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Rich Surek’s 11 Things That Can Trip Up Homebuyers

ELEVEN THINGS TO PAY ATTENTION TO FOR HOMEBUYERS

If you’re buying a house, don’t make these mistakes that could derail a sale or worse. Buying a house can be your American dream, but it can turn into a nightmare for many homebuyers. I don’t want you to go into the process with unrealistic expectations or improper information.

“The process of buying a home [can be] excruciating,” says Rich Surek, a US Lending Corporation mortgage executive with more than 20 years of experience in the industry. There are some things that seem to trip up homebuyers again and again. Here are the mistakes real estate experts say people make when buying a home:

FAILING TO GET PRE-APPROVED

Before you even start looking at homes, buyers should get pre-approved for a mortgage. This will ensure you are visiting houses you can purchase. We want to help you avoid the heartbreak that can come from missing out on a hot property. It will also help when multiple people are placing offers. “There’s nothing worse than having a buyer find the home of their dreams, find out they are not pre-approved but need to place an offer in 12 hours,” says Jill Surek, a sales associate with Dane County Real Estate in Madison, WI.

NEGLECTING TO FACTOR IN ALL THE COSTS

One reason for the housing market collapse a decade ago was the number of homebuyers who purchased properties with costs beyond their means. “Lenders own a lot of the problems that happened in the past,” Rich Surek says. “We put [people] in homes they really couldn’t afford.” Regulatory changes were enacted to help avoid a repeat of that situation, but buyers still bear responsibility for ensuring they can afford all the costs of homeownership. Those include property taxes, insurance, closing costs and association dues.

OPTING IN OR OUT OF THE COMPLETE DIGITAL MORTGAGE PROCESS

While not every lender offers a digital option for income and asset verification, consumers should consider opting in when it’s available. “It’s startling if you have to go through the manual process,” says Rich Surek, Senior Mortgage Consultant for US Lending Corporation. Lenders who can electronically verify information may be able to close in as little as 20 days, compared to 45 days for those going through manual verification. It also eliminates a headache for borrowers who otherwise have to dig out months of bank statements and pay stubs to prove they can afford the mortgage.  However, for the first time homebuyer, doing it completely digital also comes without an expert’s experience and knowledge they can pass on to you.

THINKING YOUR MORTGAGE WILL REMAIN AT THE SAME LENDER

The mortgage company that approves the loan might not be the one receiving subsequent payments. “Consumers should know it is very customary for loans to be sold after closing,” Rich Surek says. Homebuyers should watch for a notice of a mortgage sale to ensure their payments are routed correctly and late fees are avoided.

SEEING PAPERWORK FOR THE FIRST TIME AT CLOSING

Sitting down to a closing with a stack of papers to sign can feel like a high-stakes experience. Homebuyers have brought their money to the table and are planning to walk away with the keys to a new property. “All these things create pressure to just sign,” says Rich Surek.  However, that paperwork could include provisions, such as releases of liability, that aren’t favorable to buyers. “The right thing to do is get copies of the documents days in advance,” Jill Surek says. That way buyers have plenty of time to review the paperwork or have someone they trust look it over prior to signing.

NOT UNDERSTANDING PROPERTY RESTRICTIONS

Not every mistake homebuyers make is financial in nature. Some people fail to realize the property they’ve selected comes with a laundry list of restrictions. “If it’s a condo, as are most apartments in Madison, WI, there are a lot of rules,” says Jill Surek, a professional real estate salesperson for Dane County Real Estate. Rules may restrict everything from what improvements an owner can make to when to take out the trash. Homeowners associations can also make similar restrictions, and both associations and condo associations can charge residents substantial monthly or annual fees.

USING THE WRONG AGENT

Avoid mistakes by having the right agent or broker helping with the buying process. “A first-time homebuyer needs someone who’s going to spend a whole lot of time with them,” Rich Surek says. Meanwhile, a repeat buyer who is investing in real estate might not need much assistance with the selection process, but could use someone who is savvy about financing options.

VISITING THE PROPERTY ONLY ONCE

A single showing will only tell you so much about a property. At 12 p.m. on a weekday, the neighbors might all be gone and the traffic minimal. “I always make sure my clients see a condo or new home a few times at different times of the day,” Jill Surek says. That avoids situations in which someone moves in only to realize that the walls are paper thin or the street gridlocks during rush hour.

FORGETTING TO CONSIDER USES OF NEARBY PROPERTIES

When viewing a home, people should consider how nearby properties can affect their quality of life. Living near a school, for instance, may be convenient, but will traffic and noise from Friday night football games be a nuisance?

While no one can predict the future, homebuyers should also remember that neighboring properties can change over time. “You might have this amazing view, but come to find out there is a 50-story high-rise going up in front of [you],” Jill Surek says. Likewise, fields can become subdivisions and vacant lots can turn into businesses. Check with local zoning administrators to find out what’s the rules are in your area. We also will investigate whether any potential projects are already in the works.

SKIPPING A HOME INSPECTION

In a seller’s market, waiving a home inspection may be one way to make an offer more attractive. However, that tactic could backfire if a buyer later discovers serious problems with the property. Along with getting the inspection, be realistic about how its findings affect the affordability of a home. “If you’re really tight on your finances and getting into a home that needs repairs, can you afford those repairs?” Rich Surek asks.

