The first thing to consider is, “What can I afford?” Getting prequalified or preapproved for a loan gives you the information you need to begin your home search efficiently. A good lender will collect all of your financial information and let you know how much money you’ll need to close on the property, what your monthly payment will be, and how much loan you can afford or can qualify for. Keep in mind that this initially does not include homeowners insurance or property taxes. Always ask your lender for a “good faith estimate” (magic lender words) of closing costs. This should include not only down payment but other costs such as title insurance and search, applications, survey, appraisal and other fees associated with purchasing a piece of property. Even with a low or no down payment loan such as FHA or VA , you will still probably need to come up with some closing costs. As of current writing, we are experiencing a sellers’ market. Competition among buyers is strong and fewer and fewer sellers are willing to contribute toward the buyer’s closing costs, so make sure you know in advance how much money you will need.
Now that you know how much home you can afford, it’s time to decide what type, and what location. Do you want to live in a community that is governed by a condo or homeowners association? Do you want to live in a more urban, suburban, or rural area? What are the school districts like? Is it important to have public transportation or easy access to shopping, dining, and entertainment? These are all questions to ask yourself before you start actively looking at homes. It makes your realtor’s job easier, and your own less frustrating. I would even suggest that you do some legwork (or car work) ahead of time to familiarize yourself with the various neighborhoods you might be interested in.
Once you’re prequalified for your loan and have an idea what you may be looking for, it’s time to begin interviewing realtors. Find someone who returns your phone calls or inquiries promptly, who explains things clearly, and who seems experienced and familiar with the market in your area. Your agent should be able to give you information on local lenders, insurance companies, school districts, the fees, amenities, rules and regulations of your local homeowners associations, and should be able to answer most of your questions easily or with minimal research. Don’t be offended if the realtor asks you for a copy of your lender’s prequalification letter. It makes our job easier, and a good realtor will show property and advise you based on what you tell us you WANT to spend, not based on what a lender says you CAN spend! We will find available homes in your price range and set up showing appointments, and will act as your guide and liaison through the home buying process. As you begin looking at homes in person, you may find your needs or preferences change. You may decide you would prefer a move-in ready home to a fixer-upper, a little more floor space, or homes in a higher or lower price range. Make sure you notify your realtor right away so he or she can utilize this information in searching for the right type of home.
Keep in mind that the type of loan you are going to get also drives the search process somewhat. FHA and VA loans have specific requirements regarding home condition and appraisal value, and some sellers may not be willing or able to meet these requirements. Part of the information entered by the seller’s agent in the multiple listing service is the type of financing (if any) the seller will accept. Some homes are cash only deals, some will also accept conventional loans, fewer will accept FHA or VA loans. Those that do, however, are usually in good enough shape to pass a thorough home inspection with few problems and to be priced at or below the current market value. Such homes are in high demand though, so be prepared to act promptly.
These days, few sellers will accept an offer without a check for the earnest money deposit (to be credited toward the purchase) along with either Proof of Funds (if paying cash) or a lender’s prequalification or pre-approval letter (if financing).
Keep in mind that in Florida, an “offer” is actually the sales contract – so make sure you read and understand it thoroughly! Once it is signed by both the buyer and seller, it is a binding contract, and only the inability to satisfy a contingency in a timely manner (such as that it must pass inspection or the lender must either commit to or reject a loan on that property) will enable the buyer to walk away with his earnest money back! It can be changed or modified if so agreed by both buyer and seller. Your realtor acts as your agent, to communicate with the other party and to make such changes or additions (addenda) to the contract and ensure they are signed, initialed, and dated properly. Be aware the time periods involved (as an example, 10 days for the home inspection, 30 days for loan commitment) and both you and your realtor will mark your calendars to make sure these contingencies are met on time. Your realtor will also notify your lender and the chosen closing agent, and the loan should be applied for immediately, so that reports and appraisals can be ordered.
These are the basics. There are so many other possible issues in today’s market. What if I buy a home with a tenant? What about short sales, foreclosures, auctions? I will be happy to address any particular question you may have. You can call me at (772) 323-3130 or email me at: SusanLaveryRealtor@gmail.com. And if you have any suggestions for future topics, I would love to hear about them.
Thank you – and happy home hunting!