Getting pre-approved by a mortgage lender allows you to know how much of a house you can afford, if any. There are many variables involved, including: credit history, income, debt, special mortgage programs and variations in qualifying guidelines between different mortgage guidelines. The mortgage prequalification step is a relatively simple one that begins with the completion of a loan application with your mortgage lender. Getting prequalified benefits you, your realtor, and potential sellers, by identifying your buying power and price range. Suppose your seller has 2 offers on the table for his/her house. One from a fully prequalified buyer and the other from a non-prequalified buyer. Suffice it to say that your offer is the stronger one that will be considered.

There will be a few main decisions that you will have to make in the process of selecting a mortgage that is right for you.

1. Loan Term – 15 or 30 year amortization? Some like to pay off debt as soon as possible, thereby selecting a 15 year mortgage. Obviously your mortgage payment will be higher with this type of mortgage, leaving less cash flow available for emergencies that life can throw at you. Some folks choose to take the 30 year loan and pay extra toward the principal balance. For example, if you make 1 extra principal and interest payment a year, you shave off 6.5 years of payments.
2. Down Payment: The amount of cash required to put down on a home can be as little as zero, for the well qualified. Typically, if you have a 620+ credit score, the minimum required down payment for a home purchase is 3.5%. This number can be further reduced by negotiating seller credits toward your closing costs.
3. FHA: Insured by (but not funded by) the Federal Housing Administration (FHA) a division of the U.S. Department of Housing and Urban Development (HUD), and designed for, in general, low- and middle-income borrowers and many first-time buyers. FHA loans have more relaxed qualifying standards and ratios than conventional loans, with only 3.5% down payment. They offer availability of both 15 and 30 year fixed mortgages. However, there are limits to the maximum loan amount under this program. Currently, the FHA lending limit in Florida is $314,827.
4. VA: For those qualified by military service, the Veterans Administration (VA) insures (but does not fund) 15 and 30 year fixed mortgages with lower down payment requirements (as low as 0 down) and somewhat more lenient qualifying ratios. The current maximum in south Florida for a VA loan is $484,350. (Monroe County limit is $529,000)
   e. CONVENTIONAL: A “traditional” mortgage, not directly insured by the Federal Government. Most conventional loans are administered through Fannie Mae or Freddie Mac (private corporations but regulated by the government).  The current loan limit is $484,350. (Monroe County is $529,000).  Click here for more information on loan limits in Florida.

Once you have selected a loan product, your mortgage professional is obligated to provide you with a Loan Estimate. This document outlines all of the fees associated with the closing (lender, government, title insurance, homeowners insurance, etc) and estimates how much you will need to show up to closing with. Keep in mind that this is an approximation and some fees will vary.

Finding the right real estate agent to help you find the right home is a very important step in your home buying experience. Real estate transactions can be complicated, so having someone look out for your best interest can save you time and money. All real estate agents aren’t created equal. Some realtors get personally involved every step of the way, while some farm out a lot of the work to other brokers.

It is highly recommended that you interview real estate agents you’re interested in working with. Sitting down with at least three prospective realtors will give you a feel for them and what they can do for you. Don’t be afraid to ask them how well they know your neighborhood and exactly how often you’ll hear from them. Ask for references and check them. Evaluate prospective agents based on personality as well. Your relationship with your real estate agent will be a working one, and if you don’t think you’d work well with him or her, it won’t work out.

Some questions to ask your realtor:

1. How long have you been in Real Estate?
2. Are you a full time agent?
3. Are you familiar with the area in which we want to look?
4. How many home sales did you participate in last year?
5. What is the average sold price of the homes you sold last year?
6. Do you normally work with sellers or buyers?
7. How many buyers are you presently working with? How many sellers?
8. Where do you feel your strengths lie?
9. What 3 buyers that you have worked with can you give me as references?

Now that you have courted your realtor and been pre-approved for a mortgage, let the hunt begin. Your realtor will pull up a list of properties in your price range and desired neighborhoods. There will be many in the first weeks of searching, and hopefully you will fall in love with one. If not, your realtor will put you on email auto-notification of the homes that come to market with your specifications. When viewing properties, go in with an open mind. Paint, carpet, and furniture are very easily changed – so don’t place too much value on them in your decision.

