Step 1: Get Organized
The first step in the home buying process is to get organized!
Before you start looking for a home or completing a home loan application, here is a list of some information and documents you want to start collecting.
- Name, current address, social security number.
- Name(s), and work number(s) of employer(s) for the past 2 years.
- Monthly income for you and your co-borrower, for example a spouse. You’ll want to have your most recent pay stub(s) that shows a year-to-date income, showing bonuses, commissions and overtime income for the past 2 years. A good source for finding this information is on your tax return.
- If you are self-employed, you will need the last 2 years’ personal tax returns (Including K-1s) as well as the last 2 years’ tax returns for the type of business you own:
- Sole Proprietorship (Schedule C)
- Partnership (Form 1065)
- Corporation (Form 1120 or 1120s)
- Documentation to support credit history problems if applicable, which can be a written explanation of late payments, bankruptcy (petition and discharge papers), defaults, judgments and/or liens.
- As part of your closing, GTE Financial will have to verify all funds that you receive; so it’s a good idea to get together any documents that will verify proof of receipt of deposit for funds, like gifts and trust accounts.
- Read through our available disclosures containing important information regarding mortgage loan applications.
What insurance will you need?
Insurance may not be top-of-mind when thinking about buying a home, but it's a must have. Below are some basic types of insurance. Contact a GTE Financial Insurance Specialist at 813-871-2690 or email us at Insuranceservices@gtefinancial.org for more information about insurance services through GTE Financial.
Homeowner's insurance typically covers fire, theft, certain natural disasters and personal liability or if someone is injured on your property. Before closing on your loan, you will need proof of homeowner's insurance.
Several things happen behind the scenes when you buy a house. For example, GTE Financial will have someone perform a title search to make sure the seller has a legal right to transfer ownership and to see if there are any liens or restrictions on the property. A lawyer, abstractor or employee of the title company does the title search.
Title insurance provides protection against financial loss in case a defect in the title turns up at some future date. Possible defects include:
- Flawed information in deeds or mortgages, like an incorrect name.
- Liens or claims against the property or the property owner such as unpaid taxes or bills for water service.
- Claims to ownership from a former owner or spouse.
- Invalid deeds from a past sale or transfer by a party who didn't actually own the property.
Insurance That May Be Required:
Private Mortgage Insurance (PMI)
Typically, when you purchase a home, you would need to put at least 20% towards a down payment. Now-a-days, lenders offer loan solutions that can require a much smaller down payment, which can be very beneficial! If your down payment is under 20%, you may have to pay Private Mortgage Insurance, which is usually rolled into your monthly mortgage payment. Mortgage insurance makes it possible for people with small down payments to buy the home of their choice.
Flood insurance is the only type of insurance that covers floods; flooding is not covered under a standard homeowner’s insurance policy. To determine if you need flood insurance, ask your insurance professional about the flood history in your area. If there is a potential for flooding, you may be required by your lender to purchase a policy that covers the structure and your personal belongings.
Mortgage Life Insurance
When you purchase a home, some owners may opt to purchase Mortgage Life Insurance. This coverage can reduce or pay off your mortgage in the event of an untimely death before the loan is repaid. It generally is decreasing term life coverage; the benefit payable matches your mortgage balance. Consider your entire financial picture, not just your home, when considering what life insurance protection you need.
Good information on Down Payments
When you are looking to buy a home, a down payment of 15% to 20% can sometimes be a challenge. Below are some tips when determining what you can afford.
Know Your Assets. You may already have more money available to you than you realize. When considering how much you have for a down payment, be sure to include ALL of the following sources, commonly referred to as assets:
- All checking and savings accounts.
- Stocks, bonds, stock options, 401K value.
- 401K loan.
- Gifts from family, which is money given to the borrower to assist in the purchase of a home.
Other options. If the money doesn't add up, don't give up! There are often ways to make it work.
- Look for a loan that requires less money down. GTE Financial offers several home loan options that require significantly less than the standard down payment.
