As the cost of rent continues to rise in the Tampa Bay area and throughout all of Florida, buying a home becomes more than just a dream for many but the ideal way of gaining affordable housing. As you plan to become buyer-ready, here are 4 tips for buying a home in or around Tampa.
While having a high score is nice, more importantly having a healthy DTI ratio is key when getting a mortgage. Having a DTI of 35% or lower will make you favorable to lenders. This ratio helps lenders see how much you can afford as a monthly payment—and can help you determine how much you can afford as well. You can calculate your debt-to-income ration by adding your minimum monthly payments for all debts (personal loans, credit cards, car loans, etc.) and divide it by your monthly pre-tax income.
Pro Tip – The 28/36 Rule: When determining how much home you can afford, keep in mind that experts say your monthly mortgage payment should be less than 28% of your pre-tax monthly income and less than 36% of your total debt.
You’ll want to make sure you are getting the best rates and terms from your mortgage lender. Check what fees they charge and see if their fees are overinflated to make up for low advertised rates compared to their competitors.
You should also find a mortgage company who sees you as a person, not just another application. One that will help you to become qualified and give you sound advice. One big red flag is a mortgage company that encourages you to max out your pre-approved finance amount. Just because you are qualified for a $450,000 mortgage, doesn’t mean it is financially wise to purchase a $450,000 home. Verify what your payments will be over the term of your mortgage and that you can easily afford them.
As you shop around, keep in mind some mortgage lenders may specialize in certain types of loans. If you are not sure what type of home loan you want or qualify for, look for a lender who has several mortgage loan originators who have different specialties. This way, you can get more information about several loan options and see which one will serve you best.
Many home mortgage loans require a down payment, although not all do. It is better to prepare for the possibility you may be required to put a down payment to qualify for a loan. As you prepare to become a desirable borrower, start setting aside as much as you can to go towards a down payment—and other expenses associated with getting a mortgage and becoming a homeowner. You’ll need to consider closing costs that are paid out of pocket, the cost of an appraisal and a home inspection, moving expenses, and home maintenance costs you may have to take on after buying the home.
As a buyer, you are not responsible for the real estate agent’s fee. They are paid a commission of the sale price, a fee the seller is responsible for. So, don’t attempt house shopping by yourself if your concern is the cost of using a real estate agent. Real estate agents are professionals in their field and can help answer questions about the home buying process, finding a lender, and recommendations for other professionals, like a home inspector. Choosing to work with a real estate agent who is familiar with your future neighborhood can also be beneficial for overcoming other hurdles such as verifying the asking price is fair for the area’s amenities and ensuring the neighborhood suits your current (and future) lifestyle.