The Florida home buying process. 

Florida home buying requirements: 

In order to be eligible for a conventional mortgage, it’s generally required that you have a credit score of at least 620. Additionally, the lender you choose must be approved by the program. Completing a homebuyer education course is also mandatory. The loan amount you can receive cannot go beyond the program’s set limits, and your income must not exceed the program’s income limits. Lastly, you must not have owned a home within the past three years to be considered a first-time homebuyer.

Steps in the Florida home buying process.

The first step in the Florida home buying process is not actually part of buying the home but is equally important. getting pre-qualified, not pre-approved is important. Providing a little historic context here not long ago agents would drive people around looking for homes, their customers would make an offer on a home only for the agent to find out they couldn’t qualify for the home. real estate agents got wiser and requested their customers get pre-qualified before they would take them out and show them homes.

An important distinction between pre-qualification and pre-approval is critical here. when a mortgage broker looks at your income, assets, and basic qualifications they can write a letter saying you’ve been pre-qualified. that letter is just an opinion, not an actual pre-approval. Mortgage brokers don’t lend money, they are a middleman. This isn’t what agents and sellers are looking for. they want potential buyers to get pre-approved through an accredited lender. this is a process where A lender actually underwrites your loan and gives you a pre-approval based on your income assets and credit. it is a full credit approval.

Finding a home in Florida

Buying a house in Florida 2023: Finding a home in Florida seems like a relatively easy process. There are several online websites where you can search for your home and filter things like home size, square feet, bedrooms, baths, and the size of the property. you can also find the actual property size in acres, what the school districts are and most likely find some HOA information if the property is in an HOA. The most common sites are Realtor.com, Zillow and Redfin. I also found this site very useful when searching for public records. Florida home buying companies can be researched on the internet.

Here are some of the downsides of using these sites. not all of the information is accurate and the images of the homes are taken by professional photographers, they make the home appear to be pristine. The photographer also uses what’s called a fisheye lens. The lens makes every room appear to be larger than it actually is so don’t be surprised if you show up at the home and the rooms are much smaller than the photographs.

Making an offer

The home buying process Florida uses starts with making an offer. Once you find a home that checks all the boxes, you’ll sit with your agent and write an offer. As a former real estate broker, I will tell you everything is negotiable. you’ll want to add everything you’re looking for in the very first offer. for example, I had a client that fell in love with a set of burgundy curtains in a home. my clients requested in the offer that the curtains remain. This may seem like a small thing but if it’s something you want, request it in the offer. The worst-case scenario is the seller says no.

An important distinction between pre-qualification and pre-approval is critical here. when a mortgage broker looks at your income, assets and basic qualifications they can write a letter saying you’ve been pre-qualified. that letter is just an opinion, not an actual pre-approval. Mortgage brokers don’t lend money, they are a middleman. This isn’t what agents and sellers are looking for. they want potential buyers to get pre-approved through an accredited lender. this is a process where A lender actually underwrites your loan and gives you a pre-approval based on your income assets and credit. it is a full credit approval.

Offer and acceptance

When an offer is presented to a seller, the seller has a few options. they can accept your offer as is, they can decline your offer or they can make another offer back to you. any offer made back to you is known as a counteroffer. When a borrower goes for financing all offers and counter offers from the original offer must be included in the documentation needed for the lender. Once an offer is accepted the clock begins for due diligence and contingencies and the seller will expect an earnest money deposit.

Due diligence

The due diligence period is when the buyer/borrower must take care of all inspections and any other requirements during that period. In addition to that most buyers will apply for a mortgage at that point if they haven’t done so already. A home inspection is highly recommended as you’ll want to know the overall condition of the home,  especially the parts that are difficult to inspect.

Things like the electrical system, the plumbing system, air conditioning units, the condition of the roof and items similar to this require a professional to give you a report on the condition of these systems. If it is discovered that one or more of the systems is in disrepair, you may go back to the seller and request additional concessions for repairs. the seller does not have to honor your request unless these are safety items required by law. if the seller declines to assist you with these repairs, in most cases this will allow you to legally back out of the contract.

Home Inspection note

A home inspection is not mandatory for home buyers, but is highly recommended in the case of older homes. An example of not needing a home inspection is for new construction. If you are buying a home that is under construction and will be completed shortly, you will not need a home inspection as the home will have a warranty for a specific amount of time.

Next steps in the Florida home buying process

Now that the actual purchase part of the transaction has been completed, you’ll move on to the mortgage phase in the process. While you were going through due diligence it’s most likely the lender was ordering your appraisal, collecting your documentation, and beginning to underwrite your file. At this point, the mortgage process will take over until the loan funds. We will explain buying a home in Florida and the mortgage process entirely in another blog post.

Underwriting

When you apply for a loan, documents are collected and an assessment is made of your ability to repay the loan. This is known as underwriting. An underwriter will review your income, assets, credit, employment industry and other factors for loan qualification. They will also review the appraisal and the title report to ensure their collateral, the home. Once this process is completed your application will either be approved, denied, or suspended. 

