The Orlando real estate market is currently full of choices for buyers, but before you fall in love with a home check to make sure there are no red flags. Here is a list of the top ten warning signs that a home may not be the great deal it seems.

 1.Too many homes for sale in the neighborhood – Sure, there are many homes on the market right now and some neighborhoods got hit harder than others after the mortgage meltdown, but if every house on the street is for sale, it’s best to find out why. Ask the neighbors what’s going on, also ask your real estate agent, it could just be bad timing, but it could also be a sign of a major problem.

2.The smell of the home – every home has its own smell, but if you walk in the front door and something just doesn’t seem right, it could be a red flag. Inspect this home extra carefully looking for water damage which may indicate mold.

3.Spotty paint – If the home has only been re-painted in spots, or only one wall it could just be that the owner was freshening up and filling in picture holes. But be careful, because it could also be a sign of mold or mildew.

4.Neglect – does the backyard look less like a yard and more like a jungle? Is there a mountain of dust accumulated on picture frames? If the homeowner has failed to maintain the most basic parts of the home, there could be more serious hidden problems.

5.Bugs – Clearly, no one wants to buy someone else’s infestation. Once a home has a bug problem, particularly in Florida, it is often difficult to get rid of them and it can be quite costly. Keep an eye out, not just for the critters but also look under cabinets and inside closets for their droppings.

Even if the news seems gloomy regarding home financing, the truth is that many Orlando first time home buyers are realizing their dream and buying their first home. While obtaining a mortgage has become more difficult, it is certainly not impossible. Out of all homes sold in the Orlando area in 2009, 41% of them were to first time home buyers.

In fact the news really isn’t all that bad for Orlando area first time home buyers. Lenders, banks and mortgage brokers have been having a hard time, due to the credit crunch and tightened lending structures. So, they are much more willing to negotiate with well qualified borrowers than ever before. Some are even offering first time home buyer incentives.

But lenders are not the only ones trying to get your attention, builders, city, state and even the federal government have implemented programs to help first time home buyers get into their first home. The $8,000 tax credit has probably received the most attention, but as it is set to expire on November 30, 2009 more attention is now being given to what the local and state governments are offering.  Orange County for example, has offered to give first time home buyers their tax credit up front to be used for down payment or closing costs. The home buyer doesn’t have to pay this back until after they have received their check from the Federal government.

Builders are also trying to attract first time home buyers by offering low down payment loans, closing cost assistance and additional incentives in reduced loan points and home upgrades. Park Square Homes is even offering to pay up $2,000 of your travel expenses if you fly down to see one of their homes. Taylor Morrison Homes is offering “assurance insurance”. If you buy a home from them and decide to sell after five years, they will refund your down payment up to 10% of the purchase price if the home’s value has decreased,

With all of the programs available for first time home buyers it really is a great time to become a home owner. But before deciding on a loan program be sure to talk to at least 3 lenders and your local government office to be sure your taking advantage of all the incentives out there.

If you have decided that now is a great time to buy a home, you are on the right track. While buying a home is an individual decision that requires a good look at your personal finances and long term goals, the affordability of homes in the Orlando area is a tempting factor.
Here are some tips for making the most of this new market:
1. Look at new home construction: After years of big builders dictating the terms of every new home, buyers finally have the edge. Many builders are now offering special incentives, such as discounted upgrades, free appliances or great financing offers. Call your Realtor and ask about new communities and what different builders may be offering.
2. Extend your closing date: If you are not able to qualify for the 8k tax credit (expires Nov. 30) then go ahead and ask for one or two more months before closing. Maybe you want to wait for your kids 4 day weekend to move, or a little more time to get your down payment together? Well qualified buyers can often negotiate a little more time in this market than in previous years.
3. Pit lenders against each other: Get loan quotes from at least 3 lenders, then let them know what each of the others is offering. In a slow market, the lenders might just be willing to re-negotiate the terms to get your business.
4. Chances are the seller is not going to agree to a 50% price discount, but 15% is very likely. Offer 15% off the asking price and see where it goes. Keep in mind however, that a seller who has just listed their home may not be as willing to negotiate as others as well as a seller who has already deeply discounted their home. You should check with your Realtor for this information.
5. If you have the time don’t over look short sales. Short sales can take months to negotiate, but if you are not in a rush, you can end up with a great deal on a home. Just make sure you are working with a Realtor experienced in short sales.

So, after searching high and low you have finally found a property that meets your needs and you want to write an offer. This is an exciting time and you are probably feeling nervous about the whole deal. Will they accept? Are there other offers on the home already? Sometimes agreeing to a contract free of contingencies can seem like the only way your bid will be accepted, but this type of contract can cost you big, with both time and money.

Contingencies are put in place to protect you should anything major occur after the offer has been accepted and before closing. There are three main contingencies you will always want written into your offer. Especially in the Orlando Real Estate market where some home values continue to fall. Having an appraisal contingency in place will protect you should the home not appraise for the offered price.

