5 Common mistakes in choosing a lender

Buying a home is a big deal, there's not two ways about it. As much as you want to make sure you get the best mortgage possible, don't fall into these common pitfalls:

• Rate shopping without interviewing: Sure, go ahead and look around for the best rate, but don't get sucked into a lender who advertised a low, low rate only to find out that their "low, low rate" is only if you have perfect credit or pay fees up-front. You want a lender who will work with you and your financial situation, not just slap a rate in front of you and tell you it's good. Take the time to do the legwork, and homework, required to make sure you get the rate and lender best suited for you.
  
• Skipping out on getting pre-approved: Although this isn't always required, it may be in some cases. And even when it's not, it's a good idea to go ahead and get pre-approved - this will give you added confidence as you shop.
  
• Waiting to have perfect credit: The requirements of having perfect credit and a 20% down payment for your home are myths. There are many opportunities and loans available to those with less than perfect credit, and allow for no or little money down. Don't keep putting of purchasing a home because of your credit - you may be waiting a long time!
  
• Choosing a lender by direction of your realtor: If you really trust your realtor, go ahead, but many times there is a relationship in play between the two of them that may or may not be in your best interest. Make sure to interview your potential lender, don't just take the first one recommended to you.
  
• Not being completely honest with your lender: Believe it or not, even though your mortgage company is in the money-making business, they aren't out to get you. They know and understand that everyone has had bumps in their financial past. But when you aren't honest with them, it will come out in the end, and it may hurt you more than you realize. Be honest from the start and remember, they don't make money unless you're approved for a loan through them, so they're really there to help you!

Don't forget, if you're unsure, ask! Your lender should be able to find a suitable loan program for you, not try to force you to accept one without explaining the whys and hows. Don't feel overwhelmed, just jump right in and before you know it you'll be signing the papers and holding the key to your own home!

Mistakes of a Home Seller

When you're trying to sell you home, there are a lot of things you think about as the homeowner that can skew your idea of how awesome your home really is. Sometimes it's hard to take a step back and see your home as a potential buyer might, but it's critical if you're going to sell.
Here are some of the top mistakes homeowners make when trying to sell their house.

• Asking price - when a homeowner bases their price on the original price they paid, based on the improvements they've made over the years, or based on the surrounding homes, the price can be either too high or too low. You need to take all these things into consideration. If in doubt, have it appraised.
  
• Choosing a realtor - when you choose a realtor, don't base your decision solely on what they say they can "get" for your home. A realtor can't promise you anything, and if they don't have the qualifications, experience and contacts to back them up, chances are they won't be "getting" you anything for your house.
  
• Neglecting the condition of the home - It's easy to look at your house through rose colored glasses, but if you neglect the shape it's in, potential buyers aren't likely to give it another chance. If there are repairs to be made, seriously consider taking care of them before putting it on the market.

A Home for Fido

I know this is a little off topic, but when I saw this I just had to comment.

Now don't get me wrong, I'm an animal lover along with the best of them, but I just don't get it... I have a dog, a 6-year-old White German Shepherd. I love her to death even though she still acts like she's 6 months old and sheds like it's her mission in life to redecorate my house with fur. However, I just can't quite see laying down hundreds or even thousands of dollars for a dog-mansion for her when I'm still trying to finish my basement and seed my yard.

How people manage to justify this kind of expense is beyond me. I think maybe it goes under the "more money than they know what to do with" idea. Unfortunately, they do, because this article references several companies that gladly cater to the doggy-architecture niche. *sigh*

So much for giving to the needy, Spot needs a roof over his head.

Location vs. Economy

When people look to buy a house, the catch-phrase is often "location, location, location." More likely than not, now days the idea should be "economy, economy, economy." Everyone knows that people consider the neighborhood a home is located in, families with children often consider the area schools, higher income buyers often like to consider location in regards to the local golf course or lake. But these days, what is really important when buying?

The state of the surrounding economy is something to really take into consideration when looking to purchase a house. Whether you plan to live in it or keep it as rental property, property value isn't always as easy to assess as it may seem. Speaking from personal experience, with a house in a dying mill area, when you do decide to move, it can be a nightmare to get rid of. Or, if the economy starts to pick up and you've bought a home that's in sad need of repair and decide later to sell, will the fixes required to make your home as profitable as it could be become too much of a burden to match the booming economy?

