Low Credit Woes. Poor scores can cause damage even if a potential home buyer qualifies for a loan.  Borrowers who have low credit scores can end up paying thousands more in increased interest over the term of a mortgage.  Knowing your score and working to build it up over time can save lots of money in the long run.

Superficial Inspections. As a new home buyer, it’s important to be able to keep a tight reign on your finances.  Nothing can be more devastating than being faced with unexpected and expensive repairs after closing.  Make sure a thorough inspection is completed in order to assure your ability to plan repairs and/or upgrades according to your own budget and timeline.

Skipping Contingencies. Talk to your Realtor about adding contingencies to the offer on your new St Petersburg home.  A contingency gives you a potential ‘out’ if the completion of an inspection should return unexpected, deal-breaking results or if financing should for some reason fall through.

Underestimating Insurance. Buyers should be careful about including the cost of homeowner’s insurance when determining whether or not they can afford a property.  Insurance, especially in Florida, can be surprisingly more than one would expect.  To avoid a potential pitfall, be realistic about the numbers.

Overspending Extravaganzas. Lenders continue to check your credit right up until the time you close on your new St Petersburg home – not just when you originally apply for a mortgage.  Be careful about your spending both before and after you apply for a loan.  Too much spending could cause issues with your ability to complete the financing process.

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1. Purchasing a home is not an impulse buy. It’s not an item on a shelf in the check out line that can simply be thrown in a bag. This is a commitment not only to the property itself and its surroundings but also to your job and financial situation. If you do not plan on living in the home for a few years, then purchasing may not be the best idea for you.

2. Know where you stand. Recently the banking industry has increased the standards for borrowing money. One important aspect of that is the need to have a high credit score. It is virtually impossible to obtain a loan with poor credit. It may take anywhere from weeks to months to work on improving your score and making sure all facts are correct.

3. Be realistic. Everyone watches HGTV, and other shows that magnify what “real” homes may look like. Not everyone can buy a Ferrari, a helicopter, and a mansion. Focus in on homes that you can afford. For example, focus on Tampa homes for sale that are worth 2.5 x your annual salary. (i.e. $50,000 x 2.5 = $125,000).

4. Programs & Options. Though times have changed, times have not changed so much that you need to put 20% down to obtain a loan. There are still programs that let borrowers put less money down – FHA loans are an example. The FHA program currently allows a 3.5% down payment. There are stipulations that come along with this loan, so make sure you talk to a professional to guide you to the right properties.

5. Work with a professional. There are two important connections you will make when purchasing a home – your Realtor and your mortgage consultant. There is always plenty of information available from friends, family, the internet, magazines, and news outlets, but the reality is that they are not professionals. You deserve to be assisted by the very best people, whose only interest is making you happy.  They can easily assist you in obtaining your financial and lifestyle goals through the purchase of a home. It costs $0 to have a an agent help guide you through the process of finding a home and assist you in performing any related services. The only expectation a real estate agent has is that they will in turn receive loyalty from you.

6. Know your zone. School zones are important to home buyers. It is always a good idea to buy in good school areas – whether or not you have children of your own.  Though it may not be important to you, it may be important to potential buyers when it is your turn to sell the property.

7. Get pre-approved. This goes along with step 5. It is very important to know exactly what you can purchase – which includes everything from the monthly mortgage payments to insurance, taxes, and HOA fees that will all factor in to your decision of which home to purchase. Understanding your budget is the key to being happy with your house in the future.

8. Be realistic with your offers. Ask your realtor for a Comparative Market Analysis (CMA) of properties which have sold nearby near-by to learn the trends. If other Tampa homes for sale in the area have sold for 5% under the asking price, you may want to offer 10% lower then the asking price. If one of the other sold properties is in line with the asking price or higher, this is an indication that the property is ready to sell. Homes that fit this description do not stay on the market for long – unless the sale is being dragged out by a situation like a lengthy short sale process.

9. Get Inspected. After you’ve found the perfect house and have an accepted offer the next step is getting an inspection. The bank will request an appraisal to determine the value of the home in order to make sure that the offer on the property is consistent with the property’s actual market value.  This allows for the bank to feel confident in the loan. The home inspection is completed entirely for you, the buyer, to feel confident in the home.  It allows for any potential issues to be outlined which may need to be addresses prior to closing and also to make you aware of any possible future repairs which may be needed based on the state of the home.  An inspector, for example can let you know that while the roof is structurally sound currently, it may need to be replaced within 3 years. The idea is to protect yourself from potential problems which may result in the need for expensive repairs down the road.

Now that you’re up to speed on ‘Buying A Home 101′ you’re well on your way to beginning the steps of home ownership!

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There are two forms of the Federal Tax Credit: the $8k and $6.5k.  We’ll use some sample scenarios involving a St Pete Beach home to help illustrate.

The first option:

Let’s start with the $8k option. This is a tax credit for FIRST-TIME BUYERS ONLY. However, the way the IRS defines “first-time buyers” is this: “a buyer who has not owned a principal residence during the three-year period prior to the purchase.” This means that if you have owned before, but not in the last three years, you are again a first-time buyer. The credit amount is 10% of the total cost of the home, up to $8,000, and it only applies to homes that are less than $800k. This offer began January 1st, 2009 and will expire April 30th, 2010.

For example - A sample of the simplest scenario.  You’ve been renting for years and have finally decided to take the plunge – now is the time to buy!  You’ve found a fantastic St Pete Beach home in the form of a condo on Gulf Boulevard.  Your offer has been accepted and you’re under contract to close on April 5th for $249,000.  You qualify!

