First time home buyer mistakes can be deadly. While home buyers today do a lot of research on the web, they are still vulnerable. Because of this, I’ve written a series of 10 articles. One for each issue. Today we begin with the #1 – Getting pre qualified.
A List of First Time Home Buyer Mistakes
First time home buyer mistakes to avoid are the following:
- Getting pre qualified
- Using up your savings
- Mortgage shopping by rates
- Not checking your credit report
- Hiring an attorney based on cost
- Not researching the neighborhood
- Not checking daily rush hour traffic
- Choosing a home inspector last minute
- Thinking all real estate agents are the same
- Buying the Money Pit because you’re too emotional
Let’s look at these first time home buyer mistakes in depth now starting with #1.
Getting Pre Qualified
You can define anything any way you want. Mortgage companies take advantage of this. I call this a Mr Happy Banker experience.
Mr Happy Banker does not ask for all the documents that Mr Professional Banker does. He’s easy and does what you want. You’ve found the right banker. He gives you a pre-approval right away without the hassle.
There is one problem – you don’t have a pre-approval. Mr. Happy Banker really gave you a totally meaningless pre-qualification. He just calls it a pre-approval because that’s how he defines the word.
A true pre-approval is a preliminarily underwritten loan approval. You have to sign an application for the loan, gather up your last 2 years of tax statements, bank/financial statements for the past few months, pay stubs, employment verification, etc. This is a royal pain in the neck. It takes time and effort. It’s also not immediate. Getting a true pre-approval can take 24-48 hours.
Mr Happy Banker does things differently. He doesn’t ask for much if anything at all. He rockets over a pre-approval sometimes in 15 minutes. This is so much easier! Nothing is verified as it is with Mr Professional Banker. As a result pre-qualifications are not more than a good educated guess. BUT Mr Happy Banker calls this a pre-approval.
So why is this a problem for you? Because you don’t know what you can afford or the true costs. You will make an offer on a house without knowing what it will really cost you.
I do not honor offers on my listings with meaningless pre-qualifications. No good listing agent will. How can you get the house you want if a listing agent tells the owner they can’t verify your financial ability? Avoid this first time home buyer mistake by avoiding Mr. Happy Banker. This section of my website tells you exactly what to do.