Advice to Buyers
1225 Franklin Ave. Suite 325, Garden City, N.Y. 11530
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Even though 99% of the time we represent the seller, it is our duty to be fair to the buyer and also protect them against fraud and other predatory practices.
We have compiled a list of situations that a buyer normally faces when buying a house.
You can print and keep the page to check with it as you go along the transaction of buying your home.
We also made a checklist that you can find at the end of the page so as the situations arise you can check them off and know what to do.
1. The Realtor: The Realtor is your guide to showing you homes. They are also your guide to a smooth transaction. A good Realtor should have some knowledge of how things work, from mortgages to engineers, to attorneys, to banks. They have to be able to guide you through the transaction and help you with the pit falls. 99% of Realtors think their job ends when they find you a house. That's when it should begin. Our Realty helps the buyer get everything together in half the time it would take the buyer and his/her attorney and mortgage broker to get it together. For example, we get copies of the surveys, co's and other paperwork from the townships saving the buyer the expeditor fee the attorney would pay to get the info and pass the bill to the buyer. Some attorneys like to order new surveys which cost the buyer $450.00-$750.00. They do it to collect the $150.00 kickback they get from the survey company for ordering a new survey. . Just from this example our Realty saves the buyer $1,000.00.
2. Mortgage brokers and traps: Selecting a good Mortgage broker is vital. First of all you should get them as much info as needed to have them pre-approve you!! A pre-qualification is not adequate anymore. A pre-approval means that the mortgage broker has checked your credit, 2 years of tax returns, 6 months of pay stubs, and your assets. 80% of your paperwork is in. He can now form a better opinion than in a pre-qualification, where they may check your credit at the most. Plus a pre-approval means you can close faster because 80% of your paperwork is in. Sellers like that.
Next, you need to make sure of the points the Broker will charge. THERE IS NO SUCH THING AS A NO POINT LOAN!!! An origination fee is a point, an application fee is a point, a review fee is a point, the lock in rate fee is a point, plus your interest rate is a slew of hidden points. If a broker asks the bank to collect a certain amount of points the bank will raise the interest rate to accommodate the broker. That is where the idea of buy down points comes from. You pay the broker or bank points up front so as to reduce your rate and save the fact that you will pay those points up to 5 times over a 30 year loan. Unfortunately 99% of the Realtors out there have no clue on how to read a good faith estimate so they can't help you. We actually help our customers cut their closing costs by $1,500.00 just in hidden points. But we are not ordinary Realtors.
Lastly you need to make sure a broker won't hit you with last minute points. How this works is the broker tells the bank moments before the closing to collect 1 or 2 pure points. Then the broker disappears off the face of the earth. When you go to close the points issue comes up. You need to come up with that money on the spot. Now you are upset and want to call the broker to tell him/her to take the points off. But you can't find him/her. The bank cannot take them off because they need the brokers' approval. If you want you can postpone the closing but you will have to pay thousands in penalties for everyone to come back and close, that's if the seller doesn't refuse to sell to you by now. So you are cornered. Right? Wrong, if you had bought a house from L.I. Dreamhomes Realty we would have helped you avoid this situation. We know which brokers do this and we warn our customers. How do you beat this???? Just show up or request a copy of the good faith estimate signed by the broker the day before or the morning of the closing. Have your attorney fax it to the bank attorney the day before or the morning of the closing so as to ensure the broker cannot change it the day of the closing. Some brokers are arrogant and will still change it. Come to the closing at least 1 hour earlier, ask to see the closing statement again and if you see the points, call the broker immediately from a number he cannot recognize on his caller ID. Chances are he did not shut his cell phone yet so you will catch him unprepared to deal with you. Now, pass the phone over to the bank attorney to ensure he makes them take the points off. We have compiled a list of Mortgage brokers who do this practice and can warn our customers ahead of time. No one has our resources and experience, that is why we can protect our buyers better, and keep getting referrals from satisfied customers. Oh, and if you get taken because you decided not to buy from us, you can always call the banking department and file a complaint against the mortgage broker, but the banking department rarely does anything.
