Buyers Information
Finding and buying a home in Venice FL that will meet your needs, now and in the years to come, is a significant and often stressful time. My goal is to make this transition as smooth as possible. Here are some tips that you may follow to help make the search for finding your dream home seamless.
Getting Started
Before you start looking for a home, you should ask yourself a few questions:
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Where do you want to live?
- Do you want to be near schools, shopping or work?
- What kind of house would you like (need)?
- Are you looking for a particular style?
- How many bedrooms and bathrooms do you want?
- Do you want a yard?
- How much house can you afford?
- Have you consulted a Realtor or mortgage lender to determine the size of the mortgage you would qualify for?
Here are a few tips to help you get organized:
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Pull a credit report on yourself to make sure the information is accurate. If you find any errors, take steps to correct them immediately.
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Get pre-qualified. You can save and eliminate homes that do not fit into your financial budget. Most importantly you will be in a much better negotiating posture when you do find the home that you are looking for. Contact me if you would like speak to our Coldwell Banker Mortgage Advisor.
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Browse through real estate advertisements in the newspaper and on www.FloridaMoves.com/Kari.Battaglia. This will give you a good overview of the types of homes that are on the market and what they cost.
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Visit open houses on the weekends. It doesn't cost anything to look, and looking at a few different homes might give you ideas for features and amenities you'd like in a house but haven't considered.
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Start saving money - you'll need to have cash on hand for a down payment and closing costs.
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Don't incur any additional debt. Pay down your credit cards and don't apply for any new ones. Don't make any major purchases on credit - buy the furniture or car later.
I can help you determine how much you can afford and provide you with information on homes that may interest you. I will also help you complete all of the necessary forms when it comes time to make an offer.
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Searching for your dream home can be a time-consuming experience. Working with a professional Realtor will make the process much more efficient.
Since most people spend a fair amount of time with their Realtor, it's important to choose a Realtor you feel comfortable with, and one who is responsive to your needs. The following questions will help you decide if a particular Realtor is right for you:
- Where do you want to live? Do you want to be near schools, shopping or work?
- What kind of house would you like (need)? Are you looking for a particular style? How many bedrooms and bathrooms do you want? Do you want a yard?
- How much house can you afford? Have you consulted a Realtor or mortgage lender to determine the size of the mortgage you would qualify for?
If you'd like to know more about the home buying process I'd love to tell you all about.
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Advantages of Owning a Home
While some people choose the flexibility of renting and being somewhat free of maintenance while having the ability to move often, many choose ownership for other reasons. It would be nice to say that the main reason for owning a home is the pride of home ownership, but that’s not quite true for most people. Their reasons are purely economical and there are clear financial advantages.
Building Equity
The difference between what you owe on your home and its value is called equity. In the early years of a home mortgage, most of each payment will go toward the loan interest, but later it will gradually go more and more toward your principal balance (what you owe). Through the years your payments will reduce this balance, thus raising your equity. Plus, if your home increases in value, your equity will rise even more. Your equity is like a savings account and it could prove very important for future needs such as a retirement plan, or major purchases.
Tax Deduction
By law, you can deduct mortgage interest and property taxes from your U.S. Federal Income Tax and from some state income taxes. This results in significant tax savings, especially in the early years of a mortgage when interest payments are higher. And you may find the tax savings alone makes it less expensive to buy than to rent.
Payment Stability
Unlike renting where payments can increase over the years, a fixed-rate mortgage payment will remain the same for the term of your loan. Other types of loans could vary in the structure of payments and there always could be slight adjustments for tax and insurance, but owning a home can result in being able to depend on stable payments for years to come. During times of inflation when rent goes up and home values rise, renters end up paying more each month while home owners increase their equity as they make the same payment.
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There are a number of things to consider when choosing the right home and everyone’s priority is different. Where should it be located; neighborhood preference; single or multi-level, number of bedrooms and baths; square footage; yard size; features; quality of schools; age of home; interior or exterior appeal; and most of all, price, because if it’s out of your budget, it can’t be considered.
