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When you close on a home, one of the most important documents you’ll review and sign is your mortgage note. It’s an agreement between you and the lender that outlines the terms and conditions of the mortgage. The document tells you how much and when to pay, and spells out the consequences if you don’t.

What Is a Mortgage Note?

A mortgage note, often referred to as a promissory note, is what you sign when you agree to take on the responsibility of a mortgage. The note outlines:

•   Your interest rate

•   The amount you owe

•   When the payments are due

•   The amount of time it will take to repay the loan

•   How to remit payment

•   Consequences for missed payments

It’s one of the key documents you’ll sign at closing.

Promissory notes also may be used in owner-financed home sales. The buyer and seller sign the document, which contains the loan terms. When a borrower pays the seller directly, the promissory note gives the lender the ability to enforce their rights through a mortgage lien, foreclosure, or eviction.


💡 Quick Tip: SoFi’s Lock and Look ⁺ feature allows you to lock in a low mortgage financing rate for 90 days while you search for the perfect place to call home.

What Is Included in a Mortgage Note?

The mortgage note outlines the conditions and responsibilities of the buyer. You’ll see sections like these in a mortgage note:

•   Borrower’s promise to pay. This section includes the total amount of money you’re borrowing and the name of the lender to whom you will remit payment.

•   Interest. The interest rate charged on the unpaid principal is listed here.

•   Payments. Borrowers agree to pay a monthly amount before or on a specific date. The place where borrowers can remit payment is also listed.

•   Borrower’s right to prepay. This section specifies a borrower’s ability to pay toward the mortgage principal without penalty. (Some lenders charge a fee if you pay off some or all of the principal early. Make sure you understand whether you have the right to prepay without a penalty before you get to the closing table.)

•   Loan charges. All charges by the lender must be legal. Any amounts over the legal limit will be refunded to the buyer or applied to the principal.

•   Borrower’s failure to pay as required. Default is clearly defined for the buyer, as are late charges and what happens in the event of default.

•   Giving of notices. Borrower and lender will have the details of how to contact each other for legal purposes.

•   Obligations of persons under this note. All people listed on the mortgage note are equally responsible for repayment of the loan.

•   Uniform secured note. Buyers are advised that a security instrument is signed in addition to the note that protects the note holder from potential losses by giving them the ability to foreclose in case of default.

How Does a Mortgage Note Work?

A mortgage or promissory note is drawn up by the lender when preparing your mortgage for closing during the underwriting process. This document is what makes the terms and conditions of the mortgage legally binding.

Borrowers will see the mortgage note at closing, though the terms and conditions will be outlined in a closing disclosure provided at least three business days before the closing date. The closing disclosure document can be compared with the loan estimate that was provided at the beginning of the mortgage application process. (This help center for mortgages is useful if you want to understand the entire mortgage process.)

A mortgage note is accompanied by another document, called the mortgage, security instrument, or deed of trust. It restates the terms of the mortgage note and outlines the rights and responsibilities you have as a borrower. As a security instrument, the document specifically gives the lender the right to foreclose on your property if you fail to make payments. Having this right reduces the risk to the lender, which can offer more competitive terms to the borrower in return.

Who Holds the Mortgage Note?

A mortgage note isn’t usually held by the lending institution that originated your loan. Mortgage notes are often sold, and it’s not easy to tell who holds your mortgage note. This is because the loan servicer (the company that sends your mortgage statements and handles day-to-day management of the loan) is usually different from the note holder.

Selling a Mortgage Note

You’ll see in your closing documents a provision that allows the lender to sell the mortgage note. This is common and legal in home contracts and typically occurs soon after the property closes. Lenders sell mortgages on the secondary mortgage market, usually to one of the large federally backed mortgage companies, Fannie Mae or Freddie Mac. When the mortgages are sold, the lender doesn’t have to keep the mortgage on their balance sheet, which, in turn, allows them to originate more mortgages for other borrowers.

Fannie Mae and Freddie Mac then bundle mortgages into what is called a mortgage-backed security. Investors around the world (think pension funds, mutual funds, insurance companies, and banks) can buy shares of mortgage-backed securities. The investors will receive steady returns as the mortgages are repaid by individual borrowers.

The loan servicer (which may be your original lender or a separate company) typically continues to service your loan, meaning you’ll send your payment to them. They’ll keep a small portion of your mortgage to cover their costs for servicing your loan while sending the rest to the buyer of your note.

