9 Things to Know Before Buying a House in Jacksonville

Jacksonville mortgage rates

Jacksonville, Fla., housing prices are on the rise, showing recovery of the local market following the Great Recession, according to data from Zillow. With prices steadily increasing and local banks offering a variety of mortgage options, Jacksonville homebuyers can research neighborhoods for competitive deals on homes. As you consider purchasing a home in Jacksonville, keep these nine tips in mind.

9 Tips for Jacksonville Homebuyers

1. Assess Your Creditworthiness

Your credit score will have a strong bearing on whether you are approved for a mortgage, and the rate you receive. Lenders will also consider your income, debts and assets. For the most competitive mortgage rates, you will need a score above 700, according to FrontDoor.com.

As you consider mortgage options, review your credit report and check for errors. You will also want to minimize your debt-to-income ratio.

2. Consider Your Down Payment

Mortgages requiring down payments of 3 percent or less accounted for 27 percent of purchase loans in the first quarter of 2015, according to RealtyTrac’s Q1 2015 U.S. Home Purchase Down Payment Report. The average down payment for a home was for 14.8 percent of the purchase price, down from 15.2 percent from the previous quarter.

Saving up a down payment can save you money in the long run. Depending on the size of your down payment, you might be required to take out private mortgage insurance, which can cost you between 0.3 and 1.2 percent of the loan amount each year. Consider how your down payment will affect the long-term cost of your next home.

Related: How I Saved $30,000 for a Home Down Payment in 5 Months

3. Budget for Home Repairs

As you form a budget to help you afford your next home, keep in mind you will need to accommodate for home maintenance costs. On average, you will spend between one to four percent of your home’s value each year on maintenance and repairs. Depending on the age of your home, you might want to accommodate a larger budget.

4. Get Preapproval for a Mortgage

A preapproval can show real estate agents you’re serious about buying a home. You can also get an idea of how much home you can afford. By establishing a strict budget with a preapproval, you can avoid overspending on a home. Keep in mind a preapproval is not a loan commitment, rather it helps you speed up the loan approval process and establishes how much a lender trusts you to borrow.

If you receive preapproval on a mortgage with a competitive rate, you might want to consider locking in your rate. Certain financial institutions will allow you to lock in a preapproval rate for a small fee.

5. Research Neighborhoods

Buying a home that suits your family’s needs is important. Consider nearby schools and crime rates. If you have a child, they should be able to safely walk to and from school. You will also want to consider your daily commute and your home’s proximity to major highways.

6. Comparison Shop Mortgage Options

Weigh your mortgage options with Jacksonville banks and credit unions. Local financial institutions can offer personalized services with professionals familiar with the area. You can also find varying mortgages to better suit your financial situation.

VyStar Credit Union, for example, allows you to pay for “points” when you take out a mortgage in order to lower your interest rate. First Florida Credit Union offers mortgage programs specifically for rental properties.

7. Consider Local Home Prices

While the median home value in Jacksonville is $123,800, prices are on the rise, according to Zillow. Year to year, home values rose 3.9 percent and are expected to rise another 1.9 percent by April 2016. Real estate prices in the region hit $179,000 in 2006 before plummeting during the Great Recession.

Average home costs dropped to $98,000 in 2012 and have steadily risen since. When you find a home you like, consider how quickly you can pay off your mortgage to determine whether it’s a viable option. You will also want to consider how your home’s value can rise based on the neighborhood’s proximity to local attractions.

8. Avoid Buying Too Much House

Buying a large home can be an ambitious purchase, even if you can afford the house. The larger your home, the more time and money you are liable to spend on maintenance and energy costs. While a preapproval can help you determine how much home you can afford, you don’t need to buy a more expensive house simply because you can afford it.

Nearly one in 10 homeowners are delinquent on their mortgages, according to Zillow.  Assess your budget to help you determine whether you can afford emergency expenses. If you think you will have trouble paying for unexpected medical costs and other emergencies, you might want to buy less home to help you keep your budget flexible.

Read: 4 Tips to Cut Your Monthly Housing Costs

9. Negotiate Mortgage Terms

As of June 2015, Florida mortgage rates are comparable to the national average.  If you have strong credit and impressive assets, you can potentially leverage a better rate. Whether you received a competitive or average quote, your rate isn’t locked in until you receive written confirmation from your bank. Until you do receive confirmation, see how flexible your lender is on mortgage terms.

Research Jacksonville neighborhoods to find homes that suit your particular financial and personal needs. Whether you’re exploring neighborhoods for houses near schools or with access to major highways, keep your mortgage options in mind. You might find ways to save by researching local banks and credit unions.

Keep Reading: 6 Huge Mistakes to Avoid When Applying for a Mortgage Loan