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Your agent needs to know what loan would work best for you and how you can utilize the sellers contribution to your closing costs. Different loans have different guidelines on how much a seller can contribute to a buyers closing costs.
In the case of a USDA loan a buyer can get as much as 6% of the sales price in sellers contributions that can be used toward closing costs, prepaid expenses, discount points, and other closing costs. You could potentially get into a home with paying nothing out of pocket
On a VA loan the seller may contribute up to 4% of the sale price, plus reasonable and customary loan costs. Because he VA loan contribution can include additional reasonable and customary loan costs the actual amount is calculated a bit differently and it would be best to talk to your lender on how much of a contribution you could actually get
While an FHA loan requires a 3.5% down payment to the loan, a buyer can get as much as 6% of the sales price in sellers contributions that can be used toward closing costs, prepaid expenses, discount points, and other closing costs.
The conventional loan has more of a sliding scale used for seller contributions. If you are putting less than 10% down on the home the maximum seller contribution is 3%. A buyer putting 10 to 25% down can receive as much as a 6% seller contribution, while a buyer putting down 25% or more may get as much as 9%.
So what do you do if you are getting $9,000 in closing costs but you actual closing costs are only $6,500? If you don't use it you LOSE it! You as the buyer don't get to pocket that money, it would go back to the seller's bottom line. What can you do to use that money? Talk to your lender, see how much it would cost to pay down your mortgage rate, or perhaps pay the funding fee for a USDA, VA or FHA loan? Each program is different on how that extra contribution can be applied so talk to your agent and lender!
Finding the best loan for you doesn't have to be a difficult process, especially if you know your score, how much you have to put down and how much you have for closing costs. FHA, VA, USDA, Conventional? This is sooooo confusing! But here is some information that you may find useful!
An FHA is a loan that is backed by the federal government. It affords mortgages for lower credit scores as low as 500 (however down payments will be higher, as much as 10%). A credit score of 580 can afford you the opportunity of putting as little as 3.5% down. The downside as the borrower is you pay mortgage insurance (an upfront premium of 1.75% of the loan amount and an annual premium of between .45
% to 1.05% annually, which protects the lender on default. Terms on the FHA loan can be 15 or 30 years at a fixed rate. This loan is best if you can't qualify for a conventional loan due to credit OR if you don't have a lot of cash saved to put down on the home.
A VA Loan is a loan made to veterans of the military who can acquire a certificate of eligibility, which can be acquired online at VA.gov or through your chosen lender. The VA loan is made by private lenders that are partially backed by the Department of Veterans Affairs. The VA loan allows for 100% financing of the loan amount and is more flexible with its more lenient credit and income restrictions. Having your Realtor understand the VA process is critical to getting you the best possible outcome for the VA loan. You could potentially get into a home with ZERO out of pocket, to include closing costs!
The USDA loan is a 100% no money down mortgage made available that is backed through the US Department
of Agriculture. It is geographically restricted as it offers loans in more rural areas. The loan is only offered as a fixed rate product. Although the USDA loan does require an upfront mortgage insurance premium
Conventional is a mortgage loan for scores starting at 620 with down payments as low as 3%. Primary Mortgage Insurance (PMI) can be
.05% to 1% of the loan amount per year. Terms on the Conventional loan can be 10, 15, 20 or 30 years at either a variable or a fixed rate. If you have cash on hand for down payment and closing costs than the conventional mortgage could be the best loan for you. Lenders of conventional loans are not as restricted as government backed loans, although the government has special rules for over site, lenders can set their own guidelines.
Ocean Blue Mortgage
14562 Vista Ln
Largo, Florida 33774
Office: (727) 859-3702
Don't be afraid to shop a few lenders to see who may give you the best deal. In these days of technology it is easy to gain access about your credit score before you even need to apply. Banks like Wells Fargo offer free credit score programs where you can see your score through your account.
Make sure you have an idea of how your credit shapes up. Things may have happened in the past to cause you to be late on payments for your car or credit card and they will negatively affect your score. More commonly unpaid medical bills may appear from past medical bills that you may or may not even be aware of. Getting these things cleaned up prior to you applying for a mortgage would be to your advantage.
Based on your score you can search the internet for rates, however any rate you see will be subject to a review of an and all documents necessary for your loan. Therefore it can change. Some of my clients have used the inline lending companies, however I have found that the more local lenders understand the market in Tampa Bay and more importantly know the Florida home buying process.
You can ask your Realtor for a few lenders they may have used for transactions. You may find the transactions may run a bit smoother that way!
Remember ask questions and always read any fine print on any lending documents so there are no surprises!
Mark and Jeanmarie Zabilowicz
Tampa Bay Premier Realty
Team Z Realtor / Partner
5314 Van Dyke Rd
Lutz, Florida 33558
Direct: (813) 694-4110
Shopping for a new home is an emotional experience. It’s also time consuming and comes with a myriad of details. Some buyers, however, caught up in the excitement of buying a new home tend to overlook some items. Their home purchase turns into an expensive process. These errors generally fall into three areas:
When you have a systematic plan before you shop, you’ll be sure to avoid these costly errors. Here are some tips on making the most of your home purchase:
Bidding without sufficient information
What price do you offer a seller? Is the seller’s asking price too high? Is it a deal? Without research on the market and comparable homes, you could lose thousands of dollars. Before you make that offer, be sure you have researched the market. A professional realtor, can offer an unbiased opinion on the value of a home, based on market conditions, condition of the home and neighborhood. Without knowledge of the market, your offer could be too much. Or worse, you could miss out on a great buying opportunity.
Buying a mis-matched home
What do you need and want in a home? Sounds simple. Yet, clearly identifying your needs and bringing an objective view to home shopping, leaves you in a better position. Sometimes, home buyers buy a home that is too large or too small. Perhaps they didn’t consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view.
Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a realtor can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements.
Before the purchase is completed, an updated survey is essential. This report will indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbor’s new fence which is extending a boundary line, etc.).
For $300 - $500 a professional inspector will conduct a thorough inspection of the home. This way, you’ll have an idea of the cost of future repairs. Make the final contract subject to a favourable report.
Shopping without pre-approval
It only takes a few days to get financing pre-approval. When you are shopping for a home, this gives you more power. A seller is more likely to consider an offer from a serious buyer.
Remember additional cost
Besides the funds for the purchase of a home, you’ll need funds for items such as loan fees, insurance, legal fees, surveys, inspections, etc.
Rushing the closing
Before you sign, ensure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don’t rush. You could lose money, financing or even the sale.
Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!
You can sign up here to receive your own market report, delivered as often as you like! It contains current information on pending, active and just sold properties so you can see actual homes in your neighborhood. You can review your area on a larger scale, as well, by refining your search to include properties across the city or county. As you notice price and size trends, please contact us for clarification or to have any questions answered.
We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.