Becoming qualified to be a first time home buyer is easier than most people think… Most people don’t even know if you once owned a home, but haven’t owned a home in the past 2 years, you can re-qualify to become a first time home buyer!
In Florida, there are many programs and grants available to assist first time home buyers in purchasing their new home. Here are 5 basic steps to follow when preparing to qualify to be a First Time Home Buyer: 1. TAKING AN HONEST LOOK AT FINANCING You need to take an honest look at your financing and have recorded documentation of your income vs. expense ratio. It is suggested not to have a big purchase close around the time you want to buy your home, like a car or boat, before applying for a home loan. It is recommended to have a good to excellent credit score, but if you do not, have no fear! Most mortgage lenders will help you create a plan at no cost on how to build your credit score and strengthen your ability to purchase your new home (estimated 3-24 months if consistent & depending on your score. Time and steps needed to be taken will vary depending on each individual’s needs & circumstances.)
2. RESEARCHING PROGRAMS & GRANTS AVAILABLE There are many different options available to First Time Home Buyers. A decision varies on the buyer's situation, location they wish to move in, and the lender they wish to work with. For example, an FHA loan insured by the Florida Housing Administration is the most common loan with the following advantages: • 580 minimum credit score • Low down payment • Down payment can be a gift • Down payment assistance programs available • Low interest rates • Adjustable and fixed-rate loans available 3. BECOMING PRE-APPROVED BEFORE HOUSE SEARCHING I HIGHLY recommend to my customers interested in purchasing a home to do this before actively searching for their desired real estate. Many sellers require either a pre-qualification letter or a pre-approval letter to seriously consider an offer. Pre-Qualification Letter is a letter from a lender that specifies the amount they are willing to loan the buyer. Different from a Pre-Qualification letter, a Pre-Approval Letter indicates to the seller that the buyer is able to secure appropriate financing and able to purchase the property and puts the buyer in a stronger position when placing an offer on a house against other interested parties. You can interview different mortgage lenders to see who would be the best fit for your situation.
4. BUDGET FOR ALL HOME OWNERSHIP COSTS If you are looking for homes and wanting to stretch your budget, it is very important to know what your monthly expenses will be for simply living in the home. These would include:
Utility BIlls: Electric, water, trash, sewer, cable, internet, home owner's insurance, flood insurance, etc...
Some areas require mandatory Home Owners Association (HOA) fees, that vary in price. Each HOA offers different levels of maintenance of the home and lands surrounding. HOA's are not always necessarily bad. If the fee seems really high, take a moment to read what it includes. If it includes water/sewer/trash/exterior maintenance/gym/pool and is a little on the higher end, you actually might be saving on your utilities. No two hoa areas are ever alike, so make sure to check with the HOA directly on their rules, regulations, and what the fees include
5. WORKING WITH A REALTOR YOUR REALTOR IS KEY. Your real estate agent is your personal knight of the real estate realm and guide to assist you on your path to home ownership. A good realtor will have your best interests in mind and as their number one priority. Once you are pre-approved and have a hard number of what you can work with, your realtor will be able to: · Make a list of what you want in your desired home and note the areas you wish to live in · Educate you on all the different types of housing available & the market trends of each area · Provide you a list of all current properties on the market & keep you updated when new listings become available · Schedule all appointments to view properties ahead of time · Compare the property you are interested in placing an offer on to recently sold similar properties to help make an educated offer · Give objective opinions about the homes you are interested in, and if those homes are the best investment for you. A good realtor will make sure the home will work for your personal needs, and be honest about future resale qualities if you are projecting you will move again in the near or far future. · Prepare necessary contracts and explain all paperwork thoroughly from offer to closing · Be available to answer any questions or concerns you may have from beginning to closing, and beyond (BONUS STEP) 6. LEARN ABOUT THE BENEFITS OF HOMESTEADING YOUR PROPERTY
When moving into your new home, there are many tax benefits of homesteading your property. In the state of Florida, Homestead Exemption is a constitutional benefit of a $50,000 exemption from the property’s assessed value. For Florida residents living in the property, if a home’s assessed value is $75,000 or more, the owner would receive the full $50,000 exemption benefit. Once you have purchased your home and want to qualify for an exemption, you can file with your county online before the state’s deadline of March 1st for the tax year you wish to qualify. There are additional Exemptions for widows/widowers, Totally & permanently disabled persons, service-connected total & permanent disability, First responder totally & permanently Disabled in the Line of Duty (or surviving spouse), Veteran’s disability, disability, blind persons, senior, low-income seniors who maintain long-term residency on property, and many more! It is not wise to claim homestead on property you do not live in. It is considered fraudulent & the penalties are worse than being honest. If you decide to purchase and move into a different home in the future, you are allowed to bring your homestead benefits with you to your next home.
The Dos and Don’ts when applying for a home loan
THE DON'TS DON'T Apply for New Credit Changes in credit can cause delays, change the terms of your financing or even prevent closing. If you must open a new account (or even borrow against retirement funds) please consult with a real estate agent and a lending service first. DON’T change jobs during the process Probationary periods, career or even status changes (such as from a salaried to a commissioned position, leave of absence or new bonus structure) can be subject to very strict rules DON’T Make Undocumented Deposits Primarily large but sometimes even small deposits must be sourced unless they are identified. Make copies of checks and deposit slips. Keep your deposits separate and small. Avoid depositing cash. DON’T wait to liquidate funds from stock or retirement accounts If you need to sell investments, do it now and document the transaction. Don’t take the risk that the market could move against you leaving you short of funds to close. DON’T ever be afraid to ask questions If you are uncertain about what you need or what you should do, We are here to help you through the process, even long before you intend to buy THE DO’S DO Keep All Records In Good Order DO Availability Keep Your financial records close at hand in case updates are required DO income Be aware that underwriters typically verify your income and tax documents through your employer(s), CPS, and/or IRS tax transcripts. Hold onto new pay stubs as received. DO ASSETS Continue saving incoming account statements. Keep all numbered pages of each statement. Ex. 8 of 8 DO Gifts If you’re receiving any gift money from relatives, they’ll need to sign a gift letter and an account statement evidencing the source, which must be “seasoned” funds. DO keep your credit shining Continue making payments on time. Your credit report may be pulled again, and any negative change to your score could cause you to lose your approval and your home. DO Current Residence If you are renting, continue paying your rent on time and save proof of payment. If you are selling your current residence, be prepared to show your Closing Disclosure. If you will be renting your home you may need to show sufficient equity, a lease and receipt of the first month’s rent and security deposit. DO Understand that things have changed Underwriters require more documentation than in the past. Even if requests seem silly, intrusive or unnecessary, please remember that if they didn’t need it, they wouldn’t ask. If you are uncertain about anything in the home buying process, my family team is here to answer any questions you may have and guide you on the right path of your home purchasing journey.
Wishing you all the best and much success!