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| EYEMARK REALTY, INC. |
"YOUR EYE ON THE REAL ESTATE MARKET" |
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Financing
As a First Time Home Buyer, in order to qualify for a mortgage loan, you must prove to your lender that you have the ability to repay it on time. You must show them that you can make the monthly payment on time.
Your lender will look at three important items to see if you meet their current loan standards. These three items are: Your INCOME. Your CREDIT SCORE & HISTORY. Your amount of DOWN PAYMENT cash.
If your income is too low, your credit score and history are too low, or you don't have enough money for the required down payment, you will most probably not be offered a loan.
If you qualify at the lower end of their current standards you may receive a loan but the interest will be higher, the fees will be higher, or your loan amount will be smaller than what you expected.
You should shop around for the best loan rate and terms you can find. There is competition among lenders and their rates change daily and qualifying standards change periodically.
See our Finance Guide page to find out How Much Can You Afford.
There are different kinds of lenders. Banks, savings banks, credit unions, hard money (equity) lenders, and private individuals are direct lenders. Mortgage companies and mortgage brokers are usually middlemen who match you up with other lenders who provide the money. Your financial and credit situation determines which type of lender will be best.
There are government and private programs that provide aid to first time home buyers. The help comes in the form of Down Payment Assistance from the State of Florida, counties, and private organizations.
APPLYING FOR A LOAN (Mortgage Loan Application)
It is advantageous to become Pre-Qualified, or even better, Pre-Approved for your loan before actively looking at homes. That way you will know exactly what price range and monthly payment will fit your financial situation and budget.
In order to make application for a mortgage your lender will ask you for documentation.
1. Social Security Number or Proof of Permanent Residency (Green Card).
2. Pay Stubs from the last 2 months.
3. W-2 Forms from the last 2 years.
4. Bank Statements from the last 2 or 3 months.
5. Federal Tax Returns from the last 2 years.
6. List of Current Debts such as credit cards, car loans, student loans, installment loans, etc.
Your lender will compare this information to current loan programs and calculate how much you can borrow and what terms are best.
Partial List of Lenders in North Central Florida
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SHIP Down Payment Assistance Program
Florida Housing Finance Corporation
The State Housing Initiatives Partnership (SHIP) Program is a multifaceted program that provides down payment, closing cost, and repairs assistance to qualified low income first-time Florida homebuyers. It is available for single-family residences only (mobile homes, trailers, and multiple unit dwellings are not eligible). It can be used in conjunction with other down payment assistance programs. However, not all counties in Florida offer this program. Some counties are only offering an advance of the federal home buyers tax credit as their current SHIP program.
SHIP Down Payment Assistance is provided on a "FIRST COME - FIRST SERVED" basis in the form of a Zero Interest, 10 Year Term Deferred Payment Second Mortgage. It has to be paid back upon the sale of your home if the sale occurs within the first 10 years. If you sell your home after the 10 year period has passed then no repayment is required. However, you must continue to own and live in your home as your primary residence during the entire 10 years the loan is in effect.
In order to qualify for the SHIP program you must meet specific income guidelines that depend on the size of your household and your total gross income. A SHIP certified lender can compare your household and income situation to the current guidelines. If your credit is deficient you will be offered an opportunity to attend a Credit Repair Workshop and a Financial Fitness Workshop.
You will have to complete a Home Buyers Education Class offered by the city or county in which your new home is located. This class will provide you with helpful information about the process of buying a home and the basics of homeownership. It is strongly recommended that you complete this class prior to entering into a sales contract. Classes are usually held on a monthly basis and take approximately 8 hours.
You may be eligible for this program if you have not owned a Site Built Home within the last three (3) years. It is alright to have owned a mobile home or trailer. However, if you are a single parent, displaced homemaker, or you have been displaced from a home due to divorce, you may be eligible regardless of previous home ownership.
You must qualify for a loan to purchase an existing or newly constructed home from one of the SHIP certified lenders. There is a maximum purchase price that depends on current guidelines. You must be able to contribute at least two percent (2%) of the purchase price towards the transaction (deposits, appraisals, inspections, lender's fees, cash to close, etc.).
