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IMPORTANT STEPS

When Buying A Home

So you've been looking at property online, finding perfect little homes or ones where you think, "That has potential!" You do a quick mortgage calculation and determine that home ownership could be within reach. If you are a first time home-buyer or it has been decades since purchasing your last home, you may not know where to start or what to expect.

That is why I put together a step by step breakdown of the home buying process. You will find this as a general overview of the process from beginning to end with some explanations of the importance of each step. Always ask a professional who is experienced in their field for specific questions regarding your home search.

1.

Call a trusted lender to start the conversation about what your home-shopping budget should be. (Better yet, call two to compare rates and special programs)

If shopping for a condo, a local lender will be your best chance for a successful purchase. The condo market in Florida is very unique and most condos in Northwest Florida do not qualify for a typical loan due to many extra requirements they must meet. A local lender who knows the market well and can offer special financing will set you up for success.

Determine what type of loan you will be qualifying for.

There are quite a few types of loans out there but the three most common loans are conventional, FHA, and VA.

Conventional loans usually require a larger percentage down payment (around 10-20% of the purchase price) which your loan provider can help you determine. These types of loans will generally need a home inspection, an appraisal that supports the purchase price, a survey (if none is on file), and an insurance policy chosen once you are under contract.

A FHA loan is a government backed loan that can have a down payment as little as 3% of the purchase price. You will need to have all of the above requirements as well as an inspection performed by an FHA approved inspector and a wood destroying organism inspection (WDO).

A VA loan is a loan provided only to US Veterans that typically has a 0% down payment. The requirements for loan approval are the same as a conventional loan along with an inspection performed by a VA inspector and a WDO inspection.

** Your loan provider can give you a much more comprehensive and detailed breakdown on what is required and goes into applying for each of these loans. Be sure to ask many questions during the approval process to have a good understanding of what you are applying for.

HOT TIP: When you are putting less than 10% down when purchasing a home, your loan will most likely require mortgage insurance. This amount will range depending on the purchase price. Mortgage calculators usually do not include this amount when estimating monthly payments, nor do they generally include insurance monthly premiums. It's safe to assume that the monthly payment will be higher than what the calculator estimates.

Obtain a letter of pre-approval from your lender.

Having a letter of pre-approval shows the seller that you have already taken necessary steps to qualify for your loan. Being pre-approved requires submitting a selection of financial documents to your lender and having a preliminary verification to determine what your loan amount will be. It is generally requested across the board to supply a letter of pre-approval when submitting an offer for purchase. Not having one could mean your offer not being considered.

HOT TIP: When discussing the terms of your loan with your loan provider, ask about projected closing costs to get a general idea for what you need to bring to the table at closing.

Enlist a Realtor to help with your house-shopping.

Once you are pre-approved and know the budget you have to work with, find a Realtor who can help you along the way. A Buyer’s Agent can have access to “coming soon” properties and hear about “pocket listings” before the general public. Additionally, they will be able to get you into properties, schedule showings, find additional documents and any other helpful information (HOA fees / restrictions and requirements, special assessments, etc) to help you determine if the home is a good fit for you.

Having a Buyer’s Agent assist you is also beneficial because it comes at no additional cost to you. In Florida, Buyers generally do not pay commission to any agent - Sellers do!

Find your home and submit an offer

Your Realtor will discuss the terms and conditions within a Florida Purchase Agreement.

Examples of some of the terms that can be adjusted within your offer are:

* purchase price
* how inspections and repairs are negotiated
* appraisals
* additional closing costs
* home warranties
* any other item of importance that should be in writing

Your Realtor should be knowledgable of the previous sales in the neighborhood and have a firm understanding of the current market in order to put forth the strongest offer with the most favorable terms for you, the Buyer.

Once under contract, submit

- 1. A good-faith deposit aka Earnest Money Deposit to Title Agency
- 2. Further documentation to your loan provider to complete the approval process

This part of the process is what takes time. Your Realtor, Lender, Title Agents, and you will all continuously work together to supply and inform each other with what is needed to complete your purchase. You will continue to provide documents as your lender requests them. Your lender will schedule the appraisal (and FHA or VA inspections if needed) and work on approving your loan application. Your Realtor will schedule your general inspections, request insurance quotes, keep up with important dates and timelines, and negotiate with the selling side should any changes need to occur. The Title agency basically does a “background check” on the property and looks for title defects like errors in public records, unknown liens, and forgeries. Your title insurance policy will protect you against any past title defects if they arise in the future. They also handle closing details and escrow accounts

HOT HOT TIP: Do NOT make any big purchases, open a new line of credit, or change jobs while you are acquiring loan approval. Doing so could result in loan denial and not being able to purchase your home.

Select and “bind” a home-owner’s insurance policy.

Before your lender can completely approve the loan, they need to see that a home-owner’s insurance policy is in place. Your Realtor can provide quotes from different agencies for comparison and you are able to shop around for quotes as well. Policies can have a range of coverage depending on property type (house, condo, mobile home), vicinity to bodies of water, if it’s a rental, etc. Your Realtor will help you make sure you find the right coverage for your purchase.

HOT TIP: If purchasing a condo, many times the HOA covers insurance for the exterior of the home. Always read through association documents to know exactly what the HOA covers.

Close on your home!

Once all of the above mentioned requirements are satisfied, your lender can approve your loan! Your Title Agency will put together your closing documents and schedule the date and time for closing.

HOT TIP: Keep all of your closing docs, receipts, business cards (anything related to the purchase of your home) together in a safe spot. You never know when you need to pull a phone number for someone who helped you along the way and need their help again.

That is purchasing a home in a nut shell.

Of course there are many variables and moving parts that make every single transaction unique which is why it's so important to have a team of people working with you to make the process as seamless as possible.

Communication, availability, perseverance, and attention to detail are all qualities that I strive to put forward every time I am working with a customer.

I would love to answer any other questions you may have so please give me a call at 850-225-3383.

CONTACT ME TODAY

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