Buying a Home in Clearwater: A 20 Step Guide to Insure a Smart Real Estate Investment

Buying a Home in Clearwater: A 20 Step Guide to Insure a Smart Real Estate Investment

#1 How much Home?
Congratulations! You’ve decided to buy a Clearwater home! Buying a home can be an overwhelming thought once you have planted the seed, but you have come to the right place to get professional service. I have created a Step-by-Step Home Buyer Guide to help you better understand the home-buying process and to help empower you for a successful purchase. So, let us get started…

How much home can you afford? This is the most important step in the home-buying process. Finding a price range that will help give you flexibility to negotiate, as well as identifying a comfortable monthly payment that you can live with is vital. Here are a few websites that have calculators to determine how much house you can afford. If it asks you for an interest rate, use 6% as an average. We’ll talk more about that later.

CNN Money House Afford Calculator
Bankrate New House Calculator

#2 Find out your credit score.
You can get one free credit report from each of the three credit bureaus each year. It is simple and easy. Visit, call 1-877-322-8228, or request one by mail by writing to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. If you request a credit report by mail, you must include a form with your request. The form is available for download at the Federal Trade Commission’s website at Pease refrain from making large purchases before you close on your home as this will adversely affect your credit rating, Your lender will pull your credit score and will anticipate that your financial position and debt will remain consistent until closing.

The most commonly used credit score is called a FICO score, based on a calculation created by Fair Isaac and Company. The FICO score ranges from 300 to 850. In 2006, the three national credit bureaus developed a new credit score called the Vantage Score that ranges from 500 to 990. At this point, the FICO score is still the most widely utilized credit score by lenders.

Your credit score is based on the following:

• Your payment history- Have you paid your accounts on time?
• Your outstanding debt- What percentage of the credit available to you are you currently using?
• Your credit history- How long have your accounts been open?
• Credit applications- How much credit have you applied for, and how many inquiries have been made in the last twelve months?
• New lines of credit- How many new lines of credit have you actually opened in the last twelve months?
• Your credit mix- What type of credit has been extended to you?

Your credit score has a significant impact on your financial life. The lower your credit score, the more interest you will pay for credit. This means there will be less money for you to put towards other items you may need to make a Clearwater Beach, or Belleair Bluffs house your home. You may reach the three credit bureaus at the following addresses:

Equifax Information Services
PO Box 740241
Atlanta, GA 30374

Experian CBA
PO Box 2002
Allen, TX 75013

TransUnion LLC
Consumer Disclosure Center
PO Box 1000
Chester, PA 19022

#3 Your down-payment
Have a general idea of your down-payment before meeting with a lender. Keep in mind that you will want to purchase a few new things after closing on your home (i.e. minor repairs, paint, furniture). Set aside enough to also pay for movers and/or deposits on your utilities. If you have decided on a conventional loan, you will need at least 20% of the purchase price plus your costs to borrow the money (aka closing costs). If you qualify for a FHA loan, then your down-payment will be 3-5% of the purchase price plus the costs to borrow the money.

#4 Your Lender
Which lender will be on your team? Finding the right Clearwater area lender is as important as finding the right loan to suit your financial needs. You are building a team and the lender can make or break the deal. We do not recommend finding your lender online or calling the 1-800 number for your bank’s loan department. You will not receive the personal attention and professionalism you will need in order to proceed with the purchase of your home. In addition, having the name of a contact person that has been working directly with you will be beneficial in case there is a loan-underwriting issue that will need to be resolved quickly. I can offer you referrals for local lenders. A mortgage broker is different than a bank loan officer since they can shop many different lenders to get you the best rate for a small fee-similar to shopping for health insurance. (NOTE: It is a federal violation of RESPA laws for a licensed agent to receive a kick-back for referring business). Take time to personally meet with at least TWO area lenders face to face. You’ll need to provide them with your total monthly income, length of employment, total monthly payment obligation, and several other personal details that may affect your ability to repay the loan. Expect to spend about 45-minutes with each one.

