6 Things You Must Know Before You Buy
"Subtle changes in the way you approach mortgage shopping, and even small differences in the
way you structure your mortgage, can literally cost or save you thousands of dollars and years
Mortgage Regulations Have Changed . . .
Mortgage regulations have changed significantly over the last few years making your options
wider than ever. Subtle changes in the way you approach mortgage shopping and even the
small differences in the way you structure your mortgage can literally cost or save you
thousands of dollars and years of expense.
Get the Right Information
Whether you are about to buy your first home, or are planning to make a move to your next home, it is
critical that you inform yourself about the factors involved.
Industry research has revealed 6 common mistakes that most homebuyers make when mortgage
shopping and they can have a significant impact on the outcome of this critical negotiation. If handled
correctly, these issues could result in a mortgage that will cost you less over a shorter period of time.
6 Things You Must Know Before Obtaining a Mortgage
Before you commit your hard earned dollars to monthly mortgage payments, consider these 6 issues.
Effective consideration of these important areas can make your payments work much harder for you.
1. You can, and should, get pre-approved for a mortgage before you go looking for a home
Pre-approval is easy, and can give you complete peace-of-mind when shopping for your home. Your local
lending institution can provide you with written pre-approval for you at no cost and no obligation, and be
done quite easily over-the-phone. More than just a verbal approval from your lending institution, a written
pre-approval is as good as money in the bank. It entails a completed credit application and a certificate,
which guarantees you a mortgage to the specified level when you find the home you’re looking for.
2. Know what monthly dollar amount you feel comfortable committing to
When you discuss mortgage pre-approval with your lending institution, find out what level you qualify for
and also pre-assess for yourself what monthly dollar amount you feel comfortable committing to. Your
situation may give you a pre-approval amount that is higher (or lower) than the amount of money you
would want to pay out each month. By working back and forth with your lending institution to determine
what this monthly amount is, and what value of home this translates into at today’s rates, you won’t
waste time looking at homes that are not in your price range.
3. You should be thinking about your long term goals and expected situation, to determine the
type of mortgage that will best suit your needs
There are a number of questions you should be asking yourself before you commit to a certain type of
mortgage; How long do you think you will own this home? What direction are interest rates going in and
how quickly? Is your income expected to change (up or down) in the near term, impacting how much
money you can afford to pay to your mortgage? The answers to these and other questions will help you
determine the most appropriate mortgage you should be seeking.
4. Make sure you understand what prepayment privileges and payment frequency options are
available to you
More frequent payments (for example weekly or biweekly) can literally shave years off your mortgage. By
simply structuring your payments so that they come out more frequently, it will significantly lessen the
amount of interest that you will be charged over the term.
For the same reason, authorized pre-payment of a certain percentage of your mortgage, or an increase in
the amount you pay monthly, will have a major impact on the number of years you will have to pay and
could shorten your payment term considerably.
These two payment options can cut years off your mortgage, and save you thousands of dollars in
interest. However, not every mortgage has these pre-payment privileges built in, so make sure you ask
the proper questions.
5. Ask if your mortgage is both portable and/or assumable
A portable mortgage, where available, is one that you can carry with you when you buy your next home
and avoid paying any discharge penalties. This means that you will not have to go through the entire
mortgage process again unless you are making a move up to a much more expensive home.
An assumable mortgage is one that the buyer for your home can take over when you move to your next
home. This can be a very powerful tool at the negotiating table, making it much easier and more desirable
for a buyer to buy your home, and again saves you any discharge penalties.
6.You should seriously consider dealing with a Mortgage Expert
Consider dealing only with a professional who specializes in mortgages. Enlisting their services can make a
significant difference in the cost and effectiveness of the mortgage you obtain. For example they can
make the process faster thereby avoiding costly delays. Typically there is no cost or obligation to inquire.
9 Buyer Traps and How to Avoid Them
"A systemized approach to the home buying process can help you steer clear of these common
traps, allowing you to not only cut costs, but also secure the home that’s best for you."
No matter which way you look at it, buying a home is a major investment. But for many
homebuyers, it can be an even more expensive process than it needs to be since they fall prey
to at least a few of the many common and costly mistakes which trap them into either:
paying too much for the home they want, or
losing their dream home to another buyer or,
(worse) buying the wrong home for their needs.
A systemized approach to the home buying process can help you steer clear of these common traps,
allowing you to not only cut costs, but also secure the home that’s best for you.
