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Getting Ready To Buy Your 1st Home
Dated: January 27 2016
At Sandy Hartmann & Associates, one of the things we pride ourselves on is the number of first time homebuyers in Tampa Bay and Pinellas County that we’ve helped over the years. Often times, our relationship with these clients becomes a long term one before they’ve ever bought their first house.
Buying a first home is the biggest investment many people will ever make in their lives, and if it’s managed like any other investment (think stocks, mutual funds, 401k), it can be a profitable long term decision for many.
Here are some pieces of advice to help you prepare for purchasing your first home:
Start saving your money NOW- A conventional home loan requires a 20% down payment. So if you’re looking at a $150,000 home, you’ll need $30,000 to put down, plus some closing cost cash for loan fees, title insurance, an appraisal and several other items. There are great FHA programs out there that can be used as well and require somewhere around 3% down (so only $4,500 down on a $150,000 home), but be careful with these loans. In exchange for a lower down payment, you’ll be required to pay PMI (Private Mortgage Insurance) and that will increase your monthly payment (sometimes by a few hundred bucks or more a month). PMI is in addition to your regular taxes and homeowner’s insurance and insures the bank, not you.
Go Over Your Budget- It’s happened time and time again, a lender gets our clients approved for say, $300,000 for a home loan. Our clients excitedly start their home search, only to realize a few weeks later that they can’t actually afford the payment on a $300,000 home loan due to a multitude of reasons. So be sure to go over your realistic budget and decide what kind of a payment you can afford. I would recommend doing this before you see a lender (see next bullet point about that). You can also go here to calculate an average 30 year mortgage payment (this will not include taxes and insurance that will also have to be added to this payment each month- it’s called the escrow payment).
Talk to a Lender Before You Even Start Your Search- Now days, there are very few homeowners that will even entertain an offer from a buyer if there’s no Pre-Approval letter attached to it from a reputable lender. And to be clear, a Pre-Approval Letter is NOT the same as a Pre-Qualification letter, which you can basically get just for being alive. So get to a lender (actually, speak to 3 of them) to find out what your credit score is, what amount you can qualify for (take a paystub and last year’s tax return for extra points), and why your closing cost fees from them will look like (they can give you an estimate). Then compare those fees and average rate quotes to see who can give you the best deal. Your lender can then tell you what they need from you to get that pre-approval letter.
DO NOT, I Repeat, DO NOT Make Any Large Purchases in the Meantime- I can’t tell you how many times clients finally find the home they love, they go to their lender to get the Pre-Approval letter for the contract, and they are no longer qualified because they just bought a new car, boat, etc and now have a new loan on their credit report. The same goes for switching jobs, unless absolutely necessary, try not to change jobs in the middle of a home loan transaction. Also, don’t apply for any new credit cards or lines of credit either- just keep your credit report nice and clean for those loan underwriters.
Lastly, Know Where You Want to Buy a Home- Be sure to drive through some neighborhoods not just during the day, but also after dark to make sure that’s where you really want to live and that the neighborhood is still that quiet, peaceful place you thought it was during the day. If you’re not sure about job commuting, take a test drive from your target neighborhood during rush hour to make sure the commute is what you thought it was. If you want to easily know what’s for sale in your targeted neighborhoods, feel free to download our Phone App as well- it will tell you where homes are for sale nearby and what they cost as soon as you login- perfect for when you’re checking out a new neighborhood! (You can also look up past sales to see what homes ACTUALLY ended up selling for too)
Gabe has been a resident of Seminole and the surrounding Gulf Beaches his entire life. His vast market knowledge of many of the trendiest Downtown and Beach subdivisions in Pinellas County is simply u....
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