Another example – You owned your St Pete Beach home until 2005, when it was sold due to your relocation.  Upon relocating, you rented for a few years instead of purchasing.  Now back in the area, you’ve found a great opportunity to purchase a waterfront property in Yacht Club Estates.  The contract has been finalized and you’re closing on April 19th at $699,000.  You qualify!

The second option:

The other form of Federal Tax Credit is the $6.5k. This credit applies to those who currently own a home, and have lived in that home as a primary residence for at least 5 of the last 8 years. Like the $8k form of credit, it also only applies to houses which cost less than $800k, and is calculated as being 10% of that total cost. The only difference is the ceiling on this policy is $6,500. This offer began November 6th, 2009, and will expire April 20th, 2010.

For example - You purchased your St Pete beach home in 2001.  It was your primary residence from 2001 to 2004, when you purchased another property in Old Northeast which then became your primary residence.  Ownership of the residence in St Pete Beach was maintained while it was rented for a few years.  In 2006, you moved back into the beach home as your primary residence.  You’ve now found a fantastic new opportunity to purchase the home of your dreams on Snell Isle which you have under contract to close on April 12th at $725,00.  Despite the fact that you currently own a home, you still qualify!

In order to claim this credit, make sure you do so when filing your income tax returns. Both the $8k and $6.5k versions of the credit require IRS Form 5405, which will aid in determining the amount of tax credit to be received. In order to be eligible the property must close before July 1st.

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“What do I want in a home?”

This is a great question to ask. Unfortunately it presupposes an idealistic reality where you can afford whatever house you see, and unless you’re the aforementioned lottery winner that’s probably not going to be the case. Asking this question first will leave most buyers with a sense of hopeless negativism, which leads to a defeatist remorse and ultimately settling on a house rather than finding the house they really want. Buying a home should be exciting, but don’t overwhelm your senses. Everyone wants the house on the beach, or the manor on the hill, and it’s beautiful to always have those goals, but for now let’s plant ourselves in reality.

“How much can I afford on a house?”

Hey, good question! There are plenty of houses you can afford which will live up to your dreams. You’re going to want to figure out how much you can save over X amount of time. Set a goal and do some simple math. How much can you have saved after six months? How about after a year? This will help you figure out how much of a down payment you can put together (most lenders require 20% down) for your new St Petersburg home, or house in Tampa. These first numbers will help you yield a budget for monthly mortgage, but also for your utilities and other living expenses. Over estimate these numbers to be safe.

“Okay, I have my budget… now what?”

With these numbers in mind start thinking about where you might want to live. Google is the most efficient way to find anything these days, so start there. Try searches like “St Petersburg home” or “Tampa homes for sale”. From here you will find a catalogue of houses and communities that display details and price ranges on individual properties. You’ll want to get in touch with a realtor and find out when you can take a tour of the some of the houses.

“What do I look for when I’m on a tour?”

First you have to develop a rating system. It can be a scale of 1 to 10, 1 to 5, or whichever suits your particular ability to scrutinize and note differences honestly. Give each home an overall score based on your system. You will also want to take plenty of pictures and take notes. Since these notes are based on your vision they can encompass any aspect of the property you’d like to remember later. But there are a few points you will always want to be mindful of: 1) Neighboring areas, 2) Sunlight or lack thereof, 3) overall feel of the area. With these criteria, your notes, pictures, and rating system you will have the information enough to make a wise decision. Also, remember that your rating system is probably the most honest of these factors since it is based on your overall opinion of a particular property.

“Where do I look?”

While great properties for first time home buyers can be found in nearly all the fantastic communities that the Tampa Bay area has to offer, here are some suggestions for areas to start looking.  For more information of these neighborhoods, just click on the community name.

Tampa area:

• Seminole Heights
• Tampa Heights
• Carrollwood
• Westchase
• Temple Terrace

St Pete area:

• Old Northeast
• Crescent Heights
• Pasadena
• Seminole
• Crescent Lake

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The legislation also would extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The bill also creates a $6,500 credit for those who buy a home after living in their current house at least five years. That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

The credit would be available only for the purchase of principal residences priced at $800,000 or less.

The bill would raise the adjusted gross income cap to $125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

“It’s gonna put people back to work, the home builders, put people in the real estate business,” said Sen. Chris Dodd, D-Conn. “The kind of jobs that can make a difference.”

The extension will cost $10.8 billion over 10 years, according to the Joint Committee on Taxation.

Through mid-September, 1.4 million tax returns had qualified for the credit, according to the IRS. Some portion of those returns, which the IRS couldn’t specify, represents buyers who took advantage of an earlier version of the tax credit, which was only worth $7,500 and has to be repaid over time.

By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.

“The data on the present home buyer tax credit show that the credit has had its intended impact — sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably,” said Ron Phipps, the association’s first vice president, in Senate testimony last month.

The credit, however, has also posed many problems. Critics say it’s a waste of money because most of those claiming the credit would have bought homes anyway.

It’s also been the target of fraud. Some 74,000 people claimed more than $500 million in credits even though they may not be first-time homeowners, according to Treasury officials. And more than 580 children, including some as young as 4-years-old, have claimed the credit.

“Some key controls were missing to prevent an individual from erroneously or fraudulently claiming the credit and receiving an erroneous refund of up to $8,000,” said J. Russell George, Treasury inspector general for tax administration, before a House subcommittee last month

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