Buying a home is one of the most stressful and tricky scenarios to navigate for first-time homebuyers. However, knowing the steps to buy a house in Florida will go a long way toward boosting your confidence and making sure you aren’t taken advantage of by any sketchy sellers.
Buying a house in Florida can broadly be broken down into eight major steps, from figuring out your finances to closing on the house.
Buying a House in Florida Steps
- Determine Your Finances
- Get Pre-Approval for the Mortgage
- Pick a Great Neighborhood
- Choose a Florida Real Estate Agent
- Begin Searching for Your Home
- Submit Offers
- Do Appraisals and Inspections
- Final Checks and Closing Agreements
1. Determine Your Finances
It’s common sense that you need to fully understand your budget and financial situation before you buy a home in Florida. This isn’t unique to Florida, either – it’s just a fact of making a purchase as big as a new house!
Specifically, you should consider your:
- Credit score: Chances are you’ll need a credit score of at least 620 to get a conventional mortgage loan. Higher is obviously better.
- Down payment: Determine how much money you can spend upfront on the house. For most loans, you’ll need a down payment of anywhere between 10% and 20%.
- Closing costs: These are the final costs and fees associated with buying a new home. Closing costs for buyers in Florida can end up totaling between 2% to 5% of the total costs. So a $200,000 home would be between $4000 and $10,000.
- Extra homeownership costs: These are also known as maintenance costs, and you can estimate them to be about 1% of the home’s total worth each year, at least at first.
Once you figure all these numbers out, you’ll be able to get a price range of homes and prevent yourself from looking at homes or wasting time with houses that are too expensive.
2. Get Pre-Approval for the Mortgage
Once you've saved up enough money and worked out your finances, it's time to get pre-approved for a mortgage. That is of course unless you're wealthy enough to be buying a house in Florida with cash.
Getting a mortgage pre-approval is an important part of buying a Florida home as many sellers won’t even show you a house unless you have a pre-approval letter. A mortgage pre-approval letter is usually valid for 90 days and essentially indicates that the bank expects you to qualify for the loan, and they’re ready to proceed with getting you a mortgage as soon as you have a house in mind.
Having a pre-approval letter can increase seller confidence and will allow you to secure financing details and move into deciding on a home for real.
Speaking of mortgages, here are some things to keep in mind:
- Interest rates: Lower is usually better, as it can result in you saving thousands of dollars over the years. The better your credit score, the lower your interest rate.
- The down payment required: Some loans require high down payments, while others can go as low as 5% (especially if you are a first-time homebuyer).
- Terms: Most mortgages come with either 15-year or 30-year terms. Longer mortgages take longer to pay off, but you’ll pay less per month, even if you pay more over the long term.
3. Pick a Great Neighborhood
Once you've figured out your budget the next step to buying a house in Florida is deciding where exactly you want to live. That starts with figuring out what Florida municipality you want to live in and then narrowing it down to the specific neighborhood you want to buy a house in.
The neighborhood of your new Florida home matters a great deal, both for your enjoyment of the home and for potential future profits. You may wish to sell your house in the future to upgrade or to move. Buying a home in a great neighborhood means better property values and more profits for you.
Your neighborhood can affect:
- The local events or lifestyle available to you
- Your home value, as described above
- Neighbors and whether or not they’ll be annoying
- What preventative measures you may need to take for crime
4. Choose a Florida Real Estate Agent
While you can buy a house in Florida on your own, it's best to work with a professional and hire a realtor to represent you. You should specifically look for real estate agents specializing in the local real estate market. Your real estate agent will be able to find and show you new houses and can make recommendations for things like lenders, lawyers, and even escrow companies. Your realtor will essentially make sure you get a great deal.
When you select a real estate agent, look for the following factors before you choose:
- A good number of years of experience, usually at least two to five.
- Check realtor review sites to see how other clients appreciate their services.
- See how many transactions they made in the last year. More transactions usually mean a more successful real estate agent.
It’s never a bad idea to interview real estate agents individually. Remember, your realtor can seriously impact whether your new house suits your needs or is a lemon. Don’t skip this step or just go with the first realtor you find!
5. Begin Searching for Your Home
Once you have all the previous ducks in a row, you can finally start looking at houses. This is likely going to be the most time-consuming part of the process of buying a house in Florida, but whatever you do, don't rush. Take your time, and view as many homes as you need until you find the one that's right for you.
Since there are thousands of homes on the market, it’s often helpful to narrow down things into stuff you “must” have versus things that would be just nice to have. For instance, maybe you need two bathrooms, but a home with three is icing on the cake. If you have a hard time finding a Florida home that works for you, you might consider if it would cost less to build a home that's suitable.
6. Submit Offers
Once you’ve found a Florida house that you really love, the next step to buying that home is to make an offer to the seller. There are a few key things to keep in mind:
- It’s always important to move fast, as sellers usually get rid of their homes free quickly. Don’t wait around to make an offer, as most Florida homes only spend about 90 days on the market before a reasonable offer is made.
- Don’t always default to offering a higher price to convince a seller to sell to you. Sometimes, you can just cover things like closing costs to make things easier on the seller, making your offer more attractive.
7. Do Appraisals and Inspections
The next step in buying a house in Florida consists of due diligence. Even after you make an offer and a seller accepts that offer, you should still get inspections and appraisals of the property to make sure that nothing is out of order. You should hire a licensed home inspector (often covered under closing costs) to check things like a house’s roof, electrical system, HVAC system, plumbing, and so on.
Hiring someone to do a professional appraiser ensures that the house is actually worth your offer, and the seller isn’t taking advantage of you.
8. Final Checks and Closing Agreements
If you’ve made it this far, you’re almost there! Now it’s just time to dot your I’s and cross your T’s. Do a final inspection of the home and test all the appliances, then perform the closing agreements with your real estate agent and attorney present. They can make sure the paperwork is in order and even take things down to the county clerk’s office for finalization.
Buying a House in Florida Bottom Line
All in all, buying a new home in Florida isn’t too complicated if you think about each step beforehand and prioritize what you really need. Be sure to let us know if you have any other questions about buying a house in Florida. Our expert guides are always here to provide you with what you need to know when it comes to the Sunshine State’s real estate!