In my line of work I have the opportunity to observe many real estate transactions and have found what I feel are the top 5 purchasing mistakes made by both novice and experienced home buyers.
3. Not arranging optimum financing. This will cost you big time.
The explosion of the mortgage broker industry in the past 10 years has been a financial boom to consumers in opening up the “hidden” market for your mortgage business. Virtual banks such as ING have become main stream in addition to other institutional lenders. Surprisingly only about 50% of consumers actually seek a second opinion when it comes to finding the best mortgage product, one tailored to their individual needs and not to the needs of their bank.
Let me be very clear on this point. “The bank is not your friend” There are so many mortgage products in the marketplace and with rates changing daily it is impossible for the average consumer to keep on top of the changes. Don’t feel bad, those within the industry itself have a hard time keeping current. You banker will only be selling bank products so how can they possibly be objective on what your best solution may be? Fortunately mortgage brokers’ shop the market for you, save you time, and ultimately negotiate better rates for you then you are able to negotiate on your own. Did I mention the service is generally free to the consumer?
Because of historically low interest rates the real estate market has been very vibrant. Real estate agents are traditionally focused on trying to find you a home and are not so concerned about your financing as long as they think you are pre-approved and the sale can be consummated. This is a mistake you must avoid. Did your realtor suggest you get a second opinion? Your ability to finance the home with the best available terms should be as important to the realtor as the home. Why? Because not arranging optimum mortgage financing will cost you big time. Is that what you want? Is that what they want?
I hear the justification all the time. “I know you can probably save me or my client some money, but it’s only a quarter of a percentage point. Is it worth pursuing?” On a $200,000 mortgage over a traditional 25 year mortgage amortization, a quarter point will save you approximately $8000. What if we saved you a half percentage or a full percentage? What would that be worth? What if we could have your home paid for in 20 years? What would that be worth? Seems strange that you may feel the need to squeeze an extra $500 of the selling price of a home to justify obtaining a great deal, yet you are prepared to walk away from the “free” money.
We welcome your comments.
Part 4- You researched the neighbourhood. Did you research the neighbours?
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