1.
Looking for a home without being pre-approved. The pre-approval process
is very thorough. During the pre-approval process, the mortgage company does virtually
all the work associated with obtaining full-approval. Since there is no
property yet identified to purchase, however, an appraisal and title search aren't
conducted. When you're pre-approved, you have much more negotiating clout with
the seller. The seller knows you can close the transaction because a lender
has carefully reviewed your income, assets, credit and other relevant information.
Also, you can save thousands of dollars by being in a better negotiating
situation. Most good Realtors® will not show you homes until you are pre-approved.
They don't want to waste your, their, or the seller's time. Many mortgage
companies will help you become pre-approved at little or no cost. They'll usually
need to check your credit and verify your income and assets.
2. Making
verbal (oral) agreements!
If an agent tries to make you sign a written document
that is contrary to their verbal commitments, don't do it! For example,
if the agent says the washer will come with the home, but the contract says it
will not--the written contract will override the verbal contract. In fact,
written contracts almost always override verbal contracts. When buying or
selling real estate, abide by this maxim: Get it in writing!
3.
Choosing a lender because they have the lowest rate. Not getting a written
good-faith estimate. While rate is important, you have to consider the overall
cost of your loan. Pay close attention to the APR, loan fees, discount and origination
points. Some lenders include discount and origination points in their quoted
points. Other lenders may only quote discount points, when in fact there
is an additional origination point (or fraction of a point). This difference in
the way points are sometime quoted is important to you. One lender will
quote all points, while another lender may disclose an extra point, or fraction
thereof, at a later time--an unwelcome surprise. Within 3 working days after receipt
of your completed loan application, your mortgage company is required to provide
you with a written good-faith estimate of closing costs. The cost of the mortgage,
however, shouldn't be your only criteria. 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.
4.
Your Realtor is not a financial expert. He or she may not know which loan
is best for you. Your Realtor® gets a commission only when your transaction
closes. As a result, the Realtor® may refer you to a lender who will
close your loan, but who may not have the best rates or fees. . Although most
Realtors® are professional and concerned about your best interests, you should
do your own homework. There are countless stories of consumers who ended
up paying higher rates, or got a loan that wasn't right for them, because they
blindly followed their Realtor's® advice.
5.
Using a dual agent (an agent who represents the buyer and seller in the same transaction).
Buyers and sellers have opposing interests. Sellers want to receive the
highest price, buyers want to pay the lowest price. In most situations,
dual agents cannot be fair to both buyer and seller. Since the seller usually
pays the commission, the dual agent may negotiate harder for the seller than for
the buyer. If you are a buyer, it is usually better to have your own agent
represent you. The only time you should consider using a dual agent, is when you
can get a price break (usually resulting from the dual agent lowering their commission).
In that case, proceed cautiously and do your homework!
6.
Buying a home without professional inspections. Taking the seller's word
that repairs have been made. Unless you're buying a new home with warranties on
most equipment, it is highly recommended that you get property, roof and termite
inspections. These reports will give you a better picture of what you're
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 need to be made, the seller is more likely to agree to making
them. If the seller agrees to make repairs, have your inspector verify the completed
work prior to close of escrow. Do not assume that everything will be done
as promised.
7.
Not 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 find they have no time left to shop around.
8.
Signing documents without reading them. Do not sign documents in a hurry. As
soon as possible, review the documents you'll be signing at close of escrow--including
a copy of all loan documents. This way, you can review them and get your
questions answered in a timely manner. Do not expect to read all the documents
during the closing. There is rarely enough time to do that.
9.
Making moving plans that don't work. You expect to move out of your current residence
on Friday and into your new residence over the weekend. Also on Friday,
your lease terminates and the movers are scheduled to appear. Friday morning arrives:
bags packed, boxes stacked, children under arm and the dog on a leash; you're
sitting on your front door stoop awaiting the arrival of the movers. Your phone
rings. Your loan closing is delayed until the following Tuesday. The
new tenants turn into your driveway with a weighted-down U-Haul and the movers
pull up across the street. You ask yourself, "Where's the nearest Motel 6
and storage facility? How much will the movers charge for an extra trip?
Can we afford it?" How can you avoid such a disaster? Cancel
your lease and ask the movers to show up five to seven days after you anticipate
closing your transaction. Consider the extra expense an insurance policy.
You're buying peace of mind--and protecting yourself from expensive delays.
Refinancing Your Home
