An Overview

Probably the most important personal and financial decision you’ll make is choosing and buying a home.  Whether it’s your very first home or your fifth, it’s a serious endeavor not to be taken lightly.  Pride of ownership and the satisfaction in living in your own home is reason enough for many to buy, but there are also financial reasons.  Real Estate is a strong investment as values generally increase.  As your equity builds so does your purchasing power.  And of course there are the tax benefits.  We can all make our own list of advantages!

Here are some facts to consider regarding the costs involved in home buying:
 
An earnest money deposit is a good faith deposit submitted along with an offer to purchase real estate.  Its purpose is to show the serious intent of the offer. It’s placed in an escrow account and if the offer is accepted, it will be applied towards the purchase price.  One percent or more of the offering price is a good general rule of thumb.

The three elements of financing the purchase of a home are the down payment, closing costs and the mortgage.

A down payment is the cash applied towards the purchase price that you’ll bring to closing.  The higher the down payment, the lower the monthly payment and interest.  There are a variety of loan programs available and depending on one’s credit situation, down payments could be as low as three or five percent or less. Remember the lower the down payment, the higher your monthly payment will be and generally the more your loan will cost. 

Closing costs are costs associated with obtaining the loan, document preparation, appraisal fees, surveys, credit reports as well as prepaid interest, property insurance and possible mortgage insurance. There are also property taxes, Florida intangible tax on the mortgage and a Florida document stamp on the note. Generally closing costs range between two and five percent of the purchase price and are due at closing or speak to your lender about possibly rolling them into the loan.

The mortgage.  Most mortgage loans are 15 or 30 year loans and there are several options for each.  It’s advisable to speak with a few lenders before beginning your home search.  Generally, to qualify for a conventional loan, your total monthly housing costs should not exceed 28 percent of your gross monthly income.  Be sure to factor in your down payment amount and estimated closing costs, then use the Mortgage Calculator on this website to determine a general home price range for the monthly payment you desire.

Pre-approval:  It’s always a good idea to obtain a pre-approval letter from a lender to bring with you when you shop for a house.  Pre-approval letters (not pre-qualifying) show a seller that a lender will give you a loan up to the amount stated in the letter.
 
Then it’s time to decide where you want to live and what type of home you want.  Click on the “Buyers Info” section of this site for a helpful questionnaire.  Feel free to contact us with questions or to arrange a “no obligation” meeting.  Remember that sellers pay commissions.  There’s no charge to buyers!