Buying a home in Palmetto Bay can be an exhilarating and nerve wracking experience all at the same time.  This couldn't be more true than if you are a first time home buyer.  Though there is a lot to consider, the talking points listed here are a good start.

ARE YOU READY TO BUY?

Monthly rent can be high and people often find that they are able to find a monthly mortgage that is cheaper than what they are paying in rent and that is what entices them to buy. Keep in mind though that there is more than just the monthly mortgage payment.  Taxes, insurance, regular maintenance, as well as unexpected repairs need to be factored into your budget as well. 

HOW MUCH CAN YOU AFFORD?

Very few people take this step first, and they should.  There is nothing worse than falling in love with a home or neighborhood to then find out that it is out of your price range.  Conversely, you could also find out that there were other loan programs that would have allowed you to get into a different home.

This step is as easy as walking into your bank. While there, you will want to get prequalified and pre approved.  The first tells you what you can afford and the second tells you what a lender is willing to loan you.

This step will also introduce you to the type of loan programs available to you.  This matters because certain listings will only accept offers with a particular loan type. There are many loan programs but the most common are Conventional, FHA, and U.S. Department of Veteran’s Affairs or VA. 

Conventional - Conventional Loans are loans that are not backed by any sort of government agency.  Because of this, the down payment required is higher than other loan programs however depending on your credit score, you could be entitled to a great interest rate.

FHA - These loans are guaranteed by the the Federal Housing authority and are the usual choice of first time home buyers.  The government will pay back the lender should you decide to default on the mortgage.  Because of this, most lenders are willing to lend more because their risk is lowered.  Additionally, you may only need a down payment of as little as 3.5%.

VA - This loan is guaranteed by the Department of Veterans Affairs and is open to Veterans, Servicemembers, and not remarried spouses. There is NO down payment required unlike other programs and again, banks are more likely to lend because they are not assuming any risk.

There are more details and programs however this list discusses the most common of them.  It is best to ask your lender how each scenario would play out for you and make your decision based on that.

While there, you can check out the different types mortgages, Fixed Rate Mortgage, Adjustable Rate Mortgage (ARM), and Balloon Mortgage. 

A Fixed Rate is desirable because just like it sounds, the amount you pay is fixed and will not change.  This makes it very easy to budget yourself accordingly.  

ARM’s usually have a lower interest rate to start and usually allow you to borrow a larger amount.  However, your interest rate and monthly payment will continue to increase based on the market.  

Balloon Mortgages set a specific rate for a certain amount of time.  Once that time is up, 5 or 7 years, the balance or balloon portion of the loan is due.

WHO WILL GUIDE YOU THROUGH THE PROCESS?

Find a Realtor® that you love and don't overlook the little things.  Make note between the agent who promptly returns your communication and the one who doesn’t. Saying that you are going to navigate a real estate purchase on you own is equivalent to someone saying that they are going to perform surgery because they once took an Anatomy class.  Please remember that as a buyer, your agent is working for you for FREE.  The seller is the one who pays the Realtor® fees.  That being said it makes no sense to tackle the biggest purchase of your life on your own.

WHAT KIND OF HOME DO YOU WANT?

This may sound like a silly question, but there are a lot of choices. Single family, condo, townhome, HOA (Home Owner's Association) or no HOA? There are pros and cons to all of these so have a chat with your Realtor to help figure out what is right for you.

HOW DO YOU MAKE AN OFFER?

The time has come and you have found a great home. Now what? The first step is to talk to your realtor to determine the best approach to submit an offer and a CMA or Comparable Market Analysis needs to be completed. 

Next we need to look at how well the property is maintained in comparison to other homes in the area.  When you look around are your potential neighbors updating their homes? How does your compare and if repairs are needed to keep it along the value of the others how much will that cost?

Your offer will be determined by the market condition of that neighborhood.  If it is a seller’s market and properties are moving quickly you could be in a multiple offer situation which could result in multiple bids which will therefore affect how you should proceed.  The sellers in this type of market will be looking for a strong offer with little to no contingencies.  It is possible for homes to sell above asking price with these conditions.  During a buyer's market, homes are listed for longer periods of time and the sellers are usually more open to negotiations. Buying a home is a huge commitment and your feelings about that home are the most important.  If you have found the home of your dreams, let your agent go out and get it. Below are the steps to the usual course of events for placing an offer.

WHAT DOES THE INITIAL DEPOSIT LOOK LIKE?

A deposit around 10% is the norm however, that is negotiable.  Keep in mind that a solid deposit shows the seller that your offer is serious and they are more likely to entertain your offer with a good deposit. When you submit an offer on a property, will typically agree to one deposit amount and if the offer is accepted you will make an additionally deposit to equal the agreed upon amount by a certain date.  This money is held in escrow which simply means it is being held by the Real Estate Company’s or Title Company's Escrow account and it is delivered to the agent doing the closing on closing day.

HOW MUCH IS A DOWNPAYMENT?

This is the amount that you will be paying in cash for the property.  If financing is being used, this is the difference between the purchase amount and the loan amount.  A large down payment is liked by lenders and sellers.

WHAT ARE CONTINGENCIES?

Contingencies sounds like a scary word.  In actuality it simply means that the contract is binding assuming financing, inspection, and or the seller’s disclosure all go according to plan.  If you are financing, the offer is contingent on you obtaining the loan.  If you do not get the loan, the contract will be considered void and the deposits that you made will be credited back to you. Same thing goes for the inspection.  Home inspections are very important and will assess the overall condition of the home.  The inspection is done at the expense of the buyer and can be handled 2 ways. The first option is to have the seller be responsible for any repairs that are needed after the inspection is complete. Additionally, you can purchase the home as is meaning you would be responsible to repair the issues found at inspection.  The latter is the most common and this also gives you some negotiating power when submitting offers.  Of course, the inspection results can allow the buyer and seller to cancel the contract and the deposits will be returned. Another contingency is the seller’s disclosure.  This is a document where the seller gives an overall history of the property.  Age of appliances, roof, state of plumbing, structural issues etc.  Again, this is important when it comes to making your offer as it evidences repairs that may be needed, upon the findings the buyer may cancel the contract.  Numerous other contingencies can be included and your realtor can assist you based on your needs.

WHO WILL BE MY CLOSING AGENT?

Typically speaking, the buyer chooses the closing agent.  This can be a lawyer, Title agent, or both. This person is responsible for making sure the title is clear of defects.  They will be involved in the transaction from offer acceptance till closing.  They will also assist you in securing title insurance for you and communicating with the lender to come up with the amounts needed on the day of closing. The closing agent will contact you prior to closing and let you know the exact amount that you will bring in on the day of closing. This will include the downpayment and closing costs; your first deposit will be brought in by the realtor.  

WHAT HAPPENS ON CLOSING DAY?

The big event is finally here and you are going to close on your home! Prior to doing so you will conduct a walkthrough inspection.  The purpose of this is simply to ensure that the home is in proper condition and that any repairs that needed to be made have been done.  There is no adjustment in price or negotiations that take place.  On closing day, the seller receives a check, the buyer gets the keys and a transfer of title takes place.

Get in Touch
  • Amy Osorno, M.S. , RealtorĀ®
  • Berkshire Hathaway HomeServices EWM Realty
  • (305) 282-1098 Direct
  • 12751 South Dixie Highway Pinecrest, FL 33156
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