Mistakes To Avoid When Buying a House

Here are some important mistakes you want to be aware of when your buying a home. If you need clarification on any of these points, please don't hesitate to call or write!

1. Not Understanding Agency and Who Represents You.
In Maryland we have agents that represent the Sellers and agents that represent the Buyers. As a buyer you will need to find a Professional Realtor that represents your best interest as a Buyers Agents. Be aware that if you call the agent on the signs and in the ads, 95% of the time, they will be working for the Seller, and they will owe a fiduciary responsibility to share what you tell them to the Seller. Make sure that you understand agency in Maryland. Call, text or email and we will be happy to explain it to you.

2. Buying a Home from the Listing Agent May Not Be In Your Best Interest.
The listing agent is the person who makes an agreement with the seller to sell the home. The seller agrees to pay the listing agent a commission for marketing and selling their home. The listing agent is working for the seller and will consider the seller’s needs before the buyer’s. Having your own agent (buyers agent) does not cost you any more money. The seller will pay the same commission for the sale if you do or do not have your own agent. Having your own agent allows you to have someone in your corner. A buyers agent can help you find a house, confirm the value, help with inspections and financing, and answer any other questions you may have.

3. Losing Money With Lower Interest Rates.
Some loans have very attractive interest rates, but they are what are commonly referred to in the industry as “teaser rates”. In these situations, the borrower is offered a very low interest rate, below market rates, that will adjust after a short period of time, sometimes as short as three months. At that point the rate increases to the market rate, or possibly higher. Additionally, some lenders will also charge points. Where in some cases Points or Origination Fees are legitimate charges used to reduce your interest rate, sometime they are used simply to allow the lender to make more money. As the old adage goes, if it seems too good to be true, it probably is.

4. Getting a Loan From Your Real Estate Agent or the Mortgage Company in Your Real Estate Agent’s Office May Not Save You Any Money.
Many real estate companies and individual real estate agents are now offering mortgage loans as well as real estate services. In many cases Realtors are not educated enough and do not have the experience to originate mortgage loans. They spread themselves too thin and it ultimately hurts the borrower. Realtors sell real estate and Mortgage Companies originate mortgage loans. Also, using a mortgage company that is affiliated with a real estate company may cost you more. It may be slightly more convenient, but it also can be a lot more expensive. Competition drives rates and costs down. In the controlled business arrangement with a Realtor or a Realtor-owned Mortgage Company, you lose that competition.

5. Buying FHA, VA, or IRS Repossessed Homes May Be A Mistake.
There are some advantages to purchasing a repossessed or discounted property. In many markets, especially those that are having financial trouble, a repossessed home may make good sense. However many VA, FHA, and IRS repossessed homes are sold with virtually no warranty. Also, the borrower may be limited on how much they can inspect the property prior to purchasing it. Often times these houses are in need of repair and need work. Not being able to thoroughly inspect the property puts the purchaser in a risky position. There are some bargain properties, but for the most part investors who have the know how purchase them. Loans with zero or little down payment typically will have higher property standards. Keep in mind that purchasing this type of property requires bidding for it. The people you would be bidding against rehab houses for a living, so you may be at a disadvantage from an experience stand point. In addition, most homes that are for sale under these conditions require a substantial up-front deposit that may not be refundable should your loan not close within a specific period of time. 

6. Taking no Action because bad Credit Stays On your Record for 7 Years or More.
It is true that credit issues stay on your record for 7 years, but in most cases loans are evaluated on the last 12 24 months. Many lenders totally disregard ANY adverse credit issues prior to that 12-24 month window. Most of the loans with zero or no money down cater to those who need leniency in the area of credit. Taking no action may cost you money in the long run, as you may losing out on the opportunity to build equity. Also, having not re-established credit doesnt mean you cannot get a loan. There are other means for a lender to establish credit history.

7. Credit Counseling May Harm Your Credit Rating. 
In certain instances, consumer credit counseling services may be a wise decision. These services can provide education and help with debt problems. The Credit Counseling Company will set a budget for the client based on their income and how much debt there is to pay off. The problem comes when counseling companies do not meet the clients monthly obligations with their creditors. As a result, they begin to have late payments on their credit report. In other words, they may not meet the creditors minimum monthly payment requirements because the budget calls for a lesser payment. Overall, credit counseling is an effective tool to reduce debt as long as they meet the clients due dates and the minimum monthly payment.

8. Getting Your Mortgage Loan from the Internet May Cost You. 

It could be a costly mistake if you get a loan online from a company in different parts of the country. There are different rules and guidelines for different states, cities, and even counties. It can be risky to obtain a mortgage loan from a company across the country if they are not familiar with the rules that govern the area where the property is located. Typically local companies will be more concerned about their reputation and doing a good job for their customer. This is especially true if the borrower is looking for maximum service and care.

9. A Mortgage Lender Who Only Has One Product To Sell May Not Meet Your Specific Needs. 
Most lenders only have one source of funds. This type of lender is forced to fit the customer into a prefabricated loan program. They only have one or two different ways to handle the many different loan situations that occur. It is important that you research your lender and try and get everything in writing. Most first time homebuyers need to be educated on the process of purchasing a home. An educated borrower has the ability to make their own decision, a decision that is best for them. Often times a lender will make a decision for you based on the loan that will put the most money in their pocket.

10. Paying Upfront Costs Before You Know Exactly What Type Of Loan You Are Being Offered. 
It is common for lenders to collect for the appraisal and credit report before they even look at your request. They do this to keep you loyal to them. Be very careful about what you pay for and when you pay it. Again, get everything from the lender in writing and make sure you are comfortable before you pay them any money.

11. Not getting A Pre-Approval From Your Mortgage Company Before You Start Shopping For A Home. 
A pre-approval has two major benefits. First, you will have peace of mind before you get serious about buying a home. You will know how much of a house you can afford, what the payments will be, and how much of a down payment is needed. Secondly, having a pre-approval may give the borrower bargaining power when negotiating a price for the home. For example, if three buyers are looking at the same house, the seller will probably look closer at the buyer who has been pre-approved. Get pre-approved. It could save you a lot of time and money!Find out how you can get Pre-roved for a home loan, so you know how much home you really can buy! Sign up for FREE today! - www.LendersRevealed.com