BUYING WHEN YOU SHOULD BE RENTING

The biggest mistake can be simply buying a house in the first place. “It’s not cheap to buy a house,” Rich Surek says. He estimates there could be as much as $10,000 in transaction costs associated with the purchase of a $300,000 house. That’s in addition to moving expenses and other incidental costs. While buying a house can be a wise investment for those ready to settle down long term, the cost may not make sense for those planning to move in two or three years. In those instances, renting may be more cost-effective.

Buying a home can be an exciting time in a person’s life, and by avoiding these pitfalls, it can be a positive experience as well.

Richard Surek | Senior Mortgage Advisor | 608-960-4363 | rich@gosuslending.com | richsurek.com

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Rich Surek – Questions I Normally Receive Part 1: 12 Mortgage Questions

WHAT QUESTIONS SHOULD I HAVE WHEN LOOKING FOR A NEW MORTGAGE

Having a list of mortgage questions is just the start.  Knowing the answers to your mortgage questions you have helps you get ahead of the mortgage process.

1. Which type of mortgage is best for me?

This question always helped me separate myself from other mortgage brokers or advisors in my industry. When asked, “What are my options?” for each type of loan discussed, I’ve always discuss the pros and the cons of the individual’s unique position or circumstance.

2. How much down payment will I need?

A 20% down payment is usually ideal, but there are different choices depending on your qualification. Qualified buyers can find mortgages with as little as 3.5% down, or even no down payment. There are always unique considerations for every down payment option. I look forward to walking you through each option. Contact Rich Surek Here.

3. Do I qualify for any down payment assistance programs?

I value my experience combined with knowledge of local, state and national down payment assistance programs.  If you have this question, now more then ever you need help to navigate the mortgage process for purchasing or refinancing your home.

4. What is my interest rate?

Sure, you’re going to ask this one. It’s the something we can all usually have an idea about.

My guess is you may have already looked online and shopped what nationwide rates are, maybe you already have an interest rate you’ll may qualify for. Let’s say it’s 4-5%. We’ll call that your payment interest rate because that’s what your monthly mortgage payment will be based on. Knowing that, we need to move on to the next part of the question what is my annual percentage rate, or APR.

This may be effected because we may be discussing an adjustable-rate mortgage rather than a fixed-rate loan. We’ll next discuss when is the payment interest rate adjusted? What is the maximum annual adjustment? What is the highest cap on your interest rate?

5. Are you doing a hard credit check on me today?

It’s always good to know when the lender is going to perform a “hard” credit check, called a “hard pull.” That type of payment history inquiry shows up on your credit report. I will need to do this to give you a firm interest rate quote, but I can discuss options before doing this for you. Contact Rich Surek Here.

You should stop shopping more than one source everyday, you’ll want these hard credit pulls to occur within a short period of time — say within just a week or so — to minimize the impact on your credit score.  While working with me, I can assure you the best outcome for any situation you may be in to also help minimize the need to shop for mortgages any further.

7. Do you charge for an interest rate lock?

You may want to lock in your interest rate.  This ensures that your interest rate doesn’t go up, though your interest rate won’t go down, either. The basic answer is there is no charge for me to lock your rate.

8. Will I have to pay mortgage insurance?

If you put down less than 20%, the answer will probably be “Yes.” Even if the mortgage insurance is “lender paid,” it’s likely passed on as a cost built into your mortgage payment, which increases your rate and monthly payment. You’ll want to know just how much mortgage insurance will cost and if it’s an upfront or ongoing charge, or both.

I will walk you through other loan programs that you might qualify for that don’t require mortgage insurance “PMI.” I may also suggest a higher down payment for some loan products as well.

9. What will my monthly payment be?

This is one of the more important questions anyone should ask me. Knowing what your monthly mortgage payment will be is kind of key to the whole deal. You should also want to know if there is any prepayment penalty if you pay off the mortgage early or refinance later.  I would like to go through every detail so you know and more importantly understand the options, even including tax payments, home owners insurance, condo or HOA fees are all in front of you when you make your decisions.

10. What are your fees?

Everyone should have what their clients closing costs and/or any real estate fees that are going to be addressed when we close.  I don’t like leaving anything to chance or to be left out on any transaction which could spur questions that may come after you close and didn’t understand beforehand.  No question is wrong to ask, this one is crucial because it separates the advisor’s role from a salesperson’s.

11. How often will I be updated on the loan’s progress?

Having a single point of contact throughout the mortgage loan process and/or real estate transaction is IDEAL.  I pride myself on being one of very few out there that can help anyone through both sides of a new home loan. How I will update you on the progress of your loan: by email, phone, video chat, or of course in person!

12. How long until my loan closes?

You obviously want to know what your target closing and move-in dates are in a home purchase transaction so you can make preparations. Just as important is how long your refinance can be to help settle your payment structure.  Note: I’ll advise you on what to do with your purchasing or anything else that can effect your closing properly in the meantime.

Richard Surek | Senior Mortgage Advisor | 608-960-4363 | rich@gosuslending.com | richsurek.com

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