The third option is often best, since the agent will give you a range of choices. But if your friends and real estate agent are pointing to one company as affordable and consumer-friendly, ask it for a quote. If you're coming up short, get online quotes from multiple companies at www.insweb.com (but it doesn't include some of the big companies like State Farm). Also, if you're happy with your car insurance, contact that company's representative to ask whether it offers a dual-policy discount (often 5% to 15%). And for information about particular companies, check with your state insurance department, which may track local insurance rates and complaints. (but it doesn't include some of the big companies like State Farm). Also, if you're happy with your car insurance, contact that company's representative to ask whether it offers a dual-policy discount (often 5% to 15%). And for information about particular companies, check with your state insurance department, which may track local insurance rates and complaints.

Jointly Owned, Jointly Insured: What Your Community Association Pays For

If you're buying a condo, co-op, or other property in a community interest development, the community association should already have bought a "master policy," including hazard and liability coverage. It will cover common areas such as the roof, walkways, furnace, pool, and building your unit is in, but not usually your actual unit. If the roof leaks, the furnace dies, or a passerby falls into the pool, you won't have to get involved-or pay.

Still, it's worth examining the master policy for completeness. Many condo owners have learned only after a flood or earthquake that their association hadn't bought insurance for these hazards. Worse yet, a clause in your association's CC&Rs may allow it to collect from you personally if its master policy doesn't cover the full extent of a loss.

Coverage for the inside of your own unit is more complicated. The master policy's coverage may stop at your unit's bare walls, ceilings, and floors, or it may also include your cabinets, plumbing, appliances, carpeting, wallpaper, wiring, light fixtures, and more. You may have to worry, for example, about a fire that burns up your cabinets and appliances, a burglary, or someone slipping in your bathroom. Check with your association for details. Then buy insurance to fill any gaps. Special condo and co-op policies are available.

CHECK IT OUT.

To learn more about homeowners' insurance: See the Insurance Information Institute's website ( See the Insurance Information Institute's website (www.iii.org). Also see The Insurance Maze The Insurance Maze, by Kimberly Lankford (Kaplan Business).

Home Warranties for Preowned Houses

Getting a home warranty-which provides service and replacement for certain home repairs-should be both the last and the least of your worries. (Though if you might want one, decide now, because they become unavailable after the closing.) If you're buying a newly built home, skip to the next section.

A home warranty provides repair and replacement of mechanical systems and attached appliances in your house, such as the furnace, plumbing, and electricity, and for an added fee, the air conditioner, spa, pool, and roof. If one of these breaks due to normal wear, you call your warranty company. If it believes you're covered (a big "if," which we'll discuss), it sends a repairperson. You pay a set fee for parts and labor, usually $50 to $100.

Unfortunately, you could spend all night reading consumer complaints against home warranty companies. The "preexisting condition" clause in most warranties incites the most outrage. People complain, "I bought the policy in case the house contained hidden defects-now they say it covers only new problems!"

Other common policy exclusions include inaccessible areas, your failure to have the item serviced as often as recommended (will you remember to change your A/C filter once a year?), and improper installation. The policy may also require you to pay to upgrade a system to current building code standards before it pays for repairs. And if your toddler flushes a teddy bear down the toilet, that's not "normal wear and tear," so you're on your own.

Home warranties cost around $300 to $900 per year, depending on your house. Many sellers will offer to pay for the first year, as a way of inspiring confidence. In this case, your decision is easy-say yes, unless you'd rather negotiate for something else. Or, your own real estate agent may offer to pay, in the name of customer satisfaction.

If the seller or your agent isn't paying, however, you might save your money-and put it toward your annual repair fund. Setting aside $5,000 per year for home repairs is recommended (unrealistic for most, but worth a try).

All that being said, some people love their home warranties. If a major home system breaks down, and you get a good, cooperative repairperson, and your warranty company does cover it, you'll be smiling. Just make sure to look into several different companies' warranties, and read the exclusions.

Also check whether a government agency in your state-probably either your department of insurance (as in California) or real estate (as in Texas)-regulates home warranty companies. If so, contact that agency to check complaint records. But not all states have passed regulatory laws. If regulation is loose or nonexistent, pick a company with a long history in your state.

Home Warranties for Newly Built Houses

If you're buying a newly built house, don't consider one that isn't backed with a builder's warranty. Reputable builders won't balk at this. What this often means is that the builder promises to assess any problem and arrange for repairs. (Get this in writing.) In other cases, it means the builder buys you a warranty.