When your mortgage note is sold, the terms of your mortgage won’t change. Your payment, interest rate, and due date will remain the same. If your servicer changes for any reason, you’ll be notified of the new servicer and the new way to remit your mortgage payment.

Different Kinds of Mortgage Notes

There are different types of mortgage loans and different kinds of mortgage notes to accompany them.

Secured Loans

With a secured mortgage note, the mortgage uses collateral to secure the property. The collateral is usually the property itself. A secured loan is usually accompanied by better terms, such as a lower interest rate and a longer repayment period.

Private Loans

Private mortgage notes are secured by private lenders. A seller may own the property outright and act as a private lender, setting their own terms for mortgage loans.

Institutional Loans

Institutional notes are mortgage notes issued by traditional lenders, such as financial institutions or banks. They’re highly regulated. Buyers must meet specific criteria, and the loans must have standard interest rates and repayment terms.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

The Takeaway

Understanding your mortgage note and how it works is a critical step in buying and financing a home. You should review the terms of your mortgage well before you arrive at the closing, and it may be helpful to review the details of the mortgage note with a professional, as the note can protect the buyer just as much as the seller.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

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Photo credit: iStock/Chinnapong

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

⁺Lock and Look program: Terms and conditions apply. Applies to conforming, FHA, and VA purchase loans only. Rate will lock for 91 calendar days at the time of pre-approval. An executed purchase contract is required within 60 days of your initial rate lock. If current market pricing improves by 0.25 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for a one-time float down. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The change of seasons often brings on a flurry of cleaning and a home refresh. If you’re looking for some budget-friendly changes that will bring new life to your rooms, we have those for you.

Before you start, try to clear any clutter you may have. If you tend to hoard, begin your refresh by donating or throwing away items you no longer use. You may also want to review this list of home improvements that can increase the value of your home.

Living Room

Whether you’re entertaining guests or just hanging out, your living room should feel inviting and reflect your style, yet also be functional and versatile.

1. Paint

A fresh coat of paint can do wonders for any living space. Picking neutrals like white or beige ensures a clean and timeless look.

2. Statement furniture

If you don’t have the budget to buy all new furniture, you may want to consider picking one or two new pieces, such as an eye-catching chair or coffee table, that will update your space.

3. Area rug

A quality rug can anchor a room and add a subtle splash of color. It’s also a good idea to make sure it’s sturdy enough to handle high traffic. Adding a rug pad can be worth the additional cost because it feels luxe underfoot and prolongs the life of your rug.

4. Lighting

How you light a room can affect its overall feel. Installing dimmers can enable you to adjust the lighting depending on the mood you’re trying to set. A new floor or table lamps can also allow you to subtly adjust lighting.

5. Clutter containment

If you still have a lot of “stuff” after your initial purge, you may want to consider storing it in decorative receptacles such as woven baskets or a storage ottoman. This is especially useful for kids’ toys.

6. Framing

Buying nice frames to create a gallery on blank walls, or even just to display family photos on a side table, can really personalize your space. Consider a digital photo frame for convenient streaming.

7. Window treatments

Blinds or curtains can add depth to a room. The most affordable option is to buy premade curtains and rods from a home décor store and install them yourself. Measuring carefully is the key to success.

8. Sofa spruce-up

Purchasing a bold couch cover and swapping out your throw pillows can be a quick and inexpensive way to add color and patterns to your space. Toss a blanket over the arm of the sofa for both added texture and warmth.

9. Go green

Plants have always been a simple and effective way to bring life into a space. Good news if you don’t have a green thumb: You can now download an app (Planta is one example) that will help you remember to care for them properly.

10. Switch it up

Looking for a zero-cost home refresh option? You can try rearranging your furniture. Using apps like Modsy for floor plan ideas can help you find options that complement your lifestyle and make the most efficient use of your space.


💡 Quick Tip: Loans typically offer lower interest rates than credit cards. Consider a SoFi home improvement loan to fund your next renovation.

Kitchen

Dreaming about that perfect HGTV kitchen? You can use our calculator to estimate just how much a full remodel may cost you. (Hint: The average cost of a kitchen remodel taps in at more than $50,000.) Never fear: You can still refresh your kitchen with some of the following affordable upgrades — no permits or contractor required.

