I was sitting there purchasing ice cream at the grocery store listening to a bank employee repeat the social security number of someone getting a loan....that's just wrong.
Raleigh, North Carolina (PRWEB) October 18, 2013
Andy May, the mortgage expert, and Lynn Furr, veteran of the Raleigh North Carolina real estate market, explain the top 5 reasons why the consumer needs to be well educated before moving on the purchase of a new home.
Who is the consumers' fiduciary? Where does this person work? What are this person's credentials? Is this person regulated by the State? Federal entities? Will this person be fired next week, with 50,000 other bank employees? Is this person licensed?
These are the basic questions a consumer should ask when employing a professional to handle the consumer's (likely) largest liability. After-all, some banks hire only 18 year olds to sell, sell, sell... without a care for the after-effects on the consumer. Here, Lynn Furr, 919 306 0018, and Andy May explain five important methods to limit the consumer's liability when purchasing a home.
Number 1 -
Do not "put your best foot forward" when making an earnest money and due diligence check out to the seller.
Some Realtors use this as a tactic to force the consumer into purchasing the property. Andy May just had this experience occur whereby the consumer put down $10,000 on a $300,000 purchase. Whoops. There it goes. We were unable to close this loan due to the consumer's change in marriage status during the underwrite. And what about the $10k? Goodbye. So, don't think that putting more money down for earnest money and due diligence is a good idea. Lynn Furr states, "some consumers think that more money makes the consumer look stronger, when in reality it only hurts the consumer financially if the property isn't purchased".
Number 2 -
Remember, the consumer is the best advocate for the consumer (get educated). A consumer should put no more than 1% of the purchase price down for both earnest money and due diligence. Due diligence money is considered "at risk" and is lost if the home is not purchased. This started in 2011 and benefits the seller for the seller's time. If the home doesn't appraise then due diligence money may be recovered. But effectively, the consumer needs to know that this money is gone when the due diligence period hits.
Number 3 -
Change the contract. Yes, attorneys and Realtors love to hear that (facetious). One property that is closing this month the buyer wrote into the purchase and sale contract a two-tier due diligence period (11-20 days $200 and 21 days and beyond $500). If the person hired to be the Realtor doesn't understand this - educate!
Number 4 -
While the seller will get the buyer's due diligence money when the date hits, the buyer will also have to pay $425 for an appraisal and $350 for home inspections. Lynn Furr recommends getting the inspection first, so if the results are bad then the buyer can re-negotiate before spending the $425 for an appraisal. Generally a home buyer should expect to lose between $500 and $1,000 per home that is put under contract and not purchased, sometimes more if the time period extends into 3 weeks or so of review.
Number 5 -
Earnest money is the biggest part of the equation. If the consumer isn't able to obtain financing then the buyer often times will receive the earnest money back. However, make sure the consumer finds out the Realtor's policy on this. Of the suggested 1% earnest money/due diligence money - try to put 90% of that amount in earnest money. Other money saving areas (the consumer must plan for these costs): HOA fees (HOAs may charge $500 to see the insurance policy); Surveys (not required by the lender - don't waste money); septic and well testing.
These simple steps put the home buyer back on equal footing with the home seller. Before 2011 the equation tilted in favor of the buyer. Now, the seller is in command. The buyer is flat-out the due diligence check, inspection monies, time, appraisal monies, and incurs the frustration of potentially not acquiring the home.
For more information on mortgage loans, call ADRMortgage.com at 919 771 3379 or visit ADRMortgage on the web. Get the most value out of a home sale or purchase by working with licensed professionals that have significant experience. You’ll be thankful you did. You can find additional information from Andy May, mortgage expert, at Andy May's blog. ADRMortgage.com was founded by Andy May in 2005. For additional information please go to http://www.adrmortgage.com or contact Andy May directly. License number 103418.