Avoiding Common Mistakes

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Choosing The Wrong Lender

Homebuyers often make the mistake of signing off on a loan package without looking around to see what other options are available. The failure to investigate other mortgage companies costs consumers thousands of dollars that could have been spent on mortgage payments or future home improvements. Before making a final selection on a loan, examine more than one mortgage company or lender as different companies offer different loan packages. Choose a lender who is willing to work with you and discuss packages that are appropriate for you. It is also a good idea to get a written good-faith estimate from each lender. A GFE provides you with an overall estimate of costs that you can expect to incur when closing on your new home. These costs usually include various lender fees, title fees, government recording and transfer fees. Obtaining good-faith estimates from each of the three different lenders you are considering will allow you to objectively compare one home loan estimate over another. Review your good faith estimates carefully. Keep in mind that the use and arrangement of rates, commissions, discount points, interest and various third party fees will affect the total outcome of the loan amount.

Failure To Get Pre-Approved

Choosing your lender and securing your financing options is often referred to as pre-approval. Sitting down with a lender to determine how much you can afford and what your financing options are will save you both time and frustration. Not only will this process help you determine how much actual money is needed for such items as a down-payment and other related costs, but it will also give you greater negotiating leverage with the seller. This can be especially true in situations where the seller has received multiple offers for the home. Your pre-qualification status may allow you to make an offer sooner than other buyers that have not been pre-qualified. In fact, many realtors will not show homes until a buyer becomes pre-approved as they do not want to waste a seller's time in the event that the buyer has trouble securing financing.

Not Getting A Home Inspection

Home maintenance requires continual attention and care. However even with the best of intentions things wear out, malfunction or break with or without the seller’s awareness. A home inspector will check all structural, mechanical, electrical, plumbing and heating and air conditioning systems and notify the buyer of any defects to the home. When finished, the inspection company will provide a report stating what repairs need to be made and what the approximate costs will be. Having a home inspection can save you thousands of dollars by alerting you to expensive maintenance costs or preventing you from buying a home with a major defect.

Failure To Hire An Attorney

Hiring an attorney safeguards the buyer and ensures that the overall process runs as smoothly as possible. An attorney will protect your personal interests and will inform you of what needs to be done. He will make important recommendations and also interpret complicated terminology, conditions and restrictions associated with purchasing real estate.

Agreeing To Verbal Promises Rather Than Contractual Facts

Often times a seller will include extraneous items with the home. Perhaps the pool table is too large to move or the wood-burning stove is too heavy to move up the basement steps. In cases such as these, a seller makes a verbal promise that these items will come with the home. Make sure that the extraneous items are included in the contract. If they are not in the contract, they are not legally yours. Everything should be in writing.

Using The Same Agent As The Seller

Using a real estate agent who represents the buyer and seller at the same time may place the agent in a cumbersome situation due to the conflict of interests that exist between a buyer and seller. This may make it difficult for the agent to be fair to both parties given the fact that the seller is the one who is usually responsible to pay the commissions to the agent based on the sale price of the home.

Signing Documents Without Reading Them

There are a lot of legal documents that need to be signed at the closing. Although the closing officer summarizes the documents, there is little time to read them in their entirety at the closing. It may be best to read the documents before the closing and have your attorney present at the closing. This will allow you to become familiar with the documentation and provide time to have your questions answered.

Getting A Late Start On Home Insurance

Home insurance protects your home against unforeseen damages or liabilities. Home insurance plans should be in place prior to the closing of the home. Many buyers put it off and wait until just a few days before closing to shop around for a suitable plan. Don’t wait. Begin searching for a plan as soon as your offer has been accepted. This will provide you with adequate time to find a plan that provides the best protection for you and your family.

Faulty Moving Plans

Timing is everything but sometimes the unexpected occurs. Money doesn’t come through, someone or something is running late and/or the closing needs to be rescheduled for another day. To avoid being stuck with a moving van in the front of your home in the event that one of these unforeseen events occur, schedule your moving plans and closing appointment on a different day rather than on the same day.

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