Buying a Home
Choose Your Realtor®
When you are having thoughts of buying a home, start with contacting a Realtor, no matter if you want to purchase now or in 6 months. They can assess your situation to help set your expectations on everything from your purchasing power, available neighborhoods and more. Think of this person as the Head Coach of your team. Your Realtor can also be a great resource in finding other vendors including Lenders, Real Estate Attorney’s, Inspectors and more. Choose someone who is able to answer your questions on the processes and procedures of a purchase and someone you like and trust. Don’t feel guilty to interview more than one. Once chosen, meet with them for coffee, lunch, or at their office in order to create your purchase strategy and plan.
Determine Your Purchasing Power
If you are buying in cash, what is your budget? If you are looking to get a mortgage, what is your purchasing power? You can determine your purchasing power by discussing your financial situation with a mortgage lender. The lender will give you a “pre-qualification” specifying the house price range you can consider as well as how much money you can expect to put down as a down payment. Make sure to find out what types of loans you have access to (i.e. Conventional, FHA, VA).
Don’t Hit This Road Block!
If you are going to apply for a mortgage, DO NOT open any new credit accounts unless your lender asks you to do so. Also, if you have any credit cards, keep the balances less than 30% of the maximum. That alone will increase your credit rating.
I’ve found that it’s best for buyers to write down all of their criteria and categorize them under “non-negotiables” and “wants”. Non Negotiables are criteria that the home HAS to have or you are not interested (3 bedrooms, 2 baths, 1 story, location, etc). “Wants” are items that you want but would be flexible if necessary (more than 2000 s/f, pool, covered parking etc).
Frequently Asked Questions
I Have My Pre-Qualification, What Now?
When you have your pre-qualification, it’s time to start touring! Schedule a meeting with your Realtor and bring your letter. I always like to meet with the buyers again in person to speak about their needs and motivations and to go over all the possible neighborhoods that fit within their purchasing criteria before we actually hit the street to tour homes. This meeting is critical as it sets a stage and creates your Real Estate property wish-list. Here are some sample questions you should think of before your meeting. The goal of this meeting is to help narrow down the search to find the homes that meet as much of your criteria as possible.
1) What type of property are you interested in? (i.e. Single Family / Townhome / Villa / Condo)
2) How many bedrooms do you need as a minimum?
3) How many bathrooms do you need as a minimum?
4) Would you consider buying a home that needs renovations and/or repairs?
Keep an open mind when you first walk inside a home. Try to concentrate on the size, the flow, the level of updates of the home and the layout. Sometimes when you tour a home that is occupied, you get caught up on the type of furniture or the personal photos on the walls. Try to look past all of that. I recommend you bring measuring tape with you because some rooms will look bigger or smaller to you than what they actually are based on the furniture inside. Bring a notepad and write down anything that catches your attention, good and bad. I don’t recommend touring more than 5 homes on each outing. As you leave each home, give it a rating (1, 2, 3, 4, …) so that at the end of the day you know which is 1st, 2nd, 3rd and so on.
I Found The Home I Want, Now what?
Your Realtor® will strategize with you on the best way to make an offer for each situation. Your strategy may be different if the home has been on the market for a week compared to 3 months or if it’s priced higher or lower than the current market value. If you are financing the purchase, you will need to decide the percentage you will finance compared to how much money you will put down. You will also need to put down an escrow deposit once you go under contract. The normal time frame to close on a home here In Florida is between 30-45 days.
I'm Under Contract, what should I expect?
First thing is to have a home inspection to determine the condition of the home. For an average home, your general inspection can cost anywhere from $400 – $600. This inspector should be trained to look for the condition of everything from the appliances to the electrical, plumbing, roof and more. They are not super-human so can’t see through walls but can show you evidence of possible issues. Some inspectors, however, have great tools to see if there is moisture in the walls. For Florida, you may also need a 4-point inspection, wind mitigation, underground plumbing inspection and a termite inspection. Ask your Realtor and your inspector what you should plan for. You are normally allowed to be at the inspection, so I highly recommend you attend. Most properties in Florida are sold “AS/IS” so that means that the seller is not required to repair anything should there be any issues found in the inspection and the buyer is not required to move forward if the inspection does not bring acceptable results. These AS/IS contracts leave it open for a possible further negotiation between you and the seller if any issues are found at the inspection. At a minimum, this report will give you a punch list of things to do after you close.
LOAN APPLICATION (IF NOT PAYING IN CASH)
Within a certain period of time following acceptance of your offer, you will need to submit your official application for your mortgage. Your chosen lender will ask you for a bunch of documentation including your tax returns, bank statements, pay stubs and more. Make sure to get everything that they request asap. Your lender will also order an appraisal. The appraisal will confirm the value of the home. Keep in mind: If you are purchasing a home for $500,000 with 80% financing, your loan amount would be $400,000 with $100,000 down in cash. If this home only appraises for $480,000, you will only be able to get a loan for $384,000 (80% of $480,000). The seller is not required to reduce their price, but may negotiate with the buyer to come to terms in order to complete the sale.
The title company will be asking you for information as they process title clearance. The title company has the responsibility of researching the title/deed of the property to make sure that the property is sold free and clear of any liens. They will usually draw up all sale documents for both the buyer and seller. The title company will also submit to you your estimated settlement statement a few days before closing which details out how much money you will need to send to the title company in order to close. This final amount is the purchase price minus your escrow deposits plus your costs, fees and prorations.
It's Closing Day! What Happens?
On or before the day of closing, you will tour your next home for the final time before officially becoming its new owner. This is your time to walk through the home to double check that everything is in the condition that you expected. Make sure that the appliances are present and working, that nothing else is missing and that nothing is broken. If the seller agreed to repair anything prior to closing, make sure that those items were completed per your agreement. Keep in mind, that once you close, the home will be yours and all of your responsibility.
This is the day that you and your Real Estate team have been working toward for a while! Your closing day will include the walk through mentioned before, then usually an in-person document signing meeting at your chosen title company’s office. Bring your government issued ID (drivers license and/or passport) with you to give to the title company so that they can notarize your documents.
If you are FINANCING your purchase, then once you sign all of the documents the title company will send the documents to your lender for confirmation of funding. Once the lender approves the paperwork they will issue the funding. Then…Congratulations, you are closed!
If you are NOT FINANCING your purchase, then once you sign all of the documents from the title company, then Congratulations, you are closed!