Helpful Tip First-Time Home Buyers
Steps to Move from Renting to Owning a Home
Interest rates now are at historic lows and an array of reasonably flexible low-cost loan programs are available plus several
home-ownership assistance programs can help just about everyone experience home ownership in the real estate market.
This is a good time to buy your first home and get out of the "rent rat race."
However, if you been a renter for quite a while, you may not be aware
of the steps involved in acquiring a home mortgage. This report will give you some
tips to make the purchase of your first home a pleasant and successful real estate experience.
1) Clean Up Your Credit Rating First
During the pre-qualification process, you'll learn if there are any
potential problems in your credit history. This, of course, assumes that you are truthful with the
mortgage professional. Leaving out important facts isn't smart. You may sneak
something past during pre-qualification, but everything comes out before closing.
So, if your credit isn't spotless, be honest about it. Your mortgage professional may be
able to clear up the problem or, at least, deal with it up-front rather than at the formal
mortgage application when suspicious eyes will wonder why it wasn't disclosed earlier.
Review your credit report carefully with your mortgage professional. It
is not unusual for non-payments to be listed that aren't yours. Your mortgage professional
can help you address problems like these. Sometimes, a simple letter to
the creditor explaining the circumstances rectifies the situation. But, credit repair can take
months, so start early.
2) Get to Know a Real Estate Professional You Can Trust
As a first time home buyer, the biggest mistake you can make is believing that
you can save money by not using a Sarasota Realtor®. Buying a "For Sale By Owner," home, known as a FSBO, seldom gets you the best price or the best protection regardless of the claims made by
the Seller. Many FSBOs are generally selling it themselves because no Realtor®: will list the home at
the price the Seller thinks its worth.
The Realtor acting as the Listing Agent for a home may tell you that he can
represent both you and the seller fairly (that means really representing neither of you). While that
can be true, it’s generally better to consider using a Realtor® who will
represent you and you alone, as "your Buyer's Agent." Particularly on your first home
purchase, you want all the representation you can get.
3) Estimate How Long You Might Own the Home
Probably the worst thing that can happen after buying a home anywhere is to find out that you need to
sell it again within a year or two. If you have to sell a home before its value has had a chance to appreciate enough
o cover selling costs and commissions, you can put your yourself and your family in a bind. This is especially true
if you buy a home with a down payment less than 10%.
Your commission on selling real estate may average about 6%. Other closing costs add
another 1.5% to 2%. So, unless the home appreciated by more than 8 - 10% while you owned it,
you may loose your down payment or worse, you may actually need to "write a check" at closing. To be safe, make sure your plans include staying in your new
Florida home close to 5 years before you'll sell it.
4) Know Your Rights Regarding a Mortgage Application
There is a federal law called RESPA, which stands for Real Estate Settlement Procedures Act which gives you certain
rights that you ought to know about. RESPA requires all lenders to disclose information to potential customers
throughout the mortgage process, By doing so, RESPA protects you as a borrower from abuses by lending institutions.
RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account
practices, and business relationships between closing service providers and other parties to the transaction.
For more information on RESPA, go to the
RESPA website or call (800) 569-4287 for a local RESPA counseling referral. Your Realtor® will also be able to help you understand
rights under RESPA.
5) Shop Around For A Sarasota Mortgage Professional
Like most other areas, the quality of mortgage professionals and the programs they
offer varies significantly. Don’t settle on the first lender you talk to. Shop around
as much as if you were buying a car. Don't settle on one until you feel you can
completely trust the professional and the company he or she represents.
6) Get Pre-qualified for a Mortgage Before You Start Looking
Before you even think about looking for a home, get pre-qualified by a
mortgage professional. Pre-qualification is free. It's simple, and it gives you a definite
advantage in the buying process. Sarasota home sellers like to know they're negotiating with a party that
can actually close the deal. They'll often accept a little lower offer for a pre-qualified buyer.
The pre-qualification process will clarify your financial situation, and
indicate how much home you can afford. This will help you avoid wasting time and the aggravation
that comes from looking at Sarasota real estate properties you cannot actually afford.
7) Compare More Than Just Interest Rates
While interest rates are certainly a significant
factor, compare the total cost of the transaction you are planning. Different Sarasota mortgage firms charge fee for different things leading
to very different total costs when you get to your closing. Demand to see a full accounting of all the fees you will pay at closing.
Ask how long the pre-qualification is good for. You don't want to go to the pre-qualification process only to have it expire before you find the home of your dreams
8) Decide what features you "need" and those you just "want."
You are going to see a lot of homes before you find the one that's right for you and each
one will be different. To avoid being "swept away" by all the features and amenities there are in some homes,
do yourself and your Realtor®: a favor. Make a list of the items that are "must haves" and another of "wish list"
items and give it to your real estate agent. It will help him or her identify homes to show you.
You can change the list as you go along, but just having it in writing in front of you will help keep you focused
and on-course to finding the right home for you and your family.
9) Keep Everything Stable While Looking for a Home
Don't make big purchases or move money around before applying for a mortgage. Approval of your
mortgage depends, in part, on the ratio of your income to current debt. Buying a new car or a home theater system could
put your debt ratio over the limit. Similarly, during the approval process, the mortgage broker will review your "sources
of funds." It helps if your checking, savings and investment accounts remain stable and in the same place while you're
getting a mortgage commitment and searching for your perfect Sarasota real estate property.
Following these steps with the assistance of a professional
Sarasota Realtor will make buying ending the "rental rat-race" and owning a home of your
own a much more pleasant experience.
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