Advice For Home Buyers And Sellers
April 13, 2008 by John Boyd
Filed under Interesting, Lifestyle
Well, supposedly, we’ll be closing on our house at the end of this week. But honestly, the past seven months has made me somewhat pessimistic, bitter and untrusting of lenders, mortgage companies, credit bureaus, our current government administration (state and federal) and everybody in between. However, there does seem to be a light at the end of the tunnel and if everythng goes as planned, this time next week, we will be home owners again. At worse, our closing could be delayed a couple of days. But for now, I’m confident enough to share some of things that we’ve learned over the past seven months. Some things we ill-fatedly assumed and took for granted, other things were a complete surprise. With that said, here are some things that you should consider whether you’re a first time home buyer or if you’re planning on selling your current home to purchase another.
1. First and foremost, anything that’s going to happen, you have to make happen. Regardless of how many realtors or lending companies that you work with, it is your responsiblility to have all of your “ducks in a row” and to look out for your own wellbeing. All other parties involved are only there to make money on your decision to buy or sell. Simple as that. I won’t go as far as to say that nobody else gives a damn about your best interest, but chances are, they don’t. They’re helping you only to make money for themselves.
2. Your credit report and credit history. This is a BIG one. As of August 13th of 2007, the game has changed and if you’re not aware of those changes, you better start educating yourself right now. Keep in mind that every time you have a lending institution pull your credit report, it takes a hit. A lot of inquiries will actually lower your credit score. We’ll start with the obvious. By law, the three credit reporting bureaus, Equfax, TransUnion and Experian are required to provide you with one free credit report per year. I’m sure you’ve seen some of the interesting commercials from companies like FreeCreditReport.com, but stay away from anybody offering you a free credit report, chances are that by accepting their offer, you’re also agreeing to purchase some credit monitoring service as well. There are only two ways of obtaining your free credit report. One is by contacting each of the three credit reporting bureaus (which is like playing pick-up sticks with your butt cheeks) and another is by going to AnnualCreditReport.com. Yes, using AnnualCreditReport.com contradicts what I just mentioned, but they are a legit, free service. Regardless of how you choose to get your free credit report, read all of the fine print and remember, when applying for your home loan, the lending institutions use your middle credit score. Take notice of everything on your credit report. The fact that you receive a different score from each of the credit bureaus is an indication that you’re probably going to find some errors on your credit report. Now, assuming that they’re are no errors, there are no outstanding issues and your middle credit score is at least 630, then you’re probably safe to persue your loan. If you have a co-borrower, the same criteria applies. So what do you do if you have some outstanding issues on your credit report that you didn’t know about, such as an unpaid credit card, medical bill or worse, a missed payment on another loan. Well, that’s simple, PAY YOUR DAMN BILL. And when you do pay that bill, get a receipt. Better yet, get a letter from the creditor with their letterhead on top, explaining that your outstanding debt has been paid. Make copies of that letter and mail it to each of the credit bureaus that are reporting the outstanding debt and ask to have it removed from your credit report. Keep in mind, this process will probably take about 90 days. Take care of all legitimate issues before you even consider selling your home or applying for a new home loan. And since August 13th of 2007, most lenders require at least one year without any late or missed payments before they will consider you for a loan. But what if you find discrepancies on your credit report? Say your credit union reported that you missed a car payment 6 months ago, but you know for a fact that you paid it. Well, start with the source. Get ahold of your credit union or what ever creditor is reporting the late or missed payment and find out what’s going on. If in fact it is a genuine discrepancy, get proof from that creditor. Again, get on a letterhead. Send it to the credit bureaus and ask to have it removed. I believe all three bureaus allow you to do this online as well, I know that at least two of them do. But again, it’s your burden to follow thru and again, it’s going to take awhile to have it removed from your credit report. I would also recommend filing a complaint with the FTC for each discrepancy that you find on your credit report. If you have proof of the error, chances are, the FTC can have it removed a little quicker. No promises though, this is just an assumption. We filed a complaint with the FTC for every discrepancy we found on our credit report and 60 days later, 85% of them were gone. I could write so much more about how important your credit report/score is and what to do when you find errors or discrepancies, but my best advice is for you to do your homework and pursue the corrections relentlessly. Make it your full time job away from your full time job. Follow this link for more in depth information about working with the credit bureaus and the FTC, you’ll find everything you need to know there!