No matter where the warranty comes from, read it carefully to find out what it covers. For the first year, it should cover workmanship and materials on everything from the roof to the structure to the mechanical systems. The builder is off the hook for appliances or fixtures whose manufacturers provided separate warranties. The best builders will also plan to schedule one or two inspections during the first year, in order to find and repair any nonemergency problems. After that year, most builder warranties cover mechanical systems (plumbing, electric, heating, and A/C) for two years and the basic structure for ten years.

As with any warranty, damage due to normal wear and tear isn't covered. It will also be your responsibility to take care of normal upkeep, such as annual servicing on the heating and air conditioning system, and simple maintenance like caulking the seams around windows and tubs.

CHECK IT OUT.

Most states regulate builder warranties. Check your state government website for consumer information, for example, via Check your state government website for consumer information, for example, via www.visa.gov (click "State Government"). (click "State Government").

What's Next?

You're almost there-proceed to the next chapter, on closing the sale!

CHAPTER 14.

Seal the Deal: Finalizing Your Homebuying Dreams

Meet Your Adviser Stephen Fishman, a Bay Area attorney, tax expert, and author. a Bay Area attorney, tax expert, and author.

What he doesStephen has been writing about the law for over 20 years. Among his many books are Home Business Tax Deductions; Deduct It! Lower Your Small Business Taxes Home Business Tax Deductions; Deduct It! Lower Your Small Business Taxes; Every Landlords Tax Deduction Guide; Every Landlords Tax Deduction Guide; and and Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants.

First house"It was a one-bedroom condo in a 30-story building in Emeryville, California. I bought it because I was tired of being a renter and particularly tired of my landlord, who, among other things, failed to provide me with a stove for about a year! The condo complex was pleasant enough, with a pool, gym, and sauna. Unfortunately, it turned out to be quite noisy, and during the five years I lived there, I never actually used the amenities. But I earned a lot on the sale!"

Fantasy house"A brownstone in Manhattan-maybe next to Central Park (on the West or East side, I'm not that picky). Those brownstones are bigger than they look. They give you all the advantages of a house, but with easy access to all that the city has to offer. Inside, I'd have an old-fashioned leather couch, wood paneling on walls, and Persian rugs on wood floors."

Likes best about his work"The intellectual challenge is great, but what I really like best is being able to work at home any time of the day or night!"

Top tip for first-time homebuyers"Take your time looking-don't buy the first thing that looks halfway decent, but wait to find something you really like. Enjoy the fact that, if you're buying your first place, you're probably under less pressure than someone who has to worry about selling an existing house at the same time."

At last, you're approaching closing day, when the house officially becomes yours. You should have the easiest job of anyone involved-mostly familiarizing yourself with documents that other people prepare and signing your name. That doesn't mean sitting back and putting your feet up, though. You'll need to stay in close contact with your team as they take care of the myriad tasks in the last hours before the closing. And be aware that some little surprise or bump in the road may come along on closing day. Fortunately, most house closings work out fine in the end, usually because the professionals involved have the experience to save the day.

This chapter will tell you what to expect during the last hours leading up to the closing, and on the closing day itself, including: * what a closing is-the who, what, and where of it* how to conduct a thorough final walk-through* tasks that you're personally responsible for in the last days and hours before the closing* what to expect when attending your closing, including what documents you'll have to sign, and* when you can move in.

TIP.

The world won't end if your closing gets delayed. According to Carol Neil: "In my 30 years as a Realtor, I never had an escrow where something new didn't come up at the last minute, leading to scrambles or even a delayed closing date. I worked on one sale where the lender, at the 11th hour, asked for the buyer's divorce papers-even though he'd already been divorced for about 15 years! Homebuying is like childbirth: You think you might not survive the process while it's happening but later forget the pain and love the results." According to Carol Neil: "In my 30 years as a Realtor, I never had an escrow where something new didn't come up at the last minute, leading to scrambles or even a delayed closing date. I worked on one sale where the lender, at the 11th hour, asked for the buyer's divorce papers-even though he'd already been divorced for about 15 years! Homebuying is like childbirth: You think you might not survive the process while it's happening but later forget the pain and love the results."

Preview of Coming Attractions: What Your Closing Will Involve

A closing (also sometimes called a "settlement") is a meeting or a nearly simultaneous series of events during which you pay the seller and the seller transfers ownership rights to you. All of this will be orchestrated by your closing agent or, in some states, your respective attorneys.

