How to Avoid Private Mortgage Insurance (PMI)

Lenders require private mortgage insurance (PMI) on conventional loan programs to protect themselves against potential loss if you stop making payments. You may be thinking that there must be a way to avoid being responsible for paying insurance premiums on something, hopefully, your lender will never need.

The simplest way to avoid paying PMI is to make a down payment that is large enough to cancel out the need for insurance in the first place.

Easier said than done, right? So, what else can you do to avoid paying for private mortgage insurance?

FIND A LOW OR NO DOWN PAYMENT OPTION
Specifically, find one that does not require private mortgage insurance as a condition of getting the low or no down payment. Look for loans that are guaranteed or backed by a government agency such as the VA, USDA or FHA. In lieu of requiring private mortgage insurance, there may be guarantee fees, funding fees, or other mortgage insurance required to protect the agency backing the loan.

REQUEST A CANCELLATION
It’s important that you keep a close eye on your loan’s principal balance because it will be an indicator of when you might be able to request that your lender remove the private mortgage insurance from your loan.

Once your balance drops below 80% of your home’s value or below 80% of your home’s current market value, you can submit a request in writing asking if you can have your PMI cancelled.

Depending on the type of loan you have and what conditions are in your private mortgage insurance policy, you may be required to make a certain number of payments before PMI can be cancelled. You may also be required to have a payment history free of late payments for a specific number of months. For example, no 30 days or more late payments in a 12-month period and no 60 days or more late payments in a 24 month period.

Every year, you’ll receive a notice that shows where you are with your loan balance and potential for PMI cancellation. Lenders have to monitor this closely themselves because they’re required to terminate PMI per the Homeowners Protection Act of 1998 once your balance reaches 78% of the purchase price or appraised value at the time of purchase, whichever is lesser. As soon as the lender confirms you’re eligible to have your PMI cancelled, they’ll send you a letter. It may also come from a subservicers on their behalf.

If you’re not close to the 80% loan-to-value target and you’ve made improvements on the home, you may want to get an appraisal. If your remaining loan balance multiplied by the factor 1.25 is less than the appraised value, you can request consideration for PMI cancellation.

ASK ABOUT LENDER PAID MORTGAGE INSURANCE (LPMI)
In exchange for a small increase in your mortgage interest rate, lenders may be able to take care of the private mortgage insurance. Unlike regular private mortgage insurance that you pay for, lender-paid private mortgage insurance cannot be cancelled per your request. Before selecting this option, you’ll want to do some math to determine what’s best for you and your budget long-term.

It may be appealing to not have a monthly PMI premium; however, the increased interest rate may result in you paying more in interest over the life of your loan.

On the flip side, interest is a tax write-off, whereas MI isn’t always a write-off if you exceed a certain income bracket.

Let’s look at a hypothetical example:
John and Jane both get a $225,000, 30-year, fixed-rate mortgage. Both are required to have mortgage insurance. John opts for the traditional monthly-paid private mortgage insurance that’s included in his mortgage payment. Jane negotiates a higher interest rate in order to have her lender pay the private mortgage insurance as a single premium to the private mortgage insurance company.

As seen in the table below, John has a lower principal and interest payment than Jane. However, he pays $84 a month in PMI, which raises his overall mortgage payment.

Once John’s loan meets the requirements to drop PMI, his payment is reduced by $84 per month. Jane’s loan is not eligible for PMI removal. After the loan reaches maturity with all 360 payments being made, John pays $417,509 for his $225,000 loan. Because of the higher interest rate, Jane pays a bit more for the same loan.

REFINANCE
If your home value has increased but you don’t meet the requirements to cancel the PMI, you may be able to refinance into a new loan that doesn’t require PMI.

Talk to [a loan officer] about the cost-savings, because there will be fees to do the refinance and you’ll want to make sure it’s worth it in the long run.

If paying for private mortgage insurance is making you hesitant to get a mortgage loan, please talk to a mortgage banker about ways to save for the down payment, down payment assistance programs, loans that don’t require PMI and how long you may need to pay PMI before you can cancel.

