American real estate company Zillow recently conducted a survey of 1,000 potential homebuyers on areas of the home buying process they were confused about. While the survey was conducted in the United States, the myths cross over easily into the Canadian real estate market.
The home is officially yours once the purchase contract is signed. This isn’t true. The buyer actually takes legal possession of the home on closing day, and after a few important steps take place: First the lender gives your mortgage money to your lawyer while you give your lawyer the down payment. Your lawyer will then pay the seller and have the home registered in your name. Then and only then, you will be given keys and the deed to your home, rendering it legally yours.
Homeowner’s insurance is an optional extra cost. Homeowner’s insurance is often required by most lenders before they’ll consider giving you a loan to buy a home. Otherwise, it is not legally required. However, homeowner’s insurance will help cover huge costs that you may incur as a homeowner such as damage from storms, mold problems and most importantly break-ins and fires. It is definitely not something you’d want to be without.
An appraisal makes sure the home is in good condition before you buy it. Survey respondents were confusing a “home inspection” – which involves an inspector checking out the home to ensure it is in good condition and working order and an “appraisal” – using an appraiser to determine the market value of a home, something that is usually required by a lender so they know how much the home they are putting up the money for is worth.
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