Common Mortgage Mistakes & how to avoid them when buying a house or refinancing your home mortgage.

Free Report # 1 Avoid these common mortgage mistakes when buying a house.
Free Report # 2 Avoid these common mortgage mistakes when refinancing your home mortgage.

For most people, their home is the biggest investment they will ever make. However, few people do the research necessary to make a good buying decision. The home-purchase process can be extremely confusing. The trained professionals have put together this free report to help educate you on the home buying and mortgage process.

Buying a house

Not knowing how much you can afford before you start searching for a house. The easiest way to avoid this mistake is to get pre-approved for a mortgage by a lender so you know in advance exactly how much you can afford. Most top real estate agents will not show you homes until you complete this step. They do not want to waste your time or the seller’s time if the house they are showing you is out of your reach financially. If you call me, I will be happy to assist you in determining how large of a house you can buy and which type of mortgage is best suited for your needs. If you like, complete our free online pre-qualification form.

Making verbal agreements! If a real estate agent or seller tries to encourage you to sign a written document that does not include all the verbal commitments, do not sign it! A written contract will always override any oral agreements in a court of law. Example; If the realtor or seller verbally committed to leaving a washer and dryer, or a special refrigerator, make sure that is clearly stated in the written agreements. Always consult an attorney who specializes in Real Estate Law prior to signing a real estate contract.

Choosing a lender just because they have the lowest rate. When a mortgage company quotes you a rate, ask them if the rate being quoted is their lowest rate for that day or week. If you aren't planning on closing on your house for another 30 days ask them what your rate would be with a 30 day lock.

While rate is important, you also have to look at the overall cost of your loan. This includes looking at the APR, the loan fees, as well as the discount and origination points. Some lenders add origination points into their quoted points while other lenders add an origination point in addition to their quoted points. So when one lenders says 2 points they mean 2 points, whereas another lender means 2 points plus 1 origination point.

The cost of the mortgage, however, cannot be your only criterion. We are committed to your best interests and will deliver what they promise. Often, the company that has the absolute lowest quoted rate may not be the best company for your mortgage business.

Paying Private Mortgage Insurance, PMI, when you don't have to. If a 20 percent down payment is not made, lenders usually require the home buyer to purchase private mortgage insurance (PMI) to protect the lender in case the home buyer fails to pay. We can offer you alternatives to paying PMI. We even offer 100% financing programs with no PMI. Contact me, and find out if you qualify for some of our no PMI loan programs.

Choosing a lender just because they are recommended by your Realtor. Your Realtor, plays a valuable role in the home buying process, however, your Realtor is not a financial expert. They may not know what's the best loan for you. The Realtor may refer you to a lender that is sure to close the loan, but not necessarily the lender that has favorable rates or fees. You should still do some homework on your own. Contact to get a second opinion.

Not getting a rate lock in writing. Once again when a mortgage company tells you a rate, don't assume that you are locked into that rate. If they tell you they have locked your rate, get a written statement which details the interest rate, the length of the rate lock, and details about the program.

Using a dual agent––i.e. an agent who represents the buyer and the seller on the same transaction. Buyers and sellers have opposing interests. A dual agent in most normal situations cannot be fair to both the buyer and seller. Most dual agents represent the sellers more strongly than they do the buyer. If you are a buyer, it is much better to have your own agent who will be on your side. Feel free to email me and will be happy to recommend a Realtor that will assist you with buying your new home.

Buying a house without a professional inspection. Taking the sellers word that they have made repairs. Unless you are buying a new house where you have warranties on most equipment, it is highly recommended that you get a property inspection, a roof inspection and a termite inspection. This way you will know what you are buying. Inspection reports are great negotiating tools when it comes to asking the seller to make repairs. If a professional home inspector states that certain repairs be done, the seller is more likely to agree to do them.

If the seller agrees to do the repairs, have your inspector verify that they are done prior to close of escrow. Do not assume that everything has been done the way it was promised.

Not shopping for home insurance until you are ready to close. Start shopping for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and do not have time to shop around.

Making your moving plans too tight. Example: you expect to move out of your prior residence on a Friday and into your new residence over the weekend. So you give notice to your landlord to end your lease on a Friday and arrange for movers to come to your house on Friday. Then, your loan closing gets delayed until the next Tuesday. You now may be homeless! New tenants could be moving into your apartment, and the movers are going to charge you for wasting their time. You could be forced to live in a motel for a couple of days!