Another valuable contingency involves the home inspection. Even if the home looks great cosmetically it could be hiding major structural problems. A home inspection contingency will give you the right to walk away from the dea,l with out penalty, should the home show extensive damage or problems that you don’t feel comfortable with.

The third main contingency you will want written into your offer, is the financing contingency. Sometimes loans just fall through, for one reason or another, the bank decides against financing the property. Should this happen, the financing contingency will allow you to walk away and most of the time get your money back from escrow.

This is a huge purchase and you should protect yourself as much as possible by demanding at least these three contingencies.

1. Find the right Realtor – Having an educated and established realtor by your side throughout the home buying process is invaluable. Make sure the realtor you choose knows the area, has experience working within your search criteria, and most importantly that you feel you are able to communicate with.

2. Get Pre-Approved – There is nothing more stressful, when buying a home, than not knowing what you can afford. If you know your budget in advance than you will know what price range to look in and not fall in love with a home that is too expensive. On the flip side, you might find out that you can actually buy a more expensive home and have been looking at homes far beneath your limit.

3. Be Specific – Let your realtor know in advance what Orlando neighborhoods you are interested in and why. Be as specific as possible when explaining what your needs and wants are in a home. If you must have a 3 car garage let the realtor know so they can avoid wasting time showing you homes that don’t meet your criteria. The more specific you can be the more likely your realtor is to find you your dream home.

4. Avoid escrow surprises – Needing more money when the time comes to close on your new home, is the last thing you want to hear. So, do your homework in advance, ask lots of questions and be direct about how much you have to put toward closing costs and the down payment. Ask your lender for a good faith estimate on every home you make an offer on. The GFE is a list of common charges and a pretty good idea of how much you will really need.

5. Determine if and when it is a good time for you to buy – Just because home prices seem more affordable now in the Orlando area, doesn’t mean you have to give in to peer pressure and buy a home. If you don’t feel ready to own a home, the whole process will feel more like a weight than a joy. Sit down a really determine if you are ready to buy. It is a huge commitment of both time and money so be sure it is right for you before starting your search.

It may seem a little contradictory…it is supposed to be a buyers market, right? So why is there so much competition on the same house?

If you have recently started your home search in the Orlando area and have already been outbid on a home, you may have started to feel the panic of having been priced out of one of the best buyers’ markets in recent history.

The first thing you should do is take a deep breath and relax. Many people in this situation begin to feel an urgency to buy and start making offers of homes they don’t really even like. You want to keep your head during your house hunt, so try to avoid becoming a desperate house hunter by following these tips.

1. Some neighborhoods in the Orlando area have held up better than others throughout the mortgage meltdown. Because of that they tend to be more desirable at the moment. Think ahead and take the time to look at the neighborhood one street over where the competition could be a little less stiff. And before you write your next offer try to get as much information as possible. Ask your Realtor to find out if there are already offers on the home and if so how many, also inquire about what could make your offer stand out.
2. Even in a buyers market, if it looks to good to be true, then it probably is. A low asking price on a home could be a tactic to bring in multiple offers. In these cases it is important to submit a solid offer and not worry so much about getting the sellers to lower their price. You already know the home is priced well so you should feel confident offering the asking price.
3. Do a little more investigating and find out more information about the homes you were outbid on then redefine your search criteria based on that info. How long where they on the market? How high over asking price did it sell for? What are the comparable sales in the neighborhood and how did the final sales price relate? Based on these answers you can determine if you should start looking in a lower price range (to give yourself more negotiating power) or if you are prepared to offer more than the asking price.

One thing to remember is that the home must appraise for at least your offer in order to qualify for financing. If the comparable sales in the neighborhood are far below your offer, you may want to just walk away and save yourself time and money.

What better way is there to explain you this important question visually… Check out the video (courtesy of Federal Title), it covers the most important points about what happens at a closing.

Here is a short summary:
Once you have found your new home and your offer has been accepted there is one final step to complete before you can take possession. This final step is the closing and is also referred to as the “settlement”.

The settlement is when the official and legal transfer of ownership occurs. There are three “steps” that must take place for this to happen: loan steps, legal steps, and title steps.

Loan Steps: Your lender has agreed to lend you the money and you have agreed to certain terms to pay them back. At closing the lender will collect the loan fees, insurance and interest as well as any necessary reserves.

Legal Steps: The government is also paid at closing for the recording of taxes, transfer of taxes and taxes and stamps.

Title Steps: The title establishes legal ownership and the title company actually handles this transfer. To do this they must complete an extensive search on the property to determine and confirm who currently has legal ownership of the home. They are paid for the title search, a closing fee, and for the title insurance, to protect your property against future claims of ownership.