11. Cabinet facelift

If your cabinets are looking dated, you may want to try putting a fresh coat of paint on them. For an added touch, consider changing out the hardware and installing new handles and drawer pulls.

12. Seat swap

You may want to consider upgrading worn or outdated bar stools in exchange for something sleeker. If purchasing new stools isn’t in your budget, get out your staple gun and try changing the upholstery.

13. Appliance upgrade

If your appliances aren’t working as well as they used to, or they’re nearing the 10 year mark, it may be time to replace them. Although this can get expensive, you can find bargains on bundles, especially during holiday sales, and some outlet stores offer steep discounts on open box appliances.

14. Fill a wall

If you have unused wall space, you may want to consider installing floating shelves for smaller items such as cookbooks, plants, and other knick knacks. Not only will the extra shelving provide more storage in your kitchen, but it can also create an eye catching display.

15. Light it up

For a style update with a big impact, you can look into replacing old lighting fixtures with modern pendants. They come in such a wide variety of styles and price points that there’s something for just about anyone’s taste and budget.

16. Combine decor with utility

It’s easy to warm up a space with an attractive fruit bowl, colorful wall clock, or pretty serving tray. If you’re adding a TV to your kitchen, consider one that will display art or photos when you aren’t watching your favorite shows.

17. Streamline storage

Your storage areas can also be the focus of a spring upgrade. Toss expired foods from your pantry and do a deep clean of your fridge and freezer. If you want to really get organized, consider storing your dry goods and refrigerated items in clear canisters and bins for easy identification and access, and using drawer dividers to separate utensils.

Recommended: Interior Decoration Tips for Furnishing A New Home

Bathroom

In an ideal world, a bathroom remodel would include a new vanity, tile, and hardware. However, even if a demo is more idealistic than realistic, that doesn’t mean this space is out of bounds. Start small with a few less costly changes.

18. Hardware update

Replacing your outdated sink, bath and shower hardware can boost the appeal of just about any bathroom. By adding matching towel racks, door hooks, and vanity knobs and handles, you can achieve a cohesive upgrade that doesn’t break the bank.

19. Target: toilet

If your porcelain throne is starting to show wear and tear, it may be time to replace the lid and seat. You can go all in and buy a new toilet for just a couple hundred dollars, although you will likely need a plumber as well.

20. Mirror modern

If you have a long vanity with two sinks, you may want to consider installing two separate mirrors with bold frames. Mirrors with LED backlighting offer a more modern hotel-like look.

21. Shower showcase

The shower curtain is one of the first things people see when they walk into a bathroom. Introduce a new look by finding a curtain with a cool pattern and adding a new curtain rod and rings.

22. Spa retreat

A bamboo bath mat that’s easy to clean and water-resistant can elevate your space. So can candles or a diffuser. Add attractive shelving — or simply swap in plush new towels — and you’ll instantly create a serene scene that could compete with any day spa.

23. Accessorize

Placing your soap dispenser and toothbrush holder on a decorative tray easily gives your bath a tidy boost. Take a good look at all the personal care products that are visible in your space. Stow unattractive or less frequently used products in drawers and make sure what’s still visible is in attractive containers.

24. Grout out

No budget for new tiles? Put some elbow grease into cleaning the grout on your existing tile floor and walls, or regrout the entire space for a cleaner, brighter look.


💡 Quick Tip: You never know when you might need funds for an unexpected repair or other big bill. So apply for a HELOC (a home equity line of credit) brokered by SoFi today: You’ll help ensure the money will be there when you need it, and at lower interest rates than with most credit cards.

Bedroom

Your bedroom should be your haven after a long day of work, but you don’t need to do a complete bedroom remodel to reap more relaxation. Just make a few changes to create a more peaceful setting.

25. Headboard

For a few hundred dollars, you can find an upholstered headboard that’s both fashionable and easy to assemble. It can create a dramatic difference in your bedroom’s appearance.

26. Paint

It’s pretty easy to refresh your walls over a weekend. If you want to liven up your space with some color, stick with soft hues such as pale blue or gray. For the I-hired-a-decorator feel without the price tag, consider removable wallpaper.

27. New linens

To quickly liven up a boring bed, you can replace old sheets, blankets and pillows. Opt for soothing colors and muted patterns that will create a peaceful sleeping environment.

