Looking for a Home Before Mortgage Pre-Approval

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.

  Good 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 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.

  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 homework.

  Buying a Home without a Professional Inspection

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 to incur.