When you’re a first-time homebuyer, there can be an overwhelming amount of information to learn.
And while buying a new home is extremely exciting, it is not as simple as they make it look on television. As experienced title and closing agents since 1995, we’ve successfully closed thousands of real estate transactions throughout the state of Florida. Here is our list of seven must-know things for a first time homebuyer to ensure that buying your new home goes as smoothly as possible.
1. Know The Difference Between Pre-Qualified And Pre-Approved
This can be a costly mistake if you are not aware of the difference. Pre-qualification is a simple check of your credit report and score for a ballpark estimate on a loan amount. This is not a reliable number that you can be assured you will receive. On the other hand, a pre-approved loan is determined after the lender performs a hard check on your credit. The pre-approval amount is a much closer estimate of the type and amount of loan you will be approved for, as the lender has checked and verified the factors of your credit.
2. Know The Amount You Can Actually Afford
Before you start surfing through real estate websites, you should have a good idea of the price range that you can afford to purchase. This price range should be based on a budget, not the amount you are pre-approved for from a lender. To figure out the proper budget for your home, you should run the estimated calculations on the mortgage payment, maintenance or association fees, utilities, groceries, and other monthly expenses that are attached to home owning. You should spend at least two to three months testing out your estimated budget to ensure it will work, before investing in a home for the first time. Determining and sticking to your budget is crucial in the successful first-time home buying experience.
3. Understand What A Purchase Agreement Is
A purchase agreement is an offer that is typically paired with ‘earnest money deposit’ which shows you are serious about buying the home. The agreement will state your offer, who pays closing costs, when you will take possession of the home, and other details, such as which appliances will stay with the home. The earnest money deposit is a small percentage of the asking price that will then be applied to the overall buying price when the seller accepts your offer.
4. Always Get A Home Inspection
As a first-time homebuyer, you may think a home inspection is unnecessary, as it just adds to the cost of the home. However, as a buyer it’s important to have the main components of the home checked, such as the roof, heating and cooling systems and structure of the home, to ensure that everything is in good condition. You don’t want to move in only to find out that you will need to spend thousands of dollars in repairing existing problems within a home. A home inspection will reveal any problems that need fixing, and you can negotiate these issues with the seller.
5. Know Your Estimated Closing Costs
Closing costs are all costs required to close the real estate transaction. They can include (but are not limited to) surveying fees, property taxes, title insurance, attorney fees, closing agent fees, recording fees, points, loan origination fees, private mortgage insurance (PMI), and the balance of your down payment. Your mortgage lender should provide you with a Loan Estimate, which goes over all your closing costs so you’ll know what to expect.
6. Be Certain That a Property Title Search is Done
A property title search allows you to verify that there are no liens on the property title of the home and that the seller actually has the rights to sell the property. When a title company performs a title search, they’re actually performing a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller’s right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property. If you omit this title search, you may be liable for any liens against the home in the future. An experienced title company can do a thorough check for you to ensure your home will truly be yours.
7. Always Opt For Title Insurance From A Title Company
Title insurance provided by a title company is a crucial purchase for any new home buyer. A title insurance company will work to protect you against any claims in the event the home and property you purchased didn’t have a free and clear title. You don’t want to pay money to the seller and find out years later you don’t actually own your home or property. Title insurance is your policy of protection against loss if any of these problems — even a “hidden hazard” —results in a claim against your ownership. A Florida title company can provide you with a title insurance quote that could potentially save you from major financial hardship in the future.
At Title Partners of South Florida, we have an experienced team of professionals who have been serving the state of Florida since 1995. We understand this purchase is one of the biggest of your life, and we’re here to help make your first-time home buying and real estate closing experience as smooth as possible. Download our Homebuyer’s Closing Information Guide to learn more about title insurance and the closing process or request a free no-obligation quote online.