Tag Archives: Mistakes

9 Common Costly Mortgage Refinancing Mistakes

Posted on by
Reply

It may be a good idea to refinance your current mortgage in search of a better mortgage loan rate. Just make sure you dont fall for the common mortgage loan refinancing mistakes many others have. The following article contains 9 common refinancing mistakes that are pretty commonplace, and how to avoid them when refinancing a mortgage.

Mistake #1
Not doing thorough research on lenders.

Most people are comfortable with their current bank or mortgage lender. This is a bad practice to become comfortable with. You should always shop around for the best rates. If you have a current mortgage lender you prefer you should still shop around and show them your offers and see if they will match, or better yet, beat it. Just like a big purchase, it pays to shop around. You will guarantee this way that you did get the best available mortgage refinancing rate you can. Also make sure to be aware that when you apply for the mortgage refinancing, even if its the same lender you currently use, you will need to re qualify for the loan.

Mistake #2
Know when you will start to break even after you refinance

When you decide its time to refinance your mortgage, I can almost promise you will have to pay closing costs. These costs could negate any or all savings you received through the refinancing, at least initially. Calculate the costs of the closing fees and your new refinanced mortgage rate and see when your break in period is. This is when you are done paying any closing costs that have been added in due to the refinancing.

Mistake #3
You have not received a Good Faith Estimate from your lender

Any potential mortgage lender should be able to provide you with something called a Good Faith Estimate. This is a estimate that covers the closing costs, any “hidden” fees, and any other fees associated with getting a mortgage refinance. This should be given to you within 3 business days but there is no reason your lender cant give you one earlier if you ask for it.

Mistake #4
The Assessed Value of Property should not be considered

The assessed value of property is determined by the local county tax assessor. Your loan amount will not be based on this assessors value. Your property will be valued using another approach called the, sales comparison approach, also known as the cost approach.

Mistake #5
Getting an appraisal for a home with low value

If you know that your home is not that valuable, you should not pay to have its value assessed. You should ask your mortgage lender to appraise your house for you using the AVM model (automated valuation model) this method uses other houses in the neighborhood to find a good average house price in any given area.

Mistake #6
Do not sign anything without properly reviewing it

Make sure to check, and double check all the loan documents before you sign them. Carefully, read all the terms and conditions of your possible loan before signing. If you can, ask for a copy of the loan documents a few days before the official signing so you can review them on your own time.

Mistake #7
Not providing the necessary documents in a timely manner.

Stop unnecessary delays in the closing process by having all the proper documents ready to submit when the lender asks you too. If you delay too long with this, the rates on your loan may go up by the time you are ready to sign.

Mistake #8
Not getting it in writing

Sure, there are trustworthy people in the mortgage lending industry, but surely when it comes to this much money, make sure everything is in writing. Often, your lender will give you an initial verbal agreement about your rates. Get him to put those on paper. If its not on paper, its not official.

Mistake #9
Using your heloc prior to refinancing

If you have taken out any kind of home equity loan of credit, for anything but home improvements or repairs, do not immediately apply for refinancing. You should wait at the minimum 6 months before approaching a mortgage lender about refinancing. This is the same as taking out more credit, and will be viewed as such when applying for the refinancing.

Making a mistake during the long refinancing process can cost you thousands of dollars, let alone time wasted. Make sure you do all the research you can before entering the mortgage refinancing world.

-M Petrone

http://www.refinancingcondo.com

I have been in mortgage lending for over 15 years and have since retired. I provide free useful information to would be home refinancing prospects. My website http://www.refinancingcondo.com is updated daily with insider tips, tricks, and knowledgeable articles written by professionals.
http://www.refinancingcondo.com

Buying a Home – Three Mistakes to Avoid

Posted on by
Reply

Buying a home is often a stressful process, because it is usually the single largest purchase of your life. Even if it isn’t your first house, it’s easy to make a mistake that costs you hundreds or thousands of dollars. Here are three common mistakes to avoid.

1. Paying Too Much

This isn’t about over-paying for a particular home. That mistake is tough to make if you will be borrowing to buy. An appraisal will be done, and the lender will probably refuse to lend enough for you to buy an over-priced house.

The common mistake here is following the advice of real estate agents, lenders and even your friends and family, who will often encourage you to buy a more expensive home than you can afford. They may call it an “investment” and claim that real estate always goes up in value, so you should get as much as you can. Of course, recent history shows that home values don’t always go up, and this kind of thinking has a lot of families facing foreclosure now.

Buy what you feel comfortable with. If you can’t easily make the payments, even after a short layoff from work, you may be overextending yourself. And watch out for lenders “solutions” to this problem (see number 2).