The closing can't happen until both you and the seller have either met or renegotiated all the terms of your purchase agreement. The two of you have, no doubt, been working hard to bring this about for weeks, by having inspections and repairs done, arranging for financing, and removing other contingencies. But during that time, you were still hanging onto your purchase money, and the seller still owned the house. The closing was created so that each of you could feel safe handing over what you own to the other.

Of course, if you're not paying in cash, your lender actually holds much of the money for this transaction. The lender will be doing some last-minute investigating behind the scenes-don't be surprised if your employer gets a call on closing day to make sure you still work there! When the lender decides that all is clear, you'll be able (as part of the closing "ceremony") to sign off on your loan and transfer your down payment to the seller. Your lender will then pay the seller the bulk of the purchase price (like you, using the closing agent as intermediary).

But enough generalities: What about your your closing? The biggest logistical questions in the days leading up to it are: closing? The biggest logistical questions in the days leading up to it are: * When will it be?* Where will it be?* Who will attend?

When. The exact date of your closing, or an approximate date, should have been specified in your purchase agreement. If the date wasn't made absolutely clear, your closing agent will help you and the seller decide when you'll all be ready. The exact date of your closing, or an approximate date, should have been specified in your purchase agreement. If the date wasn't made absolutely clear, your closing agent will help you and the seller decide when you'll all be ready.

Don't schedule your closing on a weekend. Marge and her husband Theo lived a long way from their escrow agent's office, so, as Marge explains, "We thought we were lucky when the escrow officer volunteered to come in on a Saturday. But then she got really annoyed when we wanted to read everything (our agent hadn't given us drafts) and when a complication arose with our loan. Our mortgage broker wasn't available by phone, and it took three hours to sort everything out. By the end, we were all exhausted. Theo and I had to force ourselves to go out and celebrate afterwards, but I'm glad we did." Marge and her husband Theo lived a long way from their escrow agent's office, so, as Marge explains, "We thought we were lucky when the escrow officer volunteered to come in on a Saturday. But then she got really annoyed when we wanted to read everything (our agent hadn't given us drafts) and when a complication arose with our loan. Our mortgage broker wasn't available by phone, and it took three hours to sort everything out. By the end, we were all exhausted. Theo and I had to force ourselves to go out and celebrate afterwards, but I'm glad we did."

Where. The meeting will most likely take place at the office of either your escrow officer or attorney, the registry of deeds, your builder's sales office, or (in rare cases) your lender. The choice of location depends on local custom. The meeting will most likely take place at the office of either your escrow officer or attorney, the registry of deeds, your builder's sales office, or (in rare cases) your lender. The choice of location depends on local custom.

Who. Of course you'll be there, preferably well-rested and fresh, along with any cobuyers. Don't bring children! A closing is a serious, sometimes intense experience demanding your full attention. Hire a babysitter (for double the time you think it will take), and give yourself plenty of time for the meeting (and maybe an adult-only celebratory meal afterwards). Of course you'll be there, preferably well-rested and fresh, along with any cobuyers. Don't bring children! A closing is a serious, sometimes intense experience demanding your full attention. Hire a babysitter (for double the time you think it will take), and give yourself plenty of time for the meeting (and maybe an adult-only celebratory meal afterwards).

TIP.

What if an emergency comes up and you or a cobuyer can't be at the closing? One possibility is to arrange to sign everything a few days beforehand, for example, if you'll be traveling. Another is to prepare a document called a "power of attorney" giving signing power to a trusted friend, relative, or lawyer. The power of attorney should include an expiration date-perhaps a few days after the closing. Check with your attorney or closing agent for details of how the power of attorney needs to be formatted and possibly recorded with a government office. One possibility is to arrange to sign everything a few days beforehand, for example, if you'll be traveling. Another is to prepare a document called a "power of attorney" giving signing power to a trusted friend, relative, or lawyer. The power of attorney should include an expiration date-perhaps a few days after the closing. Check with your attorney or closing agent for details of how the power of attorney needs to be formatted and possibly recorded with a government office.

Your real estate agent should definitely be at the closing, offering support and carrying a packet of documents in case anyone forgot anything. You might also be accompanied by your mortgage broker and your attorney, if you have one. If you haven't used an attorney up to now, but are worried about any last-minute issues or complications-for example, if a recently completed survey reveals that the house's garage is over the neighbor's property line-you can hire one before the closing.TIP.