Before you buy, consider what drives the surrounding area as far as area business and where the income is coming from. For us, we were about an hour outside of Charlotte, and my husband commuted every day. Although we enjoyed a low, low house payment, we had to deal with losing at the very least 2 hours a day in driving, and now the area is slowly continuing a decline that has made our home sit on the market for 3 years. Should we have sucked it up and bought a more expensive home closer to Charlotte to save on vehicle upkeep and gas and possibly helped us get out from under it later? Who knows. Only you can decide what your personal best plan of action is, but do consider the future. It may come back to bite you.

Then again, the area our house is in could suddenly become the newest hot-spot outside of Charlotte. Somehow I doubt it, but one can always dream...

Natural Disasters create problems with insurance

Among all the things you need to consider when buying a house is the additional costs after the house is officially "yours." One of the biggest added expenses is insurance. In this day, we are all more aware of the impact weather can have on property value, and although we can be informed about what areas are more prone to bad weather such as hurricanes, floods, and tornadoes, sometimes these natural disasters can't be avoided.

If you are looking to buy a home in an area that has proven to be a hotspot for weather-related tragedy, be aware that many insurance companies are making it harder to secure and retain insurance. In a years time, in Louisiana and Florida alone, over 600,000 homeowner's policies were either cancelled or not renewed. It would be easy to immediately blame Hurricane Katrina, but from 2004 to 2005, of the $75 billion of insurance loss reported, only $45 billion was specifically from Katrina. As much as $45 billion is a lot of money, that still leaves another $30 billion from other claims.

In fact, insurance claims have been such a cause for loss among insurance companies that in Massachusetts and New York, over 80,000 coastal homeowner policies were cancelled in the past two years, regardless of the fact that it has been years since they had a major hurricane.

The good news is that some insurance companies are looking for ways to help offset their loss and help their customers at the same time. One such option is "green" building credits and/or incentives. This option alone will not only help homeowners and insurance companies, but the environment as well. I'd say that's a good deal!

for related articles, see: Homeowners Fume in CT & Hurricane Preps in FL

Questions to ask your home inspector

When you’re looking to buy a new home, one of the least fun things to check off your list is having the home inspected. However, with a good home inspector, this doesn’t need to be a painful task. Home inspectors are there to help you make sure you are getting the home you’re paying for, and that you know what you’re paying for. Don’t be afraid to ask them questions about their qualifications or during the inspection, regardless of how stupid they might seem to you. Here are some of the best questions to ask the inspector.

1. Who are you working for? Start off from the start with the knowledge that your inspector is there to serve you, not the realtor or the seller.
   
2. What kind of training and experience do you have? Knowing that your inspector has kept up-to-date with their training is very reassuring, and lets you know they care about doing a good job.
   
3. If there is a possible problem with drainage or a damp basement, ask if they have any tips to correct it. A lot of inspectors will have good suggestions.
   
4. Ask about the electrical wiring in the house. If it has been adjusted from the original wiring, they should be able to tell you if it was done properly, or if you want to add on later, if that will be an option.
   
5. Ask about the plumbing and septic systems. If the pipes appear older, they may need replacing sooner rather than later.

There are many questions that will come to mind as you walk through the house with the inspector. When you do ask, make sure you understand the answer, don’t just accept the reply and move on if you don’t. And don’t be afraid to admit that you don’t understand! This is a lot of money you’re investing and you need to be satisfied that you’ve done your homework!

Just remember that your inspector is there to help you. Don’t be afraid to ask to see their inspectors license if you feel the need. Most inspectors should be happy to answer your questions. But remember that although some problems are easily identified, they don’t have x-ray vision and cannot always tell if there is hidden damage to a house.

Beware Dual Agency

As a seller, or a buyer, there are many things you'll be finding you don't know about the business of real estate. Questions like who really has to pay for closing costs what happens to my insurance if my house sits empty, and what can I really expect my real estate agent to do for me are just a few. One aspect of the real estate business you need to be aware of if dual agency. It sounds pretty harmless, and maybe there are a few agents out there that offer this that really do have their homeowners' and/or buyers' best interests in mind, but the case is that when it comes to people's money, things can get a little sticky.

In theory, a dual agent should work with the buyer and seller with complete loyalty to both, but think about it for a minute. If you're buying a house, you expect your agent to help you get the best deal you can - knowing that they'll make a commission off of what you pay. If you're selling a house, you expect your agent to help you make the most off of you sale as possible, also knowing that they'll make a commission off of what you make. If the agent is representing both sides, all of a sudden the middle-man is in a hard spot to adequately represent each client to the best of their ability.

Be educated and aware of this practice and make sure you don't get sucked into agreeing to dual agency before you understand what it means for you.