#5 Lending
THE LOAN- There are several loan products available such as conventional, FHA, or VA. Since the industry changes so quickly you need to ask your lender what is available to you at that time. Your gross income or loan amount usually dictates the loan products available to you. Do I Qualify for an FHA loan? Click Here. HOA or CDD Fees- If you are in the market for a Clearwater Beach, or Island Estates condo or townhome, there are several different items to take into account such as Condominium Association fees or Home Owner Association fees. These will need to be factored into your monthly payment. A CDD fee (a Community Development District), common in many communities, is included in the annual tax bill and pays for things like overall community ground maintenance, swimming pools, guard gates, etc.

THE GOOD FAITH ESTIMATE- Once you have decided on the loan product, your lender or mortgage broker will prepare a GFE (good faith estimate) which breaks down the list of buying costs and fees related to a loan. Many times, the type of loan you are requesting does not meet the underwriting property condition standards. For example, if you have little money to put down you may only qualify for a FHA loan. This is a government loan most commonly used by first-time home-buyers. FHA will require the home to be safe for children before providing a loan commitment. A fixer-upper would most likely not work in this case and may force your search to exclude bank-owned/reo/foreclosure properties or even some short-sales.  Once you’ve narrowed down the neighborhood and related fees (mileage rate, flood zone area, association fees, etc) you will need to ask the lenders to provide an updated GFE using the same figures to really compare apples to apples.

THE PREQUAL LETTER- Once your lender has qualified your income and expenses and you’ve decided on which loan product works best, your lender will be able to print or email you a copy of your pre-qualification letter. This letter is typically one page and printed on the lenders letterhead. It will accompany all offers you make during your home finding process and you will need to provide a copy to your Realtor®.

#6 Buyer’s Agent
Which Realtor® will be leading your team? Not all real estate agents are Realtors®. An agent who uses the Realtor® badge is one who is a member in good standing with the National Association of Realtors and who has pledged to a strict Code of Ethics and Standards of Practice. Finding a Realtor® to represent you and guide you through the home buying process is the best thing you can do to insure you achieve your goals quickly and effectively. Michelle Chenault is the eyes and ears of the real estate business and is here to help you understand the market trends and neighborhoods, customary procedures in the area, real estate laws, contract negotiations, home construction materials, investing, appraisal guidelines, and customer service.

In fact, anything you need to know about Clearwater, I can tell you because this is my home too! We are independent business owners working under the umbrella of a broker. As Realtors® with Coldwell Banker, we believe our broker offers the best marketing exposure currently available in the world to our Sellers. As for Buyers, we run our business differently than most agents and raise the bar even higher. We schedule an initial consultation to meet with new customers whereby we create a buying plan and discuss most of the items we have written about here. We set goals that meet your needs. We also work solely by referral, which allow us the unique opportunity to provide a greater personal experience.

#7 Understanding the Tampa Real Estate Market Trend
When inventory is low, it is a seller’s market. When inventory is high, it is a buyer’s market. For the market to be near equal for both parties, roughly 6-7 months of inventory is considered normal. When you meet with your Realtor®, you should leave the meeting knowing more about how many homes are for sale, how quickly homes are going under contract, and a general idea of specific Clearwater area trends. Some communities hold their value better than others. Contact me for details on stats in your specific area.

#8 Home Research
Start researching and identifying Clearwater Beach, Belleair Bluffs, or Island Estates homes. You must know the community you want to live in first before identifying the home you want to buy. At or after your meeting with your Realtor®, you should receive a list of available homes for sale that meet your criteria- ask us. This list is usually emailed. You may want to look for homes a bit higher than the price you want to consider, usually about 6-10% more than what you want to spend, since you will be negotiating the price down. Sometimes a home is “energy priced” and will bring in at or above list price. We will talk more about this later. 87% of all buyers look for homes online, beyond what their Realtor® has provided. In many cases this can be time consuming and frustrating. Each brokerage company has different marketing objectives and not every company or every real estate search site has accurate information.

