Homeownership Month Series: Do’s and Don’ts When Buying a Home
By Sandy Spring Bank
June is National Homeownership Month and to celebrate, we created a special Homeowner How-To blog series. Throughout the month we’ll provide tips to help homeownership be as simple and productive as possible. This week, we’re highlighting the Do’s and Don’ts of buying a home.
- DO be as prepared as possible. As a potential buyer, being pre-approved, especially in a competitive situation, will give you the best chance of getting your offer accepted. It means that you have provided a mortgage banker with written evidence of income, expenses, assets, liability, and credit, which have all been approved by a lender.
- DON’T choose a lender just because they have the lowest rate. While the rate is important, consider the total cost of your loan including the APR, loan fees, discount, and origination points. When you receive a quote, insist that the discount points (charged by the lender to reduce the interest rate) be distinguished from origination points (charged for services rendered in originating the loan).
- DO get a Good Faith Estimate (GFE). Within three business days after the mortgage banker or lender receives your loan application, you are required to receive a written statement detailing all transaction fees. This serves as the best way for you to know what you’ll pay for your loan.
- DON’T let verbal and written agreements contradict one another. If you are asked to sign a written contract that opposes a verbal agreement you made with the seller, don’t do it! A written contract takes priority over a verbal agreement and will override any verbal contract. Also remember, not all verbal agreements are enforceable, so it’s always better to get it in writing.
- DO receive your rate lock in writing. When a mortgage company says they have locked in your rate, make sure to get a written statement including the interest rate, the length of rate lock, and program details.
- DON’T use a dual agent to represent both the buyer and the seller in the same transaction.This can be conflicting due to the fact that sellers want to receive the highest price, and buyers want to pay the lowest price. Because the agent gets a commission, they usually negotiate more on behalf of the seller. As a buyer, it is important to have an agent representing you exclusively to be sure you get a fair price.
- DO read all documents before signing them. It is important to review documents carefully in advance, as it is unlikely you will have time to read the entire document during the closing appointment.
- DON’T purchase a home without professional inspection. Unless you’re buying a new house with warranties on equipment, it is important to get property, roof, and termite inspections to know what you’re buying.
- DO allow for transactional delays. Home purchasing transactions are usually delayed a week or so. To avoid this and the accompanying stress, make sure to terminate your lease one week after your real estate transaction is scheduled to close, so you have some leeway.
- DON’T procrastinate shopping for home insurance. Instead of waiting until the last minute, start shopping for home insurance as soon as you get an accepted offer.
Purchasing a home can be tricky and stressful, but by following these simple Do’s and Don’ts, you will be on your way to becoming a smart and savvy homeowner. We are also available to assist you on this journey. Visit our website to learn more about how we can help.
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