Are you ready to buy a home?

Inventory is shrinking and mortgage rates are low. There has never been a better time to purchase a home in Southwest Florida. Now that you've decided to make a purchase, there are some things you need to do to ensure you make the right purchase, as well as prepare and ultimately get through the home buying process successfully. And if you're a first-time buyer, buying a home can be a complicated process and daunting process. The point is that you need to get your house in order now before you start shopping. Here's what you need to do, and when.

As soon as possible

Get your credit reports. Errors on your reports can force you to pay a higher interest rate on your mortgage or even diminish your chances of getting a loan. You can get free copies of your reports from the three major credit bureaus Equifax, Experian and TransUnion at AnnualCreditReport.com. Look for accounts that aren't yours, collection accounts for debts you don't owe and negative marks (other than bankruptcy) that are older than seven years.

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Deal with your debt. Most people needn't pay off their student loans, auto loans or other generally low-rate debt before getting a mortgage. What you want to eradicate is "toxic" debt: credit-card balances and payday loans. These are signs you're living beyond your means. If you don't get your overspending problem fixed before you buy a home, your problems likely will get worse because homeownership typically involves plenty of big costs (property taxes, insurance, maintenance, repairs, and improvements, decorating). Get a hold of this situation before you house shop.

Put your bills on automatic. A single 30-day late payment can knock 100 points off your score, and it can take many, many months to recover. Make sure every bill gets paid on time. If you don't have a reliable bill-paying system, consider using automatic debits, so payments come directly from your checking account, or an online bill-payment system's recurring-payment feature.

6 months out

Sort through your mortgage options. It's up to you to understand the risks of the different types of mortgages and to select the right one for your family. My 2 cents: Stick with traditional, fixed-rate mortgages. If you can't commit to a 30-year version, at least use a hybrid loan with a rate that's fixed for as long as you plan to own the home.

Research all the costs of owning a home. You'll have to pay property taxes and insurance on the home. There may be homeowners or condo-association fees as well. You may face higher utility bills, and you'll take on maintenance and repair costs as well. Decorating your new house can cost a pile of money as well.

Adjust your saving strategies. What you've learned so far may inspire you to boost your savings. A bigger down payment, for example, can result in a larger home or a lower mortgage payment. Or you may simply want to build up your emergency fund so unexpected home expenses don'' knock your finances off the rails.

3 months out

Reduce your credit utilization. The FICO scoring formula is sensitive to how much of your available limits you're using on your credit cards and other revolving lines of credit. Simply put, the less, the better. It doesn't matter if you pay your balances in full every month; the figure the scoring formula typically uses is the balance that shows on your most recent statement. Try to keep that balance below 30%, or even lower.

Don't open or close any accounts. Until the mortgage process is completed and you've moved into your new home, continue to avoid actions that could potentially harm your credit, such as opening credit accounts or closing old ones.

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2 months out

Get an idea of the mortgage rate you can expect. Order a fresh set of FICO credit scores (don't worry, checking your scores doesn't ding them) and talk to some mortgage lenders about what rates you might qualify for. Your real estate agent can recommend a good mortgage lender. Don't apply yet or give permission for your credit to be pulled; you just want to get a feel for what you can expect.

Understand the effect of mortgage-shopping on your score. You want to get the best rate and terms possible, which means you'll need to shop around, but how does that affect your credit score? Every time you give a lender permission to check your credit, a "hard inquiry" appears on your credit report, and that can ding your score a bit. So you want to do your serious mortgage shopping in a fairly concentrated period of time, typically after your offer on the home you want is accepted.

Get approved for a mortgage ahead of time. Pre-approval, in which a lender gives a commitment to make you a loan, is different and more valuable to sellers than pre-qualification, which merely gives you an idea of the size of the mortgage you might afford without making any commitments.

Begin researching neighborhoods and look for a REALTOR®. This is probably one of the most important steps in the process. Why? The difference between a good agent and a very good agent can mean not only finding the home of your dreams, but getting it at the right price and in the right neighborhood. When seeking an agent, do your homework. Get referrals and interview just like you would when making a professional hiring decision. Look at things like overall knowledge in the Southwest Florida market and the agent's track record with successful transactions. Does the agent have access to up-to-date marketing resources and can the agent close a deal in a timely manner? Finding the right agent will make your process much easier.

Once you've found your home and your offer is accepted…

Shop for a mortgage. There are thousands available, and sorting through the possibilities can be overwhelming. You may want to include some of the biggest national mortgage lenders, local lenders and online brokers. You'll need to move fairly quickly to secure the loan, because the full approval process typically takes four to six weeks.

Arrange for an appraisal, a home inspection and a walk-through. The appraisal is required for your loan to be approved. An inspection isn't necessarily required, but don't skip this essential step, which can alert you to serious problems before the deal closes. The walk-through is usually done within 24 hours of the deal closing, so you can make sure that the home sellers have performed any agreed-upon repairs and the place is in move-in condition.

Get homeowners insurance. Mortgage lenders require this coverage, and you'll need to prove you have it at closing.

Confirm how much money you'll need at closing. "Closing" is when you sign all the paperwork and pay agreed-upon amounts, which can include your down payment and your share of legal fees, paperwork costs, property taxes and title insurance.

The home buying process does not have to be a daunting one if you're prepared! And, remember… finding the best real estate agent can help the process immensely! Happy shopping!

If your not sure who to call, I'm confident that I can help you sell your property. Call me today at 239-498-7600 or email Michael@CoconutPointRealEstate.com

Contributed by D. Michael Burke, P.A. Keller Williams Elite Realty
Michael@CoconutPointRealEstate.com / www.CoconutPointRealEstate.com