Buying A Home
By Richard Bleuze
The author has permitted the reprinting and redistribution of this
article.
If you are like most people, buying a home is the biggest investment
you will ever make in your lifetime. Annual mortgage, taxes and
insurance costs can eat up to 25% to 40% of your gross annual income.
Buying a home Looking for a home without being pre-approved, is in my
opinion a major no-no.
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 better able to negotiate 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. In some cases (multiple offers, for example), being
pre-approved can make the difference between buying and not buying a
home. Also, you can save thousands of dollars as a result of being in a
better negotiating situation.
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! In fact, written contracts
almost always override verbal contracts. When buying or selling real
estate, abide by this maxim Get it in writing!
Choosing a lender because they have the lowest rate.
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).
Always request a written good-faith estimate. 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.
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 they promise.
Choosing a lender because they are recommended by your real estate
agent. Remember, that your real estate agent is not a financial expert.
He or she may not know which loan is best for you. Your real estate
agent gets a commission only when your transaction closes. Thus, your
real estate agent may refer you to a lender who will close your loan,
but who may not have the best rates or fees. Also, many real estate
agents refer you to one of their friends in the loan business--who also
may not have the best rates or fees.
Although most real estate agents are professional and concerned about
your best interests, you should do your own homework.
I recommend shopping for a loan with at least three mortgage companies
before you make a decision. 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 real estate agent's advice.
Not getting a rate lock in writing. Also, remember that 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 other
particulars about the program.
Using a dual agent (an agent who represents the buyer and seller in the
same transaction). 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).
Buying a home without professional inspections.
Unless you're buying a new home with warranties on most equipment, I
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.
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. Do not do
this! You might find that you have no time left to shop around for the
best rate.
Signing documents without reading them.
Do not sign documents in a hurry. I know, most escrow people or agents
want you to sign the as soon as possible. I recommend that you review
the documents you will be signing at close of escrow--including a copy
of all loan documents. Do not expect to read all the documents during
the closing. There is rarely enough time to do that. And, afterall, you
are investing your money!
Making moving plans that don't work.
Ask the movers to show up five to seven days after you anticipate
closing your transaction. Escrows never seem to close on time. Even on
the day of closing. You are buying peace of mind--and protecting
yourself from expensive delays.
Richard sells real estate in the San Gabriel Valley which is about 12
miles South of Los Angeles. For more information, visit his website at
httpwww.westsangabrielvalleyrealestate.com
If
you would like to take advantage of the market and learn how to invest
in real estate and you are local to the Dallas Fort Worth area, I know
a really great teacher and mentor here in Arlington Texas. Please take
a look at his web site: DennisJHenson.com,
Dennis has a great Mentoring and training program, I know because I am
one of his former students. I learned a lot from his one on one
teaching technique. - Michael Harman 817-457-7572
mchfun.business@gmail.com
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