With a loan approval the lender will issue conditions that must be met prior to closing. This is known as a conditional approval. You must be able to fulfill these conditions in order to close the loan. If you cannot, the lender will not grant the loan.If the loan has been suspended, there are specific conditions that must be met in order to bring the loan to an approval status. These items will be clearly identified in the suspension. Not always do these items have to do with the borrower for example, a home that is in disrepair must be repaired prior to loan approval.

Closing/Funding

Whether you’re using an escrow company, a title attorney, or some other means for closing. the documents are sent to your representative’s office, the process of closing and funding your loan can happen in two different methods. 

A wet funding state is a state where all parties show up to the closing, documents go around the table and everybody signs. This is also known as a live closing. A dry funding is where you’ll have an appointment, you show up and only sign your portion of the documentation. In either case, any monies that need to be brought in or handed over to the bank’s representative, normally in the form of a cashier’s check unless the money has already been wired.

Home buying process checklist:

1: Set up a budget, you’ll want to know how much home you can afford without breaking the bank. Gather your income and asset documentation for preparation in applying for a loan.

2: Find a lender, use the guides provided here to find the best lender for your specific needs.

3: Begin researching the real estate markets. Find the areas, zip codes, schools, and other pertinent details within the areas you choose to live.

4: Create a wants and needs list. What items do you want/need in a home? Beds/baths? Go through anything you can think of. This will benefit you in the long run and allow your decision to be an easier one.

5: Create a viewing schedule. Can you only view on weekends, weekdays? Mornings afternoons or evenings. Stay consistent so you can take in as many homes as possible.

6: Find a mover. Even though this may be the last item on the list you may want to begin this process sooner rather than later. Moving can be costly, specifically when moving to another state. 

Florida Home buying grants:

As of July 2023, the Down Payment Toward Equity Act that would provide a $25,000 grant for first-time home buyers is still in the legislative process and has not yet been passed into law. The $25,000 first-time home buyer grant application is working still pending in Congress.

However, there are other first-time home buyer programs and grants available in Florida that can help make the path to homeownership more affordable. These programs are offered buy state and local agencies including HUD.

These programs offer various benefits, such as cash grants, tax credits, and discounted mortgage rates, which can help you achieve your American Dream faster and without any further delays. Below are some of the first-time home buyer programs, grants, and mortgages available for Florida residents in 2023:

These programs are also known as the Florida first-time home buyer grants.

• Florida Housing’s Preferred Grants: provide 3% or 4% of the purchase price of the house to use as a down payment and closing assistance.
• HFA Conventional Loan: a 30-year fixed-rate loan through participating lenders across the state of Florida.
• HFA Preferred 3% Plus Conventional: a grant that doesn’t have to be repaid.
• HFA Preferred Grant: requires a down payment.
• H2H Program: provides eligible households with up to $50,000 in down payment and closing cost assistance.

Timeline for the Florida Home buying process:

The Florida Home buying process timeline differs from state to state, although generally, it will take anywhere from 30 days to 90 days. If you’re purchasing new construction, the Builder will inform you of the construction completion date. That can take over 6 months in some cases. Florida housing prices have increased significantly in recent years.

Some states use attorneys and some states use escrow companies. When attorneys are involved it generally slows the process down to a crawl. The attorneys will write the contracts, send them back and forth to one another and ultimately come up with a working contract we’re all parties will sign. when an escrow company is involved, the agent will generally write the contract, both parties will sign and the transaction can close in 30 days or less.

Q&A:

Q: Is the first-time home buying process different?

The short answer is no. While there may be incentives for a first-time Florida home buying, the process is relatively the same. There are specific programs for first-time home buyers called HomeReady and HomePossible. These programs tend to make it a bit easier for first-time home buyers to get into the Florida home buying process.

Q: What are the minimum requirements for buying a house?

The minimum requirements for purchasing a home come directly from each individual lender. The lenders with the most relaxed requirements are called portfolio lenders. they will keep the loan and service the loan on their own so in most cases they do not need to meet the standards required by Fannie Mae and Freddie Mac. Minimum requirements will also revolve around income, credit score and assets.

Fannie Mae and Freddie Mac are the government entities that make up a huge portion of the mortgage markets.

Q: Can you buy a house in Florida with low income?

You can buy a home with low income. There are special programs that apply in two specific situations for low to moderate income borrowers. You can find more information about these specific programs by searching for The Community Reinvestment Act. 

1: If a borrower’s income is 80% below the (AMI) Area Median Income, you may qualify for a special  incentive.

2: If the property is located in a census tract area that is deemed low to moderate income you may also qualify for a special incentive.

What are the 5 steps in the home buying process?

Depending on the type of loan transaction you have, they can be more than 5 steps. Some transactions require additional inspections and completion reports.

Conclusion:

The Florida home buying process of any home should enlighten you as to the most important things you need to be aware of when you begin the process. Some of the most commonly asked questions revolve around taxes and any fees associated with the home such as an HOA fee, financing options, appraisal requirements, and the closing process. Should you have any additional questions you can reach us on our contact us page.