Chris Hounchell REALTOR

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Award-winning Florida real estate Broker PROUDLY SELLING IN PINELLAS, HILLSBOROUGH, PASCO, MANATEE & SARASOTA COUNTIES since 2004.

Home Buyer Misconceptions

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The road to homeownership is a straight line from start to finish, right? It’s hire a Realtor, find a house, get a mortgage, and close. Not so fast. While the major stepping stones are almost always the same for everyone, the steps in between can be different from Buyer to Buyer.  We bust the misconceptions many home buyers, new and seasoned, have when it comes to finding their next home.

Home Buyer Misconceptions

You Need a Big Down Payment

Many people immediately count themselves out of owning a home because they can’t come up with a 20% down payment. While a larger down payment can save you from additional costs such as PMI, it doesn’t necessarily mean you can’t purchase a home. In addition to PMI, there are programs available through the Federal Housing Authority (FHA) that require as little as 3.5% or the Veteran’s Administration (VA) that may have no down payment requirement.

Your Credit Score Isn’t Perfect

Your credit score is not the end all, be all to securing a mortgage. A mortgage underwriter will review much more than the number to ascertain a full picture of your financial health. If you hit a few bumps along the way due to an unexpected illness or unemployment, your underwriter will look at your recent payment history to see if you’ve made any late payments or have any unpaid liens or judgments.

Don’t Talk To Too Many Lenders

People are still laboring under the idea that multiple lenders reviewing your credit report hurts your credit score. FICO, the credit score authority, allows for consumers to shop around for best rates. As long as credit inquiries are all within a 30 day time period, the inquiries show are all counted as 1 inquiry. This is great news that gives potential Buyers the power to find the best interest rate.

You Should Make a Low Offer and Negotiate

Making a low ball offer to “kick things off” is never a good approach. Depending on the market conditions, you may automatically exclude yourself from consideration because the Seller received other, more realistic offers. If the market isn’t super hot, it may give the Seller pause to think you may not be a strong Buyer, which could mean a delayed closing causing them additional months of mortgage payments and taxes. Instead, making your second best offer is often the best practice and provides you with room to negotiate should the Seller counter your offer.

When you decide you’re ready to become a home owner, do your research and contact our team to help you through each step of the process from pre-approval to sold.

How Long Should You Stay In Your First Home?

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If you’re considering buying your first home, you’ve probably been advised to weigh the benefits of buying v. renting and evaluate your financial health before you start looking. There’s something else you should consider as a first time home buyer and that’s how long you should stay in your first home.

The Five Year Rule

The traditional advice for first time home buyers is to be prepared to stay in your first home for at least five years. The thought behind this advice is that it will take at least that long for your home to appreciate enough to recoup the money you put out for closing costs, both buying and then selling the home. The length of time for this rule may be extended depending on how much money you paid for a down payment and how much you’re paying towards your mortgage principal. The longer you stick with a mortgage, the more money your monthly payment will be applied to the actual principal instead of interest, which decreases your debt and increases the amount of profit you could gain.

Market Trends

If there’s something to be learned from the housing crisis that began in late 2008, it’s that the signs are there and market players need to pay attention to them. This is where having an experienced Realtor on your team benefits you. A Realtor can analyze the current market and help determine if there is room for appreciation or if the market has reached its peak. Obviously buying in a market that has a good chance of appreciation over the next few years makes for a better opportunity for a first time home buyer to see a return on their investment if they choose to sell in the future. It also may allow the first time buyer to move on from their first home faster if the value appreciates quickly.

How Long Should You Stay In Your First Home | HounchellRealEstate.com

First Time or Forever

Over the last two decades the thinking has been that first time home buyers purchase a “starter” home and graduate to a larger home as their salary increases, their families grow, and the value of their starter home appreciates. In our parents’ and grandparents’ generations, their first home purchase was often their forever home for several reasons. The first reason is one income was usually enough to afford a reasonable home for a young family to grow into. They also weren’t swamped in debt from student loans and credit cards freeing up more money for a down payment. The second reason is they didn’t buy the maximum amount of house they could afford. There is also the idea that bigger is better but that’s not always the case. Larger homes require more time and money to maintain; if the space is unused this is simply wasted money. First time home buyers may want to consider buying a home that will meet but not exceed their needs for years to come or consider holding off on a purchase until they are better able to afford a home that meets their forever home requirements.

First Time to Investment

Another option a first time buyer may want to consider is not parting ways with their first home purchase and instead turning it into a rental property. There are separate things to consider when deciding to become a landlord but if this scenario works well for your situation you could help recoup closing costs faster or actually see a profit each month from obtaining a tenant.

As you can see, there’s no set time frame for how long you should stay in your first home and it’s possible you may never part with your first home. We recommend that you consider your current needs, your anticipated future needs, and market trends to help decide your plan before ever making an offer on your first home.

What To Look For During a Walk Through

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Looking at houses that could potentially be your next home can be a lot of fun. It’s almost voyeuristic…you get full access to a stranger’s home. You can get lots of decorating ideas or peak into the owner’s lives through pictures and other items around the house. But you’re viewing these houses for a reason…to find one to call your own. Use our checklist for what to look for during a walk What to Look For During a Walk Throughthrough.

Tip: assign a point value to each item depending on your priorities and the condition of the item, add the score up at the end of each walkthrough and use the score to help you decide which house meets your needs and wants.

