Real Estate Buyers

No two properties for sale in Florida are identical, and neither are any two buyers.

 

The Importance of Title Insurance

If you are buying a home for the first time the process can be intimidating. Be prepared for your real estate closing by learning what happens and what it all means to you.

Watch this segment of Designing Spaces from Lifetime TV to learn more.

 

 

 

 

YOUR TEAM Real Estate Attorney, Real Estate Agent, Lender

Real Estate Attorney - On Your Side

As the only member of your home-buying team who is qualified to give you legal advice, a good Florida real estate lawyer is worth his or her weight in gold during key points of the process. And, as long as your real estate lawyer issues your title insurance, as opposed to a title insurance agency, you won't pay more by involving him or her early on.

Main Duties

  • Provide legal advice and guide you through the closing process.
  • Review the contract and explain all the provisions and contingencies.
  • Prepare, review and explain the Closing Statement or Closing Disclosure and inform you how much money you need to bring to closing.
  • Address related legal matters like income and tax consequences and how you should take title.
  • Explain what you need to know about Florida property taxes.
  • Help you determine if you will be able to use the property as you wish.

FIND AN ATTORNEY

Real Estate Agent - First Point of Contact

Often the first person you meet, a real estate agent or broker can help you find the Florida property you want to buy. A good agent is worth their weight in gold and will work about eight to ten hours behind the scenes for every hour he or she is in your presence. Real estate agents have considerable knowledge of the local market including property inventory, pricing, neighbourhoods and schools. Most Real Estate Agents in Florida are “transaction brokers,” which means that they do not represent the seller or the buyer. One agent may be described as the “seller’s agent/broker” and one may be the “buyer’s agent/broker,” but the agent does not have any ethical requirement to act in the best interest of their client. So what does that mean? Let’s say you are negotiating to buy a new home. You tell your real estate agent how much you would be willing to go up to on the purchase price. Your agent can share that information with the seller. This does not mean the agent will not take wonderful care of you. It just means they do not represent you; they represent the transaction.

Main Duties

  • Use their unique knowledge of the local real estate market to help you discover properties.
  • Interact with sellers or sellers’ agents to arrange personal tours of prospective properties for you.
  • Interact with seller or seller’s agent to negotiate price and terms for the property.

FIND A REAL ESTATE AGENT

Lender - The Money

You may work directly with a lender or an independent Mortgage Broker who can be affiliated with many lending institutions. Did you know that only 47% of borrowers shop for financing? Rates and terms can vary widely, so don’t be afraid to shop around for the best deal. Finding a good lender is easier than ever. You can speak to your banker, ask your friends or visit websites like Zillow or Bank Rate.

 

FINANCING

If you are not paying cash, the next step in purchasing a home is obtaining financing.

Mortgages come in all shapes and sizes.

Typically a Lender will loan you an amount equal to the purchase price, less a required down payment of as little as 3% for government subsidized loans to as much as 20% for conventional financing.

Your Lender should provide you with a document called the Good Faith Estimate or Loan Estimate, which discloses the terms of the mortgage loan and an estimate of the funds required to close on the transaction. Review the Loan Estimate and make sure you are aware of what you're being charged—interest rate, points and costs—so you can be a smart shopper.

Fixed Rate Mortgage

With a fixed-rate mortgage, your interest rate stays the same, or "fixed," throughout the term of the loan. Therefore, your mortgage payment stays predictably the same, making it easier to plan your spending each month. However, lenders typically charge a higher interest rate (to make up for the lost income that could be gained from a rate increase), which lowers the total amount you can borrow. And though you're protected from rising interest rates, you're also stuck with a certain rate even if the going rates fall.

The most common fixed-rate mortgages are 15-year and 30-year, which refer to the time you have to pay off the loans. The interest rate on a 15-year mortgage is usually lower than a 30-year mortgage, meaning you'll pay less over the life of the loan, but you can expect your monthly payments to be higher since you have half the time to pay it off.

Adjustable-Rate Mortgage

Also called ARMs or adjustables, these mortgages typically start off with a lower "teaser" interest rate that stays fixed for a specified time, and then "adjusts" periodically depending on changes in the market interest rate. Your risk is that the interest rate—tied to a money market index such as the one-year U.S. Treasury bill or certificates of deposit—will fluctuate, and so will your payment. Your lender can tell you the highest possible monthly payment you would owe if the interest rate hit its max, or cap: Be sure you can afford it! One good reason to consider an ARM is if you don't plan to stay in your home for very long; another is if you're sure your income will increase enough to cover the maximum payment possible. And, of course, if interest rates go down, so will your payments.