All of these fees will be listed on a government form HUD1 and will be provided to you at your closing. Some fees vary based on where you live so be sure to talk to your lender before your closing date.

The best thing a first time home buyer can do when starting their search, is to take a few moments to understand the process. Buying a new home is a huge commitment and a legal transaction, as such there are many myths swirling around about how it works. An informed buyer will feel more comfortable and reduce their stress simply by understanding the common practices associated with buying a home. Listed below are the 5 most common myths and the truths behind them.

I can’t afford to hire a Realtor:

This is probably one of the biggest misconceptions. Realtors work on commission only. They are not paid by their company and they are never paid by the buyer. When a seller lists their home for sale they agree to pay a set commission to the the Realtor who listed their home and to the Realtor who brings the buyer. So there is never any upfront money needed by either party and certainly never any money exchanged between the buyer and the Realtor.

If I purchase a “For Sale by Owner” home I will save money:

Although the owner of this home may claim a lower price the fact is that home is likely over-priced. Home owners typically do not have access to true market value reports that a realtor would have and tend to price their homes, based on what they owe, not what the real value of the home is. A Realtor will help you to determine a fair price.

I don’t need a buyer’s agent, I can just use the listing or builder agent.

The listing agent or builder’s agent will certainly be happy to help you, but keep in mind that their interest is with their seller, not necessarily you. They were hired by the seller to negotiate the best deal on their behalf so it is a good idea to have your own realtor on board to help you negotiate your side of the deal and represent your interests.

My credit is not good enough to buy a house:

Obtaining financing has become a little more difficult over the past few years, but it is still possible to get a home loan with out perfect credit. FHA for example caters primarily to first time home buyers and only requires a minimum score of 580 to qualify.

I don’t have enough money for my down payment or closing costs:

There are many first time home buyer programs, both locally and federally, that will often help provide the money needed to close. And until December 2009 the federal government is offering first time home buyers up to $8,000 to help cover closing costs and downpayments.

Hopefully you already read part one of  Avoiding First Time Home Buyer Mortgage Mistakes In the Orlando Market, so you already know the top three mistakes to avoid. But don’t put down your pencils yet, there are three more common first time home buyer pit falls you should be aware of.

1. Not getting pre-approved – Many first time home buyers confuse pre-qualify with pre-approved. Getting pre-approved is a fairly solid commitment from your lender using all available documentation (such as your pay check stubs, tax returns and credit report). Getting pre-qualified is really just a verbal agreement based on what you tell your lender, no documentation is necessary and this often leads to bad news once you try to solidify your loan.  Once you have found a loan package you like, be sure to get a written pre-approval as well as a good faith estimate.

2.  Not cleaning up your credit report – It is critical in today’s market that you know and understand what is on your credit report before applying for a mortgage. Take what ever time is necessary to clear up any bad information and get your credit report ready for the scrutinizing eyes of the lenders.

3. Making major credit card purchases – After you have applied for your mortgage and received your pre-approval letter, avoid making any large credit purchases. Sure you want new furniture for your new home, but if you need to use credit for the purchase you will need to wait until after your loan has closed. It is an unfortunate scenario but many people are refused their loan or given “new” (often worse) loan terms because of this new credit card debt.

Since the collapse of the real estate market a few years ago it has become clear that many buyers simply did not know what they were getting into with their mortgages.  Lenders are in the business of selling mortgages, they are making money in a variety of ways from your mortgage amount. Obviously the higher your mortgage’s dollar amount is, the more money they can make. This as well as poor industry practices helped lead to the burst of the real estate bubble.

Although many lenders have tightened their criteria to qualify for a mortgage, there are still many loan programs available in the Orlando area for those who want to buy and especially for Orlando first-time home buyers. But as always knowledge is power and knowing what to avoid will help you to make a smart choice and choose the mortgage that fits your lifestyle and your budget.

There are six main mistakes to avoid. Here are the three  first time home buyer mistakes to avoid:

1. Relying on your lender to define your maximum mortgage – Lenders look at a set of numbers and percentages to define your maximum budget. While the have become a little more strict regarding the ratios, it is still up to you to determine how much you can afford. Only you know how much disposable income you require each month to maintain your quality of life. If you really enjoy eating dinner out 3 times a week, and taking frequent weekend trips it is up to you to run those numbers and determine how much mortgage you can comfortably afford each month.

2. Not planning for closing costs – Closing costs can run anywhere from 3 -6% of your loan and while it is sometimes possible to get the seller to pay some or all of that, it is not always the case. Be sure you know how much your closing costs are going to run and budget that into your savings. Discovering that you need an additional $3,ooo four days before closing is a panic you can avoid with a little extra preparation.

3.  Not shopping around for the best mortgage – All mortgages are not created equal and one lender may not offer the same loan package as the next. Try to shop at at least 3 lenders and go over in detail what each loan offers and what the fees with each are, before committing to one.