By: Beverly Darnell - Content Writer for Atlantic Bay Mortgage Group

Top 5 Reasons You Should Not For Sale By Owner

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers - Recent studies have shown that 94% of buyers search online for a home. That is in comparison to only 17% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?
   .
2. Results Come from the Internet - Where did buyers find the home they actually purchased?
   The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.
   
• 51% on the internet
• 34% from a Real Estate Agent
• 9% from a yard sign
• 1% from newspapers
  .
3. There Are Too Many People to Negotiate With - Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:
• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies, which work for the buyer and will almost always find some problems with the house
• The appraiser if there is a question of value
  .
4. FSBOing Has Become More And More Difficult - The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.
   
   The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.
   .
5. You Net More Money When Using an Agent - Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line
Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

The KCM Crew - For Sellers, FSBO's

6 Mistakes Buyers Make In A Seller’s Market

When you’re looking for a home, but the market favors sellers, you need a plan in place to avoid making mistakes.

The real estate market fluctuates often, making it tough to predict whether the market will favor buyers or sellers when it’s your turn to buy. Especially if you’re shopping for real estate in San Francisco, CA, or another market that currently favors sellers, you need to know some tricks of the trade to help ensure you don’t make any mistakes. Buyers in a seller’s market can get what they want, but they need to bring their “A” game — buying a house in a hot market isn’t for the indecisive. Here are six common mistakes many buyers make — mistakes that you can learn to avoid — when shopping in a seller’s market.

1. Not making your best offer
The drive to buy what we want for as little money as possible is practically in our DNA. So when most people see the listing price of a home, they naturally wonder what they can really get the house for. Offering lower than asking price is a perfectly reasonable strategy in some instances, such as if the house is overpriced compared with other similar homes in the area, or if it’s a buyer’s market with lots of available inventory. But trying to get a deal when you’re in a seller’s market might not be the best idea. “In a seller’s market, many buyers do not step up with a strong enough offer,” says David Dubin, a New York broker. “There is usually a shortage of inventory, and the competition is usually fierce. I always encourage a buyer to come in with a strong opening offer.”

2. Waiting too long to put in an offer
Just as impulse-buying a home is risky, analyzing a home purchase to death in a seller’s market is inadvisable too. When you wait too long, “You are at high risk of losing [the home] you have fallen in love with,” says Dubin. Once you’ve determined the type of home you want, the location you desire, and your price range, and finally find a home that meets your qualifications, make an offer. To give yourself more leverage, be prepared to make a quick offer by having your finances in order — get a preapproval if you can. “Know how much you can truly afford, repair any credit issues, have your down payment in hand, and delay [other] major purchases,” says John Lazenby, president of the Orlando Regional Realtor Association in Florida.

3. Not working with a real estate agent
In a seller’s market, it benefits buyers to get all the help they can. If you have a seasoned agent on your side, you’ll probably have a better chance of getting the home you want. Plus, in most cases, buyers don’t pay real estate agents; sellers do. “When you are competing against other buyers in a fast-paced market, it is vital to be ‘offer-ready,’” says Michael Holt, a New York agent. “Working with a real estate professional saves tons of time and stress, as they know the ins and outs of the process and can provide tremendous insight regarding upcoming inventory.”

4. Not being prequalified (or better yet, preapproved) for a loan
You might know that you’ll be approved for a mortgage loan based on your steady income, your low debt-to-income ratio, and your high credit score — but the seller probably doesn’t know that. The only way to prove to the seller that you’re a qualified buyer is to be prequalified from a lender. “Prequalification is absolutely paramount,” says Teka Klopfenstein, a New York agent. “A buyer has zero advantage if they do not have the cash to purchase without a mortgage and haven’t taken the time to speak with a lender.” Not getting prequalified, she says, “sends a message to the seller that the buyer will lag on getting their ducks in order and aren’t taking their house hunting seriously.”

