Mortgage Help   Mortgage Rates Real Estate Credit Foreclosure Tax Mortgage Rates  Mortgage Basics Chapter 1: How much house can you afford? Homeownership Should You Buy or Rent Summary   Chapter 2: Adjustable-rate mortgages ARM and a fixed-rate mortgage Fixed-rate mortgages Understanding the key elements Which type of lender is right for you? Other types of mortgages Subprime Summary   Chapter 3: Your credit score Down Payment How lenders set rates Low down payments Mortgage insurance Your mortgage payment Mortgage Points Summary   Chapter 4: The good faith estimate Inspection and Insurance Necessary paperwork for a buyer Other lender paperwork Paperwork and fees Prequalification and preapproval Special circumstances Summary   Chapter 5: Ten questions to ask Turned down for a mortgage Underwriting What lenders ask Summary   Chapter 6:  Understanding the closing process Escrow Summary   Chapter 7: When your mortgage is sold Avoiding foreclosure Paying ahead Payment changes Refinancing Removing mortgage insurance Summary Inspection and Insurance While the lender and other third parties are preparing your real estate transaction for closing, you have a short to-do list to complete. This includes having the home inspected and buying homeowners' insurance. The home inspection The home inspection is not the same thing as an appraisal. The appraisal looks at the value of the home, the inspection focuses on the condition of the home. The inspection is not always a required part of the mortgage by the lender, but it is still a vital component of the purchase process. The inspection determines the structural and mechanical condition of the home, including the roof, heating, plumbing, air conditioning and electrical wiring. The inspection report will reveal the needed repairs and potential areas of concern for the home. It is advised that you should have the home inspected after agreeing on a purchase price but before signing the contract and handing over a deposit. If you are in a hurry to make the deal concrete, make sure that your contract includes an inspection contingency. This protects you from any potentially hidden problems or defects of the home. The cost of the home inspection is usually between $250 and $500. Homeowners' Insurance After the home has been appraised, you will be able to start looking for adequate insurance. The lender will usually require you to carry insurance in the full value of the home. Homeowners' coverage comes in two types: replacement cost or cash value. A replacement cost policy gives you an equivalent new model of what is destroyed or stolen. The cash value policy gives you the cash value of the property minus the depreciation caused by age. If you are looking at purchasing an older dwelling you may want to look fro a replacement cost policy. This type of policy costs about 10% more. Owners of new homes can save money with a cash-value policy. Whichever policy you decide is best for you, make sure that you ask about the home improvements that can reduce your premium. Safety features, such as security alarms and storm shutters, can reduce the cost of your insurance.