When it comes to buyers, one huge mistake people make is in qualifying when their income and credit score aren’t the greatest, then as soon as they put the money down and make the application, they go out and lease a new car or max out their credit cards on a shopping spree or a vacation. Now, they’re far in more debt, even before they’ve completed their application/underwriting process.
This is one reason it’s important for a potential buyer to talk to talk to a lawyer, or at least communicate with their realtor and their finance person to calculate what they think their income will be in the next 5-10 years and maybe buy a little bit more house. Another mistake people make is to stress out over the interest rate, to the point where they shop a rate, and that’s all they think about.
Instead, they should be more careful about where they get their financing; some lenders such as brick and mortar banks are terrible when it comes to making home loans, because they’re more interested in collecting fees from checking accounts. Many lenders have horrible underwriting services, whereas you might have a better experience with a smaller bank, credit union or mortgage company. If there’s an extra quarter point interest, but the lender gives great service and doesn’t load on the fees, you may save money and stress in the long run.
For example there may be a one-eighth or even a quarter point difference in the loan but what I say to a lot of people is if you really want to be stressing about that little amount of money, it’s $30 a month, ultimately what do you want the guy to pick up the phone and service you because you’re not going to get that service from some of these big outfits.
All lenders will give you what’s called the TIL (Truth in lending disclosure statement), which will show you the cost of borrowing the money, but sometimes a great rate may not translate into a great deal because the actual cost of borrowing the money can be a lot higher. If one lender offers a 4 percent rate, while another offers 3.85 percent, but adds so many fees to the loan that it raises the costs above the lender offering 4 percent, then you haven’t saved. That’s another typical mistake a lot of people focus on the rate, when they should be focusing on service and getting into the house, which is really what they want.
From a seller’s standpoint, they often make the mistake of not having all their paperwork together; they don’t have their survey or their certificates, especially the certificate of completion for the house. The other issue I see, especially with older people, is that they don’t have a mortgage because they’ve paid it off and received what we call a satisfaction piece. The problem is, they get the letter and the satisfaction in the mail they forget to record it at the county clerk’s office; many of them file it away somewhere and forget about it, which means when someone runs the title, the mortgage is still showing open. For a seller, having their documentation in order prior to contacting an attorney can make everyone’s life much easier.
For more information on Problematic Property Types, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (516) 683-1234 today.