There are three categories of SHIP assistance:
1. Buying an existing home that doesn't need any repairs (Down payment assistance only).
2. Buying a new home that is less than 1 year old (Down payment assistance only).
3. Buying an existing home that needs repairs (Down payment + Rehab assistance). Repairs must be noted by the SHIP inspector and approved by the program administrators. They cannot be cosmetic such as painting or carpet replacement. Repairs may include new roofing, electrical, plumbing, air conditioning-heating, or mitigating code violations.
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Florida Bond First Time Homebuyer Mortgage and Down Payment Programs
The Florida Housing Finance Corporation First Time Homebuyer Program (FTHB) uses a network of participating lenders to offer more affordable fixed-rate, low interest mortgage loans to low-to-moderate income borrowers. Florida Housing also offers down payment and closing cost assistance to eligible borrowers. The funds for these programs are obtained from the sale of mortgage revenue bonds, thus its nickname, Florida Bond. All assistance through Florida Housing (Bond) programs are loans (not grants) and must be repaid.
First time homebuyers are persons who haven't owned a legal residence in the past three years. Non-first time home buyers might also be eligible in specific counties in Florida that are GO Zones, part of other federally targeted areas, or are military veterans. There are special programs for teachers, fire fighters, police, current military, and veterans. To find a participating lender in your area who can qualify you, call 800-814-4663.
All Florida Bond programs use your income and purchase price limits to determine your eligibility. As a potential recipient you are required to complete an approved Homebuyer Education Course offered through an approved counseling agency. Your lender may also refer you to an approved counselor.
You can purchase any new or existing single-family home, condominium, townhouse, duplex, or manufactured (mobile) home (some restrictions apply) that is less than a certain sales price in the county where the home is located. Your lender can help you find the right program for your type of home and situation.
The Florida Homeownership Assistance Program (HAP) Downpayment Assistance Loan Program helps low income buyers by providing a $2,500 in zero percent interest, non-amortizing, second mortgage loan that can be used for a down payment and closing costs.
You may be eligible for additional assistance through your local city or county State Housing Initiatives Partnership (SHIP) program. Contact your local SHIP office to find out if you qualify. You can qualify for both Florida Bond and SHIP at the same time and use both together to help with your home purchase.
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Florida Property Taxes
There are three types of property taxes levied in Florida: Ad Valorem Taxes, Non-Ad Valorem Assessments, and Tangible Personal Property Taxes. A property appraiser in each county determines the value of every property parcel including those inside incorporated city limits, inside special districts, and those outside of city limits in the unincorporated areas.
What are Ad Valorem Taxes?
Ad valorem property taxes are levied by School Boards, Board of CountyCommissioners, Library Districts, Water Management Districts, and City Commissions. In some counties the Board of County Commissioners also levies a MSTU (Municipal Service Taxing Unit) tax that is used to pay for city-like services delivered to the unincorporated areas.
The taxing authorities use the property appraiser's value to determine who will pay what part of the taxes they levy. If you have questions about your taxes and how they are spent, you should call the taxing authorities at the phone numbers listed on the TRIM (Truth In Millage) notice or attend their meetings and budget hearings. You will receive the TRIM notice each year in August.
What are Non-Ad Valorem Assessments?
Non-ad valorem assessments are fees levied against property by the Board of County Commissioners to pay for a particular service. The fees are expressed in a dollar amount instead of a millage rate. They are directly related to the service provided and the money is not used for any other purpose. In some counties the non-ad valorem assessments pay for refuse collection and landfill operations, rural trash collection centers, and special road paving projects. These fees are based upon equivalent residential units.
What are Tangible Personal Property Taxes?
Tangible personal property such as furnishings located in rental property, attachments to mobile homes on rented lots, and furnishings, fixtures and equipment used for a business purpose are subject to taxation. This type of property must be reported each year on the Tangible Tax Return available from your county's property appraiser's office. The filing deadline is April 1st of each year.
How Are Property Values (Market Values) Determined?
The property appraiser is charged by the Florida Constitution and statutes with appraising all property in AlachuaCounty at 100% of market value as of January 1 every year. This means that Florida is on an annual reappraisal cycle so your property value can change each and every year.
Market value is determined by analyzing the sales of similar properties, the cost to reproduce your property and the ability of your property to earn income. Some counties use a computer assisted mass appraisal (CAMA) system. The CAMA system incorporates our conclusions from these three analyses and then applies these decisions to all properties equally. However, most counties use a comparative value system in which the best evidence of your market value is the sale, prior to January 1, of several properties similar to your property.