28. Floors

Whether you have wooden floors or carpet, layering an area rug can help to create a cozy environment. For a luxurious feel, try shag or sheepskin rugs.

29. Lighting

Designing a unique lighting setup doesn’t have to be hard or expensive. You may be able to freshen up your space by installing plug-in sconces (which require no rewiring) on each side of your bed. It can save table space and add decor to your wall.

30. Side tables

For a budget-friendly furniture refresh, just replace your bedside tables. Look for a pair with concealed storage to cut down on the cluttered look.

31. Closet clutter

Custom closets can get expensive very quickly. But you can get your closets under control by installing affordable hanging bars and shelves that not only look good, but help you organize your wardrobe.

32. Floor mirrors

A full-length floor mirror will reflect light and make your room feel bigger — not to mention that it comes in handy when you’re pulling together your daily outfit.

33. Art & photos

Many designers suggest thinking of your walls as a blank canvas to display your style and the people you love. You can achieve this by hanging your favorite photos or artwork in eye-catching frames.

What is Your Home Missing Quiz

The Takeaway

Even small changes can make your home feel new again. Figure out how much you want to spend on your home refresh before you start so you can prioritize which changes are most important to you. Staying within your budget by choosing upgrades that you can do yourself, shopping secondhand stores, and comparing prices carefully.

Inspired to tackle a larger home makeover project? A home improvement loan may be the way to go. SoFi’s no-fee home improvement loan could help you foot the bill of your kitchen reno or bathroom demo, with no collateral required. Plus, it’s possible to get your funds the same day* which can help fast track your remodel.

Learn more about how a home improvement loan can help with your remodel.

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Photo credit: iStock/KatarzynaBialasiewicz

^* Same-Day Personal Loan Funding: 82% of typical SoFi Personal Loan applications, excluding Direct Pay Personal Loans and Personal Loan refinance, from January 1, 2022 to January 1, 2023 that were signed before 7pm ET on a business day were funded the same day.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

(Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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A home inspection is an examination of the home’s structure and mechanical systems. It’s typically performed during the escrow period of a real estate transaction so that buyers can gather information about the condition of the property. This information can help them decide if they want to complete the transaction or cancel the contract.

Many real estate professionals advise homebuyers to purchase a home inspection to protect their money and investment. While a home inspection can reveal many pitfalls associated with buying a particular piece of property, it also has limitations buyers should be aware of.

Note: SoFi does not offer home inspections at this time. However, SoFi does offer conventional mortgage loan options.

What Is a Home Inspection?

A home inspection is a visual assessment of a property’s condition, including the major mechanical, structural, and visual elements of a home. This includes things like the electrical, plumbing, foundation, walls, ceiling, heating and cooling systems, leaks, mold, and structural elements.

Getting a home inspection is one way that borrowers can protect their money when taking on a home mortgage loan. Because home inspection reports can reveal potentially expensive problems with a home, homebuyers may be able to renegotiate the contract, ask home sellers to fix problems, or withdraw from the contract entirely.

What Does a Home Inspection Include?

If you’ve been looking at properties, you probably already know some basics of what to look for when buying a house. But a home inspection delves more deeply than you could in your initial examination. It includes information about the home’s condition, including mechanical systems such as the HVAC, roof, electrical, plumbing, walls, ceiling, floor, windows, doors, foundation, and other structural components.

It’s important to note that inspectors have some limitations. If the electricity isn’t on, they can’t do an inspection of it. There are other systems that are not usually included in a standard home inspection, such as an inspection of a well or septic system.

💡 Quick Tip: A major home purchase may mean a jumbo loan, but it doesn’t have to mean a jumbo down payment. Apply for a jumbo mortgage with SoFi, and you could put as little as 10% down.

When Should You Get a Home Inspection?

Whether you’re a first-time homebuyer or have bought multiple properties, if you’re in a real estate transaction, you should get a home inspection when you want to feel more comfortable with your purchase. You’ll want to make an appointment with the home inspector as soon as your contract is signed. (A seller might also want to get an inspection before putting a home on the market, so that any big issues can be fixed before they hurt the home appraisal value.)

Home Inspection Checklist

Not quite sure what is checked on a home inspection? It’s helpful to know what the home inspection may include in a home inspection checklist.

Grounds

•   Is there proper grading and drainage away from the home or is standing water visible?

