Financing Your New Home

The last few weeks at our brokerage have been very active compared to unusually slow summer months.  I truly believe that all of the "bubble watchers" that have been sitting on the fence waiting to buy a home when the bubble bursts were pushed off the fence when the news was released that although sales in the Tampa Bay area were down 43% and inventories were significantly higher, the average price of a home in the Bay area increased another 18.8% in the last year.  With the huge wave of Baby Boomers retiring over the next 10 years I still consider Florida the "land of opportunity".  BUT ENOUGH ABOUT THE MARKET..........  Over the next few weeks I'd like to give my readers a glimpse into the role of a Realtor, mortgage loan officer, and everyone else that is out there working to make sure you get the home of your dreams.

I'd like to start with the loan officer because if you are considering buying a home, you need to know what you can afford and what programs are available.  When first time buyers come into our office, they usually don't realize that there are more costs to buying a home than the down payment.  In addition to the down payment, there will be loan fees, title fees, transfer taxes, taxes on the mortgage, taxes on recording the deeds, the premium for a full year of insurance, etc.,  etc..  The total amount of these fees will add about 2% to the purchase price.  Depending on the program you choose and how the contract is negotiated, these fees may be paid by the lender by taking a higher interest rate or by the seller as a seller concession.  Otherwise, this is $$$ that you need to put up in addition to the down payment.  

First, you need to go to at least a couple lenders or mortgage brokers for a pre-qualification.  Let them pull your credit.  It is essential to determine the programs that you are qualified for.  DO NOT WORRY ABOUT THE CREDIT PULLS AFFECTING YOUR CREDIT SCORE and don't let a mortgage person tell you that it will.  They are only trying to keep you from "shopping".  When you get the good faith estimates, do not place too much emphasis on the rate.  Rates change multiple times each day.  The rate you are quoted, may not even be available when you and your Realtor find your dream home.  Look at the total fees and look at your initial payment.  Is the payment in the range of what you can afford?  Make sure the loan officer has given you the TOTAL picture.  If you aren't putting down 20% and they didn't add PMI into the payment, you are being misled (unless PMI is included in the rate).  Make sure they also include the monthly tax amount, homeowners association fees, and monthly insurance costs in your payment.  Ask them if there is a penalty for paying off the loan early in case you need to sell or refinance.  If one company is quoting a certain fee and the other company did not, ask why.  Also make sure that you are comparing "apples to apples".  If someone is offering a rate that is a half point lower than the competition, I can guarantee that they are making their money somewhere else in the form of points or other fees.

Trust your instincts.  If you feel like the mortgage person is trying to hide something, chances are that you're right.  Also look for experience.  An experienced originator is worth their weight in gold.  They know the programs and they will make sure you get to the closing table with as little trouble as possible.  Don't make your decision based on a few hundred dollars difference in the fees.  Choosing a bad loan officer could end up costing you thousands in the end.  If you'd like more detailed information on getting a mortgage, one of the best resources is found at http://www.bankrate.com/brm/green/mtg/basics-toc.asp .

Steve Eckhardt, Broker, CRB

Certified Luxury Home Marketing Specialist