Top Home Buying Mistakes
- Buying on emotion, not value. This is also called "falling in love for all the wrong reasons." Your first priorities should always be getting the best value and avoiding financial nightmares. Formulate a plan and stick to it.
- Not asking enough questions. Remember the old adage: "There are no stupid questions, only stupid people who don't ask questions." You are not the expert - that's what you pay the realtor, lender and attorney for - make sure they keep you informed.
- Becoming a victim of bias, self-dealing or profiteering. Think twice about using service providers with potential conflicts of interest, including real estate agents that take kickbacks or extra commissions from builders; home inspectors that also do repairs; and termite inspectors that offer to perform termite control.
- Exceeding your budget. A home should be an investment, not a financial burden that sacrifices your quality of life. Don't stretch your loan qualification limits or borrow too heavily.
- Not cleaning up a bad credit history. Negative credit, or erroneous information on your credit record, will only get in the way of financing you home and waste the time of everyone involved in the process, including yours. Even if you have adverse information on your credit report, the law gives you the right to tell your side of the story, right down to placing your comments in the report next to each item. Obtain copies of your credit report.
- Not shopping for the best rates, points and fees. Take time to shop aggressively for the best deal on your home loan, BEFORE you sign the mortgage contract. Be sure to compare loan processing fees, document preparation, and application fees. Don't let closing costs get out of hand, either. Watch all costs like a hawk.
- No written confirmation of lock-in figures.
Always ask the loan officer to provide written confirmation of your interest rate on the date of lock-in. Avoid the nightmare of arriving at the closing table and discovering that your interest rate and monthly payments are higher than you expected.
- Agreeing to prepayment penalties. Insist that the loan document or contract specify that no fees will be imposed for making extra payments or paying off the loan early - prepaying your loan can save your thousands in interest.
- Not understanding the conditions of the loan. Home experts joke that you can put a bunch of $20 bills in a stack of loan documents and most home buyers would never find them. Thoroughly review every document or have a professional do it for you, before you sign on the dotted line.