Exterior

  • Roof
  • Siding/brick/stucco
  • Windows
  • Doors
  • Landscaping
  • Fencing
  • Sidewalks/driveway
  • Deck/patio
  • Pool
  • Garage/shed

Living Areas

  • Carpet/hardwood/tile
  • Windows
  • Doors
  • Walls
  • Molding and baseboards
  • Lighting (natural & electric)
  • Climate systems (heat & AC)
  • Closets & storage
  • Electrical outlets

Kitchen

  • Appliances
  • Fixtures
  • Cabinets
  • Pantry
  • Countertops
  • Flooring
  • Eat-in
  • Layout
  • Plumbing
  • Electrical outlets
  • Electric or gas hookups

Bedrooms

  • Number
  • Carpet/hardwood
  • Windows
  • Doors
  • Windows
  • Molding and baseboards
  • Lighting (natural & electric)
  • Closets
  • Electrical outlets
  • Size

Bathrooms

  • Number
  • Flooring
  • Window(s)
  • Door
  • Fixtures
  • Tub
  • Toilet
  • Mirror
  • Countertops
  • Storage
  • Shower stall
  • Lighting (electric & natural)
  • Electrical outlets

Miscellaneous

  • Privacy
  • Accessibility to transportation
  • Crime rate
  • School rating
  • Traffic
  • Parking
  • Neighborhood offerings (parks, playgrounds, rec centers)
  • Neighborhood condition (well maintained homes, low vacancy)

Newlywed Home Buyers Guide

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You’ve said “yes” and you’ve set the date now it’s time to start thinking about where you and your new spouse will begin your life together.  You’ll need to evaluate your finances, lifestyle, and future plans before you start touring potential homes.

Newlywed Home Buyers Guide

Can you afford it?

Before you say “I do” to any home you should review your budget and credit history to determine if a mortgage payment can fit.  Seeking a mortgage pre-approval from a qualified lender is the next step.  The lender will determine what you can qualify for and how much home you will be able to finance.  You can read our guide about how to prepare for home ownership for more details on your budget and other decisions you’ll need to make.

The long or short term?

Deciding how long you plan to stay in your perspective home will also help you determine what kind of house and in what neighborhood you’ll want to buy.  If your intention is for this home to be a started for just the two of you, a smaller home in a more active & urban area may better suit your needs.  You’ll also want to keep the amount of money you invest in a starter home low so you can maximize the appreciation when you sell.  Turn-key homes are the best for these situations since they require almost no repairs or home improvement other than a fresh coat of paint to suit your decor choices.

If you are planning on your purchase being your forever home, you should consider what your needs and wants will be in the years to come.  If you are planning to expand your family at some point, larger backyards, well-rated schools, neighborhoods with an active community, and easy access to parks and other recreation by foot may be amenities to consider when searching.  Properties that need major updates or construction or have the option of adding on to them later on may be more appealing since you have the time to invest and budget accordingly for such projects.

Before or after?

The last thing you will want to consider is when to buy your home.  Do you want to buy before or after your wedding?  If your wedding is a year or more away you may want to close on your home before rather than after your wedding so you can settle into it while you’re not swept away in wedding planning.  Depending on the financial demands of your wedding, however, you may want to avoid depleting all of your savings at one time.  Mortgage companies will want to see a healthy savings account and low debt when underwriting your loan.  If one of the spouses plans on changing their last name after the wedding it could delay closing while waiting for all the necessarily documents and records to reflect the new last name.  And if you take title jointly before the wedding and a name change does occur, you’ll need to record a quit claim deed reflecting the name change at a later date should you refinance your property.

And as with any real estate transaction, you should find a licensed Realtor who is an expert in the location that you want to call home.

Are You Ready to Buy a Home?

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Buying your first home will be one of the most memorable moments of your life.  Before your Realtor ever shows you a listing, you should prepare yourself to be the best buyer and future home owner possible.

What’s your savings bottom line?

Aside from the necessary down payment, do you have a healthy savings account balance?  Closing costs often surprise parties on both sides of the table.  Aside from actual closing costs and down payments, do you have an emergency fund you can tap should the roof spring a leak or one of the appliances needs to be replaced sooner rather than later?

Find your realistic price range.

Mortgage pre-approval and a realistic price range can be two very different things.  Just because you can pre-qualify for a mortgage of $500,000 doesn’t mean you can afford a home with the same asking price.  Ruthlessly examine your budget to see how much of a mortgage payment and associated monthly home costs you can comfortably afford.  Account for every cent you’ll spend over the course of a month and ensure you’ll have money leftover to do things like buying groceries and putting gas in your car.

Are You Ready to Buy a House?

Are you pre-approved?

Speaking of mortgage pre-approval, where is yours?  A pre-approval letter will tell you the maximum amount of money a mortgage company is willing to lend you in order to buy a home.  Almost every single seller is going to want a mortgage pre-approval before considering an offer.  If you don’t have a pre-approval, why not?  A pre-approval doesn’t lock in a mortgage rate, term, or note.  If you’re unable to obtain a pre-approval for a mortgage company you should examine your financial health.  Correct any errors on your credit report, work to reduce your debt to income ratio, and ensure you’re paying all of your debts on time.  If you have liens or personal judgments, you will need to resolve these issues as soon as possible.

Know what you want in a home.

This can be a big hang up for many first time home buyers.  Do you need multiple bedrooms or want a garage or a home located in a certain school district?  Write a list of every feature you could possibly want in a home then prioritize those desires.  Having a firm idea of what you really need versus what you want in a home will help your Realtor narrow down potential properties and save you both time.

How stable is your life?

Buying a home is an investment in not only money but time.  The general rule in real estate is to expect to wait five to seven years before you recuperate the closing costs in the form of home equity, longer for a sizable return on investment.  If your job security is questionable, you may want to hold off on your purchase.  You may want to consider the same if you relocate often for your career.  While the market is recovering, you’ll be hard pressed to find a profit in “flipping” a home that you could have seen seven and eight years ago.

Reviewing and addressing these topics before you start the search for your future home will make you a strong buyer when you decide the time is right for you.