3. The attorney: It is important to hire a Real Estate Attorney!!! They know specifics on just Real Estate. They can protect you best. You must find an attorney who is not too busy for you. He is there to answer questions and returns calls. If he is busy he will not give the proper attention to your deal and will overlook important things. Also remember you get what you pay for. A closet attorney $700.oo or less (works out of his closet at home) will not even have a secretary and will take you longer to close because no one can reach him/her and there is no paralegal to expedite things. Other attorneys can't reach him/her.......you see the difficulty created. The attorney should also be well rounded and know about mortgages, engineer reports and more.
4. The engineer: This is important. You need an engineer who doesn't want to be your hero. This is what we mean. Some engineers like to find things that are minor and exaggerate them to make it look like a major problem. They know you trust them so they will discourage you from buying the first and second and maybe the third house too. You think they're great because they find all the problems with the houses you want to buy and before you know it you become a professional house problem identifier, and the engineer becomes rich because where he would do 1 report for you he now does 3-4. Before you know it he made $2,000 AND YOU ARE HOMELESS. How to get around this..... have the engineer show you the problems personally, then get an expert to come and check it again. Second opinions are important. Beware of binocular engineers, the ones who check your roof with binoculars. Make them go on the roof and check it. If they won't go, fire them. Also remind the engineer that it's ok if the house is sound, and you won't think any less of them if they didn't find any problems, if there aren't any. When hiring termite inspectors make sure they don't do treatments. The "treatment guys" will always find termites and carpenter ants and offer low prices to remedy the problem....... the one that may not exist. The "inspection only guys" have nothing to gain from the outcome of the report so they will be fair.
5. The insurance and PMI: Ok here we are, ready to close and we need insurance. The bank will require you to get insurance covering the mortgage amount.....that is wrong!!!! But you cannot argue with them so you do it to close. The next day call your insurance company and reduce it to REPLACEMENT VALUE!!! No matter how much insurance you buy the insurance company will only pay you to replace the structure and maybe the valuables inside if you can prove they were there, so if you have $500,000.00 in insurance and the replacement cost was $175,000 guess what the insurance will pay...... so you overpay and have it cost over $500.00 in wasted payments yearly. Remember the flood insurance in FEMA flood zones. Better safe than sorry!!!
PMI means Primary mortgage insurance, and you pay it if you did not put down 20% down payment. Now you have to wait till you pay 20% of the value off right?............ WRONG!!! If you can prove that your house has 20% loan to value then the PMI is not needed. Unfortunately no one will tell you this. Unless you used our Realty. How do you beat this? We will tell you so if you do something uninteligent, like buy a house from another Realtor, you will know what to do. Request that your PMI be put separate from your Mortgage payment. Then contact the Realtor you bought the house from and ask them for a CMA, a comparative market analysis in writing. If you can prove that your house is worth 20% more than what you owe on your mortgage the PMI can be dropped. If you pay $100 a month in PMI and you have to pay it for 2-4 years it will cost $3,000-$6,000 but if you can prove 20% LTV in the first 4 months then what did you save? You will want to get your attorney involved to get the PMI dropped because the bank will find 100 reasons to keep you paying the PMI. If you worked with us we will help you for free, if not, you have to pay the attorney.
So with these simple steps alone, if you used us you would save:
$1,000.00 for surveys and attorney kickbacks
$3,000.00 in mortgage broker points
$1,500.00 in engineer reports
$500.00 in unneeded homeowners insurance payments
$5,000.00 in PMI payments
$11,000.00 in possible savings
just by using a Realtor who knows what they are doing!!
Of course you may feel you need to use a big name realtor, because that is the cool thing to do,
but remember it will cost $11,000.00 or more minimum!!!
If it is worth it to you, go for it!!!
There are about 10 other things you can do to save more money but if we mentioned it all then other Realtors may claim our knowledge for theirs just by reading our information!!!
Make sure you read the advice above before you use the checklist below or you will not understand it.
Have more questions, need some free advice?
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(516)512-8911 or email us at: firstname.lastname@example.org
If we know the answer, we will help, if we don't we will find out for you!!!