Make a List
Make a priority list of things important to you. Start with the most important, things you have to have. Then work down the list, putting them in order of most important. After you are done, go up to the top and move down until you get to a place where you can draw a line. Above the line should be all of the items you have to have, and below the line should be all of the things that would be nice to have. This will save you a great deal of time and provide a clear focus for your house hunting.
Working with an Agent
Although the Internet can provide you with homes matching your criteria and it seems easy to drive around, take notes, and set up appointments to view homes for sale, using an agent can be more efficient. They can do the same thing for you, but by working with an agent, you benefit from their knowledge and experience also. Their advice could better help you determine the right home for you and they can assist you with the actual purchase contract.
What to Do When You Find the Right Home
Considering everything has come together, the price is within your budget, and a home has met your demands, it’s time to make an offer. Part of the offer should require a home inspection so you have reliable information about any major problems or repairs you might incur and how they will be handled. If your offer is accepted, the sale proceeds. If your offer is not accepted, the seller may counter-offer with different terms.
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How Much Can You Afford?
In addition to your monthly mortgage payments, there are many things to factor in when determining how much you can afford, or even if you can afford to buy a home at all. There is a down payment for the loan, closing costs, moving expenses, plus purchases and maintenance for the new home. Generally, your annual gross income multiplied by 2.5 will give you an approximate amount for the price of home you can afford. It could vary depending on how much you have as a down payment, your debts, financial situation, and credit history/rating. Your debts, including alimony and child support, should not be more than 30 to 40% of your gross income.
Monthly Mortgage Payment
Lenders want to make sure you have the ability to pay your loan. As a general rule of thumb, you can figure that your monthly mortgage payment should be equal to or less than 25% of your gross monthly income. This also will vary depending on circumstances.
Amount of Money Needed
You will need money for a down payment and closing costs, plus any move related expenses and maintenance or repair costs for your home.
• Down Payment – Your down payment is a percentage of the property value and is usually from 3 to 20%, or more if you want a lower loan amount. This can vary by the type of mortgage you obtain. Also, if your down payment is less than 20%, you may be required to pay mortgage insurance (PMI or MI).
• Closing Costs – these are settlement costs involved in purchasing your home. They range from 2 to 7% of the property value and include such things as points (a percentage paid for securing a particular interest rate), financing fees, taxes, title insurance, pre-paid and escrow items, and your down payment. You will receive an estimate of these costs prior to closing.
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There is nothing more important than your credit when it comes to buying a home. The first thing a lender will do is review your credit report. This is a history of money you have borrowed in the past and how you have repaid those debts. It contains a list of debts such as credit cards, car loans, and other loans. It shows any bills that have been referred to a collection agency. It lists other public record information such as liens or bankruptcies. And, it documents inquiries about your creditworthiness and whether you were extended credit or not. Your credit report is constantly updated and most information is deleted after 7 years (10 years for bankruptcies). This credit information then helps generate a computer-derived number that indicates your risk as a payer of debts. This is called your credit score. Your credit history and/or your credit score is used to decide whether your loan is approved and it could be used to determine your interest rate.
If You Don’t Have Credit
If you haven’t established credit, start now. Perhaps apply for a credit card or two, then use them carefully and pay them off each month. Once you’ve done this, you’ve started your credit history. Next, apply for credit on a store purchase such as an appliance, or a TV. Do this even if you have the cash to pay for it. When the first bill comes, use your cash to pay it off in total. You see, buying on credit and paying it off helps your credit better than buying something for cash.
If You Have Bad Credit
At one time or another, most people have put blemishes on their credit reports. If your credit report is tarnished, there are steps you can take to repair the damage. It can take awhile to improve bad credit, but it can be done. The first thing you should do is order a copy of your credit report. Examine the credit report thoroughly and make sure it's accurate. If there are mistakes on the report, contact the credit reporting agency and ask them to remove the mistakes immediately.