Save on attorney fees. Attorney Fred Steingold notes, "Bringing an attorney to the actual closing can get expensive if the attorney's time is mostly spent watching people sign papers. Often, a good middle course is for the attorney to receive the key documents for review the day before the closing-which is probably the earliest they'll be ready-and to report any findings to the buyer by phone. The attorney may also agree to be reachable by phone if a problem comes up at the closing table." Attorney Fred Steingold notes, "Bringing an attorney to the actual closing can get expensive if the attorney's time is mostly spent watching people sign papers. Often, a good middle course is for the attorney to receive the key documents for review the day before the closing-which is probably the earliest they'll be ready-and to report any findings to the buyer by phone. The attorney may also agree to be reachable by phone if a problem comes up at the closing table."

Have my lawyer there on closing day. Mackenzie and her husband Don had agreed to buy a fixer-upper within walking distance of their jobs on the University of Michigan campus. "But," says Mackenzie, "We had a feeling our seller wasn't the most scrupulous character. He'd been renting out even the damp, gross basement spaces to students, and the place was a total wreck. Our suspicions were confirmed on closing day, when our lawyer discovered an outstanding water bill of some $800. The seller tried first to pretend that he'd paid it (he hadn't), then to argue that it wasn't up to him to pay it! It was quite a scene. But our lawyer eventually helped make him understand that he had to pay it in order to transfer the deed." Mackenzie and her husband Don had agreed to buy a fixer-upper within walking distance of their jobs on the University of Michigan campus. "But," says Mackenzie, "We had a feeling our seller wasn't the most scrupulous character. He'd been renting out even the damp, gross basement spaces to students, and the place was a total wreck. Our suspicions were confirmed on closing day, when our lawyer discovered an outstanding water bill of some $800. The seller tried first to pretend that he'd paid it (he hadn't), then to argue that it wasn't up to him to pay it! It was quite a scene. But our lawyer eventually helped make him understand that he had to pay it in order to transfer the deed."

Unless you're meeting at the lender's office, the lender won't normally send a representative, but will send the documents straight to the closing agent. If questions come up, your mortgage broker will normally contact the lender. The lender feels safe doing this because it knows the closing agent won't actually finalize the transfer (by recording the deed) until the lender gives its final okay, even if that's after you've all gone home.

TIP.

Who will answer last questions about your loan? Many buyers develop new questions on closing day when all the documents are in front of them, such as why the lender is charging certain fees. Closing agents can't answer these. Make sure that your mortgage broker or, if you have none, your lender, will either be represented at the closing or give you a direct-line phone number and a promise to be available on closing day. Many buyers develop new questions on closing day when all the documents are in front of them, such as why the lender is charging certain fees. Closing agents can't answer these. Make sure that your mortgage broker or, if you have none, your lender, will either be represented at the closing or give you a direct-line phone number and a promise to be available on closing day.

Another person who may be in the room is a notary public, charged with the brief but all-important task of making sure that you and anyone else signing documents are, in fact, who you say you are (they'll check your photo ID) and stamping the documents to confirm this.

Whether the seller and the seller's agent or attorney will come to the same meeting as you also depends on local custom. They may handle their end of things separately-the seller has far fewer documents to sign. And signing documents-anywhere between ten and 75 of them-will, in fact, be your main task at the closing.

TIP.

Differences with co-op closings. Co-op buyers normally meet at the co-op attorney's office, and a representative of the seller's bank or lender will be there (to bring the stock certificate proving the seller's ownership of the co-op, which they've been holding as security for their loan-and must destroy before you get a new certificate). Other folks in attendance will include an attorney or other representative of the co-op, the attorneys and real estate agents for both sides, a representative of your bank or lender, probably a paralegal who brings the checks, and the seller. Instead of recording a deed, your lender's attorney might record a UCC-1 financing statement to publicly show its lien on your co-op shares. Co-op buyers normally meet at the co-op attorney's office, and a representative of the seller's bank or lender will be there (to bring the stock certificate proving the seller's ownership of the co-op, which they've been holding as security for their loan-and must destroy before you get a new certificate). Other folks in attendance will include an attorney or other representative of the co-op, the attorneys and real estate agents for both sides, a representative of your bank or lender, probably a paralegal who brings the checks, and the seller. Instead of recording a deed, your lender's attorney might record a UCC-1 financing statement to publicly show its lien on your co-op shares.

Is It Really Empty? Final Walk-Through of an Existing House

Taking a last look at the house before the closing is both fun and vitally important. Never skip this step! The walk-through is your chance to make sure that the seller has (in accordance with your agreement) moved out of the house, made any agreed-upon repairs, left behind all fixtures or other agreed-upon property, and left the place clean and trash-free. Once the house has closed, it's a lot harder to run after the seller saying, "Wait, I thought you were leaving the stove?!" (You could sue, but you'll have more interesting things on your mind by then.) Be careful on your walk-through-but also don't let last-minute jitters make you see major problems when you're really looking at minor cracks or dust balls.