•   Are the walkways, yard, trees, and landscaping in good condition? Do branches or trees hang over the house?

•   Is there evidence of termite or water damage on exterior structures?

•   Are the railings secure and stable?

Structure

•   Are the sides of the house straight, without sagging or bowing?

•   Do windows and door frames appear square?

•   Do the roof ridge and fascia (the lower beam supporting the gutters) appear straight?

•   Is the foundation straight with no major cracks?

Exterior surfaces

•   Is the siding or stucco in good condition?

•   Do masonry veneers have cracks or flakes?

•   Is there any wood in contact with the ground?

•   Is the paint peeling or chipping?

•   Are there any vines covering the exterior surfaces of the home?

•   Are there stains on exterior surfaces?

Windows, door, and trim

•   Are door frames cracked or rotting?

•   Are windows in working order with no breaks?

•   Are the joints of windows and doors caulked?

Roof

•   Are shingles cracked, rotting, missing, or curling? Are there more than two layers?

•   Are there obvious patches, cracks, splits, or wrinkling on a flat roof?

•   Are the flashing and soffit in good shape?

•   Is there exterior venting for eave areas?

•   Are the gutters in good shape?

•   Are the chimneys straight, properly flashed, with no evidence of cracked joints?

Attic

•   Are there stains on the underside of the roof?

•   Is there damage or rot to the structure?

•   Is there sufficient insulation and ventilation?

•   Is there plumbing, exhaust or plumbing terminating in the attic?

•   Are there open electrical splices?

Interior rooms

•   Do floors, walls, and ceilings seem plumb and level?

•   Are there stains or cracks in the walls or ceiling?

•   Are the paint or wall covering, flooring, and trim in good condition?

•   Do the lights and switches operate correctly?

•   Are there enough electrical outlets? Do they work properly?

•   Is there heating and cooling in each room?

•   Is there cracked or broken masonry around the fireplace? Is there evidence of backdrafting? Does the damper operate properly?

Kitchen

•   Is there a working exhaust fan venting to the outside?

•   Are there GFCI outlets within 6 feet of the sink?

•   Does the dishwasher operate and drain properly?

•   Are there leaks in the pipes under the sink?

•   Does the floor under the sink have evidence of water?

•   Is the water flow adequate?

•   Are the cabinets in good condition?

•   Do built-in appliances operate properly?

Bathrooms

•   Is there a working exhaust fan that doesn’t terminate in the attic?

•   Is there adequate pressure and flow at all fixtures?

•   Is the toilet stable and working properly?

•   Are metal elements free of rust?

•   Is the caulking on the tub, toilet, and shower in good condition?

•   Are there stains or evidence of past leaking?

Basement or mechanical room

•   Is there evidence of moisture?

•   Are there stains or cracks on exposed foundation?

•   Is there visible sagging, stains, or damage from insects in exposed wood elements?

•   Is there insulation at rim/band joists?

Crawl space

•   Is the crawl space adequately vented to the exterior?

•   Is there insulation on exposed water supply, waste, and vent lines?

•   Is there insulation between the crawl space and the heated areas of the home?

•   Is there evidence of moisture or pest damage?

Plumbing

•   Is there evidence of leaking or cracked pipes?

•   Are there signs of rust on the water heater? Is it vented properly? Is it the correct size to produce enough water for the home?

•   Does the water pump short cycle?

•   Do the galvanized pipes restrict water flow?

•   Is the well water test acceptable?

•   Is the hot water temperature between 118 and 125 degrees Fahrenheit?

Electrical

•   Are there exposed splices? Knob and tube wiring?

•   Does the service panel have adequate capacity?

•   Is there aluminum cable for branch circuits?

Heating and cooling systems

•   Is there good air flow from all vents?

•   Are there open seams in the flues?

•   Is there rust around the cooling unit?

•   Is there a combustion gas odor?

•   Is the air filter clean?

•   Is the ductwork in good condition?

•   Is there asbestos on the components?

•   Are there separate flues for oil/gas/propane and wood/coal?

Miscellaneous

•   Are smoke and carbon monoxide detectors in place?

•   Are stair risers and treads in good shape?

•   Are stair handrails in good condition?

•   Does the garage door opener work properly?

Recommended: The Cost of Living by State

What Are Problems That May Fail a Home Inspection?

