If you’re considering purchasing a second home, Florida has a ton going for it. There’s the beach, with the Gulf of Mexico on one side of the state and the Atlantic Ocean on the other. The climate is warm enough to attract Northerners looking to escape the snow and ice for the winter. If spoiling the grandkids is your thing, it’s hard to beat a state that has both Universal Studios and Disney World, among numerous other tourist attractions. Year-round golf doesn’t hurt the state, either.
Considering buying that getaway, but not sure where to start? Here are five questions to consider when buying a second home in Florida.
Why Buy a Second Home?
Ask yourself why you want and need a second home. If you visit Florida once a year, and usually stay in a hotel, it might not make financial sense. If you live in another state and choose to stay in Florida during the winter months, a second home definitely makes sense. You need to evaluate how much time you’ll spend in this second home and whether you really want to go back to that same place year after year.
What Should I Know Before Buying a House?
If you’re buying a home in Florida, there are a couple of things you should think about before moving forward, as there are some extra costs associated with living in the Sunshine State.
If you plan to spend winters in Florida, there’s less chance that it’ll be unbearably hot, but it can still get pretty warm at times, so there may be a point when you want to turn on an air conditioner. You’ll have to plan for those electric bills.
Even in areas that have great weather, every once in a while, Mother Nature throws a curveball. In Florida’s case, the most serious of these curveballs tend to come in the form of a hurricane. Because much of the state is susceptible to heavy damage from hurricanes and tropical storms, there’s a good chance you’ll have to buy flood insurance coverage in many areas of the state, in addition to traditional homeowners insurance.
There’s also the more basic question of how much you can afford. It’s important to find the right mortgage to suit your needs and pocketbook. The Home Loan Experts at Quicken Loans have helped clients for more than three decades and are available to help you find a home loan with a comfortable monthly payment.
When it comes to getting a mortgage, having a rock-solid approval makes your offer that much better because both real estate agents and the sellers they represent know they can trust your offer. Lenders have traditionally offered preapprovals, but depending on the lender, that could mean different things.
In order to cut through the confusion, Quicken Loans has a three-tier mortgage approval system that we like to call the Power Buying Process™.
In a Prequalified Approval, we pull your credit report in order to get a look at your debt-to-income ratio (DTI) and your median FICO® credit score for qualification purposes. We also ask for verbal statements of how much you have saved to use as assets as well as your monthly income.
If it’s your second home, you may be familiar with the intricacies of the mortgage process, but if it’s been a while, here’s a brief refresher on DTI. Simply put, DTI is a calculation that compares the monthly debt payments reported on your credit (think minimum monthly credit card, home and car payments) against your monthly income. If you have a lower amount of monthly debt going into the process, you’ll be able to afford a higher payment on your vacation home.
The advantages of a Prequalified Approval are that you can get it quickly and it makes a good estimate of what you can afford. However, because your income and assets aren’t verified upfront, an estimate is really all it is. To make an offer from a position of strength, we recommend all of our clients go a step further and get a Verified Approval.
A Verified Approval starts with the same credit pull steps as a Prequalified Approval, but we also ask you to send in documentation to prove income and assets like tax returns, W-2s and bank statements.
Because all of your information is verified – a process we promise to complete within 24 hours, you can be sure that your mortgage approval is the real deal. Real estate agents and sellers can have confidence that you’re good for the financing. It gives your offer the strength of one from a cash buyer.
We’re confident enough in our Verified Approvals that if the loan fails to close through no fault of your own, we’ll give you $1,000.1
Knowing for sure you can afford a home is no doubt a great comfort, but we also know that no one wants to pay more than they have to. For that reason, they may wish to protect their payment by locking in their interest rate before they move any higher.
This is where our RateShield™ Approval2 comes in.
People often don’t pay attention to mortgage interest rates until they’re ready to buy a house. When they’re ready to buy, however, they become keenly aware that the lower that rate is, the more money they can save on a monthly basis as well as over the life of the loan.
Traditionally, you haven’t been able to lock your rate on a mortgage until you have a signed purchase agreement. This is fine in market environments where rates have been steady or even moving lower, but lately, they’ve been trending ever higher. Home buyers may feel pressured to hurry up and pick a house. Your selection of a home isn’t something you want to rush, though.
Our RateShield Approval allows you to protect your monthly payment by locking your interest rate for up to 90 days while you shop for a new home. If you find a home within this 90-day period and send us your purchase agreement, we’ll compare the rate you locked with current interest rates. If rates are higher, you get to keep the rate you locked. If they’re lower, we’ll lock you in at the current interest rate with extra time to close your loan. It’s a win-win!
Questions to Ask Your REALTOR® When Buying a House in Florida
The questions you should ask your REALTOR® or real estate agent are the same as they would be if you were buying a second home anywhere.
Among them, you might ask the following:
- If the house isn’t new, why is the owner selling? Are there any known problems listed on the seller disclosure that are big red flags?
- How long has the house been on the market? This might help you get a sense of how willing the owner will be to sell and negotiate on the price.
- What do other properties comparable to the one I’m looking at sell for?
- What’s the property tax rate in this area?
- What are the fees that are standard for buyers to pay at closing? Which fees are typically the responsibility of the seller? What’s negotiable?
In terms of finding the best REALTOR® or real estate agent, you’re going to want someone who knows the local market, particularly in the areas in which you’re looking, and also experience negotiating deals in your price range. You should also ask for any professional accreditations and memberships they may have.
It’s a lot to consider for anyone, but if you’re looking to find a real estate agent of your own, Rocket Homes℠ can help match you with a real estate agent based on your goals.
What Is the Minimum Age to Buy a House?
You have to be at least at the age of majority in order to legally sign contracts in most cases. In Florida, this happens when you turn 18.
Do You Need an Attorney to Buy a House in Florida?
Although you can have an attorney present to go through the paperwork with you and make sure everything is in order, it’s not necessary. Florida isn’t a state that requires an attorney to be present at closing.
A notary will be able to handle the closing. Your real estate agent or your mortgage lender can also help you go through any of the paperwork.
Are you ready to get the keys to the home in the Keys? You can get started online or give one of our Home Loan Experts a call at (800) 785-4788. If you still have questions, you can leave them for us in the comments below.
1Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, debt, property, insurance, appraisal and a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Quicken Loans’ control, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close, you will receive $1,000. This offer does not apply to new purchase loans submitted to Quicken Loans through a mortgage broker. Additional conditions or exclusions may apply. Verified Approval within 24 hours of receipt of all requested documentation.
2RateShield Approval locks your initial interest rate for up to 90 days on 30-year conventional, FHA and VA fixed-rate purchase loan products. Your exact interest rate will depend on the date you lock your rate. Once you submit your signed purchase agreement, we’ll compare your rate to our published rates for that date and re-lock your interest rate at the lower of the two rates for an additional 40 to 60 days. Quicken Loans reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Quicken Loans. This is not a commitment to lend. Additional conditions or exclusions may apply.
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