How 1st time buyers lose a house is a topic that can fill volumes. I see these mistakes so often. Buying a house is challenging enough these days with so few homes available.
The inventory has picked up a bit; 1,425 homes are for sale in the NJMLS today in Bergen County. While this is better than the 1,070 in January, it’s still not the 3,200 I’d expect at this time of year.
How 1st time buyers lose a house is a topic I want to discuss so you avoid the same mistakes. On top of low inventory, you don’t need this. Here it is in a short form and more detailed below:
- Mortgage – Not using a full time professional banker who is fully accessible
- Realtor – Not using a full time professional agent who knows what they’re doing
- Home Buyer – Not understanding the market and being prepared
- Credit – Making financial moves like leasing a car or moving money that kills your mortgage
Mortgage
This happened 2 weeks ago. Mary wanted to buy a house and had an online pre-approval for $250,000. She was looking for a small 1 bedroom condo with a reasonable commute to NYC. There was a nice condo in Hackensack that had just come on the market with a short walk to the New Jersey Transit train.
Because I’ve had so many negative experiences with online pre-approvals, I wanted to verify things.
Her so called banker didn’t return calls; it took 2 days to catch him. He under estimated taxes, monthly maintenance and insurance costs. I guess if you’re in Kansas it’s easy to forget that things here are a lot more expensive.
Let’s not forget that you can’t reach him after 5 during the week or on weekends. So what do you do if you need an updated pre-approval to make an offer by the Sunday night deadline? Nothing. You can’t make an offer.
He’s not a banker. He’s an order taker who doesn’t work directly with loan processing. Oops! Another problem. This almost guarantees that the process won’t be smooth or efficient.
Here’s something else too: Mary’s bank was not a bank because it’s a mortgage holding company. Would this impress a seller as much as Weichert Financial, Wells Fargo or JP Morgan Chase?
BUT they quoted her a great rate. Guess what? That does not matter. Read my article on why rates today don’t matter.
Realtor
I ask everyone the same question: Would you allow a part time surgeon operate on your brain? I don’t think so.
Full time professional real estate agents are vastly different from the cocktail party stories you hear. We are truly interested in your welfare and continually keep working to be expert in so many arenas. I get it. You think we’re just door openers because you’ve met a lot of less than professional Realtors.
Don’t make that mistake. Find a full time professional agent. You’ll be glad you did. If you read what I wrote on the professionals you need, you’ll see what to expect. Here’s an example of how a buyer lost out 1 week ago:
You’re sitting down with the homeowner going over the offers. One comes in with a pre-approval for more than their offer amount. Additionally the contract wasn’t filled in correctly and the math is wrong. That agent during the showing didn’t adhere to the showing instructions either. Do you think that buyer had a chance?
Home Buyer
Be prepared. This scouting motto is true in life because being prepared is the difference so often between wining and losing. Go to the Buyer’s section of my website and read it thoroughly. I wrote it to help you get properly prepared.
You have to take responsibility for getting ready and knowlegeable in all aspects of home buying. Please don’t think that everything you read on the web is correct. For example, articles you find are written on a broad scale. Real estate is hyper local from the materials in a house to market conditions.
Hire a great full time professional Realtor and let that person teach you. On the other hand, do your own reasearch too of course. Just don’t minimize the knowlege and guidance of a great Realtor.
I insist on going through paperwork before we find the house. Why? Because it removes at least half of your stress. So why not take advantage of someone like me? I spend the extra time it takes to make sure you know everything. It’s so much easier for you and puts you in control.
Credit
Did you know that a car lease is a loan? Not everyone knows this. As a result, if you lease a car while you’re applying for a mortgage, this can kill your mortgage. Why? Because it adds to your debt. At the very least your mortgage had to be re-configured. You might now qualify at a higher interest rate.
Moving funds from one account to another. Getting down payment help from mom and dad in cash. Applying for a credit card so you get 10% off. Buying that refrigerator with your VISA card for your new home. All of this and more can cancel your mortgage or raise your rate.
The solution is do nothing until after you close. IF you want to do anything, call your banker first and talk it over. Your banker will tell you whether or not it works.
By the way, be careful too. There’s a reason doing the above will hurt you. Banks know what comfortable limits are.
I hope this article on how 1st time buyers lose a house has helped you. If you have questions or want me to write about something, you can always let me know.
