The Financing process
In order for you to be ready for an offer when the right property comes up you should be prepared and have everything available and set up when financing plays a role in your purchase. This should give you a basic overview about the steps involved:
1. The Mortgage Broker
Find out whether you want to go through the financing process with a mortgage broker or whether you feel working with the bank directly is the better choice for you. The advantage you have with a mortgage broker is that the cooperation with a large number of credit institutions results in a better overall view and more possibilities for comparison than a single bank could provide. The following steps are based on the work with a mortgage broker.
2. The Pre-Approval
The mortgage broker can issue the pre-approval, a prequalification for a fixed purchase price and the corresponding amount of credit in a very short time. It is based on the ratio of income and expenses as well as on the available equity capital that can be contributed by you for the purchase of the property in Florida. Without further documentation you can have this document issued at any time. In a fast moving real estate market it is important to be well prepared for the real estate search. If you find it, you will then be able to act without delay.
3. Calculation of Expenses
The Mortgage Broker will prepare a list of costs for you. In this list you will find all expenses and fees relevant for financing. This calculation will transparently show the amount of your expected costs for the procurement of capital (closing costs) as well as the amount you will have to spend for closing, also the amount of future charges per month.
4. Signing the home contract
Between one of the preceding steps, you will sign a contract for the purchase of your home or lot. It is important to mention that it must contain a financing clause, the so-called "finance contingency". With this clause you secure a possibility of withdrawal including the return of the deposit if the financing is not approved.
5. The Loan Application
After the contract has been signed/accepted by the seller you will have to submit the application for the loan, in which you provide information about the property as well as your residence, employment, income as well as financials. When the application is submitted, the fees are also due. These cover third-party costs incurred during the processing of the loan, e.g. valuation, courier costs etc.
6. List of necessary documents
At the same time as the application, the mortgage broker will compile a list of all necessary documents that will have to be provided by you.
7. The conditional loan approval
Directly after all your documents have been submitted by you and checked by the mortgage broker, they will be submitted to the financing bank. After a detailed check by the underwriting department, you will be issued a conditional loan approval. In this preliminary approval, conditions that still have to be fulfilled are mentioned, e.g. the valuation of the property etc.
8. The appraisal
In order to determine the actual market or resale value of the property, the bank will order a state-licensed appraiser. You will receive a copy of this appraisal. The lower of the appraisal and the purchase price is used for the final confirmation.
9. The Loan Commitment
As soon as all remaining conditions are clarified/fulfilled, you will receive the Loan Commitment, i.e. the final financing confirmation. Only then will the remaining third-party services related to the financing be requested, such as the survey etc.
10. The Title Commitment
At the end of this process and when all open items have been taken care of, the bank forwards the package of documents to the Underwriter. When processing the loan, the insurance company checks whether any third-party claims against the property have been registered and then issues you a Title Commitment in writing, i.e. the confirmation for the insurance at the time of transfer. This guarantees you that you will be transferred the property free of claims.
11. The Closing documents
At closing you bring your ID or passport to the Title Company and sign the documents on the day of the transfer of ownership. If you are in another country at that time, the bank will send you the closing documents by email. You will need to have your signatures certified by a notary public or an American Consulate. The document package will then be returned to the Title Company via courier.
12. The Closing funds
Until the day of the closing and the final transfer of the property, your equity capital must be wired to the escrow account of the Title Company. The Cash-to-Close-Funds consist of your own capital, the acquisition costs for the loan as well as the closing costs for the transaction.
13. The Closing
At closing the purchase price is then transferred to the seller and you are registered as the new owner and receive keys and garage door openers for your new home. If you are not at the closing in person, your trusted person (friend, agent etc.) can receive the keys for you. It is important that you or your Realtor make a final walkthrough of the property on the day of the closing to ensure that no damage has been done to it and that installed appliances and any movable objects you may have bought with it, such as furniture, boat etc., are present.
14. Insurances and Services
From the day of the closing you will need to have your own insurance policies in place. Electricity, water and other services have to be started in your name and your monthly installments for the loan will be automatically charged.