
	First Time Home Buyer Newsletter Prepared for Your Subscriber's Full Name		Courtesy of: Your Name Your Company Name Company Phone # Your Website

	Appraisals, Inspections and Tests You Will Need Buying a home is the single biggest investment you will make. Make sure you do your homework before you buy.

When you make an offer to buy a home, and it gets accepted, you need to do your homework on the property. The first thing you need to do is to have your mortgage company order an appraisal. The appraisal is done by a licensed appraiser who provides a determination of value based on several factors, including compassions to what similar homes have sold for in your area, what it would cost to rebuild the home, and what its value would be from a rental cash flow analysis. The appraised value can be completely different from what the Realtor says it is, or even what it is listed for. The mortgage lender will base the loan to value on the LOWER of the purchase price or the appraised value. Thus, if you purchase the home for $200,000, but it only appraises for $180,000, you can either get out of the agreement if you have a mortgage contingency clause, get the seller to reduce the price, or come up with $20,000 extra in cash if you really want the property. Conversely, if the property appraises for MORE that what you are paying for it, you have some built-in equity. Appraisal Miss-Conceptions There are many misconceptions about an appraisal. Many homeowners think that if they spent $15,000 to redo their kitchen, the value of their home should go up by that amount. Same for a new roof, a garden, an in-ground pool, etc... However, the truth is that the purpose of the appraisal is to determine what someone would pay for it. The amenities of the home such as number of bedrooms, room sizes, existence of a porch, garage, finished basement, etc... are compared to properties in the area that have recently been sold, and adjustments are made between the subject property and the comparable property. Typically, three comparables are done, and the adjusted prices are averaged to get your appraised value. From the cost approach, the appraiser looks at the cost to rebuild the property, less any depreciation and the price of the land to determine a value. If the seller's real estate did their homework properly, the listing price should be near the appraised value.	Home Inspections & Tests Next comes home inspections and environmental tests. A home inspection will uncover any problems with your home's structure and systems. Typically, the inspector examines the structure, roof, heating/AC system, plumbing, electrical, attic, insulation, mold, water damage, wet basement, windows, doors and more. The report will let you know of potential expensive repairs. This can give you leverage in price negotiations with the seller, or hold-backs of money to cover repairs. Your purchase agreement can be contingent upon the findings of a professional home inspection, meaning you can get out of the agreement if you are not happy with the results. Termite Inspection You should also have a termite inspection done to see if there is any damage behind the walls or in the foundation from termites. Often you can not see this damage until you start doing some prying behind the scenes. You also should have mold tests and radon tests performed. The presence of mold can make you or your family members sick, and can often be taken care of with proper cleaning and solving any problems that are creating the mold. Radon is an odorless gas that is radioactive. It often can be vented out from the basement. Your Realtor can recommend companies who will do radon testing for you. The other inspection you need is from your city or township's department of licenses & inspections or code enforcement. You need to make sure the house you are buying meets local safety codes for electrical systems, plumbing, structural and other areas. Perhaps the owner built an addition or rewired a room without a permit. Or they could have built a deck or installed a pool without a permit. If these structures do not meet regulations, you could be forced to remove them at your expense down the road or suffer from an electrical fire or a deck collapse if the work was done improperly. Remember, code enforcement is NOT the job of the home inspector.	Home Warranty Program One additional bit of advice is to get a home warranty program for the house you are going to purchase. A home warranty is a service contract which helps protect against the expense of repairing or replacing covered home appliances and mechanical systems which breakdown due to normal wear and tear. Basic coverage includes: heating system, plumbing system, electrical system, water heater, oven/range/cook-top, dishwasher, built-in microwave oven, garbage disposal, built-in whirlpool motor and pump, exhaust fan, garage door opener, sump pump and other items. A 1-year contract can be from $300 - $500, and is an excellent investment. This is summary of what you need to do when getting ready to buy a home. I hope that I have been able to make you more educated on these aspects so you can make an informed buying decision. I know that when it comes to getting a mortgage, you will have many options, but I want you to know that I have invested this time with you over the past month to show you that I do care about making sure that you learn about what is involved in buying and financing a home. I have many financing programs for you, based on your particular situation. Please call me when you are getting close to making that purchase decision. Also, I would ask that if you found this series of articles to be of value, that you refer me to your friends and family if they are in the market to either purchase a home or to refinance their existing mortgage. Thanks for your interest.		About My Services I would like to help you with the task of buying a home. To do this, I am able to do the following for you: Evaluate your credit and rental payment history Advise you on the various types of mortgage programs Resolve any issues on your credit report that can affect your mortgage. Determine the largest mortgage for which you qualify Make sure you have all the required loan documents Provide you with a Good Faith Estimate of closing costs Keep you informed as to changes in mortgage interest rates Determine any seller assist that you may ask from a property seller Co-ordinate all aspects of settlement or escrow, including title search, appraisal, paperwork and other services At Your Company Name, we offer mortgages for most buyers, including ones who are self-employed or who have damaged credit. We have lenders who offer 100% financing meaning no down payment for qualified buyers. We also offer mortgages with start rates as low as 1%, making it easier to get into your home. If you have any questions about how I can help you purchase your home, please call me at Company Phone #.