Mortgage Do's & Don'ts - Florida
If you are in need of Mortgage Financing and want to trouble-shoot problems before you begin, you have come to the right place.
Preston Ware - 20 Years Experience
NMLS License # 216170
My Direct Line (561) 329-0075
It is always good to be an educated consumer. Here I have made an attempt to touch upon key issues to remember.
Do - Remember that a good mortgage consultant or in my case mortgage banker is here to guide you on your path to home ownership based on our previous experiences. I have been doing this for 20 years so I have seen just about everything.
DO - Read all of your paperwork. About 25% of customers read all of their paperwork. It is important to know where all of the closing costs are coming from and also what is expected of you. If you have trouble sleeping at night mortgage forms are a great cure as well. The paperwork you receive in the beginning of the process is very similar to the paperwork you will sign at the end of the process. The only major difference is that at the end of the process, you will sign a mortgage note and a mortgage agreement which will get recorded at the courthouse.
DO - Ask questions.
Don't - Try to do all of your up front questioning by email. Yes we are living in the age of the internet but it is still important to have a thorough conversation about your loan with your mortgage banker. You will absorb so much more information and trouble shoot the pitfalls of your loan much better a lot quicker. An email will conquer one question at a time every hour. A conversation will conquer 25 questions in 10 minutes.
Do - Get a pre-approval letter before you go shopping with a realtor See Video of me discussing this. (Difference Between a Pre-Qual and a Pre-Approval Letter.)
Don't - Go shopping until you have a pre-approval letter in hand. Most good realtors will not begin the process with you unless they know you have been properly prequalified by a lender. This also helps your bargaining power and your ability to secure a low purchase price if the seller knows you are the real deal and you are ready to make an offer at any time.
DO - Get a home inspection Learn the hidden secrets of the home you are purchasing. Even if you are considering an "As is" purchase sometimes you are able to bring these problems into the negotiations with the seller and get a better deal. Especially if you are buying a foreclosure that the bank wants to unload.
DO - Discuss the concept of structuring your deal with seller paid closing costs. Your lender and realtor will need to be on the same page for this but by structuring your financing this way, you will keep more money in your pocket with a minimal effect on your final payment. This may put pressure on the realtor because he or she is trying to convince the seller what a strong buyer you are, but at the same time, you may have limited funds for closing. If you are buying a foreclosure, this should not be a problem because the banks understand this. Also in most cases you will want to put your own personality into your home and that involves trips to Home Depot which cost money.
Do - Give yourself enough time
Don't - Write your contract with a short closing date. Depending on the lending environment sometimes lenders will get backed up. At one point this year some banks were taking as long as three weeks to underwrite a file. Also if you are purchasing a foreclosure, there may be issues with title that slow down the process. If you write the contract with a lengthly closing date, you can always close early.
Do - Get professional help
Don't - Go shopping without a realtor. Their commission comes out of the seller side, so you have nothing to lose and a lot to gain because they will know the neighborhood and understand all of the legal ramifications on the contract. A good realtor will also knows the pitfalls that can occur along the way, so it always make sense to have them as council. Also a good realtor knows the game of negotiating a good price.
Do - Shop your Loan Officer
Don't - Use the sellers lender. It's just like going car shopping. You can usually get a better deal if you line up your own financing rather than using the dealer's guy. Competition works. Also you need to have at least one conversation over the phone. Usually from that you get a comfort level as to whether you want to work with that person or not.
Do - Notice the difference between your note rate and the APR on the Truth in Lending Form. I wrote a whole article about this one but the difference between the two is a measure of closing costs. http://www.huliq.com/1/84526/shopping-lowest-mortgage-rates
Don't - Be suckered into an advertisement where the rate is 1/2 a percent lower than everybody else. Every loan can be looked at with no points, paying a point or having the broker pay costs for you. There is no lender out there that is a full 1% better than the rest. These ads are usually a bait and switch.
Do - When refinancing or selling your home, make your home is presentable when you get a visit from the appraiser or a potential buyer. Every little bit helps. On every appraisal, he will have to rate the condition of your home as excellent,good,above average,average,fair or poor. Also he will need to show the actual age and the effective age of the property. It's like going on a date, you want to look your best and make a good impression.
Do - Be nice to the appraiser when he comes to the door. Don't try to impress him with your knowledge of the neighborhood.
Don't try to impress him with your knowledge of the neighborhood. Don't - try to chew on the appraisers ear as to why you feel your home is worth "x" amount. You are not a realtor and he probably would not listen to you if you were a realtor. If anything you can say nothing or point out the upgrades you have done since you have been in the home. Especially now the Home Valuation Code of Conduct, the appraiser is working for the bank , bot you, so you don't want to get on his bad side.
Do - Hold on to your survey and your Owners Title policy. You will get three surveys at closing and the Owner's Title Policy will be sent back to you about 4 to 6 weeks after closing once your deed is recorded. These two items will save you money if you ever have need to refinance later. Lots of money! Put them in a safe place.
Don't - Forget when refinancing to follow up on any overpayment of your payoff and the escrow balance held by your previous lender. A good lender will let you know approximately how much you will have coming back to you after closing in 4 to 6 weeks.
Do - Remember that builder contracts and foreclosure contracts are sometimes written in a one sided manner. Especially builders will put in clauses that push you towards their lender or title company. Most of the time these entities are owned by the builder and their fees are high.
Do - Remember when buying a condo that you are also becoming bound by the health of the entire homeowners association. If their budget is low you may be open to having an assessment or a jump in the monthly homeowners association dues.
Do - Shop your homeowners insurance. Start with the company you have your car insurance with; perhaps they can bundle the policies and save money. Check with at least one other agent because most insurance people have different ways of arriving at the same number. Checking around could save you a significant amount of money. Do this every year just to make sure your agent is on his toes.
Don't - Forget about hurricanes and tropical storms. If you are living in a place like Florida and there are hurricanes in the gulf, insurance companies will not bind coverage until the storm blows through. Lenders don't want to run the risk of your home getting demolished. Either bind the coverage early to avoid a delay in closing or wait for the storm to blow though. Hopefully there will be no conflict with your contract or your lock of the interest rate.
Do - Compare your Initial Fees Worksheet with the Final Closing Statement. They are supposed to be within $200 of each other. Quite often the major differences are due to estimates on escrows such as taxes and insurance but still, compare each line item and ask questions. A good lender will get you a copy of the final closing statement well before the closing.
Do - Refer your Mortgage Consultant and Realtor to friends, family and co-workers. that is one way that helps us keep helping others.
Do - Stay in Touch. You never know when there is an opportunity out there that can save youself some money.