This article is meant to assist those searching for a home anywhere in Florida. What I really wish to do is help you avoid saying, "I wish I would have known" at least once after you have purchased your home. I hope to make this relatively in depth but you cal always skip forward to the headings which apply to the stage you are in. The advice that I give would be different if you are looking to buy an investment property. This article is for those buying their primary residence.
After you have decided to purchase a home the most important factor is how much you can afford to pay for your home. Quite likely you may want to spend less than you can afford to avoid putting yourself in a financial bind. Before you get excited enough to research what you can afford you should get a credit report on yourself. You can easily do this for free. All you have to do is contact one of the major credit reporting agencies and request it. They are required to provide it to you free once a year. Many times you can have problems eliminated by challenging them through the agency or at the minimum enter an explanation. A little research on this and you will soon become a pro.
After your credit rating is judged as awesome I suggest contacting a mortgage broker. I prefer a local one in the area that I would be moving to. I will admit to have used Lending Tree before but I prefer being able to set across from a human being. A quick consult with a lending institution will give you an Idea what you can afford. After getting the estimate is not the time to buy a new car or run up your credit card. The banks that is lending you the money will check your financial debts and status right before the closing on your new home. You simply can not have any changes to your credit without endangering your purchase and the loss of all of your efforts. Leave well enough alone, as many would say. Or at least till after you close on your new home.
Hopefully this has been done and it was me. National studies have been paid for and shown the following. Local knowledge, accessibility and likability are they keys. A quick browse through this website will show that I have a lot of local knowledge. Just call and ask me and I'll tell you I'm an awesome guy.
A good Realtor will not tell you what you need. A good Realtor will listen and understand that it is about you and not them. A red flag to you will be feeling pressured, or possibly visiting homes which do not fit the description that you have told the Realtor that you like.
What is your timetable? Plan on 2-3 weeks to possibly find a suitable home. Then 6-8 weeks to close on the home. You would be best suited to decide on your home 3 months or more before you need to be there. Hopefully you do not need to sell your own home, and rent until your new home is ready for you. Buying a home while your home is on the market and relying on your home to sell before the purchase of a new home is known as a "contingency". That word makes sellers and Realtors cringe.
At this point I am going to suggest visiting any new construction communities, town centers etc. I do not suggest touring homes which you are not prepared to purchase unless they are having an open house. It is a stressful thing to sell a home. Each time you have a stranger pass through your space is kind of violated. The owners my have to get child care, pet care, miss work and hopefully make sure their home is clean. All of that plus the emotional roller coaster their on, it is just not fair to them.
Now let's revisit the Bank approval process. Many are not aware of the difference between prequalified and pre-approved. Prequalified meany you have given verbal evidence of your financial status and received approval based on that. It is a very rough and unofficial status. The latter is official based on documentation. If your credit worthiness does not change before the closing then the pre-approval will become final approval and culminate in a successful closing. What you need to get serious in your search, what you need to see many higher end homes is proof of funds. I have used pre-approval letters and a screenshot of from an i-phone of an account balance, no joke.
At this point you should have an awesome Realtor like me taking you to see homes which fit your criteria. You have probably noticed that many homes were listed without complete information. Namely the school zones are often left off. I suggest using GreatSchools.org to confirm the homes by address. However also call the county to make sure there are not new schools being built and to make sure re-zoning is not scheduled that will effect you or your children. Orange County Public Schools in Orlando has a great site for confirming schools etc. Many of the surrounding counties could definitely learn from them.
There are times which this is a good idea and fits you as a buyer. The best times in my humble opinion are early on in the development and near the end of the fiscal year for the builder. Especially if the builder is a national chain and not a local smaller builder. Early on can mean that the prices will be going up each time a new "Phase" of the development starts. If the development is going to have hundreds of homes then you can bet on price increases barring a financial apocalypse. Questions to ask are about the construction timetable for any amenities and how you home will be affected by the ongoing construction traffic. Will there be new entrances? If so then are they going to be using the one close to you or only the newer entrances. One final note on new construction. Expect 6 to 9 months for a new build and expect some, challenges to happen before the closing. Whenever I assist someone with a new construction home I always hope it goes so smooth they think they did not need me. It never goes like that. A good Realtor is a great resource with new construction. Make sure you have an experienced one who gets involved early and answers their phone. When you have a problem, and you will. A Great Realtor will handle all of the communications that they legally can. That alone will be worth the cost. Which by the way is zero in Florida. Contact me and ask how it is zero.
One more quick tip, I have seen new communities advertise homes for sale as Cash Only. The reason you will occasionally see this is the homes will not appraise for the amount that they are being sold for. In other words they are not worth it. Keep that in mind unless you plan on living in them for a long time.
Buying a previously owned home. This is where your Realtor will actually assist you with filling in the offer to purchase. With new construction you will be using the builders contracts. They normally will not use the state contracts which most Realtors will use. The most negotiated item is purchase price. So how do you know how to offer the best price? How do you know that you are not overpaying? This is a little more difficult if only one home is for sale in a community and the community is not on par with the ones around it. A great Realtor, upon request will research the homes which have sold in the previous 6 months to a year. Often this is very revealing.
