We all can use a little help from our friends from time to time. And I can think of no other time when more friends come out of the woodwork with sage advice and stories of their own experiences than when you are buying and financing a home. (The only other event that even remotely comes close is when a baby is expected.) Once you decide to purchase a home you will hear from everyone you ever knew who has been down that road giving you direction on what you should do, shouldn't do and suggestions about what you woulda, shoulda, and coulda done.
I truly believe that most of these folks have your best interests at heart and there are some areas of this venture that they can be of great assistance (packing up the kitchen, anyone?) but there are areas that even the most fervent of your fans are not qualified to give you counsel.
If you want a referral for a real estate agent or a lender for that matter, by all means go to your friends or family (and see how often my name or that of Tippecanoe Mortgage comes up-ha!) In any event, one of the best resources at your disposal for a good real estate agent and a lender will be your friends and family. But once you have been united with those two trusted principals in the transaction-it is time for friends and family to bow out-other than to support you in your decision to purchase a home.
Because even though your friends and family no doubt are concerned about you in this biggest of big decisions, they aren't in most cases real estate and mortgage professionals. They haven't done the education, been licensed by the state, gone through the endless rounds of classes on all the Federal and State laws on how to conduct their business legally and protect the buyer, who, after all is you.
I can't count the number of times that a borrower at the behest of someone near and dear has asked me to do something that is well, er, no better way of saying it than just plain illegal. For me and for them. And since I don't look very good in orange jail jammies...the color doesn't do justice to my eyes...
I just may not be able to do what it is that your advisor has suggested. Please don't misunderstand, when most people make these requests or suggestions they don't realize they are asking you or me to do anything wrong. They just don't know how tightly mortgage loans are controlled by the Federal Government these days. We are regulated with a capital R. (Such as we can't pay fees on your behalf or pay out money for referrals.)
Your real estate agent is also a professional in their field. Agents are educated in negotiation, marketing, real estate law, and are continually informing themselves of market trends and updating data. What was true about the local market even six months ago may not be true today. So looking at the reports that your agent gives you about neighborhood pricing patterns, customary closing costs, and explanations of the process are probably quite a bit more relevant than when your parents bought their home twenty years ago. Things have changed.
Since the advent of the large foreclosure market many people on the advice of family and friends come into my office thinking they want to purchase a foreclosure because they will have a teeny tiny mortgage. Just think how small your payments will be if you buy a thirty thousand dollar home. What they don't know is that due to Federal and State regulations on lending fees it is almost impossible for a lender to loan on a mortgage amount that small. The basic required fees of lending-appraisal, credit report, and title fees will exceed the state and Federal limits that lenders can charge. And, nothing against you Pork Chop, but lenders are in business to make money, not pay for your mortgage loan out of their own pocket. That is just a rude hard fact of life. And by the way-have you ever walked through a house that was for sale for $30,000?
Oooph. Kind of rough-don't you think?
If you are working with an agent who has been referred to you, trust that they are trying to do a great job finding you the house with the amenities you want at a price that you can afford to pay. Your lender is also navigating the way through the process and is trying to obtain the best financing situation for you based upon your payment requirements, and credit and financial profile. Keep in mind that your financial picture may be very different than that of your best friend so your loan type may not be identical.
Let the real estate professionals do what they do best and allow your friends to contribute in other ways such as pointing out great schools, neighborhoods, paint colors, and music...
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And you too will get by with a little help from your friends.
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