What is "Save Our Homes" Amendment 10?
In November, 1992, voters approved Amendment 10 to the Florida Constitution which limits the size of the annual increase in the assessed values of owner occupied residential properties which have homestead status. Under Amendment 10, increases in the annual assessment of homestead residential property shall not exceed the lower of either three percent (3%) of the assessment of the prior year or the percent increase in the Consumer Price Index for all urban consumers in the U.S.
Amendment 10 does NOT apply to new construction or improvements to existing properties in the year following the year the changes were completed. However, in subsequent years, the cap provided by Amendment 10 will be in effect for both the property and the changes.
Taxable Value Changes With a New Owner Because of "Save Our Homes".
When a property sells, the process begins again from the new property value based on the new sales price. Therefore the taxes paid by you after purchasing your home in almost all cases won't be the same as the taxes paid by the previous owner. Part of the previous owner's taxable value was deferred each year in the past and that is recaptured with the new purchase price. Your taxable value will be deferred in the future.
What are Exemptions?
There are several types of exemptions concerning property with the Homestead Exemption being the most prevalent. See Homestead Exemption.
Important Dates to Remember
January 1 - The status and condition of your property on January 1 determines the property's value
for the tax year. Also, January 1 is the date that determines residency or ownership
requirements to qualify for exemptions.
March 1 - Filing deadline for all exemption requests including homestead and all classified use,
including agricultural classification.
April 1 - Deadline for filing tangible personal property tax return.
Mid August - Notice of Proposed Property Taxes or Truth in Millage, or TRIM, notices are mailed to property owners. This begins the appeal process and contains notification of deadlines.
November 1 - Tax bills are mailed.
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Home Owner's Insurance
Home Owner's Insurance provides you financial protection against disasters. A typical standard package policy insures your home (the physical building) and the contents (the things you keep in it). It covers the damage to or loss of your property and your liability (legal responsibility) for any injuries and property damage done to other persons who don't live with you. Damage can be caused by accidents, natural events, family members, other persons, or household pets.
Although most disaster caused damage is covered there are three important exceptions. Damage caused by floods, earthquakes, and poor maintenance are not covered in a standard policy. You must purchase separate policies for flood and earthquake coverage and maintenance related problems are the solely your responsibility.
If you obtain a mortgage loan (financing) you will be required by the lender (bank) to have home owner's insurance in place at all times. They will ask you for proof of insurance before the closing and periodically during the life of your mortgage. Your home is the lender's collateral for the loan and they want it fully protected. Once your loan is paid off there will no longer be any insurance requirement, but it is still a very good idea to keep your coverage intact to protect your real estate investment and personal property.
A standard home owner's insurance policy includes four types of coverage:
1. Structural: This coverage pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane (or other storm), hail, lightning, or other listed disaster. It is important for you to buy enough coverage to rebuild your home. Remember that you need extra coverage for floods or earthquakes and routine wear and tear is not covered.
Outbuildings such as a garage, carport, storage (tool) shed, or gazebo are usually covered at a small percentage of the total insurance.
2. Personal belongings: This part pays to replace furniture, clothing, household equipment, and other personal items if they are stolen or destroyed. Usually the protection is for 50% to 70% of the total structural coverage. You should do a home inventory to list and value all of your household items and keep it in a safe place outside your home.
Most policies cover your belongings off-premises, anywhere in the world, with some restrictions. Expensive items like jewelry, furs, silverware, and collectibles are minimally protected so you should buy a separate endorsement for these types of valuables.
Landscaping is covered against theft, vandalism, fire, explosion, riot, and falling aircraft, but at a small percentage of the total policy amount.
3. Additional living expenses: This coverage pays for hotel-motel bills, restaurant meals, and other living expenses you will need in the event you cannot live in your home until the damage is repaired, but it varies greatly among companies. Some restrict the total amount paid and some limit the time of coverage.
4. Liability: This part pays for lawsuits (defending you in court) and judgments (court awards) against you for bodily injury or property damage that you or family members or pets cause to other persons. Usually you are covered anywhere in the world.