Some other helpful tips:
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Begin to pay your bills on time
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Pay all of your bills, even if it's just the minimum. Neve pay less than what is due, and never pay late.
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Don't max out your credit cards because that indicates poor money management
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One of the best things you can do is to make a budget to help with your monthly expenditures and then live by it
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Start a savings account and make it part of your budget. You will need money for a down payment, or it will help if you lose your job or source of income
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Now that you've examined your credit report and are confident that you're in good shape, you're ready to choose between getting pre-approved for a mortgage or pre-qualified for a mortgage. Here's the difference.
Pre-approval uses basic information as well as electronic credit reporting to determine whether a lender will loan you money. If you are pre-approved for a mortgage, the lender has given you a commitment to support your new purchase.
Pre-qualification is not a mortgage approval but simply an estimate of what you can afford. When you pre-qualify for a mortgage, the lender also collects basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate and estimated mortgage amount. The lender has not yet committed to supporting your financial needs and, therefore, you have not received an actual guarantee of funds.
When you are pre-approved for a mortgage are more attractive buyer to the seller and have a better chance of getting the property when making an offer, especial when the seller is receiving multiple offers.
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Renting vs Buying
Should I buy or rent?
With decreasing U.S. home prices, this question is no doubt running through the minds of many. The decision to rent an apartment, condo or house, as opposed to buying, is complex and one that should be taken into great consideration. There are many misconceptions when weighing the option to rent or buy. One of the biggest may be the notion that renting is simpler. When the refrigerator in a rental needs to be repaired, it’s usually the landlord’s responsibility. But when new homeowners sign the contract, the responsibility is theirs. Unfortunately, stating that renting is the “simpler” choice takes a narrow view on the issues that go into the buy-versus-rent decision. Here are a few others:
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The tax benefits derived from purchasing a home take too long to offset other costs involved. Tax write-offs of mortgage interest can be among the biggest financial benefits of homeownership. But some question whether this benefit is really great enough to offset the “big picture” cost of ownership. Homes typically appreciate in value over time. That’s why you should evaluate carefully how long you expect to stay in your new home. If you anticipate staying for several years, the scales should tip in your favor and the value of your financial gain from homeownership is likely to outweigh those initial costs to get in the door.
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Renting a home isn’t all that different from owning. If you are renting a house, you may already feel like a homeowner by making routine repairs, gardening or cleaning the gutters. There is one fundamental difference. Unlike equity built with each monthly mortgage payment, the rent you are paying is producing zero future financial benefit. In fact, you are essentially paying the landlord’s mortgage and likely additional utility costs. Since historically, most homes increase in value over the long term, a home provides not only a place to live but should ultimately provide return on your original investment.
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It’s better to rent and wait for the market to bottom out. By the time we recognize the true bottom of the market has been reached, prices may already be on their way up. Buying a home should be approached as a long term investment, providing equity accumulation, cost appreciation and tax benefits over time. The reason why many point to now as a smart time to buy is because we are seeing historically low interest rates, coupled with the buyer’s market which exists in most communities. When purchased with the longer term in mind, housing is historically one of the safest investments consumers
can make.
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It’s cheaper to rent. This may or may not be so. Because of the current state of the housing market, many are foregoing homeownership and turning to rentals. This influx of renters may be having an impact on the supply and demand of rentals and driving rents higher. Coldwell Banker offers a handy rent-versus-buy calculator to help break down basic money questions.
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By buying a home, I’ll become of victim of the foreclosure mess. It’s important to remember that foreclosures account for just a small percentage of all homes sold. Mortgage money is still available for qualified borrowers and to help prevent foreclosures in the future, lenders have returned to upholding higher standards. These may require you to demonstrate strong basic borrowing “fundamentals” such as proof of income, solid credit and ability to make a 20 percent down payment. It’s also critical to be well-educated in terms of various mortgage options available and to know what you can afford.
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