Models. There is added money in the local divisions.

The Friday Super Late Model event has a $7,500 prize going to the winner. Saturday’s winner receives $12,500.  NeSmith Late Models and NeSmith Street Stocks compete each night.  These races affect the weekly point’s standings for these divisions for both nights. The Mini Stocks race on Saturday night only.

The grandstands open at 5:00 p.m. with the driver's meeting at 6:30 p.m., which is one hour before racing action starts. The children can participate in the Easter egg hunt Saturday before the races.  There are discounted admissions for military, and all area first-responders.

Sunday is Easter, a time when many attend a sunrise service or a regular church worship service. There are many Houses of Faith in Columbus. Some have Maundy Thursday, Good Friday and Holy Saturday services also. There is also another very special Easter tradition in Columbus too.

For nearly three decades, our many friends at Fairview Baptist Church present “Living Pictures” in their sanctuary on the corner of Airline Road and Highway 69 in East Columbus. This program is an original production each year. The title of this year’s presentation is “I Choose Jesus.” The music and drama depict Christ’s ministry as well as the events of Passover Week in Jerusalem more than 2000 years ago.

The drama takes place in and around the audience. Fairview’s widely acclaimed choir and orchestra of about 150 members heighten the moving worship experience coupling traditional and contemporary selections. There is a full choir, soloists, ensembles, and instruments. Performances start at 6:30 p.m. on Friday, Saturday and Sunday. It’s best to contact the church in advance for free tickets that ensure seating.

Anyone have a housing need this weekend? I’ll be in the office Friday afternoon waiting for your phone call.  Please be courteous and make private preview appointments least 24-hours in advance. Respect the seller, who is trying to sell a house. You may need to negotiate with them in the near future.
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Andy Kalinowski is a REALTOR®, an Accredited Buyer’s Representative®, a Short Sales and Foreclosure Resource® and a Military Relocation Professional with CENTURY 21 Doris Hardy and Associates, LLC in Columbus, Mississippi. He has a Mississippi Real Estate license. Andy is also a member of the National Association of Realtors®. Contact him by cell (or text) phone – 662.549.3421 or by e-mail – andyk@dorishardy.com.  He is also available for web video chat.

Thursday, April 17, 2014

Who’s Got Your Back When Your Credit Report is Wrong?

With some credit report errors not getting fixed by either the credit reporting bureau or credit card companies, at least you have the Consumer Financial Protection Bureau in your corner.

When you find an error in your credit report and send the credit bureau proof that your creditor was wrong when it said you paid late, didn’t pay at all, or, worse yet, are deceased, you expect the bureau and your creditor to do the right thing.

Like acknowledge the error and correct your credit report to show you paid on time, paid off your debts, or are still alive.

And yet, the Consumer Financial Protection Bureau (CFPB) recently had to tell the credit bureaus (and the companies that report your payment record to the bureaus) to pay attention to your complaints and take more care investigating your disputes.

It’s like the Department of Transportation having to order school bus drivers to use the brakes to stop their buses.


How Errors Get Perpetuated – Keeping track of your payment history is the credit bureau’s job. Nevertheless, a 2012 Federal Trade Commission report found 20% of consumers had errors in their credit report. And about 5% of consumers had errors in their credit report that could affect the likelihood of receiving credit or the terms of credit received.

To do their job right, the credit bureaus have to get accurate information each month from the companies that report data to them — parties like credit card issuers, mortgage lenders, auto loan companies, and student loan lenders.

When you tell a credit reporting bureau there’s an error in your report, the bureau contacts the company that furnished the information about you. You’d think the bureau would pass along whatever documents and proof you have to show you paid on time.

Not so much. In the past, they’ve simply boiled down your issue into a data code and sent that, not your proof (a letter explaining the issue, supporting documents) to the data furnisher. Evidence is important in establishing that the data furnisher made an error.

That’s why the CFPB stepped in and told the credit bureaus they need to pass along the evidence that supports your dispute.

Regardless of whether they see your proof, credit furnishers sometimes respond to an error report by simply deleting the disputed account, the CFPB said.

That’s not good for you because the furnisher isn’t:
Correcting your information, or
Telling the other two credit reporting companies (there are three big ones) that it made a mistake in the information it provided about you.

Here’s an example of how this might work:

Suppose you have an auto loan that you paid on time every month for 60 months. But the auto loan company says once you paid 90 days late. You dispute, and the auto lender removes your account from the data it reports to the credit bureaus.

Now, you don’t have the late payment report on your record, but you also don’t have the 60 months of on-time payments either. A mortgage lender pulling your credit report, for instance, won’t see that positive payment history, so your credit rating might decline just when you’re trying to get a home loan or refi.

Catch Credit Report Errors Early – In a related move, the CFPB also suggested credit card companies follow the example set by Discover, Barclaycard, and First Bankcard and start showing consumers the credit scores they use to set the rates their customers pay.

Discover shows credit scores on customers’ monthly statements. Barclaycard and First Bankcard give customers free access to their scores via a website.

The CFPB is asking for credit score disclosure because it wants you to pay closer attention to your credit standing.

“Consumers often learn the importance of their credit standing when it is too late — after a credit application is denied or identity theft has occurred,” CFPB Director Richard Cordray said in a letter to credit card companies. “Sometimes they fail to see the importance of their credit standing even if it has affected them in material ways, such as being rejected for a job or charged a higher price for a loan.”