In the real world homes are usually listed for more than they will sell for. Sellers have an emotional investment and are often unrealistic about the homes value. To make matters even more convoluted there is a lot f Realtors in competition for listings. Listings are often determined by how much a Realtor is willing to list the home for sale for. No Realtor can sell a home for more than it's market value. A Great Realtor can expose a home to more buyers sooner but ultimately if an appraiser says the home is not worth the money the financing bank will not give you the money and all of that time and effort to get more was wasted. Get a Realtor like me to sell your home. I have been payed by banks to perform BPO's. A BPO is a Broker Price Opinion which banks will use to price a home for sale. I rarely miss a selling price by more than a couple of thousand dollars.
Normally an offer is submitted giving the seller 24 hours to accept or decline. That may very if the owner is a Bank or if the circumstances are unique. Anytime before receiving confirmation that the deal has been signed and accepted the offer may be withdrawn by the buyer. If the offer is accepted the next step is the inspection process.
Much more than a good tire kicking. Normally the buyer will have 10-14 days to perform or have a paid licensed professional perform an inspection of the home. This usually will cost around $250-$500. You may need other items inspected if there is an elevator, solar panel system etc involved. However 90% of the time an inspector will perform this for the homeowner. The inspection will usually take 2-4 hours and a completed report will be given to the buyer. A Great Realtor will at least stop by and speak with the inspector. I myself will want it in writing that I advised the buyer to get an inspection. During the inspection period the buyer can back out of the deal for any reason or re-negotiate based on any issues discovered.
After the inspection period has passed the next steps are the title search, the survey and final approval (Successful Underwriting) of the loan. The Survey is once again conducted by a licensed professional under the direction of the lending institution you use. They will look for encroachments, in some cases un-permitted work done on the property etc. This is not the time to find out your neighbors fence or driveway is encroaching on your property by 2 inches. The title search will discover any liens or claims placed on the title ans make sure that the person selling the property has the right to do so. This is not the time for either the seller of buyer to make any changes to their financial abilities.
I have also seen past spouses and employers show up at the last minute to place a claim on the sellers proceeds. Anyone who has the legal right to can be a potential problem at close. A steady experienced hand on each side is always a benefit. In the state of Florida it takes not only the signature of the seller on the title but their current spouses too in order to be legal. "They said it was Ok" will not work with the title company.
Final Approval Status by the lender is normally the breath of fresh air that everyone is waiting for. It hopefully will be the last thing before the closing date. Barring any changes to the credit worthiness of the buyer and the discovery of hidden issues this should come 20-30 days after application for the actual home loan for the specific house. I repeat, every thing will be questioned by the lender all of the funds for the transaction will have to be accounted for and explained. Even if your relatives provide the earnest money because you do not have a checking account. Yes it happens.
Closing costs vary depending on many items. For example your home owners insurance, how you fund the transaction, property taxes etc. (By the way in Florida during hurricane season get the insurance locked in as soon as possible. The closing can be delayed by a storm if you do not).As a general rule with typical bank financing expect the closing costs to be 4% of the purchase price for new construction and 2.6% of the purchase price for a previously owned home. The largest expense will be the Mortgage Origination fee which is usually 1% of the loan value.
Ways to offset the closing costs? Yes there are. You can have the seller fund a portion of the closing costs but that is limited by the type financing that you use. Your lender will give you all of those options. It is normally best to avoid the seller paying the buyers closing costs and just get a lower price for the home. Currently some new builders will pay all of your closing costs if you use their lender. If that sound good to you reach out to me for assistance.
The day of closing bring your patience if you are the buyer. You can expect about 1 1/2 hours of signing stuff that no one understands. Your Realtor should not even attempt to explain these items. That could possibly be practicing law. Let the title agents do all of the explaining. Normally Realtors only show up to get the check, we all have to get paid.
Make sure all of the buyers bring a photo ID and someone brings the amount needed at the closing. You may be able to wire it but contact the title agency to see how they prefer to receive the funds.Often they will want a cashiers check or certified funds. You may as well ask them to tell you whatever else you may need to bring. Do they have copies of your Homeowners Insurance,divorce decree,separation agreement,flood Insurance etc. They will tell you what you need to bring. Get it straight from the title company do not rely upon your Realtor to relay this to you.
Items You Will be signing include the abstract of title,closing disclosure,declaration of reports,monthly payment letter,mortgage,promissory note,proration papers,statement of information (exactly who you are) and the truth in lending statement just to name a few. But have no fear, everyone goes through this that ever owns a home and there will not be a test afterwards asking you to remember it all. Do yourself and future Realtor a favor and keep it all in a nice secure place. Enter the pertinent information like the HOA contact number and address into your phone.
Abstract of Title
The Abstract of title is a short summary of the encumbrances and title history showing that the seller has the actual right to sell.
Use this to verify the specifics about your loan and make sure there are no mistakes. You should receive it 3 days prior to your scheduled closing.
In a nutshell these papers explain how you are going to be splitting the years taxes, HOA dues etc.
I hope this helps. If you are in central Florida consider our services. We are very diligent and will represent you well. Thank you for viewing this and please hit that like button below. Have an awesome day and I hope to be with you from searching for to closing on a home.