|1. Looking for a house without getting pre-approved. Do not
confuse a pre-approval with a pre-qualification. During the pre-qualification process a
loan officer asks you a few questions and hands you a
pre-qual letter. The pre-approval process is much more complete.
During a pre-approval
the mortgage company does all the work of a full-approval, except for the appraisal and
title search. When you are pre-approved -- you become like a CASH BUYER
and have more negotiating clout with the seller. In some cases (especially in multiple
offer situations), having a pre-approval can make the difference between buying a home and
not buying a home. In other instances home buyers have been able to save thousands of
dollars as a result of being in a better negotiating situation.
Most good Realtors® will not show you homes before being pre-approved because they do
not want to waste your time, their time, and the seller's time. Many mortgage companies
will pre-approve you at little or no cost.
They typically will need to check your credit and verify your income and assets.
verbal agreements! If an agent makes you sign a written document that is contrary
to their verbal commitments -- don't do it! Example: the agent says that the washer will
come with the house, but the contract says that it will not -- the written contract will
override the verbal contract. In fact, written contracts almost always override verbal
contracts. Buying a house is a very complex process -- but it's a lot easier when
everything is in writing.
a lender just because they have the lowest rate. Not getting a written good faith
estimate. While rate is important, you have to look at the overall cost of your loan. This
includes looking at the APR, the loan fees, as well as the discount and origination
points. Some lenders add origination points into their quoted points while other lenders
add an origination point in addition to their quoted points. So when one lenders says 2
points they mean 2 points, whereas another lender means 2 points plus 1 origination point.
The cost of the mortgage, however, cannot be your only criteria. There is no substitute
to interviewing prospective mortgage companies. Referrals from family and friends is
not always the best advise. You must also feel comfortable that the loan officer you
are dealing with is committed to your best interests and will deliver what they promise.
Often the company that has the absolute lowest quoted rate may not be the best company for
your mortgage business.
a lender just because they are recommended by your Realtor® is also not always the
answer. Remember,. your Realtor® is not a financial expert. They may not
know what's the best loan for you. On the other hand, many Realtors® have a very good
understanding of the inner workings of the loan process. Look to your Realtor® for
guidance but not for your final decision. Your Realtor® only gets paid when your
house closes. As a result your Realtor® will help you search out lenders who will help
you plan the mortgage that is just right for you and with whom you will be able to come to
an informed decision about. If you select a Realtor® is very professional and
looking out for your best interest, you should still do homework, interview your lenders
then make your decision.
We recommend shopping for a loan with at least 3 mortgage companies before you make a
decision. There are countless stories of consumers who wound up paying higher rates or
getting a loan program that was not right for them, because they blindly followed the
advice of family and friends.
getting a rate lock in writing. When a mortgage company tells you they have
locked your rate, get a written statement which details the interest rate, the length of
the rate lock, and details about the program
||6. Disclosed Dual Agency i.e. an agent who represents the buyer and
the seller on the same transaction. Buyers and sellers have
similar interests. They both want to come out of the transaction in one piece and
feel that they got a fare deal. A Disclosed Dual Agent owes a duty of limited
confidentiality to both the buyer and seller unless either give written permission to the
Agent that it is permissible to disclose confidential information about that party.
In most normal situations neither the buyer nor seller would do this. In most dual
agency situations, transactions progress uneventfully and with little or no problem.
Under the terms of Disclosed Dual Agency, your concession is that you do not have the
right to confidential information about the opposite party, whether you are a buyer or
seller. 7. Buying a house without a professional inspection is near suicide.
Taking the sellers word that they have made repairs could be very costly to you after you
close. Unless you are buying a new house where you have warranties on most
equipment, it is highly recommended that you get a property inspection, a roof inspection
and a termite inspection. This way you will know what you are buying. Inspection reports
are great negotiating tools when it comes to asking the seller to make repairs. If a
professional home inspector states that certain repairs be done, the seller is more likely
to agree to do them.
If the seller agrees to do the repairs, have your inspector verify that they are done
prior to close of escrow. Do not assume that everything has been done the way it was
shopping for home insurance until you are ready to close. Start shopping
for insurance as soon as you have an accepted offer. Many buyers wait until the last
minute to get insurance and do not have time to shop around.
documents without reading them. Do not sign documents in a hurry. Whenever
possible try to get documents that you will be signing ahead of time so you can review
them. Unfortunately the logic of this scenario is in step with realty.
It is almost impossible to get a lender to send out a Pre-Audit package for your
loan. So your fail safe is the closing agency, or Title Company/Escrow Officer.
Be sure to ask questions at the closing table of the Escrow Officer. If he or
she does not have the answer, ask them to call the lender right there and get the answer.
You will find that Escrow Officers are very accommodating and will do all in their
power to help you understand what you are signing. Do not expect to read all the
documents during the closing. There is rarely enough time to do that.
your moving plans too tight. Example:
You expect to move out of your prior residence on a Friday and into your new residence
over the weekend. So you give notice to your landlord to end your lease on a Friday and
arrange for movers to come to your house on Friday. Then, your loan closing gets delayed
until the next Tuesday. You now may be homeless! New tenants could be moving into your
apartment, and the movers are going to charge you for wasting their time. You could be
forced to live in a motel for a couple of days!
A Better Plan: Allow for a 1-3 day overlap between closing and moving. In the
long run it is not nearly as expensive, and it will sure give you peace of mind. In
Arizona the day of the closing belongs to the seller that means that the seller has all
day on the day of closing to move out of the house you have bought. Usually,
contracts are written with a 1 or 2 day slack time to accommodate the seller.