For most people,
buying or selling a home is
the largest transaction they will ever make. However, few people ever do
all the research necessary to enjoy a smooth real estate transaction. The
purchase or sale of real estate can be confusing at times but with a little bit
of homework, and some advice from family and friends who have been through
the process before, you can make this a little easier. There is no
substitute for taking the time to educate yourself before you buy or sell a home.
To learn more about how you can help prevent some common mistakes from happening
to you simply read below.
Looking for a Home Before
Do not confuse pre-approval with pre-qualification. During the
pre-qualification process, a loan officer asks you a few questions and
then hands you a pre-qualification letter. The pre-approval process is
much more complete as the mortgage lender does almost all the same work as
a full approval. Most Realtors will not show you homes until you are
pre-approved because they do not want to waste your time, their time, and
the seller's time. Getting pre-approved is always at little or no cost.
Trusting Verbal Agreements
If an agent tries to make you sign a purchase and sales contract that does
not include any verbal commitments, don't do it! For example, if the agent
says that the appliances will come with the house, but the contract says
that it will not (or does not include any mention of them) – the written
contract will override the verbal contract. In fact, written contracts
almost always override verbal contracts.
Faith Estimate - Get One in Writing!
While interest rates are 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 include origination
points in 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 for asking family and friends for
referrals and for interviewing prospective mortgage companies. You must
also feel comfortable that the loan officer you are dealing with is
committed to your best interests and will deliver what he/she promises.
Often, the company that has the absolute lowest quoted rate may not be the
best company for your mortgage business.
Using a Lender Solely Recommended by your Realtor
Your Realtor is not a financial expert and is not qualified to assure you
of getting the best loan. In fact the realtor will only get paid if
your loan closes so the interest of finding you the fastest lender is
sometimes more important than finding you the best lender. We
recommend shopping for a loan with at least 2 mortgage companies before
you make a decision. There are countless stories of consumers who wind up
paying higher rates or getting a loan program that was not right for them
because they blindly followed their Realtor's advice.
Not Asking for a Rate Lock in
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.
Using a Dual Agent
Buyers and sellers have opposing interests. In most normal situations,
dual agents cannot be fair to both the buyer and seller, and they
represent sellers more strongly than buyers. If you are a buyer, it is
much better to have your own agent who will be on your side. The only time
you should even consider a dual agent is when you get a price break from
using a dual agent. If that is the case, then tread carefully and do your
Buying a Home without a Professional
Unless you are buying a new house with 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 need to 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 promised.
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, but then they have no
time left to shop around and may subject to lock out windows in certain
states where companies have temporarily frozen the issuance of any new
policies (i.e. Florida when under Hurricane warnings).
Signing 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. It is
advisable to ask for a copy of all loan papers you are signing a few days
ahead of the close of escrow. This way you can review them and get your
questions answered. Do not expect to read all the documents during the
closing. There is rarely ever enough time to do that.
Making your Moving Plans too tight
Give notice to your landlord to end your lease at least 5 days after the
anticipated losing date. If your closing gets delayed it will
certainly save you on any mover's penalties or hotel charges you may have