Buying a Home in Florida: A Step-by-Step Guide

• In Florida, the home-buying process is similar to other states that require the use of a buyer’s attorney, escrow agent, or representative from a title company. This is used to prepare the closing documents and finalize the transaction.
• The buyers and sellers will complete the transaction at the same closing table, which is sometimes called a “settlement table.”
• Florida also has its own specific features regarding the environment. These will impact inspections, including how termite inspections are performed. Termite bond contracts are common ways that buyers can protect their investment in Florida, as well as other southern states.

Your Step-by-Step Guide for Buying a Home in Florida

Phase 1: The Title, Disclosures, and Inspections

Once the home-buyer is in contract with a seller, these are the steps that need to be completed. In most cases, they can be completed at the same time as the steps in Phase 2.

1. The seller will accept an offer by the buyer and a contract will be signed.
2. An escrow agent, buyer’s attorney, or broker will receive the deposit.
3. A contract that is signed is sent to a closing agent or title company, which will then start the paperwork for transferring and changing the title.
4. The buyer now has a chance to review the disclosures. These disclosures are based on the property type, but they should include known flaws with the property or previous remodels and repairs. A disclosure statement will be given from the seller to the buyer, and this document will outline all the disclosures related to the home. This is seen as beneficial to the seller because they can assume everything is disclosed from the start so no credits or price reductions should be needed.
5. The buyer will now elect to perform any required inspections on the property, which are agreed in the contract. The inspections will need to be completed by a specific date, which is defined in the contract. The types of inspections will vary, and some areas of Florida require different types of inspections. However, a home inspector will generally go through the home, followed by specific tests if needed, such as termite inspections, which are common in Florida and other southeastern states. A dry wall inspection may also be completed.
6. A termite bond contract may be included with the home. This is done with an extermination company to protect the house from termite damage in the longterm.
7. In addition to the drywall inspection, a seller will also provide and sign a Defective Drywall Disclosure, which essentially states that the seller has no knowledge of any problems with the existing drywall.
8. Depending on the outcome of the inspections, buyers can request repair work, closing credits, or a reduction in the sale price from the seller. In response, the seller has three options. First, they can agree and complete all of the requests. Second, they can negotiate a solution with the buyer. Third, they can decline all of the buyer’s requests. In response, the buyer can continue negotiations, accept the seller’s response, or walk away from the deal, ending the transaction without loosing their invested money, which is held in escrow.
9. The buyer can also negotiate a home warranty, which will cover the major appliances from failure. Typically this will cover the appliances for 12 months, but longer periods are possible.

Phase 2: The Mortgage Application

A house is usually the largest purchase in a person’s life, and most people will likely need to borrow money to complete the transaction. For people seeking a mortgage loan, the process can seem complex and frustrating, but if you prepare properly and follow these steps, the entire mortgage application will go much smoother.

1. As the buyer, you will need to submit a mortgage application to your lender. This will be done either directly or through a mortgage broker.
2. The lender will then deliver a “Good Faith Estimate,” also known as a GFE. This is a breakdown of the estimated costs, but it will likely vary compared to the final costs. The GFE will be delivered within three days.
3. Before the buyer has a chance to write an offer on a home, pre-approval will need to be completed with a lender. During pre-approval, the buyer will need to send a wide variety of financial information to the lending agent. These documents will often include a wide range of information, including:
   – Several months of information on bank accounts, including all accounts held by the borrower.
   – Statements on outstanding loans, financial liabilities, and lines of credit. There should be several month of information, and it can include rent checks in applicable.
   – You will need two years of tax-return documents from the IRS. These will be released straight to the lender using a specific IRS form. (Form 4506-T)
   – Information related to your employment, including recent pay stubs and contact information. The number of pay stubs will depend on the type of loan and your specific situation.
   – Any disclosures that are relatable to your financial situation will need to be presented. This can include divorce settlements, child support, court judgements, and liens against your property. Basically, if it affects your finances in a significant manner, it should be included.
   – You will also need to explain any credit inquiries, which can impact your overall credit risk.
   – If you have any large deposits in your account, you will likely need to provide information on these payments. Large gifts, for example, are useful for funding a down payment, but lenders will want information on this money, especially assurance that it is not a loan that will require repayment, which will impact your future finances. If you have a large gift in your account, the donor may need to supply a “gift letter,” which outlines the nature of the money and specifically states that it is a gift and not a loan. This letter will likely require contact information for the donor.
   – The lender may also request repeated or updated verification on any of the above documents. Lenders need to be as detailed as possible during the approval process, so they may request multiple documents to support certain facts, such as your income or debt load. You may also need to bring updated or recent pay stubs, rent receipts, bank statements, or other disclosures as the lender sees fit. If you have any changes to these documents, the lender may need to reassess your eligibility for the loan.
4. Once all the documents have been provided, the lender will give you their decision. Assuming you are approved, you can then move forward with the loan commitment letter that is issued from the lender. This letter basically states their intention to finance your home purchase. There may also be conditions, such as an appraisal. Conditions can also include a statement from the lender that allows them to pull out if there is a change in your financial situation.
5. At this phase the loan contingency can be removed by the buyer, and this will be done before the expiration of the loan-commitment period, which is sometimes called the loan-contingency date. The buyer will complete this by sending a copy of their loan commitment. If the buyer is unable to get their approval to the seller before the expiration period, they have to send written notice during the timeframe to ensure they are able to get out of the deal without losing their financial commitment.
6. An appraisal will now be ordered by the lender or the mortgage broker through a central directory of appraisers. They will be unable to order the appraiser of their choice, but they can request a different appraiser if they are unhappy with the one selected. If the appraisal comes in lower than the purchase price, the buyer will request a deduction in the price from the seller. The seller then has a chance to accept or reject the request; if they reject, the buyer can walk away from the deal.
7. Homeowner’s insurance will also need to be selected at this time. This helps protect the lender, but if the home already has insurance, such as through an HOA, the buyer will only need to provide verifying documents.

