7 Home Buyer Mistakes To Avoid During Mortgage Process
Shopping For Lenders
- Not all lenders are created equal
- Just because a lender is a HUD-approved lender does not mean that all lenders have the same requirements to qualify for FHA Loans
- Most lenders will have lender overlays
- Overlays are additional guidelines imposed by lenders that are above and beyond the minimum lending requirements
- For example, under HUD 4000.1 FHA Handbook, HUD only requires a 580 credit score for buyers to qualify for a 3.5% down payment home purchase loan
- Also, HUD does not require borrowers to pay off any outstanding collection and charge off accounts with balances
- However, most lenders will require buyers to have higher credit scores such as a 640 FICO minimum
- They also require borrowers to pay off the outstanding collection and charge off accounts
- This is called overlays on credit scores and collection accounts
- Another common overlay that most lenders will have are Lender Overlays On DTI
- HUD allowed up to a 56.9% debt to income ratio for borrowers with a 620 FICO credit score or higher
- However, most Lenders will cap the borrower’s debt to income ratios to a 45% DTI to 50% DTI
- This is often an issue even with borrowers with higher credit scores
- Evaluate credit and financial profile
Start calling around to various lenders who fit your credit, DTI, and financial profile.
Visit The Property And Canvass The Neighborhood Before Submitting An Offer
Among the top 7 home buyer mistakes home buyers make is not visiting the property several times before making an offer.
- The house may be the perfect dream home but how about the neighborhood?
- Visit and canvass the neighborhood in the evenings, weekends, and day time
- Buyers do not want to move in a drug infested area
- Or may not like the fact that the neighborhood is full of little kids playing soccer on the street
- On the flip side, buyers may like the neighborhood even more by seeing kids play with other kids
- A home purchase is not like an auto purchase where consumers can trade their vehicle in every now and then for a new vehicle
- A home is where owners will be planning on staying for quite some time
- They will be raising and growing their family
- A home is where memories are made and is most people’s largest investment
- Buyers should not rush into a real estate purchase contract without visiting the home they intend in buying
- Visit the home and neighborhood several times
- Check out the neighbors
- Are the neighbors rowdy?
- Are kids being noisy?
- Are their teenagers with loud music?
Checking out the neighborhood when most families are home is a good way to see if the neighborhood is a good fit for their family.
7 Home Buyer Mistakes Not Researching Location Of Property
Be open-minded when searching for your ideal dream home.
- Many home buyers are just dead set in a particular neighborhood or particular area or town
- Most parents are sold on the fact that they want to remain in a particular school district
- They realize they cannot be talked into transferring their children to a different school district
- Some home buyers do not like to commute a far distance to their jobs
- So being close to their workplace is very important
To others, being close to the expressway is very important.
7 Home Buyer Mistakes Is Not Searching Outside Preferred Area
Buyers who are set in a particular neighborhood or city, still search for homes outside the area:
- Do a comparison of apples to apples
- Weigh the pros and cons
- Maybe an extra fifteen-minute commute can be more buying power on the home purchase
- Maybe children may be better off in moving school districts
- This may hold true because the new school district may offer more programs that are beneficial and tailored to your children
- Maybe moving further away from first desired location may mean huge savings on property taxes and homeowners insurance
- A home purchase is one of the most emotional times of anyone’s life
But home buyers also need to think of it as a major business decision as well and try to set certain emotions aside.
7 Home Buyer Mistakes Is Buying Home Without Real Estate Agent
Why use a broker? Brokers make commissions right?
- Yes, brokers make a commission
- However, real estate agents are professionals who need to be licensed
- Realtors get paid for getting the job done
- At the end of the day, once a deal closes, they do get a commission
- Most real estate agents are not motivated by the commission they get but do have their client’s best interest at heart
- Realtors will offer advice to any questions clients may have
- If they do not have answers to questions, they will contact professionals who can answer your questions
- I have the most respect for realtors
- I contact realtors and they contact me
- Many realtors will go out of their way to get answers for their clients
- Having a realtor who buyers trust and get along with is sometimes better than having an attorney
- Homebuyers do not have to pay a realtor’s commission
- Sellers pay the commission on real estate listings
- Homebuyers realtor gets paid by the managing broker of the listed property
If you are a home buyer and need a list of Preferred Realtors Partners please contact us at firstname.lastname@example.org or call us at 262-716-8151. For faster response, please text us at 262-716-8151. Or email us at email@example.com.
This BLOG On 7 Home Buyer Mistakes Was UPDATED On February 24th, 2020