Jeff and Diane Smith - REALTORS® - Common Buyer Mistakes

Get "Pre-Approved" - Not "Pre-Qualified!"
Do you want to get the best property you can for the least amount of money? Then make sure you are in the strongest negotiating position possible. Price is only one element in the negotiations, and not necessarily the most important one. Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller.In years past, We always recommended that buyers get "pre-qualified" by a lender. This means that you spend a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you "pre-qualified" and issues a certificate that you can show to a seller. Sellers are aware that such certificates are WORTHLESS, and here's why! None of the information has been verified!So the way to make the strongest offer today is to get "pre-approved". This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan and the only loose end is the appraisal on the property. This process takes anywhere from a few days to a few weeks depending on your situation. It's a VERY POWERFUL weapon we recommend all our clients have in their negotiating arsenal.

Incurring Debt.
If you are serious about purchasing a home, it is important not to increase your monthly debt. When you apply for a loan the lenders will use certain ratios to determine what you can afford. The ratios that they use are listed below: FHA - 29% front end & 41% back end
CONV- 28% front end & 36% back endWhat do the above figures mean to you? The front end percentage is the maximum amount that you can afford for a monthly payment, this includes principle, interest, taxes and property insurance. Also known as PITI. The backend is what your total debt cannot exceed. This includes the projected monthly payment, credit cards, car payments, school loans, etc, that you make on a monthly basis. Here is an example using the FHA ratios: If you earn $60,000 a year the maximum monthly payment you can afford is $1,450.00 (29%) and your total monthly payments cannot exceed $2050.00 (41%). The difference between the two ratios is: $600.00. This means that you cannot have more than $600.00 per month being paid out to service other debt such as; credit cards, car payments, student loans, etc.Now let's say that your monthly debt is $200 more than the difference shown above (600+200=$800.00). The maximum monthly PITI payment you could afford will be reduced from: $1450.00 to $1250.00 so that you fit the ratios. I hope you understand how this could potentially affect you. If you have any questions please give us a call at 813-956-2361.If you are considering buying a car, wait until you purchase a home first. Taking on a car payment before buying a home will reduce how much house you can afford.

Changing job professions.
It is ok to have switched jobs in the same field. Going from a position as an IT (Information Technology) worker to a similar position with another company is fine, where lenders are concerned. However, going from an IT position to a restaurant manager is not the same. Lenders usually require that you have worked in the same profession for at least 3 consecutive years.

Don't Be Pushed Into Any House
Your agent should show you everything available that meets your requirements.
Don't make a decision on a house until you feel that you've seen enough to pick the best one.Don't forget to check into the SCHOOL DISTRICTS of the area you're considering. Information is available on every school; such as class sizes, % of students that go on to college, SAT scores, etc.
You can get this information from this web site.

Beware of written Ads!
Please note - ads are sometimes created to make the phone ring! Many of the homes have some drawback that's not mentioned in the ad, such as traffic noise, power lines, or litigation in the community. What's not mentioned in the ad is usually more important than what is.For this reason, I want you to be very careful when reading ads. Remember that the person writing the ad is representing the seller and not you! The most important thing you can do is have someone on your side looking out for your best interests. Your own agent will critique the property with an eye towards how well it meets your needs and will point out any drawbacks you should know about. So whether you decide to work with us or not, pick an agent you feel comfortable with and enlist the services of that agent as a buyer's broker. Then you become a client with all the rights, benefits, and privileges created by this agency relationship, and you're no longer just a shopper.

Very low offers.
Submitting a low offer on property and asking the seller to pay all the closing costs might upset the seller and ruin any chance of purchasing a home. This might not matter if you're just looking for an investment property. A low offer may also be acceptable if it is a buyer's market – you might find a great deal. If it is a seller's market, however, you might not get a second chance to submit realistic offer.

If you plan to live in the home and need to offer a lower price, list the items that need attention in order to justify your offer. Make sure that you aren't being too picky. Needing to replace the furnace, roof or driveway is understandable. Asking the seller to replace outlet covers, blinds and a new bathroom sink might be too much.