9 Buyer Traps
This important report discusses the 9 most common and costly homebuyer traps, how to identify them,
and what you can do to avoid them:
1. Bidding Blind
What price should you offer when you bid on a home? Is the seller’s asking price too high, or does it
represent a great deal. If you fail to research the market in order to understand what comparable homes
are selling for, making your offer would be like bidding blind. Without this knowledge of market value, you
could easily bid too much, or fail to make a competitive offer at all on an excellent value.
2. Buying the Wrong Home
What are you looking for in a home? A simple enough question, but the answer can be quite complex.
More often than not, buyers have been swept up in the emotion and excitement of the buying process
only to find themselves the owner of a home that is either too big or too small. Maybe they’re stuck with a
longer than desired commute to work, or a dozen more fix-ups than they really want to deal with now that
the excitement has died down. Take the time upfront to clearly define your wants and needs. Put it in
writing and then use it as a yard stick with which to measure every home you look at.
3. Unclear Title
Make sure very early on in the negotiation that you will own your new home free and clear by having a
title search completed. The last thing you want to discover when you’re in the back stretch of a
transaction is that there are encumbrances on the property such as tax liens, undisclosed owners,
easements, leases or the like.
4. Inaccurate Survey
As part of your offer to purchase, make sure you request an updated property survey which clearly marks
your boundaries. If the survey is not current, you may find that there are structural changes that are not
shown (e.g. additions to the house, a new swimming pool, a neighbor’s new fence which is extending a
boundary line, etc.). Be very clear on these issues.
5. Undisclosed Fix-ups
Don’t expect every seller to own up to every physical detail that will need to be attended to. Both you and
the seller are out to maximize your investment. Ensure that you conduct a thorough inspection of the
home early in the process. Consider hiring an independent inspector to objectively view the home inside
and out, and make the final contract contingent upon this inspector’s report. This inspector should be able
to give you a report of any item that needs to be fixed with associated, approximate cost.
6. Not Getting Mortgage Pre-approval
Pre-approval is fast, easy and free. When you have a pre-approved mortgage, you can shop for your
home with a greater sense of freedom and security, knowing that the money will be there when you find
the home of your dreams.
7. Contract Misses
If a seller fails to comply to the letter of the contract by neglecting to attend to some repair issues, or
changing the spirit of the agreement in some way, this could delay the final closing and settlement. Agree
ahead of time on a dollar amount for an escrow fund to cover items that the seller fails to follow through
on. Prepare a list of agreed issues, walk through them, and check them off one by one.
8. Hidden Costs
Make sure you identify and uncover all costs - large and small - far enough ahead of time. When a
transaction closes, you will sometimes find fees for this or that sneaking through after the “sub”-total
fees such as loan disbursement charges, underwriting fees etc. Understand these in advance by having
your lender project total charges for you in writing.
9. Rushing the Closing
Take your time during this critical part of the process, and insist on seeing all paperwork the day before
you sign. Make sure this documentation perfectly reflects your understanding of the transaction, and that
nothing has been added or subtracted. Is the interest rate right? Is everything covered? If you rush this
process on the day of closing, you may run into a last minute snag that you can’t fix without
compromising the terms of the deal, the financing, or even the sale itself.
Best Financing: A 3-Point Plan
"shopping for the best financing should start long before you start shopping for a home."
When you’re looking to buy a home, the first thing most home buyers do is start the process of
house-hunting. However, experience proves that this is one of the last steps you should be
taking if you want to get the most home for the least amount of money. In fact, shopping for
the best financing should start long before you start shopping for a home.
This report outlines 3 important steps you should take to obtain the best financing rates for
when you buy a home. Read on to find out where you can inquire, what questions you should
ask, and how to manage the process to your personal advantage.
3 Point Plan
3 Critical Questions to Ask... When you’re looking for an agent to assist you in finding a home, make
sure you find out the answers to these important questions:
1. Can you get me a quick, easy and FREE mortgage pre-approval?
2. Can I get preferred access to special low down payments, monthly payments and interest rates?
3. Can I get special advance notice of listings that computer-match my home buying criteria?
You owe it to yourself to benefit from these cost saving benefits.
1. Get Pre-approved for a Mortgage
Getting pre-approved for a mortgage will give you a number of important benefits including emotional
security in the house-hunting process, and insurance against rising interest rates in the market place. Pre-
approval is easy, and can give you complete peace-of-mind when shopping for your home. Mortgage
brokers can obtain written pre-approvals for you at no cost and no obligation. More than just a verbal
approval from your lending institution, a written pre-approval is as good as money in the bank. It includes
a completed credit application, and a certificate which guarantees a mortgage to the specified level when
you find the home you're looking for. Pre-approval means no last minute shopping around for money and
rates. With a pre-approved mortgage, if rates go up, you still get the pre-approved rate, but if rates go
down, you receive the lower rate.
