TOP 10 HOME BUYING MISTAKES Here are some of the most important and common mistakes made by home buyers. Keeping these in the forefront will help you go thru the mortgage process without major issues and help ensure a more enjoyable experience. While the following list includes many of the concerns you might encounter, it by no means is exhaustive.
- Shopping 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. Consider this hierarchy of preparedness:
- Noy pre-qualified nor pre-approved
- Pre-qualified (Meaningless)
- Pre-approved
- Full approval, Commitment Letter from a local Phoenix Mortgage Company (AmeriFirst Financial )
When a seller looks at the qualifications of the buyer they are concerned with one thing! If I accept this offer will the buyer be able to perform. Meaning will you be able to obtain the loan in order to complete the purchase. As you can imagine, the sellers comfort level with any offer increases according to the documentation the buyer is able to provide demonstrating their ability to obtain loan approval. You must also remember the seller will for all practical purposes be taking the home off the market and be forgoing any other offers while engage in a contract with you. In addition, while the seller is looking at your offer and ability to perform, they are also comparing your offer with any other offers they may have. As a seller, let’s consider what type of buyer you would feel the most comfortable with.
Not pre-qualified or pre-approved
This buyer provides no evidence that they can afford to purchase your property. You may wonder how serious they are since they're not at least pre-qualified.
Pre-qualified
This buyer has met with a mortgage broker (or lender) and discussed their situation. The buyer has informed the broker regarding their income, expenses, assets and liabilities. The broker may also have seen their credit report. 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. All information has been verified by a lender. As a result, much of the paperwork for this buyer's loan has been completed. This buyer will probably be able to close quickly. 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. This is critical in a competitive situation.
Full Approval from Local Phoenix Mortgage Company
Similar to a Pre-Approval in that the buyer has provided documentation supporting income, assets and has a credit report evaluated. However, working with The Arizona Mortgage Experts also include an automated approval and expertise on Arizona Purchase contract, guidelines and programs that help ensure a smooth transaction for everyone involved.
- Verbal Agreements. Never agree to sign any document that contains instructions or commitments at odds with any verbal agreements you have with the seller. For example, the seller verbally agrees to include the washing machine in the sale, but the written purchase contract excludes it. The written contract will override the verbal contract. Do not expect oral agreements to be enforceable.
- Choosing a lender because they publish the lowest rate. While the interest rate is important, you should consider the total cost of your loan including the loan fees, origination and discount points. When receiving a quote from a lender or broker, insist that the discount points (used to reduce the rate) be separated from origination points (charge for originating the loan).While the cost of the mortgage is very important, it shouldn't be your sole criteria. It is essential that you have confidence that the company you select is reputable and will deliver the loan with the terms and costs they promised. I can’t stress this enough, many unscrupulous mortgage company’s both online and in person can and will offer mortgage terms they can’t deliver. The old saying is still true, if it sounds too good to be true it is! With recent changes to Arizona Real Estate contracts it is more important than ever to select a mortgage company that you can trust.
- Not receiving a Cost Estimate. Within three business days after the broker or lender receives your complete 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. Bring the Good Faith Estimate (GFE) with you when you sign loan documents. You should not be expected to pay fees which are significantly different from those contained in your GFE.
- Not getting a rate lock in writing. When you decide to lock your interest rate and the lender tells you they have, it’s a good idea to get the lock confirmation in writing and should include the length of the rate lock, and program details.
- Using an 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. The only time you should consider a dual agent is when you get a price break. In that case, proceed cautiously and do your homework, making sure your agent is qualified for the job!
- Buying a home for sale in Arizona 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. This way you'll know what you are 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 settlement. Do not assume that everything was done as promised.
- 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.
- Signing documents without reading them. Whenever possible, review in advance the documents you'll be signing. (Even though some specifics of your transaction may not be known early in the transaction, the documents you'll sign are standard forms and are available for review.) It's unlikely that you'll have sufficient time to read all the documents during the closing appointment.
- 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. Will you be thrown out? Will you have to find interim housing for a week or more? The eviction process takes a little time, so the Sheriff won't immediately remove you, but this type of stress-producing episode can be avoided. How? 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, but then again, it might not.
For additional information on Phoenix Mortgages visit the Arizona Mortgage Experts.
For information on AZ Homes For Sale visit Phoenix AZ Home Deals.
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