Tips and Advice During the Popular Spring Home Buying Season

Oh, the weather outside, it’s no longer frightful. This means the Florida home loan scene will soon be delightful. A warmer climate typically translates into a significant increase in home sales across the nation and state.

Especially in this somewhat cooler housing market, buyers have more leverage than ever before. So if you’re looking for a reasonable Florida home loan, it’s important to take notice of certain rules and tools. We’ve listed them below.

Rules for home buying

1) Get pre-approved for your loan. According to Lennox Scott, CEO of John L. Scott Real Estate, it’s more important than ever this year to get pre-approved - because virtually every other buyer has. “You have to do that,” he says, “to show you’re capable and motivated.”

Mortgage broker Bob Moulton, of Americana Mortgage, says it reduces the stress of home buying. “You’re going through a fire drill before closing, lining up inspectors, attorneys, getting paperwork together. It’s a lot easier if you already have the loan in place.”

Pre-approval involves filling out a mortgage application before you begin to shop. It includes all your financial information such as salary, credit history and bank statements, and it establishes a target Florida home loan amount. Approval typically takes at least several days.

2) Determine how much you can afford. Remember, you probably can’t count on the soaring home price market to bail you out anymore.

Why? Prices have changed dramatically in many places in just the past 12 months. You may have to re-think where you want to live. In Phoenix, prices grew nearly 50 percent. Several cities in Florida showed 40 percent appreciation or more. That split-level you had your eye last April may be an unaffordable today. In addition, interest rates are on the rise, increasing monthly payments.

Florida home loan lenders typically don’t want their borrowers’ total home expenses - including mortgage, taxes and insurance - to exceed 28 percent of their gross income. A borrower with household income of $60,000 a year, paying off a car loan at $300 a month and property taxes of $3,000 a year, would be eligible for a loan big enough to buy up to a $300,000 home on a 30-year, fixed 6.5 percent rate.

Jim Gillespie, CEO of Coldwell Banker, says, “For every 1 percent rise in mortgage rates, 250,000 to 300,000 buyers are priced out of the market.”

3) Don’t get caught up in a bidding war. Try not to fall too deeply in love when bidding on a home - you’re much more likely to overpay if you do.

This year, it should be easier to hold out. Housing inventories have risen steadily the past six months. As Moulton says, “With all the inventory out there, there’s always another house.”

4) Check out the home thoroughly before going to contract. Hiring a home inspector is always a good investment. They may find problems that can be repaired at the seller’s expense. At the very least, buyers can get some idea of how much they’ll need to put into repairs and remodeling before they close.

This is more important than ever. Ken Simonson, chief economist for the Associated General Contractors of America, is predicted double-digit increases in the prices of construction materials this year, thanks, in part, to Hurricane Katrina. Labor and energy costs will also spike.

5) Pick your sales agent carefully. Working with an experienced pro can make house hunting a pleasure instead of a nightmare, but the housing bubble of the past few years has lured legions of green recruits to the field. Be extra careful in choosing a real estate agent this year.