Your policy also includes no-fault medical coverage in the event someone not in your household is injured while in your home or on your property. They can submit medical bills directly to your insurance company.
You can purchase additional coverage or an umbrella policy that includes claims against you for libel and slander if you want more protection than the standard policy provides.
Most insurance companies offer 3 levels of coverage:
1. Actual Cash Value: Pays for replacement minus a deduction for depreciation.
2. Replacement Cost: Pays for replacement up to policy amount without deducting for depreciation.
3. Guaranteed or Extended Replacement Cost: Pays for replacement whatever it costs even if it exceeds the policy limit.
Special considerations for Condominiums and Cooperatives:
In a condominium or cooperative the outside walls, roof, interior walls between units, elevators, and common areas are protected by a "Master Policy" provided by the association that runs the complex. You still need your own insurance policy to cover your personal possessions, interior or exterior structural improvements you install, additional living expenses, and liability.
It is important to find out exactly what is covered by the association policy and what is your responsibility. You will need your own coverage for floods, earthquakes, and your valuable belongings. You should use an insurance agent who specializes in condominiums and cooperatives.
State of Florida Citizens Property Insurance Corporation:
Due to Florida's unique exposure to hurricane damage, the Florida Legislature, in 2002, set up a state owned company to provide home owner's insurance to persons who are unable to obtain coverage from private companies. Citizens provides protection to home owners in areas of Florida where private companies have withdrawn coverage. It is a non-profit, tax-exempt corporation, whose public purpose is to provide policyholders with affordable property protection. There are limitations as to locations and amounts of coverage available.
It is important to understand that not all areas of Florida have the same hurricane risk. Coastal areas have a far higher risk of damage and destruction from hurricane winds, storm surge, and flooding than inland areas. The higher risk areas have the highest percentage of policies underwritten by Citizens.
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Homestead Exemption from Property Taxes in Florida
Alachua County Property Appraiser
What is a Homestead Exemption?
Homestead Exemption is a tax reduction allowable to homeowners who make their residential property (home) their permanent residence. This exemption can reduce the taxable value of your residence by up to $50,000 (only $25,000 for school taxes) or more. As a result, you get substantial savings on the taxes levied on your property.
Homeowners must file an initial application. After filing, your exemption will automatically be renewed each year, as long as you remain entitled. It is the responsibility of you, as the homeowner to notify the property appraiser of any change in their exemption status. Florida law requires the filing of a new application when any title change is made.
How do you qualify for Homestead Exemption (Eligibility)?
As of January 1 of any year, you must:
1. Be a legal resident of Florida.
2. Have recorded legal or beneficial title (deed) to the property on which you are applying. The Florida Constitution requires that the homestead claimant have beneficial title or legal title in equity to the property. A husband or wife, with the others consent, can file for each other if only one of them holds title. It is important whose name or names the deed (title) to the dwelling was recorded in as of January 1.
3. Be making the property your permanent legal residence. Homestead exemption is limited to the residence of the owner or the owner’s family. It must be the owner’s permanent and principal home. Homeowners who rent their home are unable to qualify for homestead exemption. Rental of one's primary residence constitutes abandonment of homestead exemption.
4. Mobile Home Owners can get homestead exemption if they also own the land to which the mobile home is permanently affixed. The Title or Registration to the mobile home and residency of documentation are needed.
5. Citizenship is not required to file for homestead exemption. An applicant who is not an U.S. Citizen must present a Declaration of Domicile and a permanent resident alien card (green card) when they apply.
6. If you are a qualified Florida resident who has a spouse that has deceased, you are eligible for a windows or widowers exemption.
7. Exemptions are not automatically transferred from one residence to a new home. To receive an exemption on a new home, one must reapply before March 1.
8. One will receive the benefit of a previous owners' exemption for the remainder of that year when purchasing a new home. To continue the exemption, one must reapply before March 1 of the next year to qualify.
9. If the property is in a trust, a copy of the trust agreement is necessary to determine those situations under which the resident may obtain homestead exemption.
10. Other Tax Exemptions that you might qualify for include medical and disabled veterans, total and permanent disability, quadriplegic, blind, wheelchair confined, and service connected disability.
When do you file for Homestead Exemption?
