Homebuyers’ 10 Biggest Mistakes.

For most people, their home is the biggest investment they will ever make. However, few people do the research necessary to make a good buying decision. The home-purchase process is extremely confusing for most people. With a little bit of homework, with advice from family and friends who have been through the process before, and with all of the information and resources provided here at Mortage Match you can make this a little easier on yourself. There is no substitute for taking the time to educate yourself before you buy a house––which typically costs you 25% to 40% of your gross income!

10 biggest mistakes when buying a house.

1. Looking for a house without getting pre-approved.
Do not confuse a pre-approval with a pre-qualification. During the pre-qualification process, a loan officer asks you a few questions and may hand you a pre-qual letter. The pre-approval process is much more complete and much stronger.

During a pre-approval, the loan consultant does all the work of a full-approval, except for the appraisal and title search. When you are pre-approved, you become like a CASH BUYER and have more negotiating clout with the seller. In some cases (especially in multiple-offer situations), having a pre-approval can make the difference between buying a home and not buying a home. In other instances, home buyers have been able to save thousands of dollars as a result of being in a better negotiating situation.

Most good Realtors will not show you homes before being pre-approved because they do not want to waste your time, their time, and the seller’s time. At Mortgage Match, pre-approval is always fast and free… something which is not always true with other mortgage funding sources. A strong, reliable pre-approval requires checking your credit and your income.

2. Making verbal agreements.
If an agent makes you sign a written document that is contrary to their verbal commitments, don’t do it! Example: the agent says that the washer will come with the house, but the contract says that it will not. In this case, the written contract will override the verbal contract. In fact, written contracts almost always override verbal contracts. Buying a house can be a very complex process––but it’s a lot easier when everything is in writing.

3. Choosing a lender just because they have the lowest rate.
Not getting a written good-faith estimate. While rate is important, you have to look at the overall cost of your loan. This includes looking at the APR, the loan fees, closing costs, as well as the discount and origination points.

You should also feel comfortable that the loan officer you are dealing with is committed to your best interests, and will deliver what he or she promises. Often, the company that has the absolute lowest quoted rate may not be the best company for your mortgage business.

4. Choosing a lender because they’re recommended by your Realtor.
Your Realtor is not a financial expert. Chances are they may not know the best loan for you. The Realtor only gets a commission when your mortgage loan closes and funds. As a result, the Realtor may refer you to a lender who may be able to close the loan, but not necessarily a lender who has favorable rates, fees or programs. Also, many Realtors refer you to their friends in the loan business––who again, may not be able to get the best loan for you, or may not even be able to close the loan. Even if the Realtor is very professional and appears to be looking out for your best interests, you should still do your own homework. There are countless stories of borrowers who wound up paying higher rates, getting a loan program that wasn’t right for them, or not getting their loan closed at all, because they blindly followed their Realtor’s advice.

5. Not getting 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.

6. Using a dual agent––i.e. an agent who represents the buyer and the seller on the same transaction.
Buyers and sellers have opposing interests. A dual agent in many normal or typical situations cannot be fair to both the buyer and seller. Most dual agents represent the sellers more strongly than they do the buyer. 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!

7. Buying a house without a professional inspection.
Taking the sellers word that they have made repairs. Unless you are buying a new house where you have 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 be done, the seller is more likely to agree to do them.

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. Click here for a great place to shop online for homeowners’ insurance.

9. 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 enough time to do that.

10. Making your moving plans too tight.
Example: you expect to move out of your prior residence on a Friday and into your new residence over the weekend. So you give notice to your landlord to end your lease on a Friday and arrange for movers to come to your house on Friday. Then, your loan closing gets delayed until the next Tuesday. You now may be homeless! New tenants could be moving into your apartment, and the movers are going to charge you for wasting their time. You could be forced to live in a motel for a couple of days! A better plan is to allow for a 5-7 day overlap between closing and moving. In the long run it is not nearly as expensive, and it will certainly give you peace of mind.