The process of buying a home can be daunting at first, especially when you’re trying to navigate the varying real estate regulations of different states. Most parts of Florida are currently a seller’s market, meaning demand is higher than supply. At the same time, property values across the state are continuing to rise, which means you could see a good return on your investment unless prices drop in the near future.
Due to the pandemic-triggered recession, interest rates across the country are low, which means you could secure a low monthly mortgage payment. Although you should never buy a home simply because interest rates are low, if you are ready to purchase a property, follow these steps for buying a home in Florida:
1. Assess Your Financial Situation
The first step in the home-buying process is determining your financial situation and whether you’re in a good position to buy a home. Take a look at your credit score, savings, and debt-to-income ratio. Your credit score should ideally be 620 or higher, although it’s possible to secure a mortgage loan with a slightly lower score. You should have enough in your savings account to cover a down payment (typically 3-20 percent of the purchase price), as well as closing costs and other homeownership fees, such as maintenance and moving costs.
Calculate your debt-to-income ratio by adding up your monthly debts (which include things like student loan payments, credit card bills, and rent or estimated monthly mortgage payment), and then divide the total by your gross annual income (your income before taxes). Ideally, you should spend less than 36 percent on debt every month.
If you realize you could use a bit of help on the down payment or closing costs, check to see whether you qualify for any Florida assistance programs.
2. Meet with a Loan Officer and Get Pre-Approved
Getting pre-approved for a mortgage can give you a better idea of your purchasing power and help you determine whether you’re in a place to buy right now. Sellers often will only take you seriously once you’ve been pre-approved, because it shows you’re serious about purchasing a home and have the funds on deck.
Be sure to shop around for both interest rates and the service quality of loan officers. An experienced loan officer will be able to walk you through your options and help you navigate the home-buying process. Once you’ve been pre-approved for a mortgage loan, be careful not to do anything to impact your credit score, such as making a large purchase on credit, opening new lines of credit, or buying a new car.
3. Select a Home Location
If you don’t already know where you want to buy a home, the next step would be to figure out which city and neighborhood in Florida you want to settle in. When making this decision, consider the following factors:
- Home prices and values: Consider whether you can comfortably afford a house in the area and whether the property values are appreciating.
- Job opportunities: If you plan to settle in an area, make sure there’s room for career advancement there.
- Local lifestyle: Make sure the city suits your interests, with plenty of quality restaurants, shops, and parks.
- Neighborhood safety and walkability: Check the crime rates in the area and take a walk around the neighborhood, speaking with neighbors if possible.
- School district: Check which school district the home is in and whether it’s well-rated. Even if you don’t have kids, this will affect the property value.
- Commute to work: If you work in an office, check the commute time on Google Maps.
4. Find a Real Estate Agent
A real estate agent will be invaluable during the home search. Plus, the seller covers the cost of the buyer’s agent, so it won’t cost you anything. Shop around for a good real estate agent and consider their experience, reviews, personal recommendations, and how you get along with them as you decide. Be clear with your agent on what exactly you want in a home and listen to their expert guidance.
5. Go House Hunting
Before looking at homes, make a list of what you’re looking for, with separate columns for must-haves and nice-to-haves. No home will check every one of your boxes, but as long as all of your must-haves are satisfied, the home could be a winner.
Be aware that the season will likely impact the number of available homes, with most homes going on the market in the spring and a smaller number in the winter. The goal is to hit the sweet spot when there is a large number of homes on the market and prices are as low as possible. In Florida, the month with the largest inventory is typically April.
6. Make an Offer
You may need to act fast if you find a home you’re interested in, although you have a bit more breathing room in Florida where the average home stays on the market for 79 days, which is higher than the national average.
If there are several other offers for a home you’re interested in, make yours personal with a handwritten letter to the seller. Be sure to include an inspection requirement in your offer if you can, so you don’t wind up buying a home with a bad roof or busted water heater.
7. Get an Inspection and Appraisal
Hire a licensed and experienced inspector to thoroughly look over the property and make sure the roof, foundation, electrical, HVAC, and plumbing are all in good shape. The state of Florida also recommends inspections for termites and radon.
Next comes the property appraisal, which determines whether the price matches the home’s value. If the appraisal comes back low, you may need to renegotiate the purchase price or offer a larger down payment.
8. Close on the Home
Before closing on the home, conduct a final walk-through of the home and make sure everything looks good.
Florida requires homebuyers to hire a real estate lawyer, so have your lawyer look over all contracts and explain them to you before you sign anything. Once everything is signed, you can begin making moving plans and preparing to enjoy your new home.
Discover More Tips for Navigating the Home-Buying Process
The road to homeownership will be much easier with a bit of good advice. If you’re unsure what step to take next, check out our Home Buying 101 guide to discover tips from our expert loan officers.