• Daniel Poterek

Top 5 Tips for First-Time Homebuyers

Below are our Top 5 Tips for First-Time Homebuyers:


1. FAMILIARIZE YOURSELF WITH THE COSTS OF BUYING A HOUSE


In addition to the purchase price for your new home, there are many other costs that you will need to be familiar with so that way you are searching for properties that are in your budget. To the surprise of many first-time homebuyers, closing costs can amount to several thousands of dollars. We recommend that all buyers (especially first-time homebuyers) understand these costs before signing any real estate purchase contract.


While there are and be many different types of closing costs for a transaction, some of the most common and costliest closing costs associated with the purchase of a single family home in Florida include the following:

  • Title Insurance: Title insurance is a special type of insurance that helps protect a buyer and/or a buyer’s lender from prior ownership/interest rights or claims that other individuals/entities may have to the property, as well as from any outstanding debts of previous owners. Title insurance premiums are regulated by the State of Florida. At the time of this post, the general cost of title insurance is $5.75 per thousand for the first $100,000 of the purchase price and then $5.00 per thousand above $100,000. 

  • Documentary Stamp Taxes: Documentary stamp taxes are an excise tax imposed on certain documents executed, delivered, or recorded in Florida. Intangible tax is a Florida state tax which is levied on lended money and is due and collected at the closing of your loan. When an individual borrowers money for the purchase of a home, they are required to pay documentary stamp taxes. The amount of documentary stamp taxes are based on the amount of money being borrowed. In all Florida counties except Miami-Dade, the tax rate imposed on documents subject to documentary stamp taxes (like mortgages) is 70 cents on each $100 or portion thereof of the total consideration.

  • Survey: Surveys are graphical representations of the property’s boundaries. Surveys are helpful in determining whether there are any encroachments on your property such as a neighbor’s fence, a neighbor’s tree, or even a neighbor’s shed. They also confirm whether your home is properly within the property’s boundary. Surveys will also show the location of any easements such as utility easement that FPL (or other utility provider) can access to perform certain work and services. The vast majority of lenders will require you to obtain a survey of the property before the closing. Generally, surveys for a single family homes range between $500.00 to $1,500.00; however, the actual cost will depend on the size of the property and if a recent survey was performed.

  • Closing Fee: A closing agent in the individual that prepares all of the closing documents, collects all the monies from all parties to pay off all existing mortgages and other financial encumbrances, and issues the title insurance policy. Generally, a closing agent will charge $550.00 to $1,000.00 for a single family home closing; however, the actual cost will depend on the complexity of the transaction, whether there will be multiple loans closed at the same time, and whether there are any title issues that the closing agent will need to resolve before the transaction is completed.

  • Appraisal: The vast majority of lenders will require you to obtain an appraisal of the property before the closing. Generally, appraisals for a single family homes range between $250.00 to $1,500.00; however, the actual cost will depend on the size of the property, the improvements on the property, and whether it needs to be expedited for the closing.

2. FAMILIARIZE YOURSELF WITH THE DIFFERENT TYPES OF LOANS


There are thousands of banks, lenders, mortgage brokers, and other entities whose business is based on lending money to first-time homebuyers. There are also many different types of loans available, including, but not limited to, conventional loans, VA loans, FHA Loans, jumbo loans, fixed rate loans, variable rate loans, and loans of varying maturity periods. It is important that you fully research the type of lending product that works best for your finances and financial plan. Selecting a loan for your first home purchase should not be something you take lightly. Before signing a contract to purchase a new home, the legal professionals at our firm strongly recommend researching different lenders, speaking with your financial advisor, educating yourself on the different lending products available at the time you are ready to purchase, and investigating the interest rates available based on your financial standing.


3. RESEARCH STATE AND LOCAL ASISSTANCE PROGRAMS


The federal government, state governments, and even local governments sometimes offer assistance programs for first-time homebuyers. These programs may provide down payment assistance, closing cost assistance, reduced interest rates, and even tax credits. Before selecting a property, our attorneys recommend determining if you qualify for any assistance programs as that may help guide your search for the proper locality.


4. BUDGETING FOR MOVING EXPENSES


Purchasing a new home is both exciting and stressful. It is also an expensive process. Many times, new homebuyers forget about the tangential costs of buying a new home – such as packing up their current residence and moving/storage expenses. Additionally, new homebuyers need to determine whether their current residence has any required move-out fees and/or early lease termination fees that they need to include in their budget. Before signing a contract for a new home, our lawyers recommend that each new homebuyer evaluate and estimate their moving costs so that way they are prepared to incur those expenses when closing comes.


5. HIRE A REAL ESTATE LAWYER


Buying your first home is an important milestone in your life. It should be an exciting, memorable, and positive experience. However, navigating this process as a first-time homebuyer can be extremely stressful. The lawyers at The Burton Firm can assist you in understanding your rights as a homebuyer, advise you on potential pitfalls, and make you aware of unknown and/or hidden costs.


Our attorneys have years of experience representing first-time homebuyers, flippers, and property investors. We have assisted clients with the purchase of single-family homes to high-end condos. We also have numerous legal provisions that we recommend buyers include in their contract to best protect them – provisions that are not contained in the standard purchase contracts in Florida.

Additionally, our legal team can provide you with a full understanding of your rights and responsibilities so you do not have to face this difficult and confusing process alone. If you need assistance with buying your first home, please call The Burton Firm for a free consultation.