What if you are pulling properties that are short-sales and you need to be in a home at the end of the month? Your Realtor® wants to help you find the best fit within your timeline and should be considered your resource. You should also ask to be set up with auto-notifications, so if a brand new listing or price reduction on homes you like (but can not afford) becomes available through the MLS (multiple listing service) you will be notified immediately. The MLS is the bible of listings and sale history so-to-speak. It has the most accurate information and brokers can easily be fined for not keeping it up to date or by providing false information. It is not readily available to the public.

Property taxes will change when a new sale is recorded with the county. Your property will be reassessed. To calculate a range of your estimated annual taxes click here.

# 9 Start Viewing Tampa homes.
I realize that you might not be available to view homes during the day. Most full-time Realtors® work evenings and weekends to accommodate their Buyers. This is where I provide a higher level of service to you. Appointments need to be made in advance of viewing a home so you will need to notify your Realtor® at least 24 hours ahead of time to make sure you can get a confirmed appointment. I recommend visiting open houses fully armed with your Realtors® business cards to avoid the car-dealership effect.

I also recommend the iPhone app if you are the type of Buyer who likes to drive the neighborhoods on your own. It is a great tool and tends to be the most accurate of all the real estate websites. Please refrain from walking around a home or peeking in windows while looking on your own even if you think the home is vacant- this is considered trespassing.

You should email your Realtor® any addresses or MLS numbers so they can send you all the listings in the same format and make notes to your file and schedule appointments accordingly. Your scheduled appointments should include at least three homes and no more than eight. In some cases, you might be viewing a home with an owner or renter present. You can always go back to see a home again once you narrow down your list.

#10 Seller disclosures.
Once you have narrowed down your list to your top 2-3 homes, ask your Realtor® to request the seller property disclosures. These disclosures are available if the seller has resided in the home. Bank-owned properties for example would not have anything available since they have not lived there. Keep in mind that you will want to have the home inspected by your own inspector no matter what the disclosures say or do not say. You will also have disclosures coming from your Realtor® and the title company. In this business it is all about disclosing everything that one might or might not know.

#11 Writing the offer.
We are currently seeing multiple offers on most new listings. Some homes are priced to sell and some are not, so a low-ball offer might kill future negotiations with a Seller and it may cost you getting the Clearwater home you want. If the listing is new and the home is being shown often then home is priced correctly. Depending on the needs of the Seller, I often “energy-price” a listing in order to sell it above the listed price. Buyers know the market well having seen comparable homes. If a home shows very well and is priced just under the competition, most often Buyers will pay a little more for it.

When I meet with new customers during the initial meeting I provide them with a sample copy of the contract in advance, to give them ample time to review in case they find the home they want and need to act fast. The offer becomes the contract through signatures, counter-offers, and acceptance by the Seller. I find this is the scariest part for most Buyers, so having had time to read over everything ahead of time should put your mind at ease. Also, there is a myth about why people like to close at the end of the month. Most buyers believe there is a savings. There is not. In fact, closing at the end of the month will make it all the more chaotic since everyone else wants to close then, and therefore, creates chaos with the title company and lender. Not closing on your home at the end of the month simply means you will need to bring more money to close now but your next payment would be further out.

The most important elements to the contract are- the offer price, what type of financing you are obtaining and how much, the closing date (typically 30-45 days), appliances or personal possessions in the home, how many days you need to get your inspections completed (typically 5-10 days), do you want the seller to make repairs to the home before closing based on your inspection results OR would you be willing to accept it As-Is after you have reviewed your inspection results, and would you be asking the Seller to pay for some or all of your closing expenses.

Here is an example of a home listed for $200,000- Let’s say you make an offer of $200,000 on a home listed for $225,000. You’ll need to consider that the cost to sell will run the Seller about 7% of the sale price. If you ask for repairs of $3,000, a home warranty of $400, a closing date of two months out, and seller concessions to pay for your closing costs of say 3%, your offer of $200,000 then becomes $190,600, not including their own closing expenses of $14,000 to net them roughly $176,600 and not including the two months of mortgage payments as they wait for your loan to be processed.

Whew! My point is, it is smart to consider the Seller’s perspective as well if you have decided you want this particular home.