The most common problem areas that cause a home inspection to fail (meaning, the buyer pulls out of the transaction because of the severity of the issues) include:

•   Faulty roof or foundation

•   Pests

•   Low water pressure

•   Failing windows

•   Electrical issues

•   Drainage issues

•   Failing heating system

•   Wood rot

•   Leaks

•   Mold

•   Building code violations

•   Toxic building materials (like asbestos or lead-based paint)

What Happens if a House Fails Inspection?

If there’s an issue that’s too big to ignore, you have options.

1.    Ask the seller to make repairs. Sellers may be able to make the necessary repairs to get the property up to par.

2.    Ask for a credit from the seller at closing. If you’d rather have money to fix the problem yourself, you can negotiate for a credit from the seller.

3.    Resubmit a counteroffer with a lower price. You can submit an addendum to the contract that lowers the purchase price to reflect the condition of the property and remediation cost.

4.    Abandon ship. If the problems are too big and it doesn’t make financial sense to buy the property, you may just want to walk away.

5.    Buy it anyway. In a competitive real estate market, you may need to decide if the problems found during the inspection are worth bringing up. Sellers often have multiple offers or can sell the property “as is,” meaning, the property may be able to sell even with the problems found. This is dependent on the lender, of course, because lenders may not fund your mortgage if the problems found are severe. (Lenders find out this information in the home appraisal, not the home inspection. The home inspection is for you.)

What Are Home Inspectors Not Allowed to Do?

Home inspectors have some limits. The inspection may not include a close look at:

•   Outbuildings or fences

•   Pests

•   Mold

•   Sprinkler systems

•   Wells

•   Septic systems

•   Ducting

•   Vegetation and drainage

•   Swimming pools

Additionally, home inspectors may not climb on the roof, advise on the cost of repairs, or advise on the purchase of the property.

How Much Does a Home Inspection Cost?

According to the U.S. Department of Housing and Urban Development, the typical home inspection costs between $300 and $500. This will vary, of course, depending on the size of the home, region, age of the home, and other optional services you may want to opt for.

How to Find a Reputable Home Inspector

A good home inspector is invaluable and they’re not all created equal. If you want someone that will take a good look at your home, take these steps:

•   Ask for recommendations from family and friends. If someone you know had a great experience with a home inspector, get their number.

•   Ask your real estate agent for ideas. They’re in the business and likely have a good idea of which home inspectors are thorough and knowledgeable when it comes to a home inspection.

•   Read reviews. There are many sites that offer to connect service professionals with homeowners, and they usually have reviews of past work that you can see.

Pros and Cons of a Home Inspection

When it comes to a home inspection, there are a few pros and cons you’ll want to consider.

Pros

•   A trained professional can find issues you cannot. Even if you’re experienced in home construction, a professional has the advantage when it comes to thousands of potential issues the home could have.

•   It helps protect your money. A home inspection can help you determine if purchasing a certain property is right for you or not and can help you ensure that the home is fairly priced.

•   The report can be used as a negotiation tool. A home inspection that reveals an issue can be used to negotiate repairs, price reduction, or money to repair the issue.

Cons

•   It’s possible to miss major issues. Getting a home inspection doesn’t guarantee that there’s nothing wrong with the home you’re buying. The inspector can’t open up walls. And if the home doesn’t have all of its systems operational, the home inspector cannot inspect them.

•   You may need additional inspectors for specialized systems. If the property you’re buying has a well or a septic system, for example, you’ll likely need an additional inspection from someone qualified to inspect those systems.

💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.

Do the Homebuyers Have to Be There?

Home inspectors generally do not require potential purchasers to be present when they complete the home inspection. However, it can be very helpful if the buyers make time to be there. The inspector can point out issues, address the severity of them, or make recommendations that are hard to express in a report.

How Long Does a Home Inspection Take?

On the day of the home inspection, how long a home inspection takes depends on the size of the home. Generally, the home inspection takes between two and four hours. After the inspection is complete, the report is usually sent within 24 to 48 hours.

Home Inspection Tips

After you receive your home inspection, you may see some unexpected things. These tips can help.

•   Don’t panic. Every house has something wrong with it. Most things are fixable and you just need to find out what it costs to fix.

•   Get estimates. The home inspection is usually just a starting point. You’ll need to find professionals to determine how much it will cost to fix.

•   Negotiate for fixes. Your real estate agent can ask the seller to fix items found in the home inspection. The estimates you get can come in handy.

