Before hitting another open house, it is of paramount importance to get your mortgage needs squared away. A mortgage is the biggest debt most of us will ever carry, and a home is the most expensive purchase we will ever make. That’s why it’s so important to avoid mistakes. During the 2007-2009 financial crisis, the United States economy crumbled because of a problem with mortgage foreclosures. Even high end homeowners were having trouble paying their mortgages and heading towards foreclosure. Why? Let’s start by exploring what we call a ‘Mortgage Blunder’. A Mortgage Blunder can occur before, during and after a lending transaction and it can be made by any of the people or companies involved in the transaction. It can be any kind of error, mistake, poor judgement or lack of experience which ends up either:
- costing you money.
- costing you time or slows down the processing of a loan.
- creates stress, frustration or sleepless nights.
- makes the lending transaction complicated or more onerous than it needs to be.
- worst of all, lost opportunities.
In my experience, I have seen people making Massive Mortgage Blunders that could have been avoided with a little bit of knowledge and information. Just one question can save you big $$$ if you know the right question to ask.
As a team we sat down to brainstorm and recall stories we have come across in the past 18 years of doing business- we ran out of whiteboard room, and so have collated a report titled 127 Massive Mortgage Blunders. Can you believe we got that many? Let’s take a look at some of the biggest mortgage mistakes that homeowners make;
Mortgage Blunder #6: Property purchased without a 14 day finance or building/pest clauses.
Did you know that when purchasing a property you can add in ’14-day finance and building /pest inspection clauses to the purchaser’s satisfaction’ onto the contract? This clause gives you or the lender 14 days to complete a valuation, building or pest inspection on the property. If everything is fine, you continue with the purchase. However if the valuation comes in low and you have no finance clause what would you do? What would you do if there is a white ant infestation and you don’t have a building and pest report clause? With the above clauses in your contract, you are able to void the contract AND keep your deposit. Important Note: At an auction, you cannot add this clause. You must arrange the inspections and valuations prior to bidding at an auction or take the risk! Just knowing about this clause can save your 10% deposit. That could be $55,000 for some, $75,000 or even $109,000 plus legal fees!
Mortgage Blunder #31: Not updating maiden name on identification documents
Having your identification documents with variations of a name or combinations of maiden and married names means added work to reconcile the issue before your application can be submitted. This can be a time-costly exercise dependent on your time availability and could eat into a vendor’s comfort time of having an unconditional contract.
Mortgage Blunder #66: Changing financiers during construction.
Sometimes borrowers buy land quite some time ahead of getting building contracts and building submission requirements prepared and have to get a separate loan for the land, and then a second loan for the construction. Don’t make the mistake of taking a mortgage with a lender who does not offer construction loans or one whose construction loans are not competitive- this portion is usually a bigger loan than your land loan.
Mortgage Blunder #77: Tenants delays in providing access to the valuer.
We all know that a financier will want to value a security property so make sure you give a heads-up call to the property manager to prepare the tenant to expect a call to arrange appointment. We suggest asking the property manager to speak to your tenant ahead of the call to find out some possible times that would suit for a valuer to visit and also relay to your tenant that your valuation is ONLY for refinancing purposes, and there is no threat to their tenancy.
The above are only a few of the examples of blunders we have identified that can have an effect on the smooth process of taking on a mortgage. Our advice? Take your time educating yourself about the process—and be aware of the big missteps mortgage shoppers often make. Everyday we work really hard to deflect imminent blunders. Of course, when I speak to clients and people looking for financing options one on one, we work through some basic techniques to avoid a Massive Blunder. We ask lots of questions.That’s right, we don’t want ANYONE to experience mortgage madness, loan lesions or finance fury ever again!
By reading through the 127 Massive Mortgage Blunders, you can use them to ensure that you don’t face any of these challenges ever again. If you would like a copy of this important document and be able to review it next time you need finance you might just be able to save yourself a considerable headache.
Our top 127 Massive Mortgage Blunders can be used right now to ensure that your next finance transaction is smooth sailing all the way to the bank… so to speak.
Ring Loans Australia now on 1300 855 430 to receive a copy of the 127 Mortgage Blunders.
By the way, knowing this stuff is going to change the conversations you have with your financier in the future. You will be able to ask better questions and together we can develop strategies for maximising your finance requirements. You will be able to proactively ensure your next finance transaction is a success, rather than reactively scratching around for new solutions.
Yours in Finance,
Founder & Managing Director
Loans Australia Pty Ltd
P: 1300 855 430