A Better Plan: allow for a 5-7 day overlap between closing and moving. In the long run it is not nearly as expensive, and it will certainly give you peace of mind. you expect to move out of your prior residence on a Friday and into your new residence over the weekend. So you give notice to your landlord to end your lease on a Friday and arrange for movers to come to your house on Friday. Then, your loan closing gets delayed until the next Tuesday. You now may be homeless! New tenants could be moving into your apartment, and the movers are going to charge you for wasting their time. You could be forced to live in a motel for a couple of days!

We hope you have found our report helpful. If you are considering purchasing a home please view our website

Refinancing your house

Refinancing with your existing lender without shopping around. There is a general misconception that it is easier to work with your current mortgage company. In most cases, your current mortgage company will require the same documentation as other companies. Your loan file will have to be underwritten just like any other new mortgage request. So even if you have been very good at making payments to your existing lender, they will still have to do their verifications all over again.

Applying with a lender just because they have the lowest rate advertised in the newspaper. No one rate will apply to all customers

Many things effect your mortgage rate, the type of mortgage, the loan size, the loan-to-value, and your debt ratio are just a few factors. So know one can really give you an accurate quote with out getting some preliminary information from you. At we are committed to delivering what we promise. Take a few minutes to complete our free online prequalification form.

Waiting for rates to bottom out. No one knows for sure what rates will do in the future. Don't make the mistake of not refinancing because you think rates will go down in the future. If you are able to save money by refinancing today, then you probably should refinance now instead of taking the chance of rates going up.

Not doing a break-even analysis. Find out what the total cost of the refinance is, then figure out how much you will save every month. Divide the total cost by the monthly savings to get the number of months you will have to stay in the property to break even on your refinancing costs. Example: if your refinance costs $2000 and you save $50/month, your break-even is 2000/50 = 40 months. You should refinance if you plan to stay in the house for at least 40 months.

Note: The break-even analysis only works if you are refinancing to save money. If you are refinancing to switch from an adjustable to a fixed loan, or from a 30-year loan to a 15-year loan, it is much more difficult to perform a break-even analysis.

Signing a blank or incomplete good faith estimate. Your mortgage company is required to provide you with a written good-faith estimate of closing costs. Make sure your good faith estimate is completed and totaled. If you have any questions about any of the fees ask your loan officer to clarify them. If you like I would be happy to review any good faith estimate another lender gives you. Who knows maybe I can save you some money.

Paying for an appraisal when you think that the house may appraise too low. If you aren't sure of the value of your house we at will have one of the appraiser's we work with, to do a value look up for you (at no cost to you). Do not waste your money on a full appraisal if you are doubtful about the value of your house.

Using the county tax-assessors' value as the market value of your house. Mortgage companies do not use the county tax-assessors' value to determine whether they will make the loan. Instead they use a market-value appraisal which may be very different from the assessed value. Once again if you aren't sure about the value of your house, we can usually do a value look up for you, at no cost to you.

Signing your loan documents without reviewing them. Do not sign documents in a hurry. Whenever possible try to get documents that you will be signing ahead of time so you can review them. It is advisable to ask for a copy of all loan papers you are signing a few days ahead of the close of escrow. This way you can review them and get your questions answered. Do not expect to read all the documents during the closing. There is rarely enough time to do that.

Not providing documents to your mortgage company in a timely manner. When your mortgage company asks you for additional paperwork, jump on it! Do not complain. They are trying to get you approved, not trying to hassle you unnecessarily! Jump through the hoops as quickly as possible. Borrowers who do not respond to requests for documentation quickly enough run the risk of paying higher rates if the rate lock expires.

Not getting a rate lock in writing. When a mortgage company tells you they have locked your rate, get a written statement which details the interest rate, the length of the rate lock and details about the program.

Pulling cash out of your credit line before you refinance your first mortgage. Many lenders have "cash-out" seasoning requirements. This means that if you pull cash out of your credit line for anything other than home improvements, they will consider the refinance to be a "cash-out" refinance. This leads to much stricter requirements and can in some cases break the deal!

Getting a second mortgage before you refinance your first mortgage. Many mortgage companies look at the combined loan amounts (i.e. the first loan plus the second) even when they are refinancing the first mortgage. If you plan on refinancing your first, check with your mortgage company to find out if getting a second will cause your refinance to get turned down.

Illinois Residential
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