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Homeowners Insurance and Inspection

While the lender and third parties are preparing to close your loan, there are a couple of things for you to tackle. You probably will want to have the home inspected, and you will be required to buy homeowners insurance.

Home Inspection

Home inspection is commonly required to determine the structural and mechanical condition of the home you're buying, including the roof, heating, plumbing, air conditioning, and electrical wiring. The inspection may reveal the need for repairs that the seller may have to complete before the sale of the house can go through.

It's a good idea to have the home inspected after you agree on a price but before signing the contract and putting down a deposit. If you're in a hurry to lock in the deal, make sure your contract states that the terms are conditioned on a satisfactory professional inspection. The cost of a home inspection typically ranges from $250 to $500.

Homeowners Insurance

After the home has been appraised, you will be in a better position to obtain adequate insurance. Coverage comes in two types: a replacement cost policy or a cash value policy. With a replacement cost policy, a 20-year-old camera destroyed in a storm would be replaced with an equivalent new model, while with a cash value policy, you would receive nothing for the camera because the item has lost all of its value over time. Owners of older dwellings, who have older furniture and belongings, tend to prefer the replacement cost policy even though they may cost 10% more. Owners of newer houses and furnishings should consider cash-value policies.

Whichever policy you choose, be sure to ask your insurance agent about any security features you could install to lower the premium, such as deadbolts, storm shutters, window alarms, and motion-activated cameras.