- Think about getting Private Mortgage Insurance. When you put less than 20% down, many lenders will enable you to move forward on the loan with the purchase of Mortgage Insurance, which is usually rolled into your monthly payment.
- Allows for lower down payments.
- You can pay for it on a monthly basis.
- You can often drop the insurance once you reach 20% equity.
Good Information on Credit
When you are looking to buy a home, it’s always a good idea to review your credit profile.
Lenders will look to see if you have established a solid payment track record. Credit Reporting Agencies compile a record of what you owe and if you’ve made payments on time. This information makes up your credit report.
Once you have submitted a loan application with GTE Financial, your credit report will be reviewed (with your permission) to verify your monthly payments, the amount of your long-term debts and how long it will take you to pay those off.
Your lender can help you calculate your buying power, based on your total income, debts, credit history, and other factors. If you're buying a house with someone else – a spouse, parent, partner/companion, etc. – that person's annual gross income can be included in computing the amount of your loan, or how much home you can afford. Remember that all persons applying for the loan must have their credit report reviewed, and his or her debts will be factored into whether you can get a mortgage together.
Crunch some numbers with our helpful calculators!
Home Buying Calculators
Step 2: Apply for the Right Loan
Once you’ve started getting organized, the next step is to find the right loan and apply for pre-approval!
Top Tips Before You Apply
Research Loan Options
Prior to shopping for a home, it’s important to know your financing situation. You can learn more about all GTE Financial’s loan options right here on our website, including details on when a certain loan may be your best choice.
Calculate and Compare Loans
With 12 simple questions, you’ll be able to view available rates, estimates on total closing costs and monthly payments using GTE’s Loan Consultant tool. It’s a great resource for crunching some initial numbers and comparing options.
Apply for Pre-Approval
Once you feel good about what is most important to you in a mortgage, apply for pre-approval, before shopping for a home.
Why apply for a loan before shopping for a home?
- With GTE Financial, you can apply online; there’s no obligation to move forward and it’s free.
- A credit pre-approval will give you a great idea of how much home you can afford.
- You will receive paperwork to show your agent and the seller that you’ve already got financing lined up, proving you are a serious buyer. Some agents won’t even show you homes without a pre-qualification or pre-approval, and sellers can be leery about negotiating without knowing the buyer is prepared.
Select a loan option in the application.
- Within GTE Financial’s online application, you will be asked to select a loan option. With all the prior steps accomplished, picking a mortgage will be simple!
- If you receive a pre-approval, that means you have been credit pre-approved for the loan type, amount and term you’ve selected.
- If you do not receive an instant pre-approval, you will still be contacted by a GTE Mortgage Specialist.
- If things change, or your pre-approval expires, you may need to re-apply for a new loan. By being as accurate as possible on your initial pre-approval, you can save significant time.
Apply for the Right Loan > Link to Apply Home Purchase
Purchase Application FAQs > Link to FAQs
Crunch some numbers with our helpful calculators!
Step 3: Find Your Home
Shopping for the right home is an exciting time! Here are some things to think about as you begin your search.
Find a REALTOR®
When you’re looking for a REALTOR®, often times, people shop online or ask their friends or family. Another great option is to use GTE Financial’s Realty Services program for free! When you enroll in this free service, we will match with you an experienced, top real estate professional in your area. You will be assigned a dedicated Member Advocate to help ensure a smooth home buying experience and you’ll receive discounts on popular home purchases, plus a rebate on the REALTOR® commission.
Learn more about GTE Financial’s Realty Service Program!
Find Your Home
Shopping for a home is one of the most exciting times in the home buying process. Below are some top considerations you may not have thought about!
Home Search Resources in Tampa Bay
Go online. Once you've determined how much you can afford to spend on a home, concentrate your search in areas that have homes in your price range.
- Go online! There are great real estate sites available, many for free, like Zillow.com (This website is not affiliated with GTE Financial).
- Work with a qualified real estate agent that can make recommendations.
- Check out the real estate section in the newspaper or local home buyer publications.
Make a List
Make a list of all the things you want in a home. Be as specific as possible. Consider some of the following things:
Think about what you want on the outside of your home.