Preapproval is a step above prequalification (where you simply tell your lender your financial story). The preapproval process involves submitting a mortgage application, complete with supplying verifying documents. “Preapproval from a reputable lender is key,” says New York agent Ryan Stenta. “Presenting this shows the seller that the buyer has already set the wheels in motion and is serious about making [the deal] a reality.”

5. Not being prepared for a bidding war
If there is ever a time when a bidding war could be imminent, it’s during a seller’s market. No buyer wants to be involved in such a battle for fear of possibly going over budget. But broker Michael Holt presents this solution for buyers: “Set your search below your max budget to leave room in case of an over-asking bidding war.”

6. Not learning from your mistakes
There’s no shame in learning that your offer has been declined, but it’s easy to get frustrated if your offers are declined over and over again. Learn from your last transaction(s) so you can get what you want. Stenta says that buying a house, particularly for first-time buyers, is a lot like dating. “You probably have to let a few keepers slip through your fingers, have a couple sleepless nights over it, and then come back with serious intent to lock up the next greatest opportunity in front of you.”

By Laura Agadoni - Trulia.com

First-Time Home Buyers: 4 Sleeper Costs to Watch Out For

Buying your first home is an exciting event, but it also can be an expensive one. Not only is buying a home the biggest financial commitment you are likely to make in your life, it can be even more expensive than you anticipated if you aren’t prepared for all the costs. Here are four sleeper costs first-time home buyers should watch out for.

Mortgage insurance
These days it’s much easier to buy a home without a 20 percent down payment than it used to be, and one of the reasons for that is mortgage insurance. Most home buyers who put down less than 20 percent will have to have the insurance. Your mortgage insurance premium depends on how big your loan is and how little you put down, but you easily could pay several hundred dollars a year in premiums, which usually is added to your monthly mortgage payment.

Homeowners insurance and property taxes
Another cost that first-time home buyers often fail to consider is property taxes and insurance, which can add 2 to 3 percent to their monthly mortgage payment. Most lenders require those amounts to be paid monthly into an escrow account, which the lender then uses to pay the amounts when they are due. A good real estate agent, such as one from EXIT Lakes Realty Premier, will explain to you what amount of mortgage payment to expect, including all extras such as taxes and insurance.

Home-related items
If you are buying a home for the first time and moving there from an apartment, it’s likely that you don’t have many of the tools and furnishings you need for a home. For example, you probably will have to buy a lawnmower, lawn tools, hoses and other outdoors items. You also may need to buy more furnishings to fill out your larger home.

Maintenance
One of the main costs that first-time home buyers fail to account for is ongoing maintenance. When you live in an apartment, most maintenance tasks are taken care of by the landlord, but when you own your own home, they are your responsibility. If you need to call a plumber or electrician, you have to pay for it. If your house needs to be painted or needs a new roof, you will have to shell out the costs.

Buying a home can be a smart financial investment, but to make the most of it, you must factor in all the costs of ownership.

Realty Biz News - Lizzie Weakley, freelance writer - Columbus, Ohio

Orlando Real Estate can post some of 2017's hottest gains

Less than two years after metro Orlando led the nation in foreclosures, it's now expected to post some of the hottest real estate gains in the United States during 2017, two new reports show.

Home values throughout Orange, Seminole, Osceola and Lake counties are expected to increase 5.7 percent during the next year — the highest rate among the country's top 100 metro areas, according to real estate analytics firm Zillow.

"It's actually a thriving market in the sense where people can find employment and buy a house," said Svenja Gudell, chief economist for the company. Wages are still among the nation's lowest, but analysts see that unemployment remains low and wages have begun to improve in recent months.

If predictions hold true, Orlando home-price growth this year would exceed the 4.6 increase in home prices expected nationally. The forecasts factor in projected increases in mortgage interest rates.

Analysts say the price increases are unlikely to lead to a bubble in the near term because mortgages are not easy to get and Orlando home values remain below their peak from a decade ago.

On Thursday, Krystal Little and her husband Jason saw a townhouse hit the market in the Winter Park school district. Within hours, they signed a contract to buy it for cash with intentions to flip it.

