What you should know when buying a house
CHICAGO (WLS) -- The season for buying a home is here again. While navigating the long and often confusing process of purchasing a home and obtaining a mortgage, here are some things you should know to avoid being a victim of predatory lending and hidden costs.
Use a licensed real estate agent and real estate attorney
This is not required, but highly recommended. The job of a licensed real estate agent and attorney is to serve the buyer's best interest in the home-buying and legal process. They may be able to ask important questions a buyer wouldn't be aware of, or to find loopholes or issues in contracts an average person wouldn't know to look for.
Consider loans from several mortgage lenders
Compare loans from different lenders to get the best price. Also be sure to get all costs associated with your loan, and factor that into the comparison when choosing a lender. Taking a month to shop around for a mortgage loan will not impact your credit score.
Pay attention to mortgage rates
The difference of a fraction of a percent on your interest rate can save, or cost you, thousands over the life of your mortgage. Pay attention to the possible interest rates down to the decimal points.
Check your credit
An error on your credit report could prevent you from getting the best possible mortgage rate, which can add up over time. Familiarize yourself with your finances and if you do find an error, follow the steps to dispute it.
Decide on your down payment
You can avoid purchasing private mortgage insurance if you put 20 percent or more of the value of your home down up front. Once you decide what down payment you can afford, tailor your home search at price points that are right for you. The Federal Housing Authority also has lending programs for first time home buyers that may significantly reduce your down payment.
CLICK HERE for more tips from the Consumer Financial Protection Bureau
Know your lingo
Understand the differences between buying a home "as is," "foreclosed" and on "short sale." The differences can affect your insurance, your mortgage and your future as a homeowner.
Watch out for predatory lending red flags
Know what the predatory lending red flags are and keep a close watch for them while you're obtaining a mortgage. Illinois Attorney General Lisa Madigan released a pamphlet listing the red flags and offering guidance for potential homeowners.
Take your time during closing
Once your offer has been accepted and you've moved on to closing, take your time. Pay attention to details, ask questions and know that you as the buyer have the right to understand everything you are signing.
The Federal Trade Commission offers a mortgage shopping worksheet to help buyers compare mortgages and ask the right questions to pick the right one.
Taking these measures can help prevent you from becoming a victim of hidden costs like the ones ABC 7's Jason Knowles exposed.
