You have calculated your numbers and feel financially stable and you have decided to buy a home. The process can be a bit scary and stressful as this is one of the largest purchases in your life. But being informed and finding the right tools can reduce the stress dramatically and help you find your new home with confidence.
Here at Breigel.com we understand the anxiety of buying a home, especially in Miami with all the different markets within the same city. We composed a step by step Miami home buyers guide of the home buying process that can be used as a reference.
Step 1: Check your credit report and score
Before shopping for a loan it’s advised to check your credit report. It is recommended that you check your credit report annually to ensure you’re not a victim of identity theft or false reporting. By law your allowed to get a FREE report once a year through www.annualcreditreport.com. Your credit data is pulled from the 3 major credit bureaus: Equifax, Experian, and TransUnion. Make sure your credit report shows your accurate information if not you can open a dispute in each bureau and correct the issue immediately. From the data in your credit report a credit score is assigned to you and it can range from 350 to 850. The higher the score the less of a risk you are to a lender which can be rewarded with a lower interest rate.
Your scores are based on the following:
· Payment History: Have any late payments? Make sure you pay your bills on time every time. One late payment can dramatically lower your score.
· Balances owed: Make sure that all your balances are lower than 30% to your credit limits. In the section the lower your balances are the better.
· Credit History: Do you have new credit? Lenders want to see a proven track records of on time payments.
· Types of Credit: Lenders prefer different types of credit such as, credit card, bank cards, car or student loans.
In the lenders eyes what is a good credit score? Anything over 720 you can easily expect a loan pre-approval and a good mortgage rate. If your score does not reach 700 not to worry thousands of home buyers take advantage of the FHA loan and you can secure such a loan with a 580 or more credit score.
Need a Trustworthy Lender? Contact Wil Reguera of Caliber Home Loans (305) 520-9457
Step 2: How much home can you afford?
The better question is how much are you comfortable paying each month? Lenders will qualify you for the highest amount but it doesn’t mean you have to use it all. It’s a good idea to start looking at open houses so you can see the quality of homes in your price range.
Step 3: Find a real estate agent
This is the most important tool you will need in the entire process. With the internet you can filter out different types of real estate agents based on neighborhoods, types of property, luxury, etc. Check for reviews and most importantly speak with them. This person is the lifeline that can make your home buying experience so much easier. Make sure you feel comfortable speaking with them as you will be spending a lot of time with them.
Step 4: Pre-approval
Before seeing properties, a pre-approval letter is a must. Many listing agents (seller agents) require that you show proof of the pre-approval letter to show a potential property.
This process requires a lender to pull a credit inquiry and access to your taxes and banking financials. With this information they will assess your loan risk and tell you how much you qualify for. The letter that the lender will give you will show your information and the maximum amount the lender will lend you. This process will give you a slight advantage over other potential buyers that are not qualified.
Many professionals will advise to get estimates from three lenders to compare mortgage rates and fees. But beware that each lender will pull your credit and it can impact your score.
Step 5: Start searching
The day has come to start shopping. By now you have sat down with your agent and discussed the wants and don’t wants. The agent will search the MLS (Multiple Listing Service) and set up appointments to see your potential home. We recommend to see the good, the bad, and the ugly. With multiple showings your mind will start to discover what you actually want and don’t wants and once you see the one you will know.
Step 6: Make an offer
Now for most buyers here is where the anxiety kicks in. You found the one you want and here is where your agent needs to create the contract to submit the offer. Your agent will pull comparable and make sure that your offer is competitive to the market. Most homes do not sell at asking price as that is a starting point. Always submit the best offer you so if there is a multiple offer situation you know that you sent it the best you can. Your agent will also include contingencies for your protection. I am not going to go into all of them as there are so many but the common ones are inspection contingency, loan contingency, appraisal contingency, etc.
Step 7: Home inspection day
The Seller accepted your offer now comes judgement day with the home inspector. It is recommended that all parties involved in the transaction be present at the inspection. Have the inspector look over the home feel free to ask questions. Take lots of pictures and measurements! This is probably one of the last times you will be in the home until you close and it is all yours. Once the inspection is completed and the report is in your hands review it closely and negotiate repairs or credits if needed.
Step 8: Get insurance and establish utilities
Your only weeks away from the home being all yours but there are is a contingency you need to fulfill that the lender requires “Insurance”. If you already own a home all you need to do is call your agent and notify them that your buying a new home. It should be an easy transition from the old policy to the new. If you never had insurance than you got to start shopping around for the best rate and coverage. Another insurance that is needed especially here in Miami is Flood insurance. Most insurance company will need and Elevation Certificate the properties classification and that will determine your rate.
At this point you should have an established closing date remember to call FPL and the water department to establish service to your property.
Step 9: Closing day
The big day has arrived. You will sign a ton of documents and the stress level of the closing agent and parties involved will be through the roof. Read all documents and make sure your agent is present to help you understand what your signing. There is only one step left!
Step 10: Get the keys and move in!
You made it! Congratulations!!!! Your closing documents and contract will specify when you can officially start moving in. Usually it is the same day but it can also take a day or two. After weeks of jumping through hoops you can finally relax as the journey to home buying has to come to an end and a new chapter begins as a homeowner.
Please comment below if you enjoyed our Miami Home Buyers Guide. If you would like to add a suggestion please email us in the contact us section. Thank you