January 15th, 2015
In a prior post, we talked about what red flags mortgage loan underwriters look for. Here are some red flags you should know to look out for as a homebuyer when dealing with real estate agents, and evaluating mortgages.
Your agent should be your partner working for you and helping you through the process. Finding a trained real estate agent will weed out a lot of the problems below. If you find you have an agent that isn’t working for you, don’t hesitate to let them go. Chances are, it won’t get better. And a solid agent will stay in touch after the purchase to ensure that you are happy with your home.
From MSN.com – 6 signs of a crummy real-estate agent:
Here’s a great list from Realtor.com:
1. Don’t put the house before the mortgage
“Don’t go out and look for a home, fall in love with one, and then go to lender and say, ‘How am I going to finance this purchase?’ Figure out what you can afford, shop for a mortgage and get prequalified, and then choose a home. That way, you’re less likely to commit to something you really can’t afford,” says Mike Fratantoni, senior economist with the Mortgage Bankers Association of America.2. Don’t rely on the lender’s assessment of your finances
Don’t be deluded by the “financial expert” across the desk into believing you can afford more house than you think you can. A lender will know a lot about you before the process is over, but they have no way of knowing all those family finance idiosyncrasies.“Sit down and draw up your family budget first: Here’s what we think we’d be comfortable with now, and with how that payment can vary over time,” Fratantoni says. “Then the lender can say yes or no as to whether you can qualify for that payment.”3. Don’t choose a mortgage on interest rates alone
Skrob says some mortgage advertisements promise low rates that involve a 30-year mortgage coupled with an accelerated payment plan.“You may decide you like that option, but you cannot directly compare the interest rate on that mortgage to other opportunities. This loan could cost more than other mortgages with seemingly higher interest rates,” he says.4. Don’t shop less for your mortgage than you do for your house
You’ll have both for the same amount of time, so it’s wise to give them equal weight.5. Don’t be lured by low initial payments
Some ARMs and hybrid loans can bring even the most expensive of homes within your immediate reach. But once the initial term is over – usually in anywhere from one to seven years – the interest rate adjusts and your monthly payment may skyrocket.6. Don’t even dream of fudging financials .
Some appealing loan programs promise better rates if you have a certain income or if you’re looking at a particular type of home (historic, one in a neighborhood that’s being turned from bad to good, etc.). But don’t be tempted to tweak your numbers or circumstances to help you qualify. “Misleading a lender goes beyond just making a mortgage mistake. It’s being fraudulent. You never want to do that,” Fratantoni says.Skrob says you should run, not walk, from any lender who encourages you to cover up past financial difficulties or stray from the truth.
The seller and their agent won’t tell you everything you need to know about a property. You’ll want to do some digging into the neighborhood with your real estate agent.
Your best bet is to hire a home inspector so you can be aware if any structural walls were removed, if there’s old or faulty wiring, to find foundation structural failures, and other items that may miss your untrained eye.