HOME BUYING TIPS:
ESTABLISH YOUR CRITERIA: Your Realtor should know your criteria so that he/she can better serve you and send you only listings that may be of interest. This will help you save time and pinpoint your search.
PREPARE YOUR PROOF OF FUNDS OR PRE-QUALIFICATION LETTER: It is very important to have this in place prior to making an offer. It will give you more bargaining power and reassure sellers that you are a qualified buyer. Once you have identified a property and are ready to make an offer, you’ll need to provide either the pre-qualification letter from a lender or proof of funds if you plan to pay cash. Proof of funds can be a copy of a bank statement or a letter from your financial institution.
FINANCING: In today’s market, interest rates are at record lows! It is customary that lenders will loan 80% of the purchase price and sometimes more. A minimum of 20% down payment is normally required. If the property you are purchasing is a second home or investment property, the required down payment may be more. As usual, you should allow at least 45 days to obtain financing and receive a “clear to close” from your lender. You should be able to obtain a “written loan commitment” within 30 days which is often a requirement of the sales contract. In addition, the property you are purchasing needs to appraise for the purchase price or higher. It is very important to have the financing contingency as part of the sales contract.
CLOSING COSTS: If you plan to get a mortgage, your lender must provide you with a GFE “Good Faith Estimate” prior to you making application. The GFE outlines your total closing costs associated with the loan for which you have applied. If you are paying cash, your closing costs are normally very minimal.
DETERMINING YOUR OFFER: When you find the perfect place you already know the seller’s asking/list price. To determine your offer price your agent should show you recent sales of properties with the same features in the area. Normally, your offer should be comparable to the recent sales unless there are unusual conditions.
MAKING YOUR OFFER: Prior to making an offer, your Realtor should request a copy of the “Seller’s Disclosure” form which is completed by the seller at the time properties are listed. However, in today’s market there are often cases where this is not available such as bank owned properties and foreclosures. Your offer should normally be contingent upon an “inspection period” so you can have the property inspected by a “certified home inspector”. Normally the inspection period is fifteen (15) days; however, it can be shorter or longer if all parties agree.
ESCROW DEPOSIT: The escrow deposit is a “good faith” deposit due when your offer is accepted. This deposit must be held in an “escrow account” which is normally with the closing/title agent. This deposit is usually fully refundable pending your approval of the “inspection period”. In today’s market it is common that the escrow deposit is due “upon acceptance” by the Seller or within a few days from the contract “effective date”.
INSPECTION PERIOD: Your inspection period allows you time to fully inspect the property and make sure you want to move forward. Items such as plumbing, electrical, heating and air-conditioning, roof, crawl spaces, attics, etc., are normally covered in a home inspection. Your Realtor can refer local home inspectors or you can choose anyone you like. You can even do the inspection yourself, or choose not to do an inspection (which is not recommended). If you change your mind about buying the property during the inspection period, it should be written into the sales contract that your escrow deposit is refundable.
CLOSING/TITLE INSURANCE: It is customary in Florida that the Seller pay for the title insurance policy to guarantee clear title to the property to the Buyer. This guarantees at time of closing that the property will be free of any liens and/or encumbrances. Lenders also require a separate title insurance policy which is normally paid by the buyer.
FINAL WALK-THRU INSPECTION: The day of closing you and/or your Realtor will do a final walk-thru inspection of the property to assure that everything is in order. This is also a contingency of the contract.
CLOSING: The closing can be in person or by mail. Often the Buyer and Seller never meet each other. The Seller normally chooses the closing/title company since the Seller pays the title insurance. The monies needed to close the transaction must clear prior to the closing date. Therefore, the closing funds to be in the form of a wire transfer so that they are received and collected immediately by the closing/title agent.