"Everything is moving in hours now," said Little, who also is chairwoman of the Orange County chapter of the Central Florida Realty Investors nonprofit.

The Littles plan to paint and make modest improvements to their new townhome before selling it within a few weeks of closing. They plan to reap at least a 15 percent return on their investment.

Even though investor activity won't lead to a long-term housing recovery, that group has helped rehab the region's inventory of foreclosures. Little said they are finding buyers more easily now.

"Two or three years ago, investors had to go all out improving properties," she said. "It had to be pristine. We don't see that now. It's mostly cosmetic improvements."

Limited supply, rising home values, ample jobs and income growth elevated Orlando to the nation's top market position among the 50 largest metro areas for the current quarter, according to real estate analyst Ten-X. Three other Florida metropolitan areas trailed directly behind Orlando in the ranking: Palm Beach, Fort Lauderdale and Tampa — all also among the hardest hit nationally during the recession.

"The top 20 cities in our report include many that were devastated during the foreclosure crisis — especially in states like Florida — and as home prices continue to recover, they still represent buying opportunities for homeowners and investors alike," Ten-X Executive Vice President Rick Sharga said.

Orlando's outlook for the coming year follows two years of booming price increases for a region that suffered during the housing bust. In the core Orlando market of Orange and Seminole counties, median prices have more than doubled from a bottom of $94,900 in January 2011, according to Orlando Regional Realtor Association.

But there is room for more price growth in the Orlando area, in part because home prices are 17 percent below their 2007 peak, said Sharga. Ten-X reported Thursday that Orlando jumped from fourth to first during the last two quarters to overtake Fort Lauderdale as the country's top market, when all factors are considered.

Orlando had the highest expected home appreciation for 2017, Zillow ranked it as the fourth-hottest market overall — as other factors such as unemployment or income growth kept it behind Nashville, Tenn.; Seattle; and Provo, Utah.

Zillow's Gudell said that Orlando still has not recovered fully from the bust. About 11 percent of houses are upside down with values below the mortgage owed on them — four times more than normal for a market but far less than five years ago when about half of mortgages in the region were underwater.

Little said she sees few foreclosure deals and momentum continuing into the new year.

"We've been watching prices steadily increase. Even in the holidays, we were watching it increase," she said. "Normally you see a dip at that time of year, but it's holding steady. That was surprising to me, and it's a sign of a good, strong market."

Copyright © 2017, Orlando Sentinel, By Mary Shanklin - Contact Reporter, Staff Writer

Mortgage Rates Rise in U.S. for First Time in 2017

According to Freddie Mac's latest Primary Mortgage Market Survey, the average 30-year and 15-year fixed mortgage rates rising for the first time in 2017.

Sean Becketti, chief economist of Freddie Mac said, "The 10-year Treasury yield increased more than 10 basis points this week. The 30-year mortgage rate moved up as well to 4.19 percent, a 10 basis point jump. This week marks the first increase in the mortgage rate since December 29. The 2.8 percent decline in existing home sales in December is a reminder of the lack of homes for sale. According to the National Association of Realtors, supply is at its lowest level since 1999, a factor that should support higher house prices regardless of the oscillations of the mortgage rate."

30-year fixed-rate mortgage (FRM) averaged 4.19 percent with an average 0.4 point for the week ending Jan. 26, 2017, up from last week when it averaged 4.09 percent. A year ago at this time, the 30-year FRM averaged 3.79 percent. 15-year FRM this week averaged 3.40 percent with an average 0.4 point, up from last week when it averaged 3.34 percent. A year ago at this time, the 15-year FRM averaged 3.07 percent. 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.20 percent this week with an average 0.4 point, down from last week when it averaged 3.21 percent. A year ago, the 5-year ARM averaged 2.90 percent.