2. Trusting Lenders

I am not suggesting that lenders are all out to get you, or that you should look at them suspiciously, but they are not necessarily looking out for your best interest. That’s your job. Their’s is to sell loans. Buying a home normally requires buying a loan too, and as we can see now (2008), many loans are not suitable if you want a secure future. While there are sometimes good reasons for interest-only, adjustable-rate, and zero-down loans, most of the time these should be avoided.

Never mind what a lender recommends or suggests. Ask him only for facts, and do your own math. If the rate on your loan goes from 5% to 10%, what will the payments be? Can you easily afford that? If not, you are taking a risk that may not be justified.

3. Trusting Real Estate Agents

When you are buying a home, the real estate agent who helps you, like the lender, has his own agenda. It isn’t that he or she doesn’t wish you the best, but they wish even more for their own families, so the primary goals is to sell something. Also, unless the agent is explicitly working for you, she has a fiduciary responsibility to work against you if that is what is best for the seller. In other words, if she thinks you will pay more because of a comment you make, she must pass that information on to the home owner.

Even a buyer’s agent can be biased. It is nice to think that they are working for you, but they still only get paid (typically) when a sale is made. That’s a pretty motivation to push you into a home fast, whether or not it’s the best one for you.

Pay attention to whether an agent is really showing you the houses that suit your needs, rather than the ones that he or she would buy. Many real estate agents don’t listen very well, and will show you what they think you want, rather than asking you more questions. They can lead you to buy a house that doesn’t suit your needs or costs more than you want.

One final note about real estate agents: They are not experts on all things. In fact, some are barely an expert on anything. I have met agents who didn’t understand a simple seller-financing offer, and others who suggested that cracks in foundations were “no big deal,” though they knew nothing about construction. Unless an agent has specific experience in an area, take what they say with a grain of salt, and seek out other counsel.

Buying a home that actually is right for you starts with avoiding the three mistakes above.

Copyright Steve Gillman. To see a photo of the house we bought for $17,500, get a free ebook on Buying A Home For Less, and a free real estate investing course, visit: http://www.HousesUnderFiftyThousand.com

How To Avoid The Most Common Mistakes Made When Buying A Home

Posted on by
Reply

Buying a home is one of the most important and significant financial decisions that most people ever make. And because of the large sums of money that are involved, there are definite pitfalls and problems that you want to do your best to avoid as you make your decision.

One of the most common mistakes that many home buyers make is not getting pre-approved or pre-qualified for their mortgage loan in advance of starting their home shopping. As a result, if they put in an offer on a home at the same time that another prospective buyer makes an offer, and that buyer has been pre-qualified, the other buyer will almost always get the house because of having their financial arrangements already in order. So avoid this mistake by arranging for your mortgage loan in advance.

Another common mistake that is made is not enlisting the help of a qualified realtor in the home buying process. Buying a home these days is becoming more and more complex and involved. So having your own realtor who is looking out for your best interests and is knowledgeable about all the real estate requirements for your area can save a lot of headache and hassle.

Sometimes home buyers also rush into buying a home too soon. So its very important to take your time in the buying process, and not allow yourself to feel as if you are under pressure to buy a particular home quickly. New homes go on the market all the time, so be patient and you’ll be able to find a home you want, at the price you want, soon enough.

The opposite of that scenario can also be a big mistake. There are some home buyers who have such stringent requirements for their dream home, that they often pass up excellent homes that are very good bargains simply because their demands are unreasonably high. In a rising market, this can often cost them very dearly in the process. So although you may have very definite ideas about a home you would like to purchase, try to realize that some small compromises are usually necessary when buying a new home.

Sometimes home buyers get carried away emotionally and become attached to a home that is actually out of their price range too, and then saddle themselves with a huge debt that is difficult for them to pay. Most often financial institutions will help try to prevent such a situation, but buying restraint needs to start with the home buyer first. A good practice is never to even look at a home that falls outside of your affordable price range to begin with.

Whenever you are seriously looking at any home, be sure to inspect it thoroughly before you agree to the sale and sign the papers. It’s usually best to hire a quality home inspector on your own to go through the property and give you an unbiased assessment of its condition. If major problems are found, it can save you a lot of money by making this small investment.

One other common mistake that you want to avoid is not being aware of all restrictions that may be placed on your property by local zoning laws or homeowners associations. You may have specific plans for improving your property after the purchase, but you need to make sure that there are no restrictions on the plans that you have in mind before you buy.

These are some of the more common mistakes that homebuyers have made in the past that you can learn from. So before you buy your next home, review this list of tips and ideas to help make your home buying experience a successful one.

You can find san diego real estate listings and new york luxury homes and more by visiting our Real Estate website.