Buying a Florida Home Explained
One of the biggest purchases you will likely ever make is when you buy a home of your own. You may only do it once or you may do it several times in your lifetime but anytime you are buying a Florida home, you have many important decisions that will need to be made. Every step in the process of buying a Florida home is an important one and here at True Title we can help you understand the process. Here are the basic steps to buying a house that you will need to navigate in order to finalize you purchase of the home of your dreams!
Step 1 to Buying a Florida Home: Get Your Finances in Order
Your credit report is an important tool that lenders will use to decide whether to give you a loan or not. It is a constantly updated report reflecting how well – or not – you are managing your finances. You need to know what your credit score is and what negative marks may be on your credit report before you visit lenders to ask for a mortgage loan for buying a Florida home. A lower score or a credit report with numerous negative marks will make it harder to get someone to lend you the money you need to purchase your dream home. It is best to know ahead of time if you are in for a struggle with the first step of the home-buying process. If you have not looked at your credit reports, there may be marks on the reports that you are not aware of; things that can negatively affect your chances of getting a loan for buying a Florida home. Ideally, you do not want there to be late payments, defaulted lines of credit, or previous marks like collections or bankruptcy. These will destroy your credit and your chances of obtaining a mortgage loan.
Step 2 to Buying a Florida Home: Understanding the Process of Getting a Loan
Finding the right loan and lender is another important aspect of the process of buying a Florida home that many people fail to give the serious attention it needs. Shopping for the best mortgage rate may seem obvious, but more than half of homebuyers only consider a single lender. Instead of using a lender recommended by someone you know like most homebuyers do, take the time to compare the mortgage products that are available to you for buying a Florida home. Visit different banks and/or mortgage brokers to determine what types of mortgage products for which they are willing to pre-approve you. A half of one percentage point in your mortgage rate may not seem like a lot, but it can add up to thousands of dollars over the life of your mortgage loan. Just like you do before you purchase an automobile, you should shop around and compare prices and rates so you can find the best options for your mortgage loan needs. Going with the first quote you received is not a good idea in almost all cases, so take the time to shop around when buying a Florida home.
Step 3 to Buying a Florida Home: Get Pre-Approved for a Mortgage
Do you know the cost of the home you can afford? This is a very important part of the puzzle and, unless you have been talking with lenders, you most likely do not have a clear idea of what this entails. Many new homeowners get confused about the process of getting pre-approved for a mortgage loan and do not understand the difference between being pre-qualified and being pre-approved. The difference is actually quite major and it is an important distinction that can have a huge impact on what kind of loan you can get for buying a Florida home. Getting Pre-qualified for a mortgage loan means you are qualified to obtain an approval for a home mortgage loan. It does not mean that you are actually approved for a loan. Mortgage loan pre-qualification is based on your Income-to-Debt ratio and your assets, including how much money you have available for a down payment when buying a Florida home. The lender will evaluate your financial information and give you an idea of the loan amount for which you may qualify. Pre-approval, by contrast, is the next step in the process and requires borrowers to provide to the lender documentation of their income and their assets, which will enable the lender to “verify” your income, assets, creditworthiness, etc. A credit check is always run during the pre-approval process, and you must provide the lender with your W2s, paystubs, bank statements, asset statements, etc. Once a pre-approval is issued, you know exactly how much money you can borrow for a home loan. Buying a Florida home is a pretty big decision!
Step 4 to Buying a Florida Home: Determine Your Wants and Needs
The process of buying a Florida home can be difficult as there are many things that have to be considered, addressed, and figured out before you finally close on the deal. The process of buying a Florida home can go a lot smoother if you understand the real estate market you are buying in and you have a clear picture of your wants and needs. You need to have a list of the things you are looking for in your new home, as well as the things you do not want in your new home, before you start looking for your dream home. You should consider things like the number of bedrooms and bathrooms, the layout and floor plans, the size of the yard, the style of home you want, and other amenities you want like a large bathroom, open kitchen, and a large entertainment area outside. Additionally, you need to think about what you do not want – small bathrooms, old flooring, and so forth. Knowing ahead of time will help you narrow down your choices.
Step 5 to Buying a Florida Home: Importance of Real Estate Agents
Real estate agents are specially trained individuals who work with buyers or sellers – or in some situations both parties – to help facilitate the purchase of real property. Working with a skilled and experienced realtor is one of the most important decisions you can make when buying a Florida home. “For most Americans, a home is the most expensive purchase they’ll make in their lifetime. It’s a serious transaction with significant financial and emotional ramifications for the parties involved, and having proper representation is critical. So, what’s a Realtor going to do for you … and is it really necessary to hire one? In 2012, a full 89 percent of buyers used a real estate agent, and so did 88 percent of sellers” (Realtor.com). Obviously having the knowledge and experience of a realtor by your side during this process is important. It can have a huge impact on how quickly and successfully the process of buying a Florida home occurs for you.