By World Property Journal (WPJ) Staff - Full Article

Demystifying Mortgage Lending

There are 2 primary types of lending for consumers seeking to obtain a mortgage; Direct Lenders (this includes Banks, Mortgage Banks, Internet Lenders & Home Builders) and Mortgage Brokers. Many times the average consumer makes the wrong decision and ends up spending thousands of dollars more than they needed to. Let’s break it down…

Direct Lenders (retail institutions that may not have an abundance of loan options and programs individually)

• Banks - Many borrowers prefer to secure financing with their current bank or credit union before turning to another source. Banks are usually the more trusted and familiar choice, and can often provide borrowers with discounts based on known financial information and a pre-established relationship. Usually not the best option for individuals with less than perfect credit, banks typically turn down these applications. Many times if a person does have good credit, the bank ‘auto-pre-approves’ them, it is later in the process when the contract can break down because the person really can’t afford the mortgage. Personal service is limited with calls usually directed to call centers or an abundance of automated phone prompts. Commonly known for lengthy processes, bureaucracy, mistakes & incompetence and lack of disclosure on the yield-spread premium.

• Mortgage Banks – Provide one on one personal service and will guide you through the loan process. Usually a single person to deal with, a direct phone number and offices you can visit if you have questions. They are solely in control of the process from beginning to end and make approval and rate decisions, often times can make small exceptions and subjective determinations quickly. The pre-approvals that are received by mortgage banks are usually very strong because a thorough financial evaluation was completed to ensure the customer can truly afford the mortgage.

• Internet Lenders – (Quicken Loans’ Rocket Mortgage or Lending Tree, etc.) Faster and sometimes cheaper and will often times secure lending for individuals with less than perfect credit (with higher interest rates, of course). Very easy application process – from your laptop while sitting on the couch! Can often times offer the lowest interest rates and most flexible payment terms with lower closing costs since they don’t have to pay for the same type of expenses (offices, etc.) as other lenders do. They usually charge upfront fees that should not need to be paid until later in the process. The lack of personal one on one service can impede the success and completion of the loan – usually only toll free numbers with limited hours.

• Home Builders – Usually own an in-house mortgage company to assist in making purchases easy (could be a mortgage bank or broker) when building a new home.

Mortgage Brokers (acts as middle-man to many financial lending institutions for various loan products)

• Mortgage Brokers – Like mortgage banks, brokers provide one on one personal service and will guide you through the loan process. They operate on the wholesale market to secure financing for buyers and homeowners and are able to compare mortgage rates from a large number of banks and lenders all at once; often times finding lower interest rates and more loan options than retail institutions. They must rely on the borrower’s cooperation to verify financial information, potentially causing higher interest rates. Brokers do not make any approval or rate decisions, they rely on the lending institution to do this which can sometimes delay the process. They are commonly known for having supplemental or padded charges associated with loans, but they save you time from shopping for a loan.

So, my best advice to you is… do your homework! Remember your parents telling you this when you were a kid, well make sure you know the process and associated fees that come with acquiring a loan. Check credentials and research different institutions before you decide, talk to 3 or 4 of them. Always ask friends, family members or your real estate agent for a recommendation or referral – usually this is the best way to find a reputable and dependable mortgage banker.

Some items to consider and ask about when comparing lenders:

• Interest Rate (it’s a moving target!) 
• Lock in Fees 
• Interest Points 
• Closing Costs 
• Lender Origination Fees 
• Prepayment Penalty 
• How the Broker is being Compensated 
• How are you being treated? Are they asking YOU questions, or just telling you a rate?

Good luck to you on your mortgage journey, and remember… if it seems too good to be true, it probably is!

Jason Wallace, Licensed Real Estate Agent & Realtor® (Florida #SL3354332)

Forbes: Orlando a top market to invest in a home in 2017

Orlando is one of the best cities in the country for investing in residential real estate in 2017, according to Forbes. The magazine named Orlando the third-best U.S. market in which to buy a home this year, citing the city's growth in population and jobs as factors in the ranking.