- Will it have a yard? If so, what size?
- Do you want an established garden or a chance to create your own?
- Do you want a garage? Attached? Detached? Room for how many cars?
- Do you want a pool? If you can't have it immediately, does the property allow for a pool to be built?
- If you always desired large trees and plush landscaping, think of the maintenance.
- Are there sidewalks, adequate lighting and a large driveway?
- How close do you want the neighbors? Can you put a fence up or landscaping for additional privacy?
- How old is the roof and is the air conditioner in good condition?
- Do you want to be on a cul-de-sac or have a more secluded lot with privacy?
Think about what you want on the inside of your home.
- How many bedrooms do you need? How many bathrooms?
- Do you want a large kitchen or is a big kitchen not that important to you?
- Do you have a minimum square footage?
- Do you work at home or think you may in the future and will office space be needed?
- Do you have a parent or relative that may live with you one day?
- Think storage. And, will my furniture fit or look good? Will I have to buy new pieces?
- While ceiling height can be a plus, think air conditioning and energy costs.
- Do you want an alarm system?
- Do you want stairs or a single floor unit? What about an attached unit, like a townhouse or villas?
- Is your house built for efficiency and does it have appliances or will you need to buy them?
- Florida is a hurricane state. Is the house built to code?
Home search tips you don’t want to forget:
- Schools. If you have children, education is one of the primary factors when choosing location. In some Florida school districts, public schools utilize "school choice" programs, where you may be able to determine where your child attends school. More often, where you child goes to school will be determined by zones. You can easily check out school zones and statistics online. Also take note of how often zones have changed in a given area. Sometimes, zoning updates can be more frequent than you think. It may also be a good idea to call the local school district. Here are some suggested questions to think about:
- How do students score on statewide and national tests?
- How many students go on to college?
- What colleges do they attend?
- What are some of the problems facing the schools in this area?
- What about drug use and the incidences of violence?
- What is school policy regarding weapons?
- What is the student/teacher ratio?
- What about art, music, drama and sports programs?
- What are the ages of their facilities? Old, new?
- What is the student/computer ratio?
- At what grade level do they start teaching computer skills?
- What is their language program like?
- Demographics. Conduct online searches for websites hosted by local municipalities or chambers of commerce. Often times, these websites will have valuable information on housing, employment opportunities and demographics.
- HOAs and CDDs. Amenities may be a big selling point to you, like a community pool, tennis courts or playground. Also, living in a community with specific standards to help ensure its long-term value may be important. Neighborhoods can be deed restricted or may have covenants that you have to follow, for example paint color, type of roofing, maximum pets allowed and how many outbuildings you have or can build. Make sure to consider Homeowners Association (HOA) standards and fees as well as Community Development Department (CDD) fees, both of which are aimed at maintaining common areas and amenities; these fees can affect your monthly budget.
- Emergency response. You want your family and your possessions to be safe. Call the local police department and ask for the Public Information Officer.
- Check on local hazards. While you may want to pay for a risk report, you can check out www.e-risk.com or visit the Environmental Systems Research Institute, Inc. at www.esri.com where you can generate a map illustrating recent and historical hazards like floods or wind storms. (This website is not affiliated with GTE Financial).
Before you buy, do the drive test
- Drive at different times. Drive the neighborhoods you are interested in from work, during rush hour and on the weekends to see how it feels.
- Noise. When you've chosen your favorite community, drive through it during the day and night to check out traffic and noise levels. Airplanes, car traffic, nearby businesses that may be playing music for example, can all affect your happiness in a home.
- Close to work. Often times, trying to be close to work seems like a no-brainer. Let's say you work in the city in Tampa. By purchasing a home in a suburb outside the downtown and work districts, you may be able to afford more home; there could be convenient commute routes and by adding twenty minutes to your drive, you may be able to get a 4 bedroom or be in a gated community. Careers can change, so it may not make sense for a short drive to be the primary decision maker.
