Home Financing FAQs
What are the Benefits of Homeownership
The primary difference between owning a home and renting a home is that owning a home builds equity. The home you own is an asset in which you are making an ongoing monthly investment. If you have a 30 year mortgage, after paying your mortgage every month for 30 years you will own that asset free and clear of any monthly principal and interest. During the course of the 30 years, the amount of the home that you own (your equity) increases each month. Owning a home builds equity; renting does not. After paying rent for 30 years, you would have nothing to show for it. You will have been helping you landlord build equity instead.
What are the Tax Advantages of Homeownership
Another consideration of homeownership is the significant tax advantages. The IRS currently allows taxpayers to deduct the mortgage interest and property taxes they pay. Please contact your accountant or tax advisor for specifics on how these deductions would benefit you.
Should You Buy Now or Wait?
Buying a home is one of the biggest investments you will ever make and as such, may cause you to wonder just when the right time to buy is. The answer to that question is NOW. It is currently a Buyer's Market and prices are at unprecedented lows. Couple that with the lowest interest rates we are likely to see for many years to come and there has never been a better time to buy. If you are worried that you don't have enough money saved, please keep in mind that there are loan/mortgage programs available that allow you to make no down payment and others that are less than 5%. Since it is a Buyer's market, new home builders and many sellers are also willing to assist you with your closing costs. Contact Us now to see how you can qualify for these programs and to find out more about builder/seller incentives. As the supply of homes starts to decrease, prices will begin to rise and interest rates are likely to go up too. BUY NOW and watch your investment grow.
Are There Any Zero-Down Mortgages Available?
Contrary to what the news media has been reporting, there are mortgages currently available for homebuyers. These mortgages include FHA loans with 3.5% down payments, VA loans for veterans with Zero down payments, USDA loan programs with Zero down payments and Conventional mortgages with a variety of down payments. Don’t delay, Contact Us and see how you can qualify for one of these programs while they are still available.
What is the First Step towards Homeownership?
Once you make the great decision to become a homeowner, the first step is to find out what price home you can comfortably afford to buy. Having that information before you start looking is crucial. The last thing you want to do is to fall in love with a house that is not in your price range and then try to figure out a way to stretch your budget to pay for it. Any reputable lender should be willing to start the mortgage approval process for you prior to you looking for a home. Contact Us and we will put you in touch with lenders who can help you take that first step.
Pre-Qualified vs. Pre-Approved
Two terms you will hear are pre-qualified and pre-approved. What you need the lender to do is give you a pre-approval. Pre-qualified simply means that based on the initial information that you gave the lender, he or she thinks you will qualify for a loan. Pre-approval on the other hand, means that you have actually completed a loan application, the lender has run a credit check and has verified your income and debts in preparation for full loan approval. With a loan pre-approval, not only can you have confidence that you know what price range of home you can afford, but also that when you do find your dream home, you will be approved for the loan. It also gives the seller whose home you want to buy the confidence that you are a much more solid buyer compared potentially to an offer from another buyer who is only pre-qualified.
How to Choose a Lender
Choosing a good lender is essential and our first and foremost recommendation is that you STAY OFF THE INTERNET. Many of the internet lenders claim to offer unrealistically low interest rates and chances are, if it sounds too good to be true, it probably is. Also, please limit the number of lenders you let run your credit. First and foremost, it is never a good idea to provide anyone with your social security number over the internet and the other thing to consider is that every time a lender runs your credit, your credit score can be lowered by several points. When you trying to get approved for a mortgage, you want your credit score to be as high as possible, so any time it goes down even by a few points, it could affect the interest rate for which you will qualify. It is best to choose a lender whose office is located within the state where you are planning to buy your home and who is licensed in that state. Since lending laws vary from state to state, working with a lender who is up to date on the Florida requirements is extremely important. Working with an experienced lender is also key. Ask your friends and colleagues for names of lenders they have worked with or Contact Us. A lender who is an experienced professional should take the time to answer any and all questions you have, explain the different loan programs to you and help you find the mortgage that best meets your needs. The lender should also provide you with a Good Faith Estimate detailing your estimated closing costs, how much it will cost to set up your escrow account (pre-paid items) and show what your estimated monthly mortgage rate will be. That way there are no surprises when it comes to the day you are closing on your house.
How Long Will It Take to Approve My Loan?
An automated underwriting response can occur immediately upon loan application provided all necessary documentation is available to the Mortgage Planners. However, that typically is not final approval and you must keep your credit in the same condition or better, in order not to interrupt the final commitment of the loan. That sometimes does not occur until a few days prior to closing. So, a little advice. Please don't go out on a shopping spree, or decide to buy a new car until after you close on your home. These purchases will affect your debt to income ratio and could possibly cancel the closing on your new home.
Why is My Annual Percentage Rate (APR) Different From My Interest Rate?
The APR is calculated by adding closing costs to the total loan amount and amortizing that amount over the life of the loan.
Where Do I Get My Down Payment and Closing Costs?
There are many resources of acceptable monies for a down payment and closing costs. The most common are personal savings, IRS refunds, gifts from family members, 401K withdrawal, loan against 401K, and sale of assets. You may want to check with your financial advisor to select the method which best meets your personal needs.
Where Do I Go For My Closing?
The closing office is usually held at a title company or on occasion an attorney's office chosen by the seller; new home builder or owner of a resale property. Your Realtor should advise you of the time, date and location of where your closing will take place.
What Documents or Information Will I Need to be Ready to Close?
Proper identification is required to close on a real estate purchase. You will need to present your driver's license, or a passport, which are preferred or a current photo I.D.
In addition, it is mandatory that you have your home owner's insurance bound and in place prior to the closing day. This is a requirement of the lender and your Realtor should advise you of this. Please do not procrastinate searching for home owner's insurance. In Florida, during our hurricane season, should there be a disturbance, within a certain area off Florida's coast, insurance company's stop writing. Typically quotes are good for 30 days, so please don't wait until the last minute to start shopping your insurance coverage.
Last but not least, you should, with the help of your Realtor, be advised of the amount of money owe (if any) that you need to bring to the closing table. Funds needed to close MUST be in the form of a cashier's check and made payable to the title company or law firm handling the closing.
Who Needs to Attend the Closing?
Florida Homes Realty Professional Group is dedicated to being there for you and helping you throughout the entire buying or selling process. Therefore, your Realtor will attend the closing with you to assist you with any questions you may have. In some instances, your mortgage specialist may also attend the closing, but they are not required to do so.
Florida Homes Realty is here to help you with every facet of the buying process, including helping you get pre-approved for your mortgage. We look forward to putting our Knowledge, Experience and Dedication at Your Service so please Contact Us today.