#12 Escrow deposit/ Good Faith deposit.
At the time of preparing your offer you will be required to write a check for 1-2% of the offer price as your Good Faith Deposit made payable to the escrow agent. If both parties can agree to terms then that check will act as a deposit on your behalf. Once the check is given to the escrow agent it will be subject to clearance. If your offer is not accepted then you can expect a 7-10 day turn around to receive the funds from the escrow agent. The check must clear and be reprocessed.

# 13 Countering an offer.
The countering process is very much normal. It might be the price, closing date, the good faith deposit, the repair caps, and a number of other items. The ability to be flexible and discuss your concerns is the best way to insure you get the home you want. Most counters require signatures, but in many cases I have experienced verbal agreements first before final signatures are given. Once final terms are agreed to and each party has received the final signed documents, the offer would be considered effective and that date is the period that all dates in the contract start from. A helpful rule of thumb when negotiating only a few thousand dollars on the sale price- For every $1,000 you could expect an increased monthly payment of $9-11. That is it!

# 14 Home Inspections.
If you decide to work with me then you WILL purchase a home inspection. I have always had my Buyers order one since the risk would far outweigh the benefit. They typically cost $300-$500 depending on the size of the home and its features, like a pool or crawlspace. There are several customary inspections available in the area such as the main overall home inspection, termite inspection, structural inspection, lead-based paint inspection, Chinese/drywall inspection, and a mold/indoor air quality inspection. Consult with your Realtor® for which ones they recommend for the home. The general inspection is the most important, and in many cases if a larger problem exists a further evaluation will be recommended. I can provide solid recommendations of local inspectors who have worked in the area for a number of years, or feel free to visit the American Society of Home Inspectors website.

# 15 Re-negotiating the terms.
Sometimes the contract might be opened up for negotiation. This might occur if the inspections come back with a major problem such as the age of the roof, which might prevent you from obtaining insurance or getting a FHA or VA loan approved. Other cases might include the appraisal coming in below the contract price. No matter the scenario re-negotiating usually surrounds the issue at hand. Asking for the washer and dryer now would not be appropriate. Either party in most cases can agree to new terms or cancel the contract.

#16 Appraisals.
Once you are past the inspections an appraisal will be ordered by your lender through a third party blind selection process. If you are paying cash for your home, you might want to make the sale contingent on obtaining an appraisal. Appraisals can be used as a safety net to insure that you are not paying more than what the home is currently worth.

Since you are the one paying for the appraisal it will be sent to you, and likely not to your Realtor®. Your lender will notify us if the home does not appraise. The Seller will be notified that the current value, as seen by this particular appraiser, is less than the contract price. The Seller has the option to lower the price or cancel the contract. In some cases an appraisal can be disputed by submitting additional comparable sales. This can prolong the closing sometimes up to two weeks. Appraisals are currently a prickly-pear that require some patience and experience. To learn more about Fannie Mae appraisal guidelines click here.

# 17 Survey and Insurance.
Survey- In the Clearwater area it is common for the Seller to select the title company that will process and close the file. If a survey of the property is not available then the title company will order one. A survey is used by the title company to issue title insurance and to be made aware of any easements or encroachments, and boundaries of the property. The survey is typically ordered a few days before closing.

Insurance- Home Owner Insurance aka Hazard Insurance in the area can be challenging. You will need a copy of the appraisal before a company will provide a “binder policy”. If there is a named storm in what they call “The Box” then you will NOT be able to get insurance on a home. During hurricane season in Florida (June-November) I strongly recommend prepaying your home-owner insurance policy in advance of closing as to prevent any delay in your closing. Homes that are older than 50 years, in a flood zone, or near a sinkhole will require Citizens Insurance.

# 18 Reviewing the HUD Settlement Statement.
Once the title company has received your final loan documents they will prepare a 3-page document called the HUD-1 settlement statement; this is a concise breakdown of credits and debits to both the buyer and seller. Everything will be disclosed on this government form, It will also have the final dollar figure of what you are required to bring to closing to purchase your new home, less your Good Faith deposit which will be noted.