Step 6 to Buying a Florida Home: Start Your Search for a Home
There are many ways you can actually go about searching for a home. When you work with a realtor, he or she will send you listings in your search area that they think may be a good fit for your wants and needs. You can also search yourself as you visit the neighborhood and surrounding areas and look for homes that are for sale. Recommendations from friends and family members you trust can also be a good way to learn about homes for sale in the area. As you work on compiling your list of the homes you want to see and are interested in, you will then work with your realtor to schedule walk-throughs and tours of the homes. This gives you the chance to see the home and determine how good of a fit it may be for you and your family. Your realtor can help you throughout the process of buying a Florida home and can also help you get answers to any questions you may have about the properties you visit.
Step 7 to Buying a Florida Home: Checking the Comparable Sales Records
Deciding if a home is the right one for you involves considering things like its size, structure, amenities, locations, and many other factors. However, there are other things that will need to be considered before you make your final decision about buying a Florida home, and one of them is the comparable sales records. Comparable sales are the sales prices of similar homes in that area that have sold in the recent past. These records are used as an example to justify the price that the seller is asking for or to give a potential buyer some leverage to negotiate a lower asking price on the property. For example, if the home is listed at $110,000 but homes of similar age, size, and style have been selling for only $100,000, this can be used to negotiate a lower final sale price. It is important to note that a seller does not have to lower the asking price and many times sellers will hold out for a higher asking price – something buyers need to know in the process of buying a Florida home.
Step 8 to Buying a Florida Home: Making Your First Offer
Every state has different laws and regulations relative to making an offer on a home, handling escrow payments, and handling initial paperwork. This is where a realtor can help ensure everything goes according to plan with your offer and how you proceed once the seller accepts or rejects your offer for buying a Florida home. Even if your offer to purchase has already been accepted by the seller, if inspections reveal any problems with the property, you may want to renegotiate the home’s purchase price to reflect the cost of any repairs you will need to make. You could also keep the purchase price the same but attempt to get the seller to pay for the necessary repairs. If the purchase contract states that you are purchasing the property “as is,” you do not have much recourse to ask for repairs or a price reduction, but you should still ask. You should ensure that your purchase contract allows you to cancel the purchase without penalty if a major problem is found with the home that the seller cannot or will not fix.
Step 9 to Buying a Florida Home: Home Inspections and Other Tests
In some states, it is required by law that the home inspections be completed and finalized before offers to purchase are made. In other states, these inspections can take place after an offer to purchase is received and accepted by the seller. No matter when your inspections are performed, it is critical to decide which inspections and tests you want to perform when buying a Florida home. These are the inspections and tests that could reveal potential flaws and problems with the home. Many of these problems could severely impact the value of the home or the amount of work needed to repair the property. Talk with your real estate agent or True Title agent to find out when inspections should be handled and if additional types of testing are important for your specific area. The most common checks are for things like roof damage, termites, water damage, foundation issues, and so forth. If a home is found to have major issues, the buyer can back out of the offer if necessary due to the results of the tests. You should demand that your purchase contract allows for this potential cancellation of the contract when you are buying a Florida home.
Step 10 to Buying a Florida Home: Avoiding and Correcting Last Minute Problems
One of the other important steps in the process of buying a Florida home is being alert for minor last-minute issues that may need to be addressed and taken care of as quickly as possible. As your closing date nears, everyone involved in the deal needs to keep tabs on the progress and be in touch with each other on a daily basis. Staying on top of everything makes it easier to know when something is not right or there is an issue with paperwork, filings, signatures, or something else that can delay the proceedings. At the very least your realtor should contact you every day as your closing approaches. This will help give you peace of mind and will also ensure that you take care of problems before they can cause major delays or issues. You should also consider talking with the seller on a regular basis to make sure they are taking care of everything on their end and that they are not experiencing any problems that could delay the sale or cause it to be canceled.
Step 11 to Buying a Florida Home: Do a Title Search and Obtain Title Insurance
Title insurance is crucial for a home buyer because it protects you and the lender from the possibility that your seller does not — or previous sellers did not — have free and clear title to (ownership of) the home and real property and, therefore, cannot rightfully transfer full ownership of the property to you. Even though the likelihood of using your title insurance for coverage is relatively low, the value of what you stand to lose if you proceed without coverage is high. Without title insurance, you could lose the home itself in a worst-case scenario. The value of title insurance lies in the fact that it can serve as a legal safeguard and an extra layer of protection for you and your investment. It protects against the case where someone- a disgruntled ex-spouse, a family member left out of a Last Will and Testament, or someone with an alleged legal claim to the property – attempts to take the home from you after you purchase it.