•   Make a decision by the deadline. In your contract, you’ll likely have a date that you need to cancel to ensure you don’t lose your deposit. If something in the home inspection is upsetting enough for you to cancel the contract, you need to do it by the deadline.

The Takeaway

Home inspections are recommended because they can help buyers make an informed decision when it comes to purchasing property. When there’s a sizable amount of money at stake, it’s usually worth it to pay a few hundred dollars to uncover potential problems.

However, sometimes even a home inspection doesn’t catch everything wrong with a property. Keep in mind that once your home inspection is finished, you may need to hire a specialist to get to the root of the problem identified by the home inspector. With better information in your hands, you can be prepared to commit your money to a mortgage.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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FAQ

What things are big red flags in a home inspection?

Some big red flags to look for in a home inspection are potential issues related to the safety and strength of its construction and systems, such as foundation issues, electrical hazards, drainage issues, and leaks.

What is the importance of an inspection?

A home inspection can reveal potential problems or defects in a property. It can help buyers make better decisions and help protect their money.

What does an inspection agreement typically include?

If you see a home inspection agreement, it may include the scope of work, exclusions, date and fee for the inspection, extras that can be performed for a fee, dispute resolution process, limitations of liability, and statement of no guarantee or warranty of the inspection.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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OPEC is the Organization of the Petroleum Exporting Countries, an intergovernmental organization of 12 nations focused on coordinating and unifying the oil production policies of its member countries. The organization was founded in 1960 and is headquartered in Vienna, Austria.

OPEC’s primary goal is to regulate the supply of oil to stabilize the market and ensure that member countries receive an ideal price for their oil. To achieve this, the organization holds regular meetings where member countries discuss current market conditions and decide on production levels for each country. By controlling the oil supply, OPEC can influence the price of oil on the global market, which affects the global economy and, thus, investors.

What Is OPEC?

The Organization of the Petroleum Exporting Countries (OPEC) is a cartel of oil-producing countries founded in 1960 in Baghdad, Iraq. The founding members of OPEC were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Since then, the group has expanded to include as many as 16 countries, but currently has 12 member countries.

As noted above, the main function of OPEC is to regulate the oil supply that its member countries produce to manage the price of the global oil market. The organization achieves this by setting production levels, conducting research, and promoting cooperation among member countries.

Despite its power, OPEC has faced criticism over the years for its production policies. Some critics claim that OPEC’s decisions to limit oil production have led to higher oil prices and gas prices that benefit member countries while harming the global economy and consumers. Others argue that the cartel’s power has diminished in recent years due to increased competition from non-OPEC countries such as the United States and Canada.

Which Countries Are Members of OPEC?

OPEC currently has 12 member countries. At its height, OPEC had 16 member countries, but Qatar, Ecuador, and Indonesia withdrew membership in recent years.

The current member countries of OPEC are:

•   Algeria

•   Congo

•   Equatorial Guinea

•   Gabon

•   Iran

•   Iraq

•   Kuwait

•   Libya

•   Nigeria

•   Saudi Arabia

•   United Arab Emirates

•   Venezuela

These countries are major producers and exporters of oil, and they play a significant role in the global oil market. Together, they account for about 80% of the world’s crude oil reserves and produce about 40% of the world’s oil. This makes OPEC a major player in the global energy market and allows it to wield significant power in setting the price of oil.

However, several large oil-producing countries that are not a part of OPEC, including:

•   The United States is the world’s largest oil producer and consumer.

•   Canada is the world’s fourth-largest oil producer.

•   China is the world’s fifth-largest oil producer and the second-largest oil-consuming country.

•   Brazil is the eighth-largest oil-producing country.

The decisions of oil producers in these countries may counteract OPEC policies.

OPEC vs OPEC Plus

OPEC Plus (commonly written as OPEC+) is an extension of OPEC that includes a number of non-OPEC countries that have significant oil industries. These countries have joined forces with OPEC in an effort to collectively manage the global oil market and stabilize oil prices. OPEC+ was formed in 2016 and currently includes Azerbaijan, Bahrain, Brunei, Kazakhstan, Russia, Mexico, Malaysia, Oman, South Sudan, and Sudan.