Whether looking for a place to live or a property to rent out for yield, every home buyer wants to make a smart investment. To find out where you can do just that in 2017, Forbes teamed up with Local Market Monitor, a North Carolina-based company that tracks more than 300 housing markets. For each market, the company analyzed housing indicators as well as broader growth trends to determine each city's projected three-year growth in housing prices. Below you'll find 20 markets where population, jobs and home prices are growing. Florida and Texas dominate, but solid markets can be found across the United States. For every city on the list, Local Market Monitor expects home prices to grow by at least 17% by 2020.

1. Dallas, TX 
2. Jacksonville, FL 
3. Orlando, FL 
4. Seattle, WA 
5. West Palm Beach, FL 
6. Salt Lake City, UT 
7. Tampa / St. Petersburg, FL 
8. Nashville, TN 
9. Fort Worth, TX 
10. Grand Rapids, MI 
11. Sacramento, CA 
12. Charlotte, NC 
13. Raleigh, NC 
14. San Diego, CA 
15. Las Vegas, NV 
16. Boston, MA 
17. Columbus, OH 
18. Atlanta, GA 
19. Phoenix, AZ 
20. San Antonio, TX 

See details of the full list here.
Samantha Sharf, FORBES STAFF

Top 10 Orlando metro areas with the highest and lowest appreciating home values

The total value of Orlando homes is on the rise, reaching $187.5 billion at the end of 2016, up 8.5 percent, or $14.6 billion, from the prior year. The local median home value in 2016 was almost a 10 percent increase over the previous year.

The combined market value of every home in the U.S. reached a record-high of $29.6 trillion in 2016, up $1.6 trillion from the prior year, according to a new Zillow analysis.

Check out Zillow’s 10 top metro Orlando areas that had the fastest appreciating home values, shown here with the median home value, followed by year-over-year growth:

1. Pine Hills: $107,700; 23.7%
2. Lockhart: $138,400; 16.8%
3. Altoona: $135,600; 16.1%
4. Paisley $143,000; 15.8%
5. Fairview Shores: $174,600; 15.6%
6. Tangelo Park: $82,900; 14.5%
7. Wedgefield: $275,500; 14.3%
8. Orlovista: $93,100; 14.2%
9. Kissimmee: $158,700; 14.0%
10. Sky Lake: $136,600; 13.3%

...and on the flip side, the lowest appreciating home values:

1. Yalaha; $156,800; 1.4%
2. Celebration; $362,900; 4%
3. Howey in the Hills; $230,100; 4%
4. Groveland; $179,600; 4.5%
5. Lake Mary; $265,600; 4.6%
6. Grand Island; $160,400; 4.7%
7. Lady Lake; $190,700; 4.8%
8. Tavares; $158,200; 5.2%
9. Longwood; $256,200; 6.7%
10. Umatilla; $130,200; 6.7%

Among the list of major U.S. cities with the highest housing stock toward the end of 2016, Orlando ranks 26th out of the 35. “Orlando is a relatively strong job market and is affordable. It’s still a great place for entry-level homebuyers and continues to grow,” said Aaron Terrazas, human economist at Zillow, adding that the Orlando market is still well below the peak, meaning there are deals to be found in comparison to other major cities.

What does this mean for 2017? Zillow forecasts the housing market in metro Orlando "to appreciate 5.7 percent over the next year. The U.S. as a whole is forecasted to appreciate 3 percent over the next year," Terrazas said.  Orlando’s median home value for 2017 will be $209,400, which is roughly $11,000 more than what it is now at $198,100.

Veronica Brezina., Staff Writer - Orlando Business Journal

What every first-time buyer needs to know

Meet fictional 34-year-old identical twin brothers Fred and Ted. Fred is a marketing manager for an import-export company. Ted is a social worker at a non-profit agency. Both are single and considered to be smart, successful guys. While Fred's annual salary is nearly four times what his brother earns, however, Ted is worth much more than Fred and is already in a better position to face retirement one day.

Why is Ted worth more than Fred? The difference? Ted became a first-time homebuyer when he was just 26, while Fred still rents, paying off his landlord's mortgage with money and resources that would be better spent building his own personal wealth.

