Have you always dreamed of owning your own beautiful beachfront property in Florida? Or maybe you love Florida’s quaint suburbs, year-round weather, and close access to major metropolitan areas (without the noise of living in one). Or maybe you love our cities and can’t wait to purchase a condo overlooking the bustling streets of Miami, Fort Lauderdale, West Palm Beach, and more!
Florida has a lot to offer. And if you’re moving here from out of state, you’re in for a wonderful treat! But if this is the first home you’ll have ever purchased, or you’re new to Florida, then we’re here to guide you on the basic steps you’ll need to take if you’re from out of state, looking to buy a house in Florida.
Here are our 5 simple steps to buying a Florida home:
Step 1: Know Your Finances
While taking out a mortgage is not necessary to purchase a home, it is a common option. If you’re going to take out a mortgage though, you need to be in a good financial position. Regardless of whether or not you can qualify for a mortgage though, you should make sure you have your finances in order so you can make sure that you’ll be able to pay off your debts.
You’ll need a FICO score of at least 620 for most loans, a good debt-to-income ratio (no more than 36% of your income should go toward debt and no more than 28% should go toward housing costs, which all includes the mortgage payment), the ability to pay at least 20% of the down payment, and the ability to pay for closing costs and normal home maintenance.
Also take into consideration the interest rate on taking out a mortgage. The lower your rate, the better for your long-term financial health.
Once you’ve evaluated your finances, before you even start looking, we recommend you get pre-approved for a mortgage from a lender you like, and acquire quotes from a few other lenders. This pre-approval will (1) verify that you qualify for a mortgage (2) make you a more likely candidate when putting down an offer on a home. In many cases, you won’t even be able to look at a house without having already acquired a pre-approval letter.
Maintaining your credit is crucial so make sure to avoid situations that would potentially drop your score, such as missing payments, opening new accounts, closing long-time accounts, etc.
You may not actually need to pay a down payment if you or your spouse qualify for VA financing (from serving in the U.S. military). Although, you will need to pay a VA funding fee to take out the loan. There are also FHA loans, where you only need to pay 3.5% of the price of the house for your down payment.
If you’re taking out a loan from a bank and not the government, the amount you’ll need for a down payment is larger. If you want to pay less than 20% on your down payment and you do not qualify for VA or FHA loans, then you’ll need mortgage insurance to be able to take out the loan.
Florida offers down payment assistance programs for low-income and first-time buyers, although you’ll need to already be a Florida resident to qualify in most cases.
Keep in mind the additional closing costs for buying a home in Florida. These include the cost of homeowner’s and title insurance, inspections, property taxes, lawyers, and more.
Step 2: Hire a Real Estate Agent
When it comes to finances, unfortunately a lot of that is on you and your lender. But a real estate agent can take away much of the added burden and stress that comes with buying a home. A top notch agent will guide you through every step of the way as you work toward purchasing the house of your dreams. They’ll be there to help you find houses, get a good deal, and more.
As you search for the best real estate agents in Florida, consider how many years they’ve been in the business, their experience in what you’re looking for, their reviews, and how successful they have recently been with selling homes.
While you search for and interview agents, make sure you know the type of agent they are. In Florida there are single agents and transaction brokers. A single agent will only represent your interests, not the interests of both you and the seller. Whereas a transaction broker often helps both, treating both parties fairly, and not handling negotiations. Both types of agents are compensated differently (oftentimes with single agents making a commission, vs. transaction brokers typically only requiring a flat fee or a lower commission). The decision of which type of agent to hire depends on your situation and what makes the most sense for you. This is a good question to ask about when speaking with potential agents.
Also keep in mind that you will need to hire an attorney as well. A real estate agent is not allowed to offer legal advice or write legal documents unless they are also an attorney. They function more as someone who makes the finding, negotiating, and buying process more streamlined.
Step 3: Have the Property Inspected
Your lender will send out an appraiser to determine the worth of the home, but this is not the same thing as having the home inspected. While you are not required to conduct a thorough home inspection, we highly recommend it to protect yourself from any defects you may discover after you’ve closed on the house. Once you’ve closed, the seller is not legally liable for any issues with the house such as infestations, mold, the home’s foundation, electrical, plumbing, and more. For the inspection, you’ll need to hire a licensed professional home inspector.
It’s your choice to have the property inspected before or after making an offer, but it cannot be done after closing. Having the property inspected before making an offer will show the seller though that you are serious about purchasing, giving you a better chance of closing.
This is also a good time to look into title insurance as it will protect you from any financial obligations related to defects in the property title. If you took out a mortgage, this will likely be required. This is also the time to look for homeowner’s insurance, also potentially required from your lender.
Step 4: Make Your Offer
In Florida, an offer is made through a formal contract. Your real estate agent should help you through this process.
You’ll likely hear back within one business day if your offer was approved. But keep in mind that the seller is not obligated to accept your offer or explain their reasoning. If they do share their reasoning that they need a higher offer, then you can negotiate by putting in a new offer. Don’t assume that you always need to bid a high price though. You can write in items such as no contingencies in your offer to appeal to the seller.
Once your offer is accepted, you’ll likely need to sign a purchase agreement, in which you’ll be asked to put down some of your deposit upfront as an earnest money deposit (up to 10% of the purchase price). There’s the standard purchase contract in which a seller is required to fix any issues with the home that arise during inspection, and you cannot back down on your intent to close without losing what you deposited. Another purchase contract, termed the “As Is” contract, gives you more wiggle room to change your mind and receive a full refund if anything is not up to par in the inspection.
The earnest money deposit goes into an escrow account and until you close, the full amount for your purchase can also be put in escrow.
Step 5: Close Your Purchase
Before closing, you should first walk through the property once more to make sure nothing has changed in the home’s condition. Check the outlets and switches, faucets, toilets, appliances, heating and cooling systems, etc.
If the house is still in the expected condition, you will need a licensed real estate attorney or a closing agent to close the purchase (although a lawyer is recommended). Either you or your realtor then attend a closing meeting to go over and sign the paperwork. Once the paperwork is signed, your title insurance will be issued and your funds will be transferred from escrow. Once all of that is complete, you have officially bought a house and you get your keys to your new home!
Now that you’ve packed your bags and are moving down to your gorgeous Florida home, you’re probably bursting with excitement about personalizing it. One of the first steps to making your home feel like your home is to upgrade it.
The two most prominent rooms to remodel are the kitchen and bathroom. From your cabinetry to your sinks and faucets to your vanity to your bathtubs and showers, there’s a lot of work to be done after you’ve actually purchased your home! But at Nuform Cabinetry, we make it easy.
With our variety of stunning kitchen and bathroom fixtures, counters, and more, it’s simple to select what you’re looking for. Our vanities are ready to assemble, and we offer both unassembled and assembled kitchen cabinets. We even offer free 3D design services to help you see how our counters will fit in with your new home!
Not sure where to start? Contact us today and we’ll guide you through this next step of moving into your new Florida home!