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Miami Home Buyers, Homes for Sale Miami FL | Josh Garcia

The process of buying a home is can be both exciting and stressful. On the one hand it is very exciting to begin entering a new stage of your life, to be able to say that you are a homeowner! But on the other hand, the process of buying a home can be complicated in that there is much to consider when trying to find the right home that fits both your needs/wants and your budget. Regardless, of whether you are a first time home-buyer or an experienced buyer, there will undoubtedly be obstacles you will encounter during this process. As such, to help make this process less stressful for you, I have compiled a list of issues you should consider when you are starting to look for a home. 

Financial Information

  • Gather important documents that you will need to get a mortgage
    • Pay Stubs
    • Statements from banks, brokerages, and retirement accounts
    • Incoem Tax Returns
    • Records of debts such as auto loans, student loans, credit cards, etc.
  • Start Shoring-Up your Credit
    • Your credit rating will have a major impact on whether you will be approved for a mortgage, what your interest rate will be, and/or how much you will be approved for.
    • A score above 720 is most desirable and scores below 600 it is very difficult to get approved for a mortgage.
    • A few months before you start the process of buying a home you should get a copy of your credit report and make sure all of the information is correct and fix any problems you discover.
  • Run the Numbers
    • Put together a financial plan to determine what you can afford. The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary.
    • Start saving for your down payment. You will want to put down at least 20% for a down payment. It is ideal to keep your down payment in cash or cash equivalent accounts, so that market conditions do not hinder your plans.
    • Find out how much you will likely pay in closing costs. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items such as homeowners insurance or homeowners association fees.
    • Find out what the total monthly housing cost will be including taxes and insurance to get a feel for the maximum amount you should spend.
  • Taxes
    • Don’t just ask what the most recent tax bill was, make sure to ask what several recent tax bills have been. In some areas, houses are re-appraised and taxed at higher rates frequently.
  • Get Pre-Approved for your Mortgage
    • Getting pre-approved will save you the pain of looking at houses you can’t afford.
    • It will also put you in a better position to make a serious offer when you find the right house, because sellers will take your offer more serious when they know you are pre-approved and have the money to back up your offer.

Looking for your Home

  • Know the Neighborhood you are Buying in
    • Visit the neighborhood and surrounding area. You will want to know whether your pretty neighborhood backs up to a dumpy commercial area or a less-than-savory part of town.
    • Look up the reported crime statistics in the area to make sure you’re moving to a safe area.
    • Visit the property at various times of the day. The seemingly quiet residential street may be a noisy, highway-feeder street during the morning or even rush hour.
    • Find out how good the schools are where you are buying. Even if you don’t have kids when it comes time to sell many buyers will have kids and this will be very important to them, thus helping boost property values.
    • Talk to your neighbors to try and get a feel for them. There is nothing worse than finding out you cannot stand your neighbors after you have moved in to a property you cannot readily move from.
  • Home Condition
    • Make sure you know the accurate condition of the house before you submit an offer.
    • You should always have the home inspected by your own inspector who has experience inspecting houses.
    • Some issues will be obvious and most are curable, but knowing what needs fixing can help you negotiate a lower price or at least prepare you for costs you will soon incur.
    • Try to get detailed records on past improvements, although this isn’t always possible. This will help ensure that improvements were not done with cheap materials and were done to code.
    • Get an appraisal of the property to determine the true market value of the property.
  • Think of your House as an Investment
    • If you can commit to remaining in one place owning a home is a great way to build wealth, because owning a home is a great way to hedge against inflation.
    • If you can’t commit to remaining in one place for at least a few years. Being unable to remain in a property for any prolonged period will likely cost you a great deal of money in the long run. 

Closing the Deal

  • Step 1: Starting the Process
    • A sales contract is signed by the buyer and seller and delivered to the closing agent, usually with a deposit check. The escrow is accepted by the escrow agent, usually by written notation on the contract. The escrow agent starts the closing process by opening a title order. The file begins to be processed. Tax information, loan payoffs, survey (if necessary), homeowner/maintenance fees, inspections/reports, and hazard and other insurances as well as legal papers are ordered. A title search is ordered.
  • Step 2: Title Search and Examination
    • This is a search made of the public records. Records searched include deeds, mortgages, paving assessments, liens, wills, divorce settlements and other documents affecting title to the property. Title examination is the examination of the documents found during the title search that affect the title to the property. This is when verification of the legal owner is made and the debts owed against the property are determined. Upon completion of the search and examination, a title commitment/preliminary report is prepared and reviewed and sent out to interested parties.
  • Step 3: Document Preparation and/or Request to Produce
    • The closing agent reviews the new lender's instructions/requirements, reviews instructions from other parties to the transaction, reviews legal and loan documents, assembles charges, and prepares closing statements and schedules the closing.
  • Step 4: Settlement/Closing the Transaction
    • Escrow/settlement agent oversees closing of the transaction. Seller signs the deed and closing affidavit. Buyer signs the new note and mortgage. The old loan is paid off. Seller, real estate professionals, attorneys and other parties present at the closing of the transaction are paid.
  • Step 5: Post-Closing
    • After the signing has been completed, the escrow/settlement agent will forward payment to any prior lender, and pay all parties who performed services in connection with your closing (if they have not been paid). The transaction documents are recorded in the county in which the property is located. Title insurance policies are prepared and sent to the new lender and to you. This all happens without any further actions by the buyer or seller.

Bottom Line

  • This is an important decision in your life that will have major implications on your life.
  • Always ask your realtor questions whenever you are unsure about any aspect throughout the process.
  • It is the job of your realtor to take you step-by-step through this process and make it as anxiety free as possible.
  • The more informed you are when you enter this process the easier it will be and the more successful you will be in obtaining the best deal possible.