The main difference between OPEC and OPEC+ is that the latter is a broader group that includes both OPEC and non-OPEC countries, and was formed more recently in response to changing market conditions. Both groups have the same goal of regulating the supply of oil to stabilize the global oil market.

What Is the Purpose of OPEC?

The main purpose of OPEC is to coordinate and unify the oil, gas, and energy policies of its member countries. This is done to stabilize the international oil market and secure fair and stable prices for energy producers in the member countries. By working together, OPEC member countries can ensure that they are able to influence the supply of oil in the global market, which in turn can help to maintain stable prices.

Pros and Cons of OPEC

The pros of OPEC include:

•   Stabilizing the market: By regulating the supply of oil, OPEC can help to stabilize the global oil market and prevent prices from fluctuating wildly. This can provide a degree of predictability and reliability for both producers and consumers.

•   Ensuring fair prices: OPEC’s goal is to ensure that member countries receive fair prices for their oil. By controlling the supply of oil, the organization can influence the price of oil on the global market and help to ensure that member countries are not exploited by outside parties.

•   Providing economic benefits: The oil industry is a major source of revenue for many of the member countries of OPEC. By controlling the supply of oil, OPEC can help to maximize the economic benefits for its member countries.

The cons of OPEC include:

•   Harming the global economy: Critics argue that OPEC’s decisions to limit oil production can lead to higher oil prices, which can harm the global economy and consumers. High oil prices can lead to inflation and reduce the purchasing power of consumers, which can slow economic growth.

•   Diminishing power: Some argue that the power of OPEC has diminished in recent years as a result of increased competition from non-OPEC countries such as the United States and Canada. This has led to a more fragmented and complex global oil market, which has reduced OPEC’s ability to influence the price of oil.

•   Facilitating corruption: Because OPEC is a cartel of oil-producing countries, it has been criticized for facilitating corruption and non-transparent practices. This can lead to abuses of power and mismanagement of oil revenues, which can have negative consequences for both the member countries and the global market.

How Does OPEC Affect Oil Prices?

OPEC’s decisions about production levels can have a significant impact on the price of oil. If OPEC decides to reduce production levels, it can lead to a decrease in the global supply of oil, which can cause the price of oil to increase. On the other hand, if OPEC decides to raise production levels, it can increase the global supply of oil, which can cause the price of oil to decrease.

Therefore, OPEC’s decisions about production levels can significantly impact the price of oil on the global market, as well as global investments. By controlling the oil supply, the organization can influence the price of oil and help ensure that member countries receive fair prices for their oil.

However, OPEC’s influence on oil prices has arguably waned in recent years, largely because the United States has become the world’s largest producer and one of the largest exporters of oil. Because the U.S. has grown its oil-production market share, it has lessened the influence of OPEC on the markets.

OPEC is also facing challenges to its oil hegemony because of the rise of renewable energy sources, like solar energy, which may lessen the demand for oil in the future.

Does OPEC Affect Investing in the Oil Sector?

The decisions made by the Organization of the Petroleum Exporting Countries (OPEC) may affect investors. Because OPEC members control a large portion of the world’s oil supply, its decisions about production levels can affect the global supply of oil and, ultimately, the price of oil on the market.

If OPEC decides to reduce production levels, it can lead to a decrease in the global supply of oil, which can cause the price of oil to increase. This can be beneficial for investors who have invested in energy stocks or oil-related assets, as they may see an increase in the value of their investments. However, higher oil prices could also harm the global economy, which may be a drag on an investor’s overall portfolio.

On the other hand, if OPEC decides to boost production levels, it can increase the global oil supply, which can cause the price of oil to decrease. This can be detrimental for investors who have invested in oil companies or oil-related assets, as they may see a decrease in the value of their investments.

Therefore, it is essential for investors to monitor OPEC’s decisions and how they may affect the global oil market. By understanding the organization and its role in the market, investors can make more informed decisions about their investments in the oil industry.

💡 Recommended: How and Why to Invest in Oil

The Takeaway

meets and makes production decisions, it can ultimately affect consumers at the gas pump and investors’ portfolios. Thus, staying up to speed with OPEC and its decisions can help you understand how the organization affects your wallet.
If you’re interested in investing in the energy sector, SoFi can help. With a SoFi Invest® online brokerage account, you can trade energy-related stocks and exchange-traded funds (ETF), along with IPOs and more, with no commissions for as little as $5. All you need to do is open an account.

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Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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