3. Realtors. I really don’t have a problem with realtors, but I don’t trust them either. Especially if you’re working with a realtor who is representing both the buyer and seller. I believe that in some states, this practice is illegal. Regardless of whether it’s illegal or not, it’s still immoral and a conflict of interest. Put your realtor to the test, ask for references, if they don’t have anything to hide, then they won’t be offended. And make sure they follow thru on any questions you have about the property that you’re about to purchase. And one last thought, it’s my opinion that your realtor should not recommend any lending institution to you unless you ask. Alot of these realtors are in bed with local mortgage companies who may provide a perk to the realtor for sending business their way. Now I know that a lot of you realtors are going to say that that’s bullshit, but I say to you, I really don’t give a damn what you think.
4. Lending institutions. Ahhh, my favorite. I really want to keep this part simple because the more that I write, the more pissed I’m going to be. So I’ll just give you some of my opinions and thoughts when it comes to finding a lender. Stay away from the national lenders such as CountryWide, Wachovia, etc. And even though the subprime market has taken a direct hit this past year, stay away from any lender that ever offered subprime loans, they’re nothing but trouble and they’re the reason we’re in the mess that we’re in, that and the fact that the government looked the other way while these companies were providing loans to people who couldn’t pay them. Look for local programs. Not necessarily local banks, but local programs in your community that offer a variety of lending options. Some of these programs work with local banks in your community, so your money stays in your community and helps others in your region secure a loan as well. If working with a local program that represents many of your regional banks, chances are that you’ll be working with a real person such as a loan originator, who works directly with the under writer. This way, it’s more personal, you’re not just a number and your information isn’t just “fed into the system”. Make your presence known without being overbearing. Let your loan originator know that you’re available for any questions that they may have. Let them compete for your business. Stay away from any online “apply now, get an answer in 30 seconds” bullshit. As a matter of fact, stay away from any online application when it comes to applying for a home loan. Work with real people who you can ask questions. Do your homework! Remember, it is your responsibility to find a lender that is going to work for you. Don’t settle, shop around. Let each lender know up front that you’re shopping around for a lender who has your best interest in mind. Look for non-traditional kinds of loans besides FHA or VA. Again, your chances of finding a non-traditional, low interest rate kind of loan is by working with a housing program in your region that wants to keep your money in your region. Tell the rest of them to go to hell! GET PRE-APPROVED BEFORE SELLING YOUR CURRENT HOME! CountryWide had pre-approved us for a loan, 20% down and an interest rate of 7.5%. Working with a regional program (who I’ll mention after the deal is closed), we were pre-approved, 5% down and an interest rate of 5.95%. SHOP AROUND!
5. I guess the best advice I could give anybody who is thinking about selling their home or purchasing a new home is to do your homework. I thought that I had done my homework thoroughly, only to find out that there were a lot of things that I had assumed and taken for granted. I thought that “it’s a dog eat dog world” pertained to somebody else. Times have certainly changed, so you better be on top of your game. You’re in this on your own and nobody is looking out for you. And when you fall flat on your face, nobody gives a shit. Well, nobody outside of your family and closest friends. Regardless of who you’re working with, be it the realtor, lender, insurer, etc., ask questions, tons and tons of questions. Don’t commit to anything that has you unsettled or that you are uncomfortable with. And when ever possible, involve the rest of the people that your decisions are going to affect.
And last but not least. The most valuable lesson learned is that home is where the heart is. Any place can be a shelter, but home is where you’re loved (even when you’re on my last damn nerve) and where you feel secure.
Ok, now for the disclaimer. Blah, blah, blah, everything written above is my opinion and not professional recommendations or counseling, yada, yada, yada and for those of you who don’t agree with my views and opinions are more than welcome to express your disagreements by kissing my ass!
Comments
Tell us what you're thinking...(no ALL CAPS!)