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Home Buying Tips

Buying a home can be extremely stressful, as it may very well be the largest purchase you will ever make. There are many mistakes that can cause you big problems if you are not careful.

Read the following tips to help avoid many of the common mistakes made by first time home buyers.

Home Buying Tip 1

Find out if a local community agency offers a course on home ownership.

You will be well educated and make a better decision.


Home Buying Tip 2

You do not need a realtor to show you homes for sale

They offer the convenience of easy entry, appointment setting, organizing a new home search, and help with closing.

Most realtors charge a fee calculated using points scale. Points scale is a percentage of the homes sale amount.

Most realtors will charge anywhere from a half a point to three or four points.

(Example: Two points on a $100,000 home is $2000). Mortgage brokers usually charge the same amount of points as the realtor.


Home Buying Tip 3

Don't allow yourself to be pressured by the seller or the real estate agent.

Take your time. Make a list of the positive reasons for buying the house.

Make a list of the negative reasons for buying the house.


Home Buying Tip 4

Don't accept the appraisal provided by the lender who gives you a mortgage.

  • An appraisal report tells you the market value of a property.

  • Get your own certified appraiser to prepare an appraisal report for you.

  • You should be able to get an appraisal report for less then $200.


Home Buying Tip 5

Get a home inspection.

Find out ahead of time if the home needs repairs.

A home inspection may cost $250 but it's worth every penny.

If there is a major defect like termites, bad foundation, roof, electrical or even plumbing you will have to pay a lot more then $250.

Better to be safe than sorry.


Home Buying Tip 6

Don't simply accept the representations of the seller or real estate agent.

They make money only if the home is sold.

Do your own homework. No one will protect your interests but you.


Home Buying Tip 7

If the seller is holding the mortgage, make sure the interest rate is reasonable compared to the rate that the larger banks are charging.

Typically the rates will be a bit higher because a private lender will be dealing with a low volume and needs to make more profit per deal.


Home Buying Tip 8

Don't be afraid to ask questions.

If you are not crystal clear about everything; you could be making a big mistake and will regret it later.

Buying a home may be the biggest transaction you will ever make. Even a small mistake could mean tens of thousands of dollars.


Home Buying Tip 9

If you are serious about buying, visit the property at different times throughout the day.

Try to visit early morning, late morning, afternoon, sunset and late evening.

You will get a good feeling of how noisy it may get or find certain irritating factors about the location.

For example: You may find that your quiet side street is a shortcut for rush hour traffic and gets a lot of traffic that you would not know about if you didn't investigate.

Once you have bought the property it's too late.


Home Buying Tip 10

Never just take the first loan that is offered.

Once you have found the home you want you will need to shop your new loan.

The ideal way to shop your home loan is to be prepared for everything.

You want to have all necessary documents readily available, which will save you time and aggravation.This way you will not need anyone to pull your credit reports and avoid any unnecessary inquiries resulting in a reduction in your credit scores.


Home Buying Tip 11

Gather and organize all necessary information... your (3) credit reports, employment history, rent stubs, pay stubs,your past two or three years income tax return documents, credit card statements, and your current mortgage information.


Home Buying Tip 12

You do not need a mortgage broker to purchase a home loan.

Mortgage brokers are intended to shop a loan for you.

They have access to many different lending institutions and can help you avoid multiple inquiries on your credit report.

In many cases, a legitimate broker will be able to help you find the loan that is right for you.

It is recommended that a mortgage broker is used for first time home buyers because they will guide you through the often complicated process of obtaining a mortgage.

Contact both mortgage brokers and lenders who offer credit directly.


Home Buying Tip 13

When applying for a loan with a mortgage broker, be sure that he/she does not allow multiple lenders to pull your credit report.

Mortgage brokers are supposed to pull your credit report one time and share that information with other lenders, not allow each one to pull your credit report.

Each inquiry on your credit report will reduce your score!

Tell them up front that you do not want your credit report pulled, that you have all three credit reports and all three credit scores.

Many lenders will fax, email or mail a Good Faith Estimate based on your general information.


Home Buying Tip 14

High fees mean you turn a substantial part of your home equity into cash and pay it directly to the lender at closing.


Home Buying Tip 15

Don't deal with brokers or lenders who require you to pay an application fee before they will estimate your rate and fees.

Application fees tend to lock consumers into a relationship, sometimes before they have finished shopping around.


Home Buying Tip 16

Be sure to examine the papers at closing carefully.

Do not rush. Be prepared to walk away if the fees and interest on the final disclosures at closing are higher than you expected.


Home Buying Tip 17

If you complete the closing but you are uncomfortable with anything, you have three days after you close to cancel your loan without a penalty.

Check the APR (the "Annual Percentage Rate") disclosure on your loan documents to see what your rate is, if it is out of line, you may cancel the loan within that period.

If you don't understand your documents, or a lender's explanation, find a friend, a credit counselor, or other person to look the papers over for you.


Home Buying Tip 18

Don't take the first offer!

You would never buy the first car someone has for sale, would you?

Your home may very well be the largest and most expensive item you ever buy; you will not get the best deal if you do not shop your loan.

Look at and question every charge on the Good Faith Estimate and closing statement.

Make sure you question every item you are being charged for.

Never sign a blank document or leave blanks to fill in later, many unscrupulous people willmake changes to increase their commission knowing that you will probably never notice.

Beware of promises to refinance later because it will probably not happen for years.

Ignore high-pressure sales tactics, good loans are easy to sell.

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