Purchasing a home can be difficult, but when you use the right approach and start as soon as possible, getting a mortgage can be easy. At times, it can seem like the process is too complicated, but the mortgage-approval process can be handled with ease. We encourage you to avoid making any changes to your financial situation or credit profile until after the transaction has been completed, as changes can cause the process to restart from the beginning.

Phase 3: Closing the Deal

When buying a home in Florida, the closing process will happen at one table, either at the office of the attorney or title company. During this phase, the buyer will sign all the required documents related to the loan and the transaction. Once the documents have been signed and payments exchanged, the buyer will get possession of the property. (Unless an agreement has been reached that allows the seller to stay in the home for a certain period.)

1. Part of the preparation for closing includes the attorney or title company performing a title search, which may have already been done. This will determine if there are any liens or assessments against the title of the property. If the title is “clear,” the closing will continue as planned and a title commitment will be issued. All paperwork for changing the title and deed, as well as title insurance, will now be prepared. A final closing date will also be set.
2. A final cash figure for what the buyer needs will also be generated. This is the amount that the buyer needs to bring in a cashier’s check, and it’s based on a few factors, including closing costs, property taxes, and utilities.
3. Before the final closing, a final walkthrough will need to be performed. This will verify that the property is in the same condition as it appeared during the sales process.
4. At the closing table, all the appropriate documents will be signed, including the final loan documents.
5. The buyer will now pay the remaining fund to the an attorney or a representative from the title company. Again, this will be a cashier’s check.
6. The transaction will now be recorded with the appropriate municipality. The buyer gets the keys and officially takes possession of the property!

This document is intended as an informative guide and should not be taken as legal, financial, or property advice. Laws will change on a regular basis, so always speak with a qualified professional before making any decisions.

Downpayment Assistance in the State of Florida

Statewide Programs for Florida Homebuyers

While there are other options available, the vast majority of statewide downpayment support in the state of Florida comes through a single government-created organization:

Florida Housing Finance Corporation
The Florida Housing Finance Corporation (FHFC) was created by the state legislature to help homebuyers and increase homeownership rates in the state. This organization provides a variety of assistance programs, including “Florida Assist,” which offers up to $10,000 of support on FHA, VA, USDA, and conventional loans. Repayment for Florida Assist is deferred and has no interest rate.

They also offer the “Florida Homeownership Loan Program” which is a second mortgage that has a 3% interest. Eligible buyers in Florida can receive up to $10,000 in assistance with this program.

If you are seeking a home in Florida but are struggling with the downpayment, the Florida Housing Finance Corporation is likely the best place to start.

Major Local Downpayment Assistance Programs in Florida

Depending on where you live, you can likely access downpayment assistance from your city or county government.

MDEAT Homeownership Assistance Program
Miami-Dade County, the most populous county in Florida, has the Miami-Dade Economic Advocacy Trust. This organization offers downpayment assistance programs in the form of a deferred payment, zero-interest loan. This is for buyers who have not owned a home for at least three years.

Tallahassee Lenders’ Consortium
If you live in the state capital, you may be able to get support from the Tallahassee Lenders’ Consortium. They offer loans that can cover a downpayment or closing costs, but the homebuyer is required to contribute at least $500 of their own savings.

Home Sweet Home Hillsborough Program
Buyers in the Tampa area can take advantage of the Home Sweet Home Hillsborough Program, which is offered through the Hillsborough County government. This is also available as a second mortgage, and applicants can receive as much as $10,000 in financial support.

Common Requirements for Florida Downpayment Assistance

Florida downpayment assistance comes with a variety of requirements. Most notable, there are income restrictions. Each program has different specifics, but most require that borrowers are low or middle-income earners. People with incomes above the area median are usually ineligible.

Most of the DPA programs in Florida offer loans with generous terms (no interest, deferred payments, etc), but repayment is required. Usually they state that the support must be repaid when the primary mortgage ends. Whether you refinance, sell the property early, or pay off the mortgage over 30 years, when the main loan is ended, the support will need to be repaid. Other requirements may include first-time buyers or single-family homes.

For more information on downpayment assistance in Florida, contact our experienced team.

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