5 Questions To Ask Before Buying A Home In Tampa Bay In 2017

Dated: 01/17/2017

Views: 579

So you've been thinking about buying a home here in Tampa Bay in 2017, but are you ready? If you're one of the many prospective first-time home buyers out there hoping to make home ownership a reality before interest rates and prices tick up, consider your answers to each of these questions:

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1. Are your finances in order?
Are you currently in a position to pay your bills and save for a down payment? Ideally, your down payment should be at least 10% of the sales price of the home. Even better, a down payment of at least 20% will eliminate the private mortgage insurance (PMI) that lenders tack on to your monthly mortgage payment. Though it's possible to purchase a home with less of a down payment (for instance, FHA loans only require 3.5% down and VA loans require no down payment at all), if you're not in a position to save for a down payment, it's not a good idea to venture into home ownership. As all home owners will tell you, there are always extra costs lurking in your home - repairs, upgrades, etc. You will want to be able to continue the discipline of saving after you buy, so really evaluate your current and potential financial situation before embarking on your first home purchase.
2. Are you planning on staying in Tampa Bay for a while?
The rule of thumb in home buying vs. renting is that it only makes sense to buy if you plan to hold onto the home for at least 3 to 5 years. This is just a general rule. As we all learned from the crash of 2008, market conditions can be volatile. In recent years, many local home owners have had to hang on for 7 to 10 years in order to avoid selling at a loss. Moving forward in 2017, market conditions in Tampa Bay will most likely warrant that home owners adhere to the 3 to 5 year rule.  So ask yourself if the forecast for your job and lifestyle will keep you in the Tampa Bay area long enough to make your home purchase a sound investment.
3. What are the costs in renting vs. owning in Tampa Bay?
Unlike mortgage expenses, which are typically fixed for 15 to 30 years, rents will fluctuate from year to year depending on the market where you live. In Tampa Bay, rents are at an all-time high and have been steadily increasing year after year since the crash, which created more demand from home owners who were forced into foreclosures or short sales. Currently, the average rent in Tampa Bay for an average 3 bed/2 bath single family home is $1800/month. A mortgage payment is broken down into principal, interest, taxes and insurance (PITI). Given today's interest rates, combined with average taxes and insurance costs for Tampa Bay, you would pay about $1800/month for a 30-year fixed mortgage of $315,000. 
According to the 3 to 5 year rule, you could expect to recoup your monthly mortgage expenditures, plus any appreciation the home may realize, upon the sale of your home. In essence, you can look at the home you own like a forced savings account. Conversely, if you rent your home, the rent you pay goes into the "savings account" of your landlord. As mentioned above, market conditions can change, but as I write this today, you most definitely get more for your money by owning vs renting in Tampa Bay. 
4. Are you ready for the responsibilities of home ownership?
With home ownership comes many, MANY, to-do lists! Once you become a home owner, you will acquire the responsibility of maintaining and periodically upgrading your home. It's your forced "savings account" remember, and if you nurture your home you will likewise be nurturing your potential to make a nice profit when you sell. So when the grass needs mowing... mow it. When the gutters need cleaning... clean them. Summer around the corner? Time to service the A/C. And so on... Now, of course, you can hire someone to do all of these things for you if your budget allows, but bottom line, they need to get done or your investment will suffer.
5. How's Your Credit Score?
Okay, if you've answered Yes to questions 1-4, congratulations, you are most definitely ready to become a home owner! And if you're planning to purchase your home with cash, you can shut down this blog right here and contact us to schedule your first showing! 
But if you're planning to borrow the money, then your next step is to speak to a lender. Here's where your credit score will either become your best bud, or your biggest obstacle.  Even if you earn enough income to support your payments, your ability to borrow will depend on your FICO score. A score above 750 will ensure your eligibility to lock in the best terms with pretty much any lender you choose. Most lenders want to see a minimum score of 620, but FHA will sometimes approve borrowers with scores as low as 580 if other criteria are met to their satisfaction. Step one, before even looking at one home, is to contact a lender for a preapproval. If your credit score isn't where it needs to be just yet, a good lender will map out a plan for you to improve your score. If you follow their plan, you may be able to get your score where it needs to be in just a few months.  We work with excellent local lenders, so if you're ready to take this first step we'll be happy to put you in touch with someone we trust to work hard for you.
Whether you're ready to buy or not, our House Hunters Tampa Bay team is here to help you in any way we can!

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Tracey Reynolds Brunetto Broker

FUN FACTS ABOUT TRACEY: - Is a Florida native, raised in Seminole - Cooking & Yoga are her favorite off-duty activities - Mom to Delaney & Ryan, the 2 greatest kids in the world - Is a graduate of....

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