Are you considering purchasing your first home in South Florida? Maybe you’ve been asking yourself, are you at the right age to buy your first home? Well, the answer is simple: any age is the right age to become a homeowner, so don’t be afraid to make the jump from renter to homeowner.
Overall, owning a home is an excellent investment for the future and can give you and your family stability. To help you with your first homebuying experience, we’ve put together the following tips:
#1 Do not get discouraged – Patience will take you far
From understanding contracts, escrow accounts, scheduling appraisals, inspections, speaking to lenders, etc. – the process of buying a home involves a lot of moving parts. It’s easy to get frustrated, especially when there are aspects in the process that could get confusing or affect timelines. That is why it is extremely beneficial to work with a real estate agent that you trust.
Buying a home takes time. You have to be willing to invest the time you need to make a smart decision. This process is called due diligence. It means that you (and only you) have to make sure that the deal is a good deal for you. So, don’t be discouraged by a failed home inspection or if your initial offer is not accepted in the competitive South Florida market. Take your time, relax, and enjoy the journey.
#2 Be cautious of giving out your personal information to websites
When you begin your search, avoid entering your personal information (i.e., your Social Security number, date of birth) on every website you visit. This is a big mistake!
At all costs, hold off giving out this private information for as long as you can. While it is true that you will have to enter your information at some point, you should wait until you’ve learned about the mortgage process and narrowed down your lenders because most of these websites are lead generators that sell your information to multiple lenders. Once you fall into the trap of entering your information, your e-mail will be flooded with loan offers, which can be very annoying.
You want to avoid the situation where you are having your credit run by multiple lenders. If you have numerous inquiries in your credit in one month, this can affect (and lower) your credit score. This can cost you up to 50 points or more on your credit score. Generally, the lower your credit score, the higher your interest rate will be, and the opposite is also true, the higher your credit score, the lower your interest rate.
#3 Hire a professional inspector to look past the “flipper’s makeup”
Flippers are in the business of renovating properties for profit. However, not all renovations are equal. Some South Florida, real estate flippers, will make cosmetic upgrades without making the necessary major repairs to the property. As such, all first-time buyers should hire a good inspector on their own without relying upon their agent’s referral or suggestion. The reality is, some agents may find an inspection that will “fudge” the details of the inspection to help the agent get the sale. To protect yourself and your investment, find your own home inspector.
If the inspector finds a problem, don’t get emotional about it. Use facts, logic, and common sense to decide if the deal is worth moving forward. Sometimes you can use a small repair issue as a bargaining chip to get the seller to lower the price, or you may get the seller to make other concessions. Your real estate agent should be able to help you with this process.
#4 Work with someone you trust
Finding a South Florida Real Estate agent that you trust can be the difference between a successful home buying transaction or a costly experience. Overall, hiring a knowledgeable agent saves you both time and money.
Home lending is a big business, primarily fueled by the internet. Mortgage Brokers and Lenders are everywhere. As a first-time homebuyer, it’s important to know that there’s a big difference between working with a lender and a mortgage broker.
Lender
- Lenders can be an individual, a public or private group, or a financial institution.
- Lenders make funds available to another with the expectation that the funds will be repaid.
- Lenders offer programs from banks they work for.
Mortgage Broker
- Brokers are considered a “middleman” between you and the lender.
- Brokers get paid for putting the deal together.
- Brokers can offer you the best deal on the market regardless of the bank.
- Brokers help you get loan offers from multiple lenders.
Whichever way you decide to secure your loan, be sure to work with someone who is trustworthy.
#5 Save money by talking to lenders to develop a game plan.
Once you have a loan officer that you feel you can trust, you should evaluate the mortgage terms offered. Is the loan a fixed-rate loan? Or is it an ARM? Is it the same interest rate that he/she quoted you in the beginning? As a South Florida first-time, homebuyer you can’t trust that the lender will always be watching out for your best interest. Don’t make the mistake of thinking that since you got approved for a certain loan amount that that is the amount that you can afford.
If you plan and develop a relationship with your lender, you can explore your options. For example, it may be smart to consider saving a bit extra to qualify for a conventional loan rather than an FHA mortgage. That way you won’t have to pay the pricey mortgage insurance, which is required on FHA loans when a borrower’s down payment is less than 20% of the loan amount. Additionally, keep in mind that all FHA loans require two mortgage insurance premiums. The first one is the upfront mortgage insurance premium, which is 1.75 percent of the loan amount. This is paid when the borrower gets the loan. However, typically the premium can be rolled into the loan amount. The second payment is the annual mortgage insurance premium, which ranges from 0.45 percent to 1.05 percent, depending on the loan terms. This payment is paid monthly.
In most situations, FHA mortgage insurance premiums cannot be canceled. So, if a borrower no longer wants to pay the premiums, he or she would have to refinance the loan into a non-FHA loan or sell the home.
Overall, working with a lender that you can trust can help you save money in the long run. Working with a loan officer who is on your side will protect you.
We help first-time homebuyers
As a first-time home buyer, when you are searching for your home, it’s ok to listen to your heart; however, when evaluating your financials to purchase that home, or conducting home inspections, listen to your head.
If you’re considering purchasing your first home, we’re here to help. We’ve assisted many first time homebuyers over the past 15 years purchase their dream home. We put our clients’ needs first. Contact us if you have any questions.