Part 2 – Obtaining a Mortgage and Home Appraisal
Buying a home is one of the most important decisions in a person’s life. As we discussed last week, in Part 1 of our Beginner’s Guide to Buying a Home in Florida, the Contract and Depositing Earnest Money, even for the most experienced sellers/buyers, closing on a home in Florida can become an intimidating challenge. This series is written to assist you in understanding the basics of real estate transactions in Florida.
Obtaining a Mortgage
In many real estate transactions, the buyer will require a loan in order to finance the purchase of the property. The seller may be willing to hold a note and mortgage or the buyer will need to obtain a loan from a private or institutional lender to provide funding to enable the buyer to purchase the property. Once the buyer has selected the lender, the buyer will be required to apply for a “mortgage loan”. A mortgage is a loan from a bank or other institutional lender that enables a buyer to obtain sufficient funds to purchase the property. The collateral for the mortgage is the property itself, meaning that if the buyer does not comply with making timely payments or other the terms of the mortgage, then the lender can declare a default and foreclose on the property requiring the property to be sold in order for the lender to recover the moneys due to the lender. A buyer should be aware that it is helpful to a buyer in making an offer to purchase property to have pre-approval for a loan in order to show the seller that the buyer is able to complete the purchase. So, a wise buyer will search for the lender before making an offer to purchase property in order to obtain a pre-approval document, showing the seller that the buyer can readily secure the required loan and move quickly to the closing. As part of the lending process, the property will need to be appraised to show that it is worth the value shown in the contract, and the lender will require proof that the title and the property is insurable. The attorneys and staff at the Sherrard Law Group have assisted buyers for forty-seven years in finalizing their loans and closing on the purchase of their desired property.
A licensed appraiser, selected by the buyer’s lender, will conduct the appraisal on the subject property. The appraiser will visit the property and investigate the condition, square footage and location of the property. Off-site, the appraiser will also evaluate the current real estate market in the neighborhood in order to estimate the fair market value of the property. The value in the appraisal will be relied upon by the lender to determine if the property value is sufficient to warrant to loan value. If the purchase price is more than the value shown in the appraisal, the lender may refuse to make the loan, and the buyer may be required to negotiate a reduction in the price from the seller or cancel the purchase contract.
No matter if you’re buying or selling a home in Florida, you should have a skilled representative working with you throughout the process. While an agent or realtor can answer certain questions you may have, only an attorney will act in your best interests and is often less expensive than people think. In fact, in most instances having a real estate lawyer close your transaction will cost no more than a title company will charge to conduct the closing. That is why we invite you to contact the Sherrard Law Group today to speak to a member of our legal team about your real estate transaction. We look forward to serving as your trusted legal representatives.
Next week – Part 3…Inspections
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Stuart, FL 34994
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