2. Receive Preferred Access to Special Low Financing
Agents that conduct hundreds of real estate transactions every year may be able to offer you certain
negotiating advantages with lending institutions. These lenders are often anxious to do business with such
agents and their clients, and may be willing to extend better than average rates.
This can make purchasing a home much easier and more affordable for many buyers to qualify for a
minimum down payment, and low monthly payments. Therefore many more buyers can own the home of
their dreams much sooner then they ever thought possible.
3. House-hunting Service
Most agents offer a house-hunting service to make it easier for you to find the home you want. Through
these programs you can find out in advance which homes on the market match your home buying criteria.
To do this you simply provide your agent with a brief description of the type of home you’re looking for,
for example, number of bedrooms, price range, neighborhood and so on. Then you should receive advance
notice (including pictures) of all the homes for sale that match your requirements. This will give you the
competitive edge to find out before other buyers which homes that are likely to be of interest to you.
Because you are there before most other buyers, perhaps you can even negotiate a better price. You can
then drive by these homes, without the assistance of an agent, to see which ones you want to view. Then
it’s simply a matter of you advising your agent about which homes you like and want to see.
These Steps Will Help You Save Thousands When You Buy a Home
Make sure you know what you want . . . As simple as this sounds, many homebuyers don't have a
firm idea in their heads before they go out searching for a home. In fact, when you go shopping for a
place to live, there are actually two homes competing for your attention: the one that meets your
needs, and the one that fulfills your desires. Obviously, your goal is to find one home that does both.
But in the real world, this situation doesn't always occur.
When you're looking at homes, you'll find that you fall in love with one or another home for entirely
different reasons. Is it better to buy the 4- bedroom home with room for your family to grow, or the one
with the big eat-in kitchen that romances you with thoughts of big weekend family brunches? What's more
important: a big backyard, or proximity to your child's school? Far too often people buy a home for
the wrong reasons, and then regret their decision when the home doesn't meet their needs.
Don't shop with stars in your eyes: satisfy your needs first. If you're lucky, you'll find a home that
does this and also fulfills your desires. The important thing is to understand the difference before you get
caught up in the excitement of looking.
Find out if your agent offers a “Buyer Profile System” or “House-hunting Service,” which takes
the guesswork out of finding just the right home that matches your needs. This type of program will cross-
match your criteria with ALL available homes on the market and supply you with printed information on an
ongoing basis. A program like this helps homeowners take off their rose-colored glasses and, affordably,
move into the home of their dreams.
To help you develop your home buying strategy, use this form:
What do I absolutely NEED in my next home:
What would I absolutely LOVE in my next home:
How Sellers Set Their Asking Price
For you to understand how much to offer for a home you’re interested in, it’s important for you to know
how sellers price their homes. Here are 4 common strategies you’ll start to recognize when you begin to
1. Clearly Overpriced:
Every seller wants to realize the most amount of money they can for their home, and real estate agents
know this. If more than one agent is competing for your listing, an easy way to win the battle is to
overinflate the value of your home. This is done far too often, with many homes that are priced 10- 20%
over their true market value.
This is not in your best interest, because in most cases the market won't be fooled. As a result, your home
could languish on the market for months, leaving you with a couple of important drawbacks:
your home is likely to be labeled as a "troubled" house by other agents, leading to a lower than fair
market price when an offer is finally made
you have been greatly inconvenienced with having to constantly have your home in "showing"
condition . . . for nothing. These homes often expire off the market, forcing you to go through the
listing process all over again.
2. Somewhat Overpriced:
About 3/4 of the homes on the market are 5-10% overpriced. These homes will also sit on the market
longer than they should. There is usually one of two factors at play here: either you believe in your heart
that your home is really worth this much despite what the market has indicated (after all, there's a lot of
emotion caught up in this issue), OR you've left some room for negotiating. Either way, this strategy will
cost you both in terms of time on the market and ultimate price received
3. Priced Correctly at Market Value
Some sellers understand that real estate is part of the capitalistic system of supply and demand and will
carefully and realistically price their homes based on a thorough analysis of other homes on the market.
These competitively priced homes usually sell within a reasonable time-frame and very close to the asking
4. Priced Below the Fair Market Value
Some sellers are motivated by a quick sale. These homes attract multiple offers and sell fast - usually in a
few days - at, or above, the asking price. Be cautious that the agent suggesting this method is doing so
with your best interest in mind.