buying in Central Florida

As your buyers agent, my primary goals are to get you a home that you love, in an area that suits your needs, while making the process of buying as smooth and painless as possible. Buying a home is often an emotional process and there are many things to take into consideration. I’ve walked through several thousand properties since my real estate journey began back in 2010 and if desired, I can be the voice of reason. If I feel that a property is just not a good fit for you, if desired, I will voice my concerns. It’s a big decision, and I’d rather you take your time and get it right the first time. 

What to expect when you’re expecting…to buy a house! Aside from the obvious things like finding a home that suits your needs, is attractive, and is in the area that you desire, there are a multitude of other items that you must concern yourself with when planning to buy a home. The key word being planning! If you happen to be fortunate enough to buy using all cash, your list of concerns will shrink. If you happen to be financing your home, the list can get lengthy. Below you’ll find a brief guide as to what to expect during the process and best practices for making the whole process as smooth as it can be.

You are in the fortunate position of not needing financing and this typically makes the whole process faster and smoother, many times allowing a close in as little time as two weeks! Your position also comes with the added benefit of being preferred by sellers because you don’t need to qualify for financing. That said, your concerns would be the obvious ones stated at the beginning of this article, along with;

• How it may affect your tax burden
• Making sure there is clear and marketable title
• Making sure the property is structurally sound and all the various systems like the envelope, HVAC, electrical, and plumbing to name the majority, are in good working condition
• Finding homeowners insurance
• Getting an appraisal
• Getting a survey
• Considering your offer strategy based on market conditions
• Securing your proof of funds
• Making your bid
• Understanding the contract and settlement process
• Making your earnest money deposit
• Securing the payment method for the remaining balance and any other funds you may need for closing
• Doing your final walkthrough
• Close
• Finally, move into your new home!

More planning is usually involved when buying real estate using financing, and before you start shopping, it’s a good idea to get your financial house in order. If you haven’t done so already, now is a good time to start a file(s) that contain all of your financial data including;

• All bank statements (checking, savings, cd’s, everything)
• Any investment account statements, including the rules of withdrawal for those accounts
• All credit card statements
• All vehicle loan statements, cars, trucks, motorcycles, ATV’s, jet skis, boats, RV’s, airplanes etc.
• At least two months’ worth of pay stubs
• Two years of complete tax returns
• Copies of any leases on any investment properties
• Any existing mortgage statements, usually the most recent two months
• If you have an AirBnB or some other vacation rental that doesn’t have a traditional lease, they will want to see income and expenses for that
• Statements from any retirement accounts like 401k’s along with their rules for withdrawal
• Life insurance policies
• Basically anything that provides income to you or that you are required to pay, they want to see

It’s probably becoming clearer to you that the lending institution you decide to use is going to want to go over your financial life with a microscope. Be prepared for this as it may feel quite intrusive while it’s happening.

During the 2008 financial crisis, lenders, among many other entities, got absolutely crushed. Fannie Mae and Freddie Mac are two Government Sponsored Enterprises which in 2008 securitized about 70% of all U.S. mortgages. To say they were mortgage giants, is an understatement! In 2008 Fannie and Freddie lost $47 Billion in their single family mortgage businesses. But wait, there’s more…..both entities would lose another $218 Billion by March of 2012. The rate of losses in 2008 called into question the stability of the entire U.S. mortgage market, causing the U.S. government to place both entities into conservatorship.

Many factors led to the great financial crisis. How the lending community contributed to that crisis, can definitely be debated, but suffice to say, the industry as a whole became extremely gun shy afterwards. In the aftermath, lending standards (underwriting) became extremely strict and to be perfectly blunt, with few exceptions, this is how lending should be. It may take a person longer to purchase a home but it will greatly decrease the chances that they lose that home to foreclosure. Check out some videos of people losing their homes during the crisis, it’s a sad event that sticks with the entire family.

Underwriting is a process where a bank or other institution takes on financial risk for a given fee. Basically it means that the underwriter (which came from and older practice of the person analyzing the risk, signing off under the total amount of that risk.) is going to examine your financial life under the aforementioned microscope before they sign off on you as a good credit risk.

So, if you’re under contract on a house that you really love, odds are that you’re only going to have one shot at it, and this is why careful planning, organization, and financial discipline is highly recommended.

That said, check your credit score and see where you stand. If your FICO score is below 620, getting financing is going to be challenging. There are ways to increase your credit score which I go into in more detail in my books, but for the sake of brevity, I will move on.

The next financial concept that I want you to think about is boring. No, really! Be financially boring! Underwriters don’t like excitement. They want to see consistency. They want to see the same paycheck coming in every two weeks, and they want to see the same bills getting paid out at the end of every month. Obviously they want to see more money coming in than going out, but they don’t want to all of sudden see a random $5000 deposit either. You’ll probably have to explain that to them in a letter. Seriously.

So get your finances right, to where there is consistently more coming in than going out, and during the months that you are planning on buying your home, don’t decide to change jobs or start a new business, and don’t decide to buy a boat, car, or new big screen tv. Remember, BORING!

So you’re organizing your financial records, making your financial life as boring as possible and you’ve checked your credit score. If things are lining up, now is the time to get a loan pre-approval. Don’t confuse this with pre-qualification. Pre-qualification is the lenders opinion of the maximum amount that you can borrow based on WHAT YOU TELL the lender vs. the lender actually reviewing bank statements, paycheck stubs, and running a credit check. A pre-approval requires the completion of a mortgage application. That said, a pre-approval has significantly more weight with sellers. Getting a pre-approval is usually fairly quick and painless.

Your financial house is in order, you’ve been pre-approved for a mortgage which tells you how much you can borrow and combined with your down payment, gives you an accurate picture of what price range you can start shopping for. During this phase, you get out of it, what you put into it. What I mean by that is, the more time you can put into driving through neighborhoods and areas that interest you, the chances are greater that you’ll get a good idea of what it would be like to live there, and thus make a better purchase.

Once you have a solid idea of what areas you’re very interested in, you can then effectively narrow your search. You then select a few properties that interest you the most and have me make appointments to see them.

When you’ve finally decided on the property that you want to purchase, I can help you make the strongest offer possible based on your situation.

If all goes well, we should have an accepted offer on your favorite property. From there the clock starts ticking because you’ve entered into a legally binding contract. There are several things that need to be accomplished according to a specific timeline laid out in the contract. The first is usually the earnest money deposit.

The next step is usually the formal mortgage application process followed by the inspection of the property by a licensed home inspector. If all goes well with the home inspection your mortgage originator or lender will order an appraisal. The lender will pick a licensed appraiser and send them out to value the property. If all goes well with the appraisal, the next step is usually, hurry up and wait!

If the property has an HOA (Home Owners Association), it may require an approval process that you must go through. If so, we’ll want to get the rules, regulations, and any other important HOA documents from the seller as soon as we can. During this hurry up and wait period it is very important to pay attention to the timeline of the contract and be very receptive to requests from your lender. Remember, if you miss any of the deadlines, you could lose the property along with your earnest money deposit!

Next, your lender will most likely secure insurance for the property as this is a requirement by the lender to protect the lenders interest in the property. After that will usually be your final loan approval and this is when you can begin to relax as everything thus far has lined up with your finances, the condition of the property, the value of the property, getting insurance on the property, and the property having marketable title and receiving title insurance.

After that we have to close the deal and you’ll end up signing a bunch of paperwork. At closing you will also pay any closing costs required by the contract including your down payment and your lender will pay the seller the difference between the purchase price and your down payment. If all goes well you’ll get the keys to your new home and the only thing left to do is move in, Congrats!