- Everyday conveniences. How important is it for you to be near local conveniences like a grocery store or restaurants? Do you need to be near a hospital or a public transportation station? Create a list of what means the most to you and then use this list when comparing locations.
- Walking. If being able to walk to local conveniences is an important factor to you, check out www.walkscore.com to measure the walk-ability of any address. (GTE Financial is not affiliated with this website).
Step 4: Make an Offer
Congrats! You’ve found a home you love. Now, it’s time to make an offer.
Make an Offer
The next step to buying a home is to make an offer in writing and submit it to the seller. This is usually done through your real estate agent and is accompanied by a deposit. This deposit indicates a serious intent for purchase, called earnest money, and is usually a pre-determined amount. This deposit is refundable in most cases and will only be charged if the offer goes through. Make sure to thoroughly understand the stipulations of the money that’s exchanged as it can vary.
Follow the advice of your agent or lawyer when deciding how best to make your offer. Here are examples of details offers typically include:
- The price you're willing to pay.
- When you want to move in.
- What kind of inspections you'd like to have (structural, electrical, plumbing).
- If your ability to buy the house depends on your ability to get financing.
- The amount of time both you and the seller have to make all these things happen (usually 30 to 60 days).
Counter offer. The seller usually has 24 to 48 hours to consider your offer or make a counter offer. A counter offer, under the terms you’ve offered, indicates they want to sell you their house, but they want to make a change.
Consensus. When you both agree on terms, you have a deal! You sign a contract and your earnest check goes in to an escrow account.
Walk-through. Another step that your real estate professional will usually request is a walk-through of the home done very close to closing. This ensures that the home is in the same condition that it was in when you signed your contract. You will want to do your walk-through as close to your closing date as possible. For example, you can check to make sure the appliances are still intact if it was indicated that appliances were part of the sale of the home. You will also want to make sure the power is on so you can test out the electrical elements in the home. You can also check for any damage that may have occurred possibly when the seller was moving out and be able to inquire with the seller or their agent prior to closing.
It is always wise to make an offer “contingent on inspection”. Your real estate agent can help recommend vendors or you can look in the Yellow Pages® under 'Home Building Inspection Service'. “Contingent on inspection” means that your offer isn’t really valid until the home has been carefully examined by a qualified home inspector who is trained to take a critical look at various aspects of the home including:
- Heating and cooling systems
- Electrical system
- Windows and doors
- Exterior grading to make sure water drains away from the home
- Especially in Florida, if the home you want to purchase is wood frame construction, or even if it’s block construction, termite and infestation inspections can also be very important
Loan Processing & Escrow
Once you have put in a contract for the purchase of a home, the lender will begin processing your loan. At this time, GTE Financial will verify the information you've provided us on your loan application and will request minimum documentation to confirm your assets and income.
Your property will be reviewed by ordering:
- An appraisal, a professional assessment of the property’s market value.
- A title report, a legal document establishing the right of ownership.
- A flood certification on the home, which is a determination as to whether or not a property is located in a flood zone. If it is, the lender will require the new buyer to purchase federally approved flood insurance. For more information on insurance, contact a GTE Financial Insurance Specialist at 813-871-2690 or email us at Insuranceservices@gtefinancial.org.
Defining an Escrow Account:
A prepaid processing deposit is usually required for the appraisal, title report and flood certification and typically is applied toward the buyer’s closing costs. The lender will also set up an escrow account for the loan closing and send out applicable disclosures so you have a chance to read through them.
Escrow is the holding of documents and money, such as a deposit, by a neutral third party prior to closing. It is also an account held by the lender into which a homeowner pays money for taxes and insurance.
An escrow account ensures that:
- Homeowners are protected from the possibility of losing their homes for missing tax payments.
- The escrow account will advance the funds to cover any unexpected increase in tax or insurance payments, which may result in higher monthly payments.
Step 5: Close
Closing is the final step when purchasing a home. This is when the buyer assumes legal ownership of the property from the seller.
