Often Made Mistakes
Buying a home - Refinancing your home
If you're like most
people, purchasing a home is the biggest investment
you'll ever make. If you're considering buying a
home, you're likely aware of the complexity of the
endeavor. Because of the numerous factors to
consider when purchasing a home, it's important to
prepare as best you can. Some common home-buying
principals and caveats are presented here for your
consideration. By keeping them in mind, you'll help
create a successful and more enjoyable experience.
These Top Ten lists are by no means exhaustive.
Since your home could cost you 25 to 40 percent of
your gross income, it's important to conduct
research, ask questions and study the process
carefully.
Buying a home
Looking for a
home without being pre-approved. As a potential
buyer competing for a property, you'll have a
better chance of getting your offer accepted by
being as prepared as possible. Bring your
pre-approval certificate with you.
Choosing a
lender just because they have the lowest rate.
While
the rate is important, consider the total cost of
your loan including the loan fees, discount and
origination points. The cost of the mortgage,
however, shouldn't be your only criterion. Have
confidence that the company you select is
reputable and will deliver the loan with the terms
and costs they promised. If in the final hours of
the transaction you determine that the lender has
suddenly increased their profit margin at your
expense, you won't have time to start again with a
different lender. Ask family and friends for
referrals.
Not receiving a
Good Faith Estimate. Within three
business days from the date you apply for a
mortgage, Federal law says that you must receive a
written statement of the fees associated with the
transaction. This is called a God Faith
Estimate. Why wait three days though.
Any reputable mortgage company or bank is going to
give you that information when inquiring -- or at
least they should. you should not be
expected to pay fees which are substantially
different from those contained in your GFE.
Not getting a rate lock in
writing. When a mortgage company tells
you they have locked your rate, get a written
statement detailing the interest rate, the length
of the rate lock, and program details.
Buying a home
without professional inspections. You should always
get property and termite inspections. This way
you'll know what buying. Inspection reports are
great negotiating tools when asking the seller to
make needed repairs. When a professional inspector
recommends that certain repairs be done, the
seller is more likely to agree to do them.
If the seller agrees
to make repairs, have your inspector verify that
they are done prior to close of escrow. Do not
assume that everything was done as promised.
Not shopping for
home insurance until 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.
Signing documents
without reading them. Always read all
documents that you sign. Do not sign them if you
do not understand them.
Refinancing your home
Refinancing with
your existing lender without shopping around.
Your
existing lender may not have the best rates and
programs. There is a general misconception that
easier to work with your current lender. In most
cases, your current lender will require the same
documentation as other companies. This is because
most loans are sold on the secondary market and
have to be approved independently. Even if you
have made all your mortgage payments on time, your
existing lender will still have to verify assets,
liabilities, employment, etc. all over again.
Not doing a
break-even analysis. Determine the
total cost of the transaction, then calculate how
much save every month. Divide the total cost by
the monthly savings to find the number of months
you will have to stay in the property to break
even.
Not getting a
written good-faith estimate of closing costs. See
item number three above.
Using the county
tax-assessor's value as the market value of your
home. Mortgage companies do not use the county
tax-assessor's value to determine whether make
the loan. They use a market-value appraisal which
may be very different from the assessed value.
Signing your loan
documents without reviewing them. See item number
seven above.
Not providing
documents to your mortgage company in a timely
manner. When your mortgage
company asks you for additional documents,
provide them immediately. They are doing what's
necessary to get your loan approved and closed.
Delays in providing documents can result in costly
delays.