Looking at prospective homes can be a very exciting process, especially for first time buyers. It can be easy to lose focus as to what are the most important factors in making your decision. Evaluate the properties that you are looking at using a home buyer’s checklists. This is a great way to stay on track and establish some guidelines to consider before making the important step of making an offer. At the very minimum, take a mental note of the questions listed on our home buyer’s checklist.

Once you have found the property that you love, it is time to make an offer. First, remember that what you are signing is a legal contract. No matter what anyone says, you are not just making an “offer” here. Most sales contracts will have some paraphrase of the following: “This is a legally binding contract. If not understood, seek competent advice before signing.” To put it simply, if what is written on the contract regarding selling price and provisions is accepted by the seller, you have bought a home. Unlike other negotiable businesses, such as the automobile business, “would you take?” is defined in Real Estate by a legally binding contract backed with a monetary deposit.

Some of the things to consider before you submit your offer:

• The proposed selling (offer) price: Is it within the range of comparable homes that have sold recently in the area? Has your realtor done a CMA (Comparative Market Analysis) to be sure you are not paying too much, and that the property will appraise?
• The amount of earnest money (deposit) that is being tendered with the offer.
• Any concessions you desire the seller to make. (i.e. – 3% towards closing costs)
•  Any contingencies (i.e. – subject to you being able to obtain a satisfactory mortgage or subject the third party approval in the case of a short sale offer)
• Any home inspection contingencies (i.e. – subject to an acceptable home inspection report).
• A clear definition of precisely what is to be included in the sale. Don’t simply assume that items such as porch swings, fireplace doors and refrigerators are included. Doing so usually causes some unpleasant surprises on moving day. When in doubt, list it in the contract in black and white.

Inspections are designed to disclose defects in the property that could materially affect its safety, livability, or resale value. They are not designed to disclose cosmetic deficiencies (for example, an interior wall that needs paint touch up). You will need to determine on your own those types of items that will need attention: don’t expect a whole house inspection to reveal them to you. A typical home inspection will run you between $250 and $500. This is one of the best investments you can make in your home buying transaction. Any offer to purchase you make should be contingent upon a whole house inspection with a satisfactory report. Do not let anyone dissuade you from having the property thoroughly inspected! A professional inspection can give you an escape hatch from a contract on a defective house – even an ‘as-is’ Contract. If the contract is written contingent on an acceptable inspection, any defects in the home must be either repaired or monetarily compensated for. If you are not satisfied, you have the option to cancel.

After all of the negotiations have been completed and agreed – you have yourself a deal. Now comes the time for you to select our attorney staffed title insurance company to coordinate the closing and perfect your title. Keep in mind that it is your choice to choose the title company, if you are paying for the owner’s title insurance. Communication is very important throughout the real estate purchase transaction. The title agent is the ‘hub’ that ties all parties together. Your realtor and mortgage lender will work closely with us. Olympia Title & Escrow has handled thousands of real estate closings, claim-free, which means we do it right the first time. Additionally, our ‘Client Login’ function allows you to track the progression of your closing. We stand by to answer any pre-closing questions you may have, before ultimately “signing on the dotted line.” Our job is to clear any obstacles in the way of issuing a clear title to you. We order a title search of the public records to determine what liens, judgments, or other encumbrances need to be paid off at the closing. If you are purchasing a condominium or house in a planned unit development, we also obtain an ‘Estoppel’ search. This identifies any encumbrances at your condo or homeowner’s association level. The last place to search for potential liens is at the municipal level. We obtain and clear outstanding water bill balances, open permits, code enforcement, and building department issues. Click our ‘Quick Quote’ function for a custom taylored estimate.

Some things to look into while the gears of your escrow are in motion:

