by
Carl Hampton
08/04/2006
Don't Make The Top Ten Mistakes When Buying
A Home
If you're like most people, purchasing your
home will be the biggest investment you'll
ever make. It's very important to prepare as
best you can. I will outline the Top Ten
Mistakes Made By Home Buyers. By keeping
them in mind, you'll help create a
successful and much more enjoyable
experience.
(1) 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. A complete stranger
(buyer) is asking you (seller) to take your
property off the market for at least the
next two to three weeks while they apply for
a loan. As the seller, lets consider the
type of buyer you'd prefer to deal with.
Neither pre-qualified nor pre-approved, this
buyer provides no evidence that they can
afford to purchase your property.
Pre-qualified this buyer has met with a
mortgage broker (or lender) and discussed
their situation. The buyer provided you with
a letter from the broker stating an opinion
of what the buyer can afford. Pre-approved
this buyer has provided a broker written
evidence of income, expenses, assets,
liabilities and credit. As a result, much of
the paperwork for this buyer's loan has been
completed. They provide you with a letter
(pre-approval certificate) from the lender.
You're as certain as possible that this
buyer can close. As a potential buyer, you
can see that being pre-approved will give
you the best chance of getting your offer
accepted.
(2) Making verbal agreements. If you're
asked to sign a document containing
instructions contrary to your verbal
agreements--don't! For example, the seller
verbally agrees to include the washing
machine in the sale, but the written
purchase contract excludes it. Do not expect
oral agreements to be enforceable.
(3) Choosing a lender just because they have
the lowest rate. While the interest rate is
important, consider the total cost of your
loan including the APR , loan fees, discount
and origination points.
(4) Not receiving a Good Faith Estimate.
Within three business days after the broker
or lender receives your loan application,
you must receive a written statement of fees
associated with the transaction. This is
both the law and the best way to determine
what you'll pay for your loan.
(5) 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.
(6) Using a dual agent--i.e., an agent who
represents the buyer and the seller in the
same transaction. Buyers and sellers have
opposing interests. Sellers want to receive
the highest price, buyers want to pay the
lowest price. In the standard real estate
transaction, the seller pays the real estate
commission. When an agent represents both
buyer and seller, the agent can tend to
negotiate more vigorously on behalf of the
seller. As a buyer, you're better off having
an agent representing you exclusively.
(7) Buying a home without professional
inspections. Unless you're buying a new home
with warranties on most equipment, it's
highly recommended that you get property,
roof and termite inspections. Inspection
reports are great negotiating tools when
asking the seller to make needed repairs.
(8) 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 and do not have time
to shop around.
(9) Signing documents without reading them.
Whenever possible, review in advance the
documents you'll be signing. It's unlikely
that you'll have sufficient time to read all
the documents during the closing
appointment.
(10) Not allowing for delays in the
transaction. In a perfect world, all real
estate transactions close on time. In the
world we live in, transactions are often
delayed a week or more. Suppose you asked
your landlord to terminate your lease the
day your purchase transaction was scheduled
to close. A day or two before your scheduled
closing date, you discover your transaction
is delayed a week. In a perfect world, no
one is inconvenienced and your landlord is
willing to work with you. More likely,
however, your landlord is inconvenienced and
angry. Terminate your lease one week after
your real estate transaction is scheduled to
close. That way, if there is a delay in
closing your transaction, you have some
leeway. This approach might cost a little
more, then again, it might not.