Parts of the Closing
Closing date. The closing date is decided upon by the buyer and the seller typically during the negotiations of the sale. Often times, closing is conducted at the Title Company or a lawyer’s office whom will be responsible for recording the transaction with the county and documenting the formal change of possession. Closings usually take about 1 to 2 hours. All the necessary title and loan papers will be signed by the buyer at this time. In Florida, the seller may have already signed all the paperwork prior to the appointment versus at the actual closing.
Escrow. The lender will prepare the loan documents for you to sign and send them to an Escrow Company for signing as well. Once GTE Financial receives the signed documents, we will transfer the money to the Escrow Company and they will disburse the loan and record the closing documents.
Money you need to bring. In preparation for the closing, the buyer must obtain a cashier’s check or a wire transfer ready for the amount of money due upon closing. Once payment has been made and paperwork completed, the deed and the keys to the home are provided to the purchaser.
How will I know how much I have to pay at closing?
Depending on the stage of your loan, there are 3 primary ways you will receive information on how much you owe at closing.
Loan Estimate (LE), an itemized list of fees and costs associated with a loan usually provided within 3 business days of applying for a loan, but is highly subject to change.
Summary of Charges, another estimate that is also subject to change. When you apply online with GTE Financial, there is a page within the online system that will provide a Summary of Charges as well as Closing Cost Details. The Summary of Charges is usually a bulk number, for example $7,500, and then the Closing Cost Details specifically outline all of the line item costs that get you to your bulk sum. You can receive a Summary of Charges with our online mortgage application or using our Loan Consultant tool. Based on 12 simple questions, the Loan Consultant will calculate available interest rates, total closing costs and monthly payments.
Closing Disclosure Statement (CD), the official and final detailing of what you owe at closing. This will be provided to you usually 5 days or more in advance of your closing date.
What’s included in my closing costs?
One of the major questions that arise for both the buyer and the seller is what am I actually paying for at closing?
As a part of your Purchase and Sales Agreement, which is a legal document requiring the buyer to buy and the seller to sell, the purchaser can ask the seller to pay their closing costs. It is important to note that GTE Financial and other lenders may have limitations on the amount a seller can contribute. It is typically 3% to 9% that a seller can provide, depending heavily on the loan to value ratio (LTV).
- Application fees, covers the initial costs of processing your loan request.
- A credit report, typically done by an independent credit association to establish your credit rating.
- An appraisal, conducted by an independent appraiser to establish the value of the property.
- A flood certification on the home, a determination as to whether or not a property is located in a flood zone.
- An inspection, done by an independent inspector to provide information about the integrity of the house.
- A title search and insurance, which will disclose whether the property has any liens, a legal claim against a property that must be paid prior to the property being sold or encumbrances. Title insurance covers the lender against errors in the results of the title search.
- Recording fees, which cover the cost of the transfer of the property with the appropriate government bodies.
- Courier fees, covering the cost of transporting documents between the escrow service and various other entities.
- A loan origination fee, imposed by the lender to cover certain processing expenses in connection with making a real estate loan.
- Discount points, a fee that results in a lower interest rate for the borrower by allowing them to pay more money to reduce their interest rate (Typically the higher the interest rate, the lower the discount points).
- Escrow services, the holding of documents and money, such as a deposit, by a neutral third party prior to closing. It is also an account held by the lender into which a homeowner pays money for taxes and insurance.
- Homeowner's Insurance, which covers certain damages to a home.
- Federal Housing Administration (FHA), Rural Development Services (RDS), Department of Veterans Affairs (VA) fees or Private Mortgage Insurance (PMI), fees that may be required for loans insured by federal government housing programs.
- Escrow services (seller’s portion).
- Title insurance, usually set by the purchase price, paid to protect the lender’s policy or the buyer’s policy against loss arising from disputes over property ownership.
- Excise tax.
- Recording fee.
- REALTOR® commissions.
Some other items that may be required at closing, but not always:
- Water and sewer certification, especially if your new home is not on municipal or sewer facilities, a certification may need to be ordered through your local health department to save you money.
- A building code compliance letter.
- Mortgage insurance.
- A survey.