1. 1. Get a Homeonwers Insurance Quote: Unless you pay cash for your home, one of the requirements that will be made by your lender is proof of a valid homeowners insurance policy, secured before closing. Sometimes your mortgage lender will have a relationship with a local agent, but it does not hurt to get multiple quotes. Find out if you need flood insurance (check your survey) or windstorm insurance (your lender determines). Usually properties east of I-95 require windstorm insurance. Don’t always go with the lowest premium! Inspect the deductibles and coverage amounts. In the event of a loss, how much are you on the hook for? Most policies will offer a $1,000 – $5,000 deductible, which is your portion should you have an accident (similar to auto insurance deductible). Windstorm deductibles range from 2%-5%. Also consider how much ‘personal property’ coverage you require. A homeowners policy will reimburse you for personal items such as furniture, cabinets, carpet, jewelry, etc. Reconcile the coverage with your inventory to determine whether the amount of personal property insurance is sufficient. Click here for a sample homeowner’s insurance binder. If you are purchasing a condominium where the home’s insurance is included in the monthly maintenance payment, you may wish to purchase an H06 policy – which covers your personal items inside of the unit.
   2. Look into a Moving Company: Are you going to want to do the entire move yourself? Will you want a professional mover to handle the entire process? Don’t wait until the last minute–or you may be doing the whole move on your own. Compare rates and services as well as availability. Make agreements with sellers regarding possession of the home and moving date. Get these agreements in writing to avoid hassles on moving day!
   3. Lighten your Load: Once you are reasonably confident that you will be proceeding with the purchase, start weeding out your current possessions. Sell, give, or toss things that you don’t want to take. Use this as an opportunity to unclutter your life.
   4. Think Ahead: Prepare a list of important places and organizations you will use when moved into your new home: Water service, Schools, Phone, Electric, Gas, Hospitals, Police, etc. Make a list on any important items you will need to buy for the new house. Examples: draperies, blinds, shower curtains, etc. Having these things with you on the day you move in prevents unnecessary surprises.

The purpose of a walk thru is to verify that all items for which you have contracted for are in the home. On the flip side, you want to be sure that any items you have not contracted for are removed. For example, you do not want to arrive at your new house after closing to find that the beautiful chandelier in the dining room has somehow been replaced by a cheap overhead fixture, or that the draperies and window treatments that were specifically referenced in the contract have been packed and moved away. Additionally, you do not want to move in to find that numerous items have been left by the sellers because they did not want to move them or take them to the dump. When you perform your walk-thru, pay particular attention to attics, crawl spaces or basements, and garages. If the sellers have not moved yet, you still may get a clear picture that there are certain items (since they may not be boxed or appear to be ready to move) that they have no intention of taking with them. Bring this to the attention of your Agent to avoid the hassles that can surface on moving day.

Take your time when you are doing your walk through inspection. Try to be as calm as possible. Many buyers have been gotten lost dreaming of themselves in the new home, that they neglect to take a good look around. Have a copy of your Sales Contract and a walk-thru checklist with you so that you can review any items that should be included with the house. Here are some bullet points to consider:

1. Check the house from bottom to top: basement to attic.
2. Pay particular attention to expensive items and those that are of importance to you.
3. Watch for areas where furniture or rugs may have been when you originally looked at the house. Many times defects in carpeting or floors that were covered are now visible.
4. Leave your emotions outside the door. You will have plenty of time to swoon over your new home–now is the time to make sure the house is as you expected it to be.
5. This is the time to deal with any and all potential problems. If you see an item that needs to be addressed, let your Agent know so that they can get it handled before closing

With all other tasks handled, now comes the process which will put the title to the house in your name – The Closing. A closing date and time will be coordinated between all parties, and scheduled by your title company. Even though your closing date has been scheduled, you may be missing some information – such as “How much do I need for closing?”

The day before the closing (or sometimes the day of), your mortgage lender will send instructions and documents to the title company. The instructions will be used to prepare a Settlement Statement – the document containing all fees, payments, deposits, and disbursements to be made upon closing. At this point, your title agent will call you with the amount you need for closing – in the form of a cashier’s check. The documents sent by your lender require your signature to perfect their lien – The Mortgage. Be sure to bring a valid ID for the settlement agent to copy. Some documents require notarization and the verification of your identity. Click to see a Sample FHA Loan package.

At the end of the closing, you will be given copies of all documents signed, a settlement statement, and the keys (house, pool, gate, garage door, etc) to your new home. Within a month or two, your title company will send your original Warranty Deed and Owner’s Title Insurance policy – showing that the transfer of property into your name has been perfected. Keep these documents in a safe place, as they can be of considerable value in the future if you refinance or sell the home.

If your plan on occupying your home as a primary residence, you may be eligible to file for Homestead Exemption. This exemption will entitle you to a $50,000 reduction of your county assessment, and cap the subsequent yearly increases of your property tax bill. You must take title to your property before December 31of the prior year and file by March 1of the exemption year. Visit our links page for additional homestead filing information.