Unfortunately, even with modern technology, this document is not always ready far in advance of the scheduled closing time. If there is an error, the lender will not provide the final approval and a delay could occur. Since you will most likely be making arrangements with your employer to attend closing, the final funds should be wired at least 24-hours in advance of closing. The title company will cut you a check back at closing for the overage if any. Once the settlement statement has been approved and is ready it will be emailed. Your lender and I are both available to review this document with you to make sure everything is correct and as you expected.

#19 Scheduling a final walk-through.
You will want to schedule a final walk-through of the property, either the day before or just before closing, to make sure everything is as the contract states it should be (i.e. washer and dryer are still there). In Florida, the Seller is required to leave the home ‘broom-swept’. This can be subjective, but the home will most likely not be professionally cleaned. The final walk-through typically takes about 10 minutes. If you want to have your photo taken in front of the home with a SOLD sign, this would be the best time. Remember, you still do not own the home, so if you have movers they will need to wait until the deed has been transferred.

#20 Closing Day.
This is the day you have been waiting for!!! The stress, the elation, the move-week before you move into your new home! You will want to get your utilities set-up effective as early as today. The day of closing belongs to YOU. You should already know where the closing is going to be held and at what time. If your final walk-through is just before, we will caravan together to closing. I will be there at the closing to assist with anything you might need. You will need to bring your photo ID, such as a driver’s license or passport, and make sure your funds were wired to the title company well in advance. Your good faith deposit will already be at the title company on your account. If you have a loan, the closing will take approximately one hour; if cash, 30 minutes. Your lender will most often not be present but accessible by phone. The loan documents are plentiful and with the same verbiage on most loans-“you don’t pay, you don’t stay”.

If you want to read every page, PLEASE let us know in advance so the title agent can plan accordingly. Specifically, pay attention to the Lending Note, your interest rate and if you have a pre-payment penalty. There will be a short delay at the end of closing when the closing agent steps out of the office, to send the signed settlement statement as well as several other forms to the lender. Once the loan underwriter has approved everything they will send a wire to the title company. You will finally receive the keys once all documents are signed and your loan funds have been transferred to the title company.

Hooray! Congratulations on your new home! Please let us know if we can serve your real estate needs. We would love the opportunity to earn your business.

Article courtesy of Sophia Sanchez. Click here to read this post at THE REAL ESTATE POST | Sophia Sanchez Team.

Michelle Chenault
Your Local Clearwater Beach, Florida Real Estate Expert

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Michelle Chenault is your ultimate resource for Clearwater, Clearwater Beach, Belleair Bluffs, Island Estates and Tampa Bay real estate.  Visit our website for detailed information on all real estate including Clearwater Beach Condominiums  

Michelle Chenault  is your ultimate resource for Clearwater, Clearwater Beach, Belleair Bluffs, Island Estates and Tampa Bay real estate. Michelle Chenault helps people with all of their Clearwater, Clearwater Beach, Belleair and Tampa Bay real estate needs. Michelle Chenault helps people who are: relocating to Clearwater, relocating to Clearwater Beach or relocating to Tampa Bay. She can help you if you are: buying a home in Clearwater, buying a home in Clearwater Beach or buying a home in Tampa Bay, selling a home in Clearwater, selling a home in Clearwater Beach or selling a home in Tampa Bay, buying a waterfront condo in Clearwater Beach and Tampa Bay or selling a waterfront condo in Clearwater Beach and Tampa Bay. Michelle Chenault is an expert in Clearwater, Clearwater Beach and Tampa Bay foreclosures and Clearwater, Clearwater Beach and Tampa Bay short sales. The website is dedicated to helping you search all Clearwater, Clearwater Beach and Tampa Bay homes for sale and any other types of properties available for sale like Clearwater, Clearwater Beach and Tampa Bay condos, land and luxury real estate in the Clearwater, Clearwater Beach and Tampa Bay area MLS. You may also use this site to find out everything you need to know about living in Clearwater, Clearwater Beach and Tampa Bay, relocating to Clearwater, Clearwater Beach and Tampa Bay, a Clearwater, Clearwater Beach and Tampa Bay real estate search and finding things to do in Clearwater, Clearwater Beach and Tampa Bay.