Your title search is designed to reveal these title “defects” before you purchase the real property. If title defects are discovered, your Florida title insurance company will do everything allowed by law to cure these defects prior to your closing, and they will issue your title insurance policy to cover you in the event previously uncovered and/or undisclosed defects in fact exist despite the fact that you had a valid, thorough title search performed on the property
Step 12 to Buying a Florida Home: Signing of the Papers
This final step of the process of buying a Florida home is also one of the most critical steps. During your closing, there will be a lot of papers that will need to be reviewed, explained, discussed and signed by the seller(s) and the buyer(s), or by the borrower(s) in the case of a refinance. It is imperative that you read each page carefully because the fine print can greatly impact not only your finances but your life for years to come. Everything from what is and is not to be included in the sale, what furniture is to be left behind, how payments are to be made, and the final payment amount will all need to be spelled out in the paperwork. Nothing is official until all involved parties have properly signed the closing papers.
You will want to pay careful attention to every aspect of the closing, including ensuring that the mortgage interest rate is correct, the final sale price is what was agreed upon, and that there is no prepayment penalty on your mortgage loan. Buyer and seller alike should take their time and ensure that everything is correct before signing.
Things You Do Not Want to Do While Waiting For Your Closing
Waiting is never fun or easy but chances are there will be a period of time where you are waiting for the final closing to occur. This may be a matter of a few days or it could be a few weeks depending on the specifics of your situation and where you are located. During this time, there are a few things you absolutely do not want to do. These seemingly innocent and normal actions can have a huge impact on your closing and can delay or even cancel some of the proceedings that are going on while you are closing the deal. So, make sure you are aware of these actions that you should absolutely avoid during the home-buying process:
- Do not touch your credit report. You have already pulled your credit report before you started the home-buying process. The banks and lenders already have your information and are using it to determine the final arrangements of your closing. Do not pull your credit report again during this time, no matter how tempting it may be to look at it again. You could make a harmless inquiry and it could delay your closing by flagging your credit falsely and affecting what lenders or creditors are seeing in your report. Do not touch it!
- Do not establish new credit. Contrary to popular belief, opening up new credit lines will not do any good while you are in the process of closing the deal on a new home purchase. In fact, it can destroy your credit and even negate everything you have done and cause lenders to throw out the credit score upon which they based your pre-approval. If you get pre-approval offers in the mail, shred them and do not give in to the temptation of opening new lines of credit. It will do much more harm than good!
- Do not close any credit accounts. Even if you have come to the realization that you have credit cards you are not using, do not close those accounts. Even if you no longer want these lines of credit, do not close these accounts while you are in the process of closing on a home. Cut it up, stick it somewhere you will not use it, but wait till after your closing is finalized before you cancel any credit cards or other revolving credit accounts. It is not worth the risk of changing your credit score at this time and potentially canceling your home purchase.
- Do not increase the credit limits. Many people tend to ask for a credit limit increase after they have had their cards for a while and have remained in good standing. This is perfectly fine to do – at any time other than when a home closing is pending. Anything that is worth buying on credit is worth waiting for until you either have another option or until after your closing process is finished. Again, it will directly impact your credit standing and can have a huge ripple effect on the process of finalizing your home purchase.
- Do not buy on credit cards at all. Do not buy anything on credit – not one little thing. This means no gas purchases, no hotel reservations, no new washer or dryer. Nothing. Wait until everything is done and finalized with your closing and then order your new appliances and book that family vacation getaway. Your closing can be severely delayed or even canceled if it seems you are abusing your credit and making risky or unwise choices with a line of credit that you already have. Do not take the chance – be smart and wait!
Even the simplest of things can have a huge impact on your ability to close on your dream home. Do not take the chance and avoid these common pitfalls while you are waiting for everything to be approved, signed and finalized. Once the home is yours you can go back to your normal financial routine, but during this time extra care and attention are essential to avoid delays and/or a cancellation of your purchase!
The steps outlined in this article can help serve as a general home-buying guide and offer insight into the home-buying process. You will need to seek help from skilled and experienced professionals and it is important that you ask as many questions as necessary. Never sign anything you do not understand and do not finalize any agreements until you understand and are comfortable with all terms. You are making a long-term commitment and spending a lot of time and money in this investment. Naturally, you want to make it the best experience possible. This guide for the home buying process is a great place to get started! True Title is ready, willing and able to answer all of your questions and to further assist you in the process of buying a Florida home and/or finalizing the mortgage refinance process.