In spite on the current economic problems in the U.S, Tampa FL real estate is more affordable than ever, thanks to low interest rates and lower home values. Many buyers who manage to have a 20% (or more) down payment believe this will get them the lowest monthly mortgage payment. However, simply because buyers can afford to put down this amount does not necessarily mean they should.
Those buyers who have saved enough to put 20%—or more—down on the purchase of a home may want to consider another approach—preserving some of their cash for savings, investing, or other purposes. It may sound counterintuitive, but with today’s interest rates and the competitive pricing of private mortgage insurance (MI or PMI), borrowers can retain some of their money by putting less money down on a home—say only 10%—and still get a low monthly payment. Generally, more is better than less when buying Tampa FL real estate. But purchasers shouldn’t wipe out their savings account to do it.
Too often buyers, especially first-timers, underestimate the costs of all the “extras” that accompany a house purchase and overlook the possibility of a prolonged illness, job loss, or immediate need for a major home repair. In addition to planning for closing and moving costs, buyers should also strive to maintain an emergency fund to cover 6 months of living expenses. They need to also keep in mind property taxes and higher utility bills, not to mention the purchase of mundane items such as ladders, hoses, garbage cans, filters, lawnmowers and the like. Basically, buyers will still need to have funds set aside for a rainy day and for things to buy after buying a home.
Potential purchasers should analyze their cash flow, debt situation, and future financial obligations before meeting with their Realtor and lender to discuss mortgage options for their Tampa FL real estate purchase. Possibilities might include VA loans which are available to past and present military personnel and require no down payment at all; FHA loans for as little as 3.5% down; and conventional loans, generally preferring 20% down, but where, with a high enough FICO score, 5% may be acceptable. In all three cases, MI would be required.
For those potential buyers who have stayed out of the market over worries of declining property values, they can still purchase a home without funneling all of their available cash into the down payment. By utilizing this strategy, home buyers are able to leverage their current assets, while still keeping a sufficient cash reserve.
When buying or selling property in today's real estate market, it's important to have confidence in your Tampa FL real estate professional! In order to be the best, I have earned the CRS (Certified Residential Specialist) and ABR (Accredited Buyer's Representative) designations. I have also been awarded a National Award of Excellency by Realtor.com. This demonstrates my desire to stay on the cutting edge of the Tampa Bay real estate market. My commitment as your Tampa area REALTOR® is to provide you with the customized real estate service you need!
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