How to buy a home in Southwest Florida
Part one of a 3 part series
Check your credit report & clear up any discrepancies or items that will improve your credit score. Just a few minor adjustments could be the difference in getting the loan or not. This process could also save you thousands of dollars over the life of your home loan. Warning: consult your financial advisor, lawyer or accountant before you negotiate a payoff on a credit account. Certain paid off accounts will show your payoff as the last activity date. This could hurt your credit more than if you just let it go to the 7 years.
Once your credit is cleared up the next step is to interview a few mortgage loan officers and pick one you are comfortable working with .Your Real Estate agent can recommend quality officers that they have worked with in the past. . By now you should have a good idea how much cash you should be able to put down on your new home. In these times you do not want to over extend yourself. Add up all your monthly bills for you and your new home and times this amount by four or six months (six is recommended). Example: total monthly expenses after home purchase $1500.00 X 6 months = $9000.00. This should be your reserve money. I know these sounds like a lot, but things happen, a new AC: $5-10 thousand, new roof: $ 6-20 thousand etc.
The loan officer usually will send you a list of documents required. See my web site www.davefoster1.realtor “must have list for buying a home” for a list of documents you will need to get started in the mortgage process. Your preferred lender will interview you for 20-30 minutes. This could be over the phone, in person or applied for online. They will ask you financial questions about your job, income, bank accounts & statement etc.. You will probably be asked to provide these documents. If your credit and financial history looks good, the lender will then pre-approve you for the amount they are willing to loan you. If your pre-approval amount is 250K that doesn’t mean you have to use every dime. Be conservative; remember you may have upgrades, appliances, furniture, repairs, window coverings and other items to pay for. Pre-approval amount $250,000 + down payment = Maximum home price.
This pre-approval letter will be submitted with the offer to show the seller you are a serious buyer and are not wasting their time .If the seller has two offers at or close to the same price, the offer with the pre-approval will always be the stronger of the two. Once your offer is accepted you will begin the application for a loan commitment from the lender. This is a much more in-depth look at your financial records, job & payment history. Lenders are as tough as they have ever been; they have lost billions of dollars on short sales and foreclosures. So be prepared to get them whatever documentation they ask for ASAP. It will be worth it in the end.
Now that we know what your price range is, with your Realtors guidance, I suggest you drive around and see what neighborhoods you’re interested in. Location is the key. The new smell will wear off but your 2 hour drive to and from work will not. Tell your Real Estate agent the addresses of homes you are interested in. They will look the home up on the MLS and schedule a showing so you can see the inside. The internet is a great tool. You can check the prices and sales on Real Estate websites like zillow.com. , Realtor.com ,Lee County Property Appraisers web site etc. Caution!! The problem with a lot of the bigger Real Estate web sites is they are not updated fast enough. It’s frustrating when a buyer calls me all excited and wants to see a property and I look it up in the MLS and find it’s had a contract on it for 4 months. A good Real Estate agent can send you an updated list of all the MLS listing’s and sales from each area. If you want to search on your own, my search engine is updated several times a day www.davefoster1.realtor This way you won’t waste time researching listings that have been sold. Another great software tool I have is I input the buyer’s criteria in a database and when a new listing comes up it is immediately e-mailed to the buyer. If you have a smart phone you can receive it on there as well. The good ones sell fast so this is a great tool.
Narrowing down the List Sit down and make a list of what you like and don’t like about your future home. If you are buying with a spouse or significant other, friend etc., compare notes and come up with a list of must haves, would like to haves. Take a few days to ponder over the list and add or subtract until you think the list is polished.
I like to sit down with all my buyers for at least an hour and review the Geographic’s of SWFL and the type of property they are looking for. By doing this it gives me a good idea of the locations, neighborhood, amenities, style and price range of home they prefer. When I meet and familiarize myself with the person, It helps me narrow the search. This is a tremendous time saver for both of us. We talk about their must haves and like to haves. I once sold a townhouse to a customer that was about as far from the beach as you can get in Lee County. Funny thing was she had first insisted she wanted a Condo on Fort Myers Beach. But she loved the resort pool and amenities and is extremely happy with her choice. My point is for both agent and buyer to keep an open mind. What sometimes seems like a huge con when you are home shopping, can be very meniscal once you move in.”News Flash” there’s no such thing as a perfect house! The key is to get as close as possible while satisfying everyone’s needs. When I introduce a buyer to the right home for them, it’s amazing how their body language and domineer just come alive. Somehow they just know “that’s the one!!
If you have kids, check out the Lee County School Board site for area schools, schedules, bus routes, etc. http://www.leeschools.net/ You can also check the Lee County Sheriffs website http://www.sheriffleefl.org/main/ for convicted predators and area crime statistics. Florida Department of Transportation http://www.dot.state.fl.us/ has a good website on future projects that may affect the value of your home. I could go on all day but a good Real Estate agent should have all these websites and be up to date with projects & circumstances that would affect the value of a certain area.
Please do not do this yourself! This is where a good Real Estate agent earns their money. Calling a Real Estate agent from a sign is like going to court without a lawyer!! It amazes me how many people insist on riding around with no agent representation. A savvy Real Estate agent has an arsenal of time saving tools & connections to help you find your dream home. Yes, there are agents out there that would play fair and look out for both sides, but the listing agent’s interest is in the seller and getting the home sold. It’s important for you to have a skilled negotiator on your side. The base Florida contract is a minimum of 10 pages not including addendums. The average bank addendum for a foreclosure is at least 13 pages and very scary for a home buyer. Some agents may give the seller a discount on the commission, if they represent both sides, but the buyer will not get a better price by going it alone. They will surly miss out on a better price and concessions your Realtor will fight for.
A Buyer pays Real Estate Agent no commission. The savvy investors know this and take full advantage. Buyer only pays a $249.00 transaction fee at closing. The commissions have already been negotiated in the listing agreement between the selling agent and the seller. These commissions will be paid by the seller.
The next article will start at the home showings and what to look for in a neighborhood and home. I hope this article helped you with the buying process.
David Foster Realtor GRI E-pro 239-246-5660