Over the years, Ted tried to convince his brother of the many benefits of home-ownership: tax savings, building equity, the ability to adapt your home to your style and preference without having to get permission from a landlord, and more. Fred knew deep down his brother was right, but something always stopped him from moving forward: Was this the right time? What if he was transferred? What if prices dropped? What if prices started to rise -- along with his insurance and taxes?

Are you the victim of analysis paralysis? In the end, Fred allowed himself to become the victim of analysis paralysis, continuing to throw his money away on rent, unable to deduct the mortgage interest from his end-of-year taxes and feeling frustrated he hadn't taken the plunge. Meanwhile, Ted saw prices go up and down; he worried at times if he could afford his taxes and insurance; and he had to rent his house out for a year when he took an assignment with an agency out of state.

In the end, though, Ted watched excitedly as the forced savings of paying a mortgage increased along with his equity. And, even though the current market value of his home is less than it was a couple of years ago, it is still worth $250,000 more than what he paid for it in 2000. Fred's entire investment portfolio, including his 401-K, is less than half of that amount.

What's stopping Fred -- and maybe you, too -- from purchasing now? So, what's stopping Fred from entering the market now at a time when prices are lower than they've been in years, interest rates keep inching downward, and builders and developers in a number of new-home communities are catering to first-time buyers with impressive incentive programs and special financing?

Even though he'd never admit it to his "kid" brother (Ted was born six minutes earlier!), he is intimated about the application process.

Fortunately, we have a few tips to steer Fred -- and other first-time buyers -- in the right direction.

Tips to take away the fear First, if you're considering purchasing a home, it's important you get your finances in order. Start is by obtaining a copy of your credit report.

According to the Fair Credit Reporting Act, you are entitled to obtain a free credit report once a year, or within 90 days of being denied employment or credit based on your rating. A credit report verifies such things as your name, address, social security number, job history and debt history.

The major credit reporting agencies are Equifax, Experian and TransUnion. Visit any of their Web sites to obtain your free report. Credit scores range from 300 to 900, with the lower end indicating to lenders that you will be a poor credit risk. Generally, the cutoff point for issuing loans is around 600.

If your credit rating is questionable, it is probably a good idea to improve it before applying for a loan. Paying off debt, canceling unneeded credit cards and even consulting consumer credit counseling services are all steps you can take to get your finances in order.

Locate a lender The next step is to find a mortgage broker, bank or credit union that can help you secure a loan. A mortgage broker will have access to a number of programs from a variety of lenders, while banks and credit unions will only offer you their programs. In either case, shop around for the best rate, terms and loan fees (in many cases you can negotiate these down).

To make things easier and more convenient, many new-home builders have in-house lenders who can offer a preferred rate, excellent terms and numerous incentives. While it is not mandatory that you use a certain lender, it is worth at least considering, since it can translate into big savings.

Finding the home of your dreams Once you choose a broker, bank or credit union, you should ask to be pre-qualified, which is an initial assessment of how much you can afford and will give you leverage in your home-buying search. Prequalification is different from pre-approval, which is a more complete analysis by a lender of your ability to pay for a home as well as confirmation of how much is to be borrowed.

Now comes the fun part -- finding the home of your dreams. Once you know how much you can realistically afford, you can work with a sales associate at a new-home community and/or a Realtor® to choose the neighborhood, floor plan and upgrades that work best for you and your family.

When you settle on a home that is the best fit, you will execute a sales contract on the property being purchased. You should give this -- along with the other items listed in the sidebar -- to whomever you decided will be handling your mortgage.

Retire early with Ted Just as with owning a home, the road to closing will be filled with twists, turns and potholes -- and at times it will seem like you're signing your life away -- but, in the end, it will all seem worth it. Just ask Ted? He's hoping to retire at 55 with the equity from his home, while Fred may still be working and paying rent … unless he moves quickly.

With the current market prime for first-time buyers, take the lead from Ted and become a homeowner in 2017!

Garrett A. Foster - Copyright © 2017, Orlando Sentinel