2. Simply dismissing FHA loans
Even though there is an upfront mortgage premium, FHA loans have several advantages:
- Required down payments range from 3.5% to 10%
- The loans are assumable when you sell your home.
- Minimum credit scores range from 500 to 580, and credit scores don't influence pricing
- Underwriting can be flexible
A lower mortgage payment doesn't always represent savings. If a 15-year loan and a 30-year loan had the same mortgage rate, the 15-year loan would require a higher monthly payment than the 30-year loan but you'd pay A LOT less in total interest on the 15-year loan.
4. Only considering a 30 year fixed rate
If you know you will be in your home for over five years, then a 30 year fixed rate probably makes sense. If you are younger though and know you will be moving within the next five years, you should consider a five year adjustable-rate mortgage (ARM)--which will give you a fixed rate for a specified number of years and can often be a lower rate than a 30 year fixed rate.
5. Not hiring a real estate attorney
In the Chicago area, having a real estate attorney is normal - almost required. As a buyer, not having a real estate attorney can put you at a huge disadvantage. There are contract deadlines, title policies to review, closing paperwork to review, tax prorations to figure out, etc. Getting clean title and making sure the numbers are right is very important on any transaction. If you do not have a real estate attorney on your side - good luck trying to figure it all out. The relatively small fee ($500 at Bradford Miller Law) is well worth it.
Offering free legal representation to homeowners seeking a short sale