Here’s What Not to Do When Refinancing

Are you considering a refinance for your current mortgage? Then you need to be sure that you understand the mistakes that you need to avoid before you refinance your mortgage with any lender.

Here’s what NOT to do when refinancing your mortgage:

Not checking out all of your refinancing options - Before you decide to refinance, you have to shop around and learn what your options are. You don't want to make the mistake of not shopping around and simply staying with your current lender. This can lead to the wrong refinancing option for you in particular. Shopping around will help you ensure that you are definitely getting the best deal possible for your needs.

Signing any loan documents without first carefully reading over them – It’s wise to review every document for refinancing before you close the deal. Otherwise, you will easily find that there was some essential information that was missed.

Not understanding what your break-even point will be for refinancing - Are you aware of how much time you will need to recoup from the upfront transaction costs? You need to know when you will break even and even when you will start getting ahead so you can make sure that you are not going to be in trouble with your mortgage if the break-even point is too far into your future. 

Not providing the mortgage company with the refinance documents on time - If your lending institution is requesting that you provide them with additional documentation like verification of employment or income and expense statements, then you have to be sure that you get them to them right away. Delaying in providing these can lead to costly delays that you could have avoided if you had just gotten them in on time. 

Not having the estimate of your mortgage refinance put down on paper - Lenders and brokers are required by law to give you a written statement for the fees will be for refinancing. You want to get this so you can have it with you at the closing to ensure you get the deal that you agreed to.

Ignoring your credit history-The most common mistake that homeowners make is ignoring their credit history. You should be aware of your exact credit history before refinancing. Many people do not know whether some mistakes were made on their credit reports and ends up taking high interest rates. This high loan and credit fees ends up disqualifying them from mortgages or even missing their chance of buying new homes or refinancing. The best way to avoid this is to always know your credit score as well. Also, check your credit report regularly to make sure there are no mistakes.

Investors Beware: Don’t Fall for These Real Estate Blunders

At times, the real estate market appears truly hot and moves up really fast. Many people think it’s similar to a stock market, but the reality is different. For a successful real estate investment, a long-term approach is required.

Here’s a list of some common, but costly mistakes to avoid in the real estate field:

Selecting a house on the basis of current décor

Keep in mind that when you buy a home – the house is more important than the things within it. Look beyond decorative items and try to see how strong the bones are. Pay attention to things like the square footage and floor plan to figure out whether your belongings will fit appropriately.

Buying without research

Researching the neighborhood is of utmost importance before you select a property. You’re buying more than simply a house – you’re buying a piece of real estate with land around it. Find out details of the area and amenities. Also study the school system to ensure your address is in line with the appropriate school district. Try attending a community meeting if you can.

Buying without an expert inspection

Home inspection professionals can reveal many things about a property that might not be visible to you. Make sure you hire an expert with a good referral and sound experience in the field. Insist on a written report which includes photos. Photographs will help you see the condition of areas you might miss out in the normal course.

Not considering hidden costs

There’s more cost involved in buying a home than what you pay upfront. There’s a lot of spending beyond that. Find out the details regarding property taxes, water bills, and electricity bills.  You also need to consider investing in required furnishings before you move in.

Incorrect bidding at an auction

Though a starting bid for a property on auction might sound like a great deal; you can’t be sure that the same will hold true for the final price. Plan a strict budget in advance and make sure you don’t exceed this in the excitement resulting from a bidding war.

Also keep in mind that with an auctioned property, you will not get any warrantees and guarantees. You’ll not be able to get the home inspected too. Find out all associated liabilities like liens and taxes payable which might convert a good looking deal to a really bad one.

Not marketing your home correctly

When it comes to selling your home, you need to market it in different ways. Simply putting up a "for sale" board isn’t enough- you need to deploy other marketing tools too. Discuss marketing options with a real estate agent and what he can contribute.

Putting up photographs and having virtual tours online is a good idea. Include floor plans as well. These enable buyers to see the complete layout of a home and decide if it’s suitable for them.

Not getting an agent

It's important to have an expert at your side who understands all complexities. You cannot get included in the multiple listing service (MLS) without hiring an agent. Because of this, other agents will not know that you’ve put your property up for sale. Also, when prospective buyers come, you’ll have to show them around yourself.

Budgeting Mistakes of First-time Home Buyers

The experience of purchasing your first home can be both exciting and stressful. Like in all first-time situations, the probability of committing “newbie” errors is high. This especially happens in the case of the budgeting of funds to cover all expenses before and after the house purchase.

Some typical budgeting mistakes are made by buyers going in for their first homes. Though these errors are understandable, they can prove to be quite costly. If you’re aware of them, you have better chances of avoiding them.

Lack of affordability knowledge

Many buyers envision their first home as a castle or a dream house. But a first home most often has very few features of the dreams of young home buyers. You need to have a clear idea regarding how much you can afford to spend on your home before you begin shopping.

Make it a point to invest more time in researching for suitable financing options and understanding the effect of debt ratios on mortgage approvals rather than in judging design preferences and home styles. Once you know what exactly you can afford, you’re in a better position to make a judicious choice from the options available.

 

Incorrect assumptions

It’s true that everyone is thrilled to get a deal. But it’s highly erroneous to assume that every foreclosed or short-sale property offers a fabulous deal. This may be true in some cases but in the real estate market, a property is only worth as much as a buyer is ready to pay for it.

Experts in the real estate field know that it’s quite likely that properties which appear to be bargains often have serious HVAC, plumbing, structural, or other problems.

Inappropriate buyer's agent

A seller's agent has the responsibility of getting the best deal in terms of the highest sale price possible for a home seller. Similarly, a buyer's agent needs to represent the buyer's interests and try to get a great deal from the buyer’s perspective.

If you pick an inappropriate buyer's agent to represent you, you could be down by thousands of dollars by the end of the transaction.

Underestimating total costs

If you do not correctly gauge the real costs associated with home ownership, you’re in trouble. When you’re staying on rent, you can call your landlord when anything goes wrong. But when you become a home owner, this option is eliminated. The complete responsbility is on you.

So even if you’re buying a brand-new house, some things may go awry and you’ve got to solve all issues yourself. You would generally need to spend money to resolve the problems because you cannot be a master electrician, plumber, and everything else yourself. So make sure you plan for repairs, maintenance and emergencies. Also, remember to budget sufficient funds to take care of moving expenses.

No contingency clause in sales agreement

Today, most standard Sales and Purchase Agreements contain contingency clauses. While sellers would prefer not to have these clauses, they are of utmost importance from the buyer’s perspective. If you do not receive the required mortgage, the purchase will not be possible.

If you do not have a clause regarding this in the agreement, you don’t have a way out and your seller can refuse to return your deposit. Also funds spent for things like land surveys, appraisals and home inspections are forever gone. So make sure you have contingency clauses in the Sales Agreement before signing on it.

 

Don't make the mistake of not knowing the value of the home you want to purchase! Neighborhood IQ offers a free home value report that will tell you what a house is worth so that you can budget accordingly. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.