Balloon Loans

Balloon loans have a lower interest rate than a fixed-rate mortgage. The interest rate stays stable for a specified time—such as five, seven or ten years. But when that time is up, you still have to pay off the entire balance of the loan. Borrowers consider balloon loans when they don't qualify for a traditional mortgage, or during periods of high interest rates. The idea is to refinance when the loan balance is due.

VA, FHA and FmHA Mortgages

If you have less than 20% of the purchase price to apply to a down payment, you can ask your lender about loans guaranteed by the government organizations below. These mortgages offer competitive interest rates, with little to no money down, such as:

  • Veteran's Administration (VA) mortgage. Qualifying veterans can get VA loans with no money down for houses valued at up to $647,200 in all but two of Florida’s counties. Limits are higher in Collier and Monroe counties.
  • Federal Housing Administration (FHA) mortgage. Designed for people with modest income, these mortgages usually require a down payment of around 3% to 5% of the purchase price and offer competitive interest rates.
  • Farmers Home Administration (FmHA) mortgage. These no-money-down loans are for individuals with limited income who prefer to live in rural communities. Interest can be as low as 1%.

 

It's easy to get confused about this part of the process.

And since what you do here will affect your monthly mortgage payments for the next 30 years, this is one part you don't want to get wrong! Once you've done the homework, consult your real estate attorney or another trusted source and talk over your options until you feel you're making the best decision for your situation.

 

THE CONTRACT

One of the most crucial steps in the process is the contract for purchase and sale.

It’s the blueprint for the entire transaction. Real estate agents often provide these, but unless you understand the nuances of real estate law, don't sign without having your attorney review it. If you need to proceed with the contract and don’t have time to meet with your attorney, add in a contingency clause saying the contract is valid only with your attorney’s approval.

Get an attorney on your side to protect your interest.

Remember, once the contract is signed, you're legally bound to the terms.

Your attorney is familiar with Florida real estate contracts and Florida real estate law. He or she will review the contract, explain all the provisions and contingencies and suggest changes necessary to protect you and your investment.

The contract spells out the terms and conditions of the purchase-from the purchase price all the way down to who pays the utilities until you take possession of the house. Remember, your attorney can offer you valuable advice that can save you hundreds, even thousands of dollars down the road.

 

CLOSING PROCESS

Race to the Finish

The closing process can be the scariest part of the entire journey of purchasing a home. It doesn’t have to be.

DOWNLOAD PRE-CLOSING CHECKLIST

Inspection

The home inspector is an objective third party who essentially gives your house a complete physical. He or she examines the property with a fine-toothed comb, reporting on the condition of the structure and systems of the house. He’s going to give you the truth about the house you are going to buy.

Appraisal

Before a lender will approve your loan, the loan officer will hire (and you will pay for) an appraiser to determine the quality of the property and its fair market value—a price range a given property will bring, assuming neither buyer nor seller is under any extreme pressure to buy or sell. The appraisal should come in the same or higher than the price you are paying, because the lender won't lend you more money than the home is worth.

Title Insurance

Make sure the home is legally yours. There are many situations after everything you just went through that can come back to get you. The purpose of title insurance is to secure your legal claim to the property and protect you against title “defects” – legal rights to a property claimed by somebody else.

With title insurance, the title insurer not only pays the costs if you're ever forced to defend your ownership in court, but covers any financial loss if the title defects can't be settled.

Get the law on your side.

Since your ownership rights must be legally protected, a person trained in the complexities of real estate law is best qualified to issue your owner's title insurance policy. That's your real estate attorney. Since the fee for title insurance will be about the same with or without a real estate attorney, it just makes sense to get the added value of an attorney's legal advice and counsel.

FIND AN ATTORNEY

Homeowners Insurance

Lenders require property owners to purchase a homeowner’s insurance policy to protect both the lender and the property owner in case of fire and other risks. In addition, Florida homeowners who live near the coast, or any flood-prone area, to purchase flood and/or windstorm insurance, which also covers damage or loss due to hurricanes. Costs vary, but you can get an idea of prices for your area by visiting the Florida Office of Insurance Regulations' Compare Homeowner Insurance Rates.