11 costly mistakes to Avoid when buying a home. |
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1. Your first step in the entire home buying process should be sitting down with a Lender to determine your comfort zone for price and payments as well as obtaining a pre-approval, for several reasons. This will be critical to negotiating with the seller. It will let you know exactly what your payments are, and any problems that may affect the loan process can be identified at this time. |
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2. If you have been turned down by a bank, don’t give up. Most banks will try to fit you into a loan program rather than trying to find a loan program that meets your needs, which a mortgage broker will do. Mortgage brokers have a large variety of loan programs that can be used to meet the needs of diverse financial situations. |
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3. Know who your Lender is. An agent should refer you to someone with whom they have had many successful closings, rather than a friend or family member who has not earned the referral. Using the wrong Lender can put your entire home purchase in jeopardy or cause you to end up paying thousands of dollars more for your financing than is necessary. Many online loan providers have a history of promising low priced loans that they are unable to deliver on. |
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4. If you are offered a loan program with a prepayment penalty ask if the program is available without the prepayment penalty. If for some reason you need to pay off your mortgage on short notice a prepayment penalty can cost you tens of thousands of dollars. |
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5. Never assume that an interest rate quote is a guarantee that you will get that rate. The interest rate must be locked in for the length of your escrow. |
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6. Many Lenders do not offer first time home buyer programs. Ask your Lender what programs they offer, if any. These programs can save you thousands of dollars a year and many times are only available on your first home purchase. |
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7. Always ask the Lender for a copy of your credit report, there may be incorrect information which can easily be corrected. If you aren’t sure what to expect, ask the lender, they should be able to advise you how to correct any issues and improve your credit score. Your credit rating will determine how much your interest rate will be on your mortgage. |
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8. When you apply for your loan, make sure that you receive a good faith estimate. It will give you your payments and itemize the cost of your loan and the escrow process. |
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9. If you are going to be using an Adjustable Rate Mortgage or Negatively Amortized loan program, make sure that you are very familiar and comfortable with the terms of the loan. These types of loans can be dangerous to someone who does not understand how they work, however, in the right applications they can be great programs. |
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10. Before you write an offer on a home, make sure your agent shows you comparable sales within one mile of the property. Comparable homes have similar square footage, bedrooms and bathrooms, and condition. You will soon be writing checks of hundreds of dollars for inspections and an appraisal, which is non refundable if the transaction does not conclude. |
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11. Don’t hold your close of escrow date to be written in stone. Your close of escrow date is not a date that you can count on. Staying flexible and knowing that as many as 70% of escrows close after the negotiated time period will save you aggravation and time when it comes to move out dates, utility switches, and movers. Allow additional time in your plans for potential delays. |
Contact us now to avoid costly mistakes during the purchase of your home!
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