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When you are looking to purchase a home, you will need to get done with a lot of paperwork. While your lender and other applicable parties are getting the paperwork together in preparation for your closing, there are several things you might want to get taken care of. First up, you would want to get your home inspected and get your homeowner's insurance policy in place. But, what exactly is a home inspection and what types of insurance do you have to select from?

Understanding Home Inspections

When you hire someone to complete a home inspection, that person is responsible for determining the mechanical and structural condition of your home. This includes looking at many aspects of your home, including the condition of all of the following:

Air Condition
Electrical Wiring
Heating
Plumbing
Roof

By completing a thorough inspection, you can learn about any items that may need to be repaired before the sale is finalized. Therefore, it is best to have the home inspection completed after you have agreed on a selling price with the seller but before you have actually signed a contract or put down a deposit. Although home inspections typically cost anywhere from $250 to $500, it is money well spent because it can help you avoid purchasing a home that is nothing but a money pit.

Choosing the Best Homeowner's Insurance

When it comes to your homeowner's insurance, you can choose between two basic types of coverage. The first, which is referred to as a replacement cost policy will replace any damaged items for the amount it would cost you to replace the item today. The other type of policy, which is called a cash value policy, will pay you the amount of money the damaged item would be valued at today. If you had a replacement cost policy, on the other hand, you would receive a payment for the amount it would cost you to purchase a new television.

If you are purchasing an older home and your belongings are also older, you might want to consider obtaining a replacement cost policy. Just keep in mind that this type of policy is more expensive than the cash value policy. Therefore, you should evaluate the value of your home and its belongings carefully before deciding on the type of policy you wish to have.

It is important for you to have your home inspection completed and your home owner's insurance in place before you come to the closing. This way, you can feel confident you are getting the best deal possible and your lending institution will be comfortable with moving forward with the transaction.