The Top 3 Home Buying Mistakes Buyers & Realtors Make When Securing A Mortgage

Purchasing a house is one thing, successfully closing escrow on a purchase mortgage loan is something else entirely. The top three mistakes home buyers and real estate agents make has nothing to do with mortgage loan financing and everything to do with the real estate purchase contract.

“Anything specified, spelled out or added to a residential real estate purchase contract becomes material and has the potential to impact the origination of the that mortgage loan.”

The top three home buying mistakes happen with the real estate purchase contract.

The top three home buyer/realtor mistakes are as follows:

1. Including the sale personal property in the residential purchase contract

Here’s why-by adding personal property to the contract including such items like a washing machine, children’s play structure, or an outdoor patio set, these things become material to the transaction and when the buyer goes to get the mortgage loan that’s when things get challenging. The mortgage company will require a bill of sale. The bill of sale will have to be a signed document between the buyer and the seller stating the additional personal property included in the sale has no dollar value.  When the mortgage lender sells the loan in the secondary market, an investor buys the loan under the promise, that the loan is collateralized by real property, not personal property.

2. Including pest reports in the residential purchase contract

Here’s why-if you are a home buyer, obtaining a pest report is always a good idea. It’s up to you and your real estate agent if you want included in the ratified purchase contract. Above all, know this….including in the contract a “request or a transfer of a pest report”, this will trigger the mortgage company to require a copy of that that the pest report. Put another way, it will need to “pass clear pest” prior to ordering loan documents. If your purchasing a home and you feel you need to purchase an additional pest report go ahead and do so. Including it in the contract will cause the mortgage company to require prior to closing escrow and the report must be free of all wood destroying pests.

3. Including a rent back term in the residential purchase contract

Here’s why- this only matters on residential primary residence purchase transactions when using mortgage loan financing to acquire the property. When you purchase a home, you expressly tell your mortgage lender, that you will occupy the home upon close of escrow. Including a rent back is fine,  to accommodate sellers, such as when the sellers are closing on the purchase of their own.

If the rent back period exceeds 30 days, this could create a hiccup with your mortgage company. This creates doubt in the eyes of the mortgage lender that the property you are purchasing is indeed your primary residence. Simply put, if you are purchasing a primary residence, using primary residence financing, then the property needs to be your owner occupied home. If your purchasing the property as an investment property, you pay a premium for that and rightfully so because the lender takes greater risk in providing that type of financing.

If you and your real estate agent can avoid these three common home buyer mistakes on the front end, your home buying process becomes much easier for you and all the other parties involved. When making an offer to purchase a home consider these three obstacles and how they should be handled. A sharp real estate agent and diligent mortgage lender can walk you through these obstacles that often times, come up.

If you are in the process of purchasing a home or would like to get preapproved to purchase a home down the road, feel free to submit an online prequalification request, see this link sonoma county loan prequalification. Avoid The Top 3 Home Buying Mistakes Buyers & Realtors Make When Securing A Mortgage.

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