The Financing Process
So how does the actual financing work?
First, we will provide you with a detailed statement of costs. This statement includes a "good faith estimate" that covers all potential costs that you may incur when financing or buying Florida real estate. It includes the expected closing costs, the estimated total amount you will have to pay at the time of closing, as well as the estimated monthly payments.
If you decide to apply for a mortgage, the application requires details about the property you want to buy, as well as about your place of residence, your current employment status, your income and your financial situation. Depending on the type of mortgage, you may have to furnish proof of all of the above. When applying for a mortgage, you will have to pay the corresponding application fees (usually about $500). These costs cover third-party expenses that may be incurred when your mortgage application is processed; for example, expenses for a credit check or a property appraisal.
While you are procuring the required documents (if you are applying for a mortgage), we will take care of the property appraisal for you. Appraisers in the US are usually independently licensed or certified. The property appraisal is based on a comparison of the property in question to three other properties that are similar in size/construction and are located in the same area. Comparable properties have to be located within one mile of the property you are looking to buy and they must have been sold within the last 12 months. This constitutes the basis for appraising the current market value and the resale value of your property. If desired, you can also obtain a copy of your property appraisal.
After the appraisal and the credit check have been completed and you have provided all required documents, your credit file will be submitted to the financing institution, usually a bank. The bank checks the details of your credit file and issues a so-called “credit approval”. This approval can be an unrestricted approval (i.e., no additional documents or inquiries are necessary); however, the bank may issue a limited approval, in which case you have to provide additional documents, such as a letter of reference, statements, etc.
When all requirements have been met, the bank will issue a so-called “loan commitment”. This is the final step in the loan or mortgage application process. When your loan or mortgage has been approved, we will take care of all financing-related services. These include, for example, a property survey that determines the boundaries of your lot or property. In addition, we will commission a termite inspection of your property (this is not to be confused with pest control). Any termite infestation will be treated immediately. If your home is not yet connected to the public water supply or to public water treatment facilities, we will inspect your home for compliance with local regulations. Parallel to the mortgage process, we will also take out insurance that covers your property in the event of storm, fire, flood damage, burglary, etc.
Once everything has been approved, we either submit the corresponding documents to the title insurance company or to your lawyer. The title insurance company or the lawyer perform fiduciary and notarial tasks. During processing, the title insurance company checks to find out if there are any claims from third parties against your property. During the actual closing, the title insurance office or your lawyer pays the seller and lists you as the new property owner. At this time, you need to provide the equity portion of your mortgage as a cashier's check. Therefore, it is vital that you deposit the equity amount to a U.S. bank account prior to the closing date.
Author: Kirsten Paul (info@paul-finance.com)
Website: www.paul-finance.de
Kirsten Paul is a qualified banker and mortgage broker who specializes in providing consulting services for European investors in Florida. After living in the Sunshine State for many years, Kirsten now works from her Munich and Florida offices on a regular basis. Phone: +1 (239) 565-7057
