You just signed on the dotted line, and given a deposit to buy a piece of Florida Real Estate (a.k.a. your dream home).
My next question was always: “Ok, now what?”
Let’s see if we can clarify what must happen in order for you to take ownership of your Florida property.
All real property sales or exchanges eventually conclude with a transfer of title. This occurs at the title closing, when the seller delivers title to you (hereafter “the buyer”) the buyer in exchange for the purchase price. The date and place of title closing should be specified in the sale contract. Here are the several things that need to be accomplished between the time of signing your sales contract and the title closing. For example some of the pre-closing steps include the following:
A CHECKLIST OF WHAT MUST BE DONE BEFORE YOU CAN GET THE KEYS
Step 1 - Mortgage Application: If the buyers (you) intend to finance the purchase, you will complete a mortgage application. The contract for sale and purchase specifies the number of days within which the buyer must submit a loan application. The real estate contract typically contains a financing contingency clause that provides for cancellation of the sale contract and return of the buyer’s escrow deposit if the buyer is unable to secure financing.
After completion of the above application it’s time to request a pre-qualification letter. Why do you need a pre-qualification letter from a mortgage broker?:
- it strengthens your position with the seller.
- it shifts some of the responsibility to the lender to provide financing at an agreed upon date so you may have some lender accountability.
Step 2 - Property Appraisal: Because the property is pledged as collateral for the mortgage loan, the lender will order an appraisal to determine whether the property’s value is sufficient to ensure recovery of the loan amount should a default occur. In a cash transaction the buyer may want the property appraised to verify the property’s value for tax or investment reasons.
Step 3 - Property Inspections: It is advisable for you to have a certified property inspector check the condition of the structure and mechanical parts. An inspection for mold and wood destroying organisms (WDO) including termites and wood rot is also recommended and may be required by the lender.
Step 4 - Property Survey: The buyer should have the property surveyed to determine the exact location and size of the property and to make sure there are no encroachments, such as a neighbor’s fence across the property line.
Step 5 - Title Insurance: A search is made of the public records for condition of the title and existing liens, judgments, or other encumbrances. The seller is responsible for removing any encumbrances on the title. These “encumbrances” can be anything from construction liens, to the city put in new sidewalks and has a hold on title until the cost is recovered from the homeowner.Typically there is a simultaneous issue of an owner’s policy issued for the total purchase price of the property (which protects the new owner against forged deeds; and the lender’s policy which is written for the loan amount and is transferable should the loan be sold.
Step 6 - Property Insurance: At this time you (the buyer) would be well advised to begin the process of obtaining homeowners, flood, and any other insurance policies that you will need to have in place before closing. This normally is an item that people tend to put off until the last few days, and probably is the single biggest culprit in holding up closings and stopping an otherwise easy transaction from occurring. (Especially true in Florida).
Step 7 - Pre-Closing Inspection: Before the closing date, you to make a final pre-closing inspection of the property (a walk-through) with the sales associate. The purpose of the pre-closing inspection is to verify that repairs have been completed and that the property has been left in good condition.
Step 8 - Final Closing: The closing agent, usually a title company or an attorney, prepares the closing documents. Closing documents include the new mortgage, a note (pledge) to repay the mortgage, the deed transferring ownership, and most importantly the settlement statement showing a distribution of funds between all parties.
Keep this checklist in front of you, check off items as you go. Stay ahead of schedule, and you may find it simple and easy rather than arduous and difficult.