Your Guide to Financing a Home in Northeast Florida

An appraisal is an estimate of a property's fair market value performed by a licensed professional. Lenders typically require an appraisal to ensure the home's value supports the loan amount being requested. The appraiser evaluates the property's condition, location, features, and compares it to similar recently sold homes in the area.

An escrow account is a separate account established by your lender to collect funds for property taxes and homeowners insurance. Instead of paying these expenses separately once or twice per year, a portion is included in your monthly mortgage payment. Your lender then pays these bills on your behalf when they become due.

At closing, lenders often collect several months of property taxes and homeowners insurance in advance to establish the escrow account. This helps ensure there are sufficient funds available when those bills come due.

Cash to close is the total amount of money you'll need to bring to closing. This amount typically includes your down payment, closing costs, prepaid expenses, and escrow funding, minus any credits or concessions you may receive.

The underwriter reviews your financial profile, including income, assets, credit history, employment, and debts. Their job is to verify that the loan meets lender and program guidelines. Depending on your situation, they may request additional documentation to clarify information or verify eligibility.

Not all income types are considered stable or eligible under lending guidelines. Lenders must verify that income is likely to continue and can be documented properly. Overtime, bonuses, commissions, self-employment income, and other income sources may require additional documentation and history before they can be included.

Florida is a homestead state, and certain legal documents may require a spouse's signature even if they are not applying for the mortgage. This helps protect ownership and homestead rights associated with the property.

It's generally best to avoid opening new credit accounts, financing vehicles, making large purchases, or allowing significant changes to your financial profile during the loan process. New debt can affect your debt-to-income ratio and may impact your loan approval.

Large deposits may require documentation showing where the funds originated. Lenders must verify the source of funds used for down payments and closing costs. If possible, discuss any large deposits with your lender before making them.

Closing costs are made up of several fees associated with your transaction, including lender fees, title fees, government fees, prepaid taxes, homeowners insurance, and escrow funding requirements. Some costs are determined by service providers, while others are regulated or based on the specifics of your loan.