The real estate market in Sarasota is thriving. We have real estate agents on our radio show almost every week talking about growth areas and new trends in buying and selling patterns.
If you’re considering buying a home in the heart of the Gulf Coast, make sure you’re prepared. By following the steps below, you can make the process much easier and less stressful — plus, you’ll be in a better position to get the home you’re dreaming of.
You’ve probably run the numbers — you have sufficient income to support a mortgage, and you may even get a good interest rate. But if your credit score is below the 700 range, you’ll likely get hit with some hefty fees or a larger down payment requirement. If you spend some time improving your credit score, you could see a big difference in your upfront investment.
MyFICO.com allows you to check your credit score for free and has resources available to help you improve your credit.
A monthly payment may look reasonable on paper, but until that money actually disappears each month it’s difficult to know for sure if you can handle it. In most cases, the recommended maximum debt-to-income (DTI) ratio hovers around 30 percent. Determine what that number looks like for you and start putting it aside each month in a savings account.
If this drop in disposable income causes you stress or threatens to put you in financial hardship, you’ll know ahead of time that you need to adjust the price range for your home search. If you feel comfortable parting with that money each month, it was a worthy investment — especially because you’ll now have some extra padding on your savings account.
Remember, you’ll be making this payment every month for the next 30 years. Make sure you can handle it.
Most home buyers know they will be required to put a down payment on a house. Depending on your credit score and financing situation, your down payment will vary between 3 and 20 percent of the sale price of your home.
Some home buyers don’t realize that they should also save for closing costs — including surveys, inspections, lender fees, and other administrative costs. In the state of Florida, closing costs typically amount to 7% of the purchase price for buyers who take out a mortgage.
If you spent some time testing out your monthly mortgage payment and saving that money, you should have a decent amount set aside. Not only will this help with closing costs and down payment — lenders like to see financial stability. It’s important that you’re not living paycheck to paycheck, otherwise the risk of loan default is much higher.
Real estate agents and lenders like to see that you’re organized and prepared for the home buying process. Getting pre-approved for a mortgage shows you’re serious about buying a home, and confirms how much house you will be able to afford. This extra step also expedites the home-buying timeline. The pre-approval process is more extensive than it used to be, and you don’t want to miss out on the perfect house while you’re waiting for your financing paperwork to process.