1. January 1 through March 1: Regular filing time (for current tax year).
2. March 2 through December 31: Prefiling (for the upcoming tax year). For the best service and to avoid long lines at the regular filing time, you may want to prefile your application.
How do you file for Homestead Exemption?
New homeowners can expect to receive an original application with instructions on how to file. You can also call to have an application mailed to you. In any case, the application must be completed and submitted along with proper proof of residency information. You can file in person or by mail.
What do you need to file for Homestead Exemption?
1. Proof of ownership (title) of the home: A recorded deed showing your name and the address and legal description of the property.
2. Proof of residency: Show proof that you were living in the dwelling as of January 1.
If you drive, you must have a Florida driver's license and one of the following:
a. Florida auto tag (license plate) registration.
b. Florida voter's registration.
c. A declaration of domicile, obtained at the clerk's office.
If you do not drive, you must have any two of the following:
a. Florida identification card.
b. Florida voter's registration.
c. A declaration of domicile, obtained at the clerk's office.
d. Florida auto tag (license plate) registration.
3. If you are not a U.S. citizen, you must provide your immigration number and date or provide your resident alien (green) card.
4. You must provide a social security number for each applicant, their spouse or any occupant who may be entitled to the exemption.
5. If you are married, you will need the above information for both husband and wife.
Reminder: Remember the deadline to file is March 1st of every year.
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HOW - Home Owner's Warranty
(Home Buyer's Protection Plan)
A Home Owner's Warranty is a protection plan (a type of insurance policy) that protects you, as the buyer, from incurring high costs of specified repairs after you purchase your home. Most companies offer plans for site-built homes only, but there are a few companies that offer plans for condominiums, mobile homes (trailers), and manufactured homes.
This type of warranty is different from a Builder's Warranty on a brand new home. With new construction the home builder typically warrants the entire home and all systems for 1 year. A home buyer's protection plan is limited in scope and only covers specific items.
It typically is purchased by a seller as an incentive to induce a buyer to make an offer on a home for sale. But, in some cases it can be purchased by the buyer of a home when the seller doesn't include it. Some protection plans can include coverage for the seller during the listing period.
Most companies offer a standard coverage paid for by the seller. Then you have the option of increasing the coverage by purchasing different levels of upgrades. When the seller is paying, payment is made at the closing from the proceeds of the sale. When the buyer is paying or obtaining upgrades the payment is included in the buyer's closing costs.
Coverage for existing homes typically extends for 12 or 13 months depending on the company. Some plans will offer you a renewal before it expires. There are a few companies that offer plans to cover the years 2 - 4 of new home construction which protects you after the builder's 1 year warranty expires.
As with other types of insurance there is a deductible, usually $50 - $100 per repair that is paid by you at the time of the repair. Costs over the deductible are paid by the home warranty company. There is a 24 hour - 365 days a year toll-free phone number to call when you need service and the warranty company will send you one of their certified insured contractors.
Different plans cover different items so make sure you read the list of coverage very carefully.
Usually the following items are included in standard plans:
Central Air Conditioner-Heat Pump, Gas-Oil-Electric Heater-Furnace, Ductwork, Plumbing System, Water Heater, Instant Hot Water Dispenser, Toilets, Sump Pump. Bathtub Whirlpool (Spa) Motor-Pump, Kitchen Refrigerator, Dishwasher, Oven-Range-Cooktop, Garbage Disposal, Built-In Microwave Oven, Trash Compactor, Electrical System, Exhaust Fans, Ceiling Fans, and Central Vacuum.
Premium plans include everything in a standard plan plus some of the following items:
Washer, Dryer, Swimming Pool, Well Pump, Garage Door Opener, Septic System, Limited Roof Leak, Pest Control, Hauling Away Debris, and Permits.
Some companies include, for an additional fee, items such as faucets, registers, and grills-racks.
As you can see, a Home Owner's Warranty (HOW) can increase your comfort when buying your new home. You will be protected against potentially huge repair bills for covered items. All you pay is a nominal service fee per repair call. So, it is in your interest as a first time home buyer to request that the seller provide this kind of an incentive when you make your initial offer on a home.
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Mark Cohen, Broker
EYEMARK REALTY, INC.
Gainesville, FL 32653
Florida Licensed Real Estate Broker
352-373-3783 Office 352-222-5609 Cell
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