Unless you are in a position to pay all cash for your Greater Tampa Bay Area home, you will need to obtain a home loan (mortgage) to complete the purchase. We will assist you in this process to help ensure that you obtain the financing that meets your needs.
Being pre-approved for a loan before you submit an offer will put you in a stronger negotiating position and can save time in the loan approval process. Team 54 Real Estate Advisors can put you in touch with an experienced loan officer in our office who will be your guide through the financing process.
Obtaining a mortgage in today’s ever-changing market is often complicated. Numerous products serve varying needs depending on a home owner’s future income, length of occupancy and current real estate trends. Here are answers to some of the most common questions about mortgages when buying a home in Greater Tampa Bay.
Q: What advantages does pre-approval offer to home buyers?
A: When a borrower applies for a mortgage before finding a house and receives a written commitment from a lender to finance a suitable property when found, the buyer has several advantages including:
House hunting made easy. Pre-approval lets the home buyer know exactly how much home he or she can afford. Home finding is focused on a precise price range.
Cash buyer status. The buyer has the increased negotiating leverage of cash buyer status because the mortgage is already in place.
Accelerate the mortgage process. Significant time is saved because a large part of the mortgage has already been processed.
Q: How do underwriting or qualifying ratios work?
A: Qualifying rations are percentages of a home buyer’s gross income that can prudently be allotted for debt. These calculations help the mortgage lender determine whether the borrower will be able to make mortgage payments in a timely and consistent way.
The most commonly used rule of thumb is 28 percent or 36 percent, which limits the sum of monthly mortgage principle, interest, property taxes and insurance payments (PITI) to 28 percent of the home owner’s gross monthly income and further limits the total of all long-term debt payments to 36 percent.
Lenders may relax these limits to allow a financially stable borrower to qualify for a larger loan amount. Compensating factors that count include an excellent credit history, a consistent savings pattern or a future increase in income. Moreover, borrowers who are being relocated by their employers are eligible for qualifying levels of 33 percent and 38 percent (vs. 28 and 36) because as a group they show a track record of lower risk of default, and they move more frequently than other home owners.
Q: What costs are incurred at a typical closing?
A: In addition to the “points” you elect to pay when applying for the mortgage, at closing on your Greater Tampa Bay Area home you will be required to pay a down payment, closing costs and prepaid costs.
Points are fees paid to the lender to obtain a lower interest rate. A point equals one percent of the loan amount. Points are usually paid at the time of closing. Discount points are paid by the buyer to reduce the loan’s interest rate. Paying one discount point normally reduces the rate by 1/8th percent. If the home buyer plans to keep the residence for five or more years, it is worthwhile to pay as many discount points as possible to reduce the monthly payments and achieve greater savings over the life of the mortgage.
The down payment is the difference between the price of a house and the mortgage amount. Part of the down payment is usually paid as “earnest money,” or deposit, when the contract is signed by both buyer and seller. The balance of the down payment is due at the closing.
Closing costs are the other charges the buyer must pay to obtain a loan. These usually include taxes, which are charged in most states, and title insurance, which protects the borrower and the lender in the event anyone can prove that the borrower is not the proper owner of the house.
Q: How much will these closing costs actually be?
A: If the mortgage is for more than 80 percent of the price of the home, private mortgage insurance protecting the lender may be required. Closing costs also include the cost of a property appraisal and credit report. Prepaid items are the first several months of costs paid on a monthly basis such as homeowners insurance and real estate taxes. These prepaid items are held in an escrow account for the borrower.
The down payment will depend on the mortgage you have obtained. It can be as little as three percent and occasionally even zero, or as much as 30 percent or more of the purchase price. Points will add another one percent to three percent of the purchase price.
When applying for a mortgage to buy a Greater Tampa Bay Area home, your mortgage counselor will provide a good faith estimate of the closing costs as part of the applications package you receive.
Q: What information is required with a mortgage application?
A: Personal, employment and financial information from you and legal or technical real estate information from your attorney and/or your Realtor. A list of what you need to supply your lender follows:
Q: What do I need to do to apply for a VA loan?
A: Basically, two documents;
Q: What payments are made at the time of loan application?
A: Usually only two payments.
At some banks or financial institutions, you may have to pay an “application fee” to cover the lender’s (or loan broker’s) cost to process the paperwork.
The steps to buying a home in the Greater Tampa Bay Florida also include:
It is our privilege to represent you as a Trusted Greater Tampa Bay Real Estate Advisor. We have received specialized training, and extensive educational courses, to help navigate and inform you through the entire home buying process.
We focus on Greater Tampa Bay Area Real Estate in the following counties, but not limited to:
Your wants and desires are our top priority!
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