Applying for a Mortgage? Avoid These Common Mistakes

If you're a first-time buyer, an itch to start looking at homes typically starts just after you make the decision to buy. The feeling may be so overwhelming that it's the very first thing you do. That's mistake number one: Looking at homes without knowing how much you can spend on a home isn't just a mistake, it's silly.

So, how do you know how much you can spend? By visiting a lender and getting preapproved for a mortgage. Sure, it's not as exciting as actually looking at houses, but it's the first step in a process that, if not followed, presents plenty of potential pitfalls that may make it impossible for you to purchase a home.

Before you put pen to paper, though, signing away a big chunk of your salary for the next 30 years, do yourself a favor and prepare.

Check Your Credit

Did you know that up to 79 percent of Americans' credit reports contain errors? Twenty-five percent of credit reports contain errors that may result in the denial of credit, according to the U.S. Federal Reserve. That's why it is so important that you check yours before setting foot into a lender's office.

Everyone is entitled to a free copy of his or her credit report once a year. Get yours at AnnualCreditReport.com, the only source authorized by the Federal Trade Commission to provide the free credit reports.

Fix any issues on your report before applying for a mortgage.

Tell the Truth

Not too long ago lenders were busily providing what have come to be known as "liar loans." These were mortgage loans to people who couldn't afford them and were obtained by means of a "no document" process, meaning the applicant didn't have to prove his or her income or verify assets.

Those days are over, and obtaining credit is nowhere near as easy as it once was. Although you may be tempted to stretch the truth on your application to ensure you get the loan, don't give in to the temptation. The lender may dig up the truth, and you will be denied the loan.

Turn Down the Job Offer

One of the first things the lender will look at is your employment history. They want to see a minimum of two years with your employer or in your current field. While switching employers during the loan application process may not derail the loan, it will most likely delay the process while the new employment and salary are verified.

Don't Make Major Purchases

House hunting is exciting and shopping for the new house is probably top-of-mind. Don't do it.

The lender may run what is known as a "soft pull" of your credit just prior to closing escrow. If, for some reason, the closing is delayed beyond 30 days, you can almost count on the lender pulling your credit again.

If new debt is high enough to change your debt-to-income ratio, you may no longer qualify for the mortgage. So keep the credit cards safely tucked away in your wallet until after escrow closes.

The loan application process isn't nearly as glamorous and exciting as touring homes and shopping to outfit the new home, but it's the most important step in the process. Don't make any major financial or life changes between applying for the loan and closing escrow, and you should have no problems.

Consider Local Experts

There are so many options to choose from when it comes to lenders, and everyone has their own situation to consider. Sometimes working with a loan officer or lending company who is just down the street might help you avoid potential frustrating communication scenarios. For a list of local lending options, contact Brian Pingleton, a Realtor with Keller Williams in Tulsa, and he will direct you to some choices that his clients have considered excellent in handling their transaction.

*** For all the real estate tools and the only Realtor you will ever need, visit TulsaHomeGuru.

How to Stage a Vacant House

Most homeowners learn about the value of staging their homes for sale from their real estate agents. The statistics are clear: Staged homes sell quicker and for more money.

What happens when you don't live in the home? If you've used it as a rental or had to move to the new home before putting your current home on the market, you're stuck with a vacant home for sale. The average homebuyer doesn't have the ability to look at empty rooms and realize their potential, according to Kiki Wanshura, regional sales manager at Obeo, a virtual tour and marketing solutions company in Utah.

When confronted with the need to market a vacant home, the homeowner has several options.

Hire a Professional Home Stager

Think back to the last time you were in a model home. Everything was perfect: the furnishings, accessories and color palette. Model homes are carefully staged to emotionally appeal to buyers. This is one reason so many new-home buyers overspend on upgrades – trying to get their home as close to the model as possible.

Hiring a professional stager to stage an entire house may cost from $2,000 to $5,000, depending on where you live and the size of the home.

Stage the Home Yourself

A less expensive alternative to hiring a professional stager is to do it yourself. Most large cities have furniture rental companies where you can rent a sofa and end tables or enough furniture to fill an entire house. Use large moving boxes as beds. When covered with a comforter or quilt and lots of fluffy pillows, unless someone touches it, nobody will know it's not a real bed.

Purchase accent pieces from thrift stores, garage sales or online, such as at Craigslist or eBay. Hang a shower curtain and some towels in the bathroom, and place a few decorative items on the kitchen counter.

Model homes are good sources of ideas, or go online and look at some home decorating sites for inspiration.

Virtual Staging

What would you say if I told you that you could stage your vacant home, even replace the flooring and paint the walls for a couple hundred dollars? With virtual staging, you can do all that and more.

Virtual staging is a relatively new concept that is catching on all over the country. Virtual staging professionals work off of photographs of the rooms and add furniture and accessories from their digital warehouse.

Although the house won't look the same in person as it did online, virtual staging captures the buyer's attention at that important stage when they're looking at homes online. It's important to let buyers know that the photo they're viewing online has been virtually enhanced to avoid giving them the impression that they're being deceived.

The cost of virtual staging may run as high as $100 per photograph, according to Kim Palmer of the Star Tribune.

Hire a Home Manager

Nothing gives a home that lived-in look as much as when someone actually lives in it, with food in the refrigerator and clothes hanging in the closets. And there are now businesses that can help home sellers achieve this look. For example, Showhomes is a nationwide home staging service that provides what they call "resident managers" to live in vacant homes while they're on the market.

The managers are meticulously screened and most bring their own furniture and accessories. Best of all, rather than the homeowner paying for utilities on the empty home, the resident manager pays them. Showhomes purchases the additional homeowner insurance required.

Hiring a professional tenant is not for everyone. Showhomes, in fact, only supplies its services to homeowners whose homes are listed at $500,000 or more. They charge a staging fee of anywhere from $1,000 to $3,000 and, at closing, the homeowner pays .25 percent to 1 percent of the list price to the company. Since Showhomes is a franchise, some pricing structures may differ by region.

"On a million-dollar home, we would typically charge a $2,500 setup fee and a $5,000 success fee if and when the home sold, paid at closing," Thom Scott, director of operations for Showhomes tells the Daily Breeze. "If we didn't succeed in producing a sale, the homeowner would only pay the setup fee."

Hire a Local Expert

Some Realtors actually provides similar services at a reduced rate when using them to list your home. Brian Pingleton of Keller Williams in Tulsa is one such agent. He offers incredible opportunities to for sellers, such as help with staging on a budget, organizational techniques, increasing curb appeal, and more. "The whole idea is for a potential buyer to see the home not as the current seller does, but how the buyer sees the property in their own mind, using their own furniture and decor.  Homes that are staged well generally sell faster and for more money. If that's important to a seller, they could be losing money by not taking some simple steps for preparation, especially since it is generally inexpensive and quick to do."

*** For all the real estate tools and the only Realtor you will ever need, visit TulsaHomeGuru.