Buying a home is expensive!
First you’ve got the cost of the home. Add on the required things…appraisals, inspections, taxes, insurance, maybe even repairs. Then you’ve got discretionary things like furniture, landscaping & decorations.
Total it all up and you’re making a major investment!
The sheer risk of losing your hard earned money is one of the reasons why we believe you should always understand WHY these details are important when it comes to buying a home.
The cold hard truth is that any single mistake could cost you thousands of dollars or worse – make you lose out on the home you really want!
Unfortunately, both happened to a recent borrower of ours.
Putting the Cart Before the Horse
Each client is unique and some clients have tighter budgets than others, so you want to make sure you know what you can afford.
That’s why it’s a smart move to get pre-approved BEFORE you go house shopping.
One recent borrower in particular (let’s call her Mary) had a really tight budget. Really tight!
And while we got Mary pre-approved for a loan, the house she fell in love with wound up being in a flood zone and required another $2,000 a year of flood insurance!
What’s the big deal, you ask?
Well, 2 things actually.
The first problem is that she didn’t find out the house was in a flood zone until AFTER she’d made an offer, put up a deposit AND paid for an appraisal!
The second problem, and this is the doozy, is that Mary no longer qualified for her loan because of the required flood insurance premium.
The dreaded DEAL KILLER!
And this happened after she’d already put up more than $1,000 in deposits and appraisals. Non-refundable. And there was nothing anyone could do about it…
Don’t Make This Expensive, But Common Mistake
Finding out what type of flood zone and insurance requirements a home has should always be ONE OF THE FIRST QUESTIONS you ask before signing any paperwork.
If those insurance requirements are higher than you’re expecting it can easily kill your loan.
In Mary’s case, she had already spent money on deposits, appraisals and inspections before finding out she would have to come up with more money for escrows and an increased payment for the $2,000/year flood policy.
Either problem was too much for her situation.
And she lost that money because she couldn’t close on the house
Make sure you know what you’re getting into before you sign.
Find out what the insurance requirements are and call us ahead of time so you don’t wind up like Mary.