How Do I Get Errors Fixed? – It’s up to you to guard your credit. The first step is checking to see what’s in your credit report. You can get one free credit report from each of the three bureaus once a year. Then, if you find mistakes, get to work trying to correct them.

If the credit bureau doesn’t fix the error, complain to the CFPB. You can:

Call the toll-free phone number at 855/411-CFPB (2372) or TTY/TDD phone number at 855/729-CFPB (2372)
Fax the CFPB at 855/237-2392

Mail a letter to: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244

The CFPB will give you a confirmation number immediately, email updates along the way, and you’ll be able to check the progress of your case online.

If you need to fix an error, you’ve got a lot of company. Between Oct. 22, 2012, and Feb. 1, 2014, roughly 31,000 consumers complained to the CFPB about credit report problems, the agency says. About three-quarters of those complaints came from consumers who had trouble fixing a credit report mistake.

Related:
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Dona DeZube wrote this copyrighted article that appeared on National Association of Realtors® web site and is used with permission. She has been writing about real estate for more than two decades. She lives in a suburban Baltimore Midcentury modest home on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound. Follow Dona on Google+.

Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

Andy Kalinowski is a REALTOR®, an Accredited Buyer’s Representative®, a Short Sales and Foreclosure Resource® and a Military Relocation Professional with CENTURY 21 Doris Hardy and Associates, LLC in Columbus, Mississippi. He has a Mississippi Real Estate license. Andy is also a member of the National Association of Realtors®. Contact him by cell (or text) phone – 662.549.3421 or by e-mail – andyk@dorishardy.com.  He is also available for web video chat.

Wednesday, April 16, 2014

Why Getting A Home Inspection Is So Important

When a buyer finds a great home to purchase, and then negotiates the price and terms with the seller, the next order of business is hiring a home inspector. Let’s discuss why this is a very important step early in the purchase process. Let’s also discuss some other facts about the necessity of a home inspection.

Reason – A home inspection is one way a buyer reduces the risk of buying a house with defects. The seller may not realize the house has problems. Many of the deficiencies that a home inspector discovers occur because of changes in building or safety codes. As an example, a house built to code in 1970 may not have ground fault interrupters (GFI) in the kitchen or bathroom. The GFI provides protection from an electrical shock when there are critical differences between the “hot” and “neutral” wires. While installation of GFI outlets are today’s standards, they were not 40 years ago.

The home inspector does more than just inspect electrical outlets. A house consists of several systems. These include the roof, insulation, plumbing and structural systems in addition to the electrical issues.

Qualifications – During the home preview phase, the buyer has the job of concentrating on finding a house that fits the household needs, wants and desires. Your REALTOR® is an expert when it comes to selling real estate and knowing how to negotiate and close a sale. It is very common for neither the buyer nor the REALTOR® to have the technical experience that qualifies either as an expert in the many systems found inside a house.

The Mississippi Real Estate Commission licenses the home inspectors. Most inspectors have a construction background. During the inspection the home inspector climbs onto the roof to check the grit of the shingle for a determination of the remaining life expectance. While on the top, they also look for other obvious problems, especially near the chimney or exhaust outlets. The inspector crawls into the attic to check the amount of insulation, observe any traces of roof leaks or other potential problems.

How fast the does heating and cooling system change room temperature? How quickly does the water heater provide hot water – and what is the temperature of that hot water? Those are just a few of items evaluated.

Findings – After completing a three to four hour physical property inspection, the buyer receives a detailed written report that includes photographs. The buyer receives the report because the buyer hired the inspector. That’s the way it should be. The inspector works for the buyer, not the seller. That way the buyer has the assurance of receiving a full and accurate report, rather than one filtered by the seller.

Most purchase contracts include language that for the sale to proceed, the house must pass inspection. Identifying potential problems early in the transaction is also important, from two standpoints.

Major Problems – Suppose there are major problems with the house. That is the main reason for completing the home inspection early in the process. The purchase contract may need renegotiation. The buyer may have second thoughts about completing the purchase. Early identification of problems gives each side time to take logical second steps in their best interests.

It is possible that the seller could make all required repairs, regardless of the cost to keep the transaction alive. It is possible the seller could refuse. In this case the buyer has the option of walking away from the transaction without a financial penalty.

Minor Problems – Something as easy to repair as a GFI is a minor problem. Most buyers write language into the purchase contract that the seller makes minor repairs up to the amount indicated in the purchase offer. The buyer uses the inspectors report as documentation for requesting those minor repairs. The buyer prioritizes the minor repairs starting with ones deemed most serious to the least serious.

Validation – The buyer or the seller does not have to accept the word of the home inspector. Either party can hire a specialist, especially if the inspector discovers a potential problem that goes beyond the scope of the inspection, or for a second opinion. As an example, a buyer could find a great house but the geology is one of a shifting Earth. A buyer could want the expert advice of a structural engineer to explain why a wall appears to lean.

Finding A Home Inspector – Your REALTOR® has a list of all area licensed home inspectors. The REALTOR® also receives a copy of the inspection report and prepares the paperwork to send to the listing agent and the seller.
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Andy Kalinowski is a REALTOR®, an Accredited Buyer’s Representative®, a Short Sales and Foreclosure Resource® and a Military Relocation Professional with CENTURY 21 Doris Hardy and Associates, LLC in Columbus, Mississippi. He has a Mississippi Real Estate license. Andy is also a member of the National Association of Realtors®. Contact him by cell (or text) phone – 662.549.3421 or by e-mail – andyk@dorishardy.com.  He is also available for web video chat.