Here's What You Need to Do If you were in the process of buying a home -- or refinancing your current mortgage -- when Hurricane Sandy struck the East Coast, you are most likely experiencing delays with your lender now. Now you're wondering if the closing will ever happen! Rest assured, eventually everything will return to normal, but in the meantime, here are some tips you can follow to help make everything a little easier:
1. Expect delays Clearly, no one can predict the exact path of a storm -- or the magnitude of its destruction -- before it actually makes landfall. Now that it has passed, if you live in an area affected by Hurricane Sandy, be prepared to play the waiting game. Just like everyone else, lenders are trying to sort through the situation the best they can. However, if your rate lock expires due to a delayed closing, ask the lender to honor the rate. Typically, they will. After all, they know neither of you are to blame for the delay, so you should get the same rate they were offering before the storm.
Hurricane Sandy and your mortgage
2. Be prepared for extra inspections Before the lender approves the loan, they will want to make sure the property is still structurally sound after the storm. That means they will most likely require an exterior inspection of the home. They might even request an interior one as well. If the property you intend to buy (or refinance) is located in an area declared as a disaster by the federal government, (which includes parts of New York, New Jersey, Connecticut, and Rhode Island), you can bet that the exterior inspection will be a requirement. But even if you don't live in a specially-designated disaster area, your lender may still require extra inspections. This is designed to protect you and the lender, though! After all, they don't want to approve a loan on a property (and you don't want to purchase one) that could have possibly been damaged by the storm without knowing the extent of those damages.
Home renovations and your insurance
3. Consider requesting an inspection yourself Just because your lender doesn't require a re-inspection of the home, doesn't mean you shouldn't ask for one! After all, you're going to be the one living in the home, so you need to know what condition it is in, and if the storm affected the property's value. How do you determine that? It's easy. Ask for a re-inspection or an appraisal to get an accurate, up-to-date analysis of the home's condition and value.
4. Determine who is going to pay for damages After all of the inspections and appraisals are complete, you should have a list of any damages caused by the storm, and you should roughly have an idea of how much it will cost to repair them. But who is going to pay for those home repairs? Sort all of this out before you sign any paperwork! If you and the seller agree that they will pay for any needed repairs, get it in writing, as part of your legal purchase contract. If the damages are fairly minor, ask the seller to reduce the asking price in the amount of the needed repairs. In other words, ask that they credit you for the money you'll have to spend to fix up the place. Another option is to have the seller set up an escrow account with the amount of money needed to make the repairs, after a contractor has given a price estimate.
By following these simple (yet time-consuming!) steps, you will get approved for the loan you were expecting to receive prior to the storm, and be able to purchase the home you wanted before Hurricane Sandy came along and delayed the process.
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