You'll normally want to schedule the final walk-through within the five days before the closing, most often the day before, if not on the closing day itself. The closer to the closing day, the more time the seller has to move out completely-but the less time remains to fix any problems. There's no perfect balance!

Arrive at your final walk-through with your agent. The seller's agent may also be there as well as, in rare cases, the seller.

CD-ROM.

Bring the "Final Walk-Through Checklist (Existing Home)" provided in the Homebuyer's Toolkit on the CD-ROM. A sample is shown below. It lists all the things you should check out, like the windows, faucets, and appliances. A sample is shown below. It lists all the things you should check out, like the windows, faucets, and appliances.

Also bring along a copy of your purchase agreement and any follow-up writings explaining what the seller has agreed to repair or leave behind.

Then take a good, hard look around. Make a list of what remains to be done, and negotiate accordingly. If it's just a matter of removing the old magazines from the garage, the seller should be able to handle that preclosing. If you find a more serious problem-one that appears to be new or previously hidden, such as a mysterious puddle in the crawl space or a foundation crack revealed after the boxes were moved-quickly get a contractor's estimate. Then try to negotiate to withhold enough money from the seller's proceeds to cover repairs after the closing.

Depending on the timing of your walk-through, the sellers may not have actually moved out yet. In that case, focus on whether repairs have been completed, and check that nothing has been removed that should have stayed behind. If, for example, there are holes in the wall where a mirror fixture used to hang, or the light fixtures have been downgraded, bring this up with the seller's agent. If most of the seller's possessions are in boxes, ask about trashy-looking items that no one seems to have taken an interest in packing. And if the seller has only a few hours in which to move, your real estate agent might need to get assurances about what will happen (preferably in writing) or, at worst, delay the closing or negotiate to have the seller rent the place back from you for awhile.

Final Walk-Through Checklist (Existing Home) Use this checklist to walk through the house and make sure everything is in good order or repair. You'll want to make sure that the seller has made any agreed-upon repairs, left behind all fixtures or other agreed-upon property, and left the place clean and trash-free. Add any other relevant items (inside and outside) or questions you may have (such as the name of the architect who did a recent kitchen remodel) to the list. Note any problems and try to work them out with the seller before the closing. If the seller agrees to do additional work or repairs, be sure to get the details in writing, including how the costs will be paid.[image] The keys fit in the locks, keys have been provided for every door, and you know how to use them. The keys fit in the locks, keys have been provided for every door, and you know how to use them.[image] The lights and fans work when you turn switches on and off. The lights and fans work when you turn switches on and off.[image] The doorbell rings. The doorbell rings.[image] The alarm or security system works, and the seller has left the company's contact information and any entry codes and remotes. The alarm or security system works, and the seller has left the company's contact information and any entry codes and remotes.[image] The faucets turn on, no leaks are evident under or around the sinks, and all toilets flush. The faucets turn on, no leaks are evident under or around the sinks, and all toilets flush.[image] The stove, oven, refrigerator, garbage disposal, dishwasher, microwave, and other appliances work. The stove, oven, refrigerator, garbage disposal, dishwasher, microwave, and other appliances work.[image] The garage door opener works, and the seller has left the remote. The garage door opener works, and the seller has left the remote.[image] The ceilings, wall, and floors are in the condition you expected. The ceilings, wall, and floors are in the condition you expected.[image] The heating and air conditioning work. The heating and air conditioning work.[image] The windows all open and close. The windows all open and close.[image] The sump pump, if there is one, works (to turn it on, you'll normally need to fill the pit with water). The sump pump, if there is one, works (to turn it on, you'll normally need to fill the pit with water).[image] None of the seller's trash or personal items remain in the house, garage, attic, basement, yard, or refrigerator. None of the seller's trash or personal items remain in the house, garage, attic, basement, yard, or refrigerator.[image] The seller has left you any brochures or warranties regarding the furnace, appliances, and other fixtures. The seller has left you any brochures or warranties regarding the furnace, appliances, and other fixtures.[image] Other. Other.

NOTES:.

What if you've just noticed a problem that was probably there before and your inspector could have seen, such as cracks in the ceiling? You may just have to live with it. This isn't a new inspection, it's your chance to confirm that the house is in the same condition in which you agreed to buy it. These can be tough calls, so confer with your real estate agent before rushing to judgment.