Buying a new home or refinancing your mortgage - How many of you are excited about buying a new home, yet are worried at the same time that it won't fall apart at the end because of horror stories that you have heard in the past. I am not here to scare you, this doesn't happen often, that real estate transactions fall apart last minute. But it does happen more often than many think. Overall, it just comes done to the loan officer or realtor giving you the basic education that comes with real estate and mortgages.
For many of you that read my blogs on a weekly basis, I have like 3 to 4 major pet peeves when it comes to loan officers and what they should be explaining to you in the beginning. I have even mentioned some of these throughout this first time homebuyer series, because it's extremely important that you pay attention to these types of red flags. Here are the top 3 that you should concern yourself with.
RED FLAGS !!!
Good Faith Estimates - So many will agree with me on this one, that there are times that a borrower doesn't get a copy of their good faith estimate, no matter if they are purchasing or refinancing. There is a law that requires that you receive a Good Faith Estimate from the time of application up to the 3rd day after application. An important FYI - Check through your paper work when you have the application in front of you. In many cases, it's there, but the loan officer didn't make a copy for you. If this is the case, make a copy yourself. Please read:
Know how to read a good faith estimate properly and what to look for.
Another red flag. When you actually shop for an interest rate, many loan officers will just give you a rate, but not explain to you that it's probably based on a 30 day lock. It's doesn't matter if you are shopping for a mortgage or decided to go with that loan officer. Please read the section locking in mortgage interest rates.
Which leads me to a major pet peeve of mine. Too many people focus on interest rates and allow themselves to get sucked up into the hype. Your loan officer's focus should be on what kind of mortgage payment that you are comfortable with and not selling you rate right from the get go. Yes, many of us have different ways of selling. But you can't get the lower rate unless you have more money to buy it down. Something a true mortgage professional will share with you and not ignore. Please read : Payment vs Rate And when shopping for a mortgage, don't just shop APR (Annual Percentage Rate). Please read : APR vs Interest Rate
Red Flag : The bag & tagged concept : As you shopped for a realtor or a loan officer, this person was always getting back to you. Now you have signed a listing agreement, a buyers agreement, or the loan application and they do not get back to you right away or in many cases, it seems like forever. Hence that they got you into the door, bagged & tagged you as a solid client. Now you need to hunt them down per se, calling and e-mailing. Or that they use excuses such as, "I am just very busy right now". Time management is one of the hardest things for any person to become successful with. You need to be organized to a certain degree. Just keep in mind, do you think that your transaction will go smoothly at the very end, if this is like this in the beginning? The probability might not be good. Please read more about these types of red flags here .....
RED FLAGS !!!
Lastly, the bait & switch method. Beware, just because the loan officer put down a rate, promised you over the phone, or gave it to you on a good faith estimate, doesn't mean that it's guarantee. Even if they use the rate guarantee. If you want to shop for a rate properly, you need to do it all in the same day, because rates can change daily. Secondly, you want to get a good faith estimate from each loan officer.
Talking to not only a successful realtor and or loan officer will get your deal closed without major pain, but speaking with a professional, caring, & knowledgable realtor and loan officer will usually solidfy your deal also. Again, I don't have a problem with consumers shopping, it's the lack of information that is supplied to them, keeping them in the dark. Once you find out certain things that you should have been told, why do some of you still stay with that person? Yes, I believe in second chances, but buying a home and or refinancing is one of the largest transactions in your lifetime. And if something major has been left out of the process, and sometimes more than once, why give that second chance? Just words to think about.
For two more tips in regards to buying and refinancing, please read :
Good Luck to All !!!!
The First Time Homebuyer Series :
Understanding if you should rent or buy :
Buying Tips :
- FHA 203-k Loans
- Asbestos and Your Health, Tips for Remodeling your Ann Arbor Home -- This post does talk about some specific places in Michigan, but in general, Missy Caulk gives us some great information on homes built prior to 1980 in regards to asbestos. This is a must read.
- FHA Loans - USDA Loans - VA Loans -
- Energy Efficient Mortgages -
- Conventional Loans - 203 k loans -
- Mortgages -
Experience & Knowledge at its BEST !!!
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For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!
Copyright © 2009 by Jeff Belonger
Jeff- This is an awesome series! First time homebuyers need to be guided along the way and taken care of. I am sure that you are very good at doing just that.
KENT..... . communication and clients expectations are the biggest, in my opinion. I am glad you enjoyed this, thanks for the compliment.
KATERINA..... . thank you for those very kind and polite comments. It's much appreciative and hope borrowers this the same as you did. thanks
Jeff - wow! This is a lot of information! Thank you for sharing. We have a lot of reading to do.
Jeff,
Well done!
I still say:"The only protection the consumer has is the personal integrity of their loan originator!"
Bill
Jeff- this is a great post with a lot of tips & information. Thank you for posting that!
Jeff, when I work with buyers I'm always asking if they got their Good Faith Estimate when they ask ME what their payment would be.
Truthfully, I didn't know it was the law. What's the senario when they do their application over the phone, which is often the case now? Just last week I had to call the lender and ask her to send it to them and to copy me.
Jeff,
Your information is always so great, keep it coming!
Good call dude. I think most people need to be wary of the bait and switch you know?
FRAN & ROWENA..... . yes, a lot of information, even though there are many links, I think you can't go wrong with this kind of information. Thanks for the polite compliments.
WILLIAM..... . I agree, unfortunately, that only goes so far with so many. I keep hearing more and more horror stories about botched closings. Thanks for the kind comment.
LAURA.... . my pleasure and thanks for the compliment. I hope many find this very useful. thanks
CONNIE...... . that part is very sad, when they are asking what their payment is, after they have spoken to a loan officer. I don't understand why a borrower needs to ask for their good faith estimate, when the loan officer should be volunteering it. But since I don't handle it that way, I can only assume. And it's basically to hide their costs or to low ball and not have another loan officer explain this to the borrower.
The scenario over the phone. It's date stamped when the lender receives the application back in the office. Technically, since the date is placed on the application, the day that they sent it, the borrower can delay sending it back. So it's from the date that the lender receives it. Almost like an agreement of sale. thanks
CYNTHIA..... . thank you very much. That compliment is greatly appreciative.
LARRY..... . thanks dude. ;o) Seriously, the bait and switch urks the h. e. double hockey sticks out of me. And loan officers still get away with it because many borrowers don't really complain about it or complain correctly. thanks
Jeff,
Being at a loss for words today I'll just echo the comments like a scratched record. Ditto, Ditto, Ditto, Ditto................. :)
Jeff, if every potential buyer and Realtor read your posts we all would have much better success getting from qualifying to closing! Your posts are always a treasure trove of information!
Brian.
Jeff great ending to a great series. I just had a customer today tell me they were keeping $1500 aside just to handle surprises they hear happen at closing! I had to explain to this young couple that those "surprises" don't happen when you have a good loan officer. Thanks for bringing up all these valid points!
Gerry Suarez, Jr.
Your FHA Loan Pro!
Jeff, It's important to point out the Red Flags people may be missing....and shows why it's SO important to work with an expert like yourself when getting a mortgage.
Great information Jeff for home buyers...
Jeff,
All really good stuff....excellent post....loved it!