This guide must not and should not be construed as financial or legal advice. It is purely intended as a guide to serious purchasers. We have a panel of affiliated financial advisers who are willing to service our clients.
The potential buyer should be pre-qualified before the agent shows them any homes in Florida. Qualifying avoids many problems such as showing an overly priced home to the potential buyer.
Mortgage Approval Time:
Once the mortgage application and all documents are received from the buyer, the average approval time is 3 weeks. The mortgage application can be completed by mail. Types of programs available (international buyers):
Fully Documented Loans
20% deposit, no redemption penalties
7.5% to 8.25% fixed for 30 years (most popular)
7.25% to 7.75% fixed for 15 years
No-income / non-status Qualifying Loans
30% deposit, redemption penalties may apply
7% adjustable interest rate for 30 years
Where does the buyer apply for the mortgage?
The buyer can apply for the mortgage in person here in Florida or the mortgage can be applied through the mail. One of our approved mortgage companies will mail the package to the potential buyer. Can the buyer be pre-approved for the mortgage?
A mortgage broker can pre-qualify the potential buyer over the telephone or in-person here in Florida.
Estimated Closing Time:
Existing/Pre-built Homes: 4 to 5 weeks
New construction: 12+ months
The closing can take place here in Florida or the Mortgage Closing Package can be mailed to their home country.
Who Conducts the Closing?
The closing is conducted by Florida Licensed Title Company, similar to a solicitor. The title company will insure all Florida Laws are being followed. The title company will also ensure that there are no title defects to the property being purchased and in turn provide title insurance. Title Insurance is approximately 1% of the sales price and will be disclosed on the Good Faith Estimate given by the mortgage company.
Our Standard Wealth Warning
Remember your home is at risk should you not keep up the repayments of a mortgage or loan secured thereon.
Although it’s very viable to finance your Florida home your resident country, U.S. mortgages will frequently be more attractive, subject to status. Advances of 70% are relatively simple to obtain, 75% is not usually problematic bearing in mind that more detailed financial information will be required. Advances of 80% are not uncommon. Our associated mortgage brokers in Florida and the U.K. can quickly pre-qualify your application and they will recommend the most appropriate mortgage product for your individual circumstances . You will probably need to increase your life insurance as well as taking out home insurances in the U.S. following the purchase of your property. Our affiliated experts in the U.K. and U.S. will be happy to provide quotations in this regard.
Lender Checklist
To help facilitate your loan qualifying process bring the following to the appointment with your lender:
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Copy of earnest money deposit.
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Copy of executed sales contract.
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Copy of social security cards and picture I.D.
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Residential addresses for past 2 years, landlord's address and phone number.
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Last 2 pay stubs, and any bonus or commission information, if applicable.
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Names, addresses, account numbers and balances of all checking and savings accounts.
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Last 3 month's statements of checking, savings and investment accounts.
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Names, addresses and account numbers with balances and monthly payments on all debts.
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Addresses, loan information and lease agreements on any real estate owned.
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Estimated value of furniture, jewelry and personal property.
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Values of life insurance policies, retirement accounts and profit sharing.
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Certificate of eligibility and/or DD214 for VA loans.
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Checkbook for appraisal and credit report.
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If self-employed, 2 years income tax records with all schedules and year to date profit and loss.
Deposits and Closing Costs
Deposits vary dependent on the builder and/or private seller. Expect to pay a nominal $1000 at contract stage of the purchase of a property to secure your chosen lot and purchase price prior to arranging the balance of monies due before the completion of the construction.
We strongly suggest that you open a U.S. bank account to easily assist the transfer of funds from your home currency to USD Dollars. As part of our service, we are happy to assist you in the opening of such an account and will introduce you to a major bank in this regard. This An initial deposit of $50-$100 is standard to open the account and it should take approximately than half an hour. Expect to produce your a passport and two utility bills relating to your primarily residence at home for identity purposes.
Closing costs are mainly made up of various stamp duties payable on several documents. The most substantial cost is usually associated to the mortgage. Realistically this can amount to 6-7% of the loan/mortgage amount and you will be notified of this expense once a suitable mortgage has been obtained in your favour.
A lot of builders will cover the majority if not all of the costs for you, however a typical builder would probably offer you around 2% of the loan amount in assistance with these closing costs. Please refer to your allocated expert at Integrity Realty of Central Florida.
Please remember that the above information is an up to date indication of what you can expect when purchasing a home in Florida. Due to ever changing Laws and Regulations, the above must not and should not be construed as Legal or Financial advice. We have a panel of independent Legal and Financial experts affiliated to our company who will be pleased to furnish you with the relevant information appertaining to your individual circumstances upon your request.
Taxes
Property Tax
Property tax equates to around 1.5% of the property's value which is usually paid monthly along with any mortgage payment although it can be paid annually. Sales tax (similar to EU VAT or IVA) is chargeable upon on rental income usually at a rate of 12%. Although it is effectively the tenant's liability, it is the owner or property management agent’s obligation to enforce.
Rental income is declared in the U.S. for income tax purposes. It may also be declared in the owner's country of residence and to avoid ‘double taxation’ we strongly recommend that you seek independent advice from your accountant. Should you not already be in possession of accountant services, we would be happy to arrange an introduction to an expert from one of our professional panel of affiliates.
We strongly advise that all our clients speak with our affiliated experts in relation to topics such as Capital Gains Tax and Inheritance Tax Planning.
Foreign Investment Real Property Tax Act (FIRPTA)
Foreign Investment Real Property Tax Act or commonly known as FIRPTA is a U.S. tax law that states a foreign investor must have 10% of the selling price of the property withheld at closing and within twenty (20) days these funds must be sent to the Internal Revenue Service. If that happens, in some cases, it has taken more than two years for the seller to obtain their funds back. To avoid this from happening, an exemption request may be filed with the IRS on or before the date of closing. What this request does is to present all the facts to the IRS and requests that they determine what they feel is the correct tax due. If the exemption request, Form 8288-B, is present at closing, the closing agent usually the title company does withhold the 10% funds, but are allowed to keep these funds in their escrow account until the IRS has made their determination. At such time the funds are then disbursed according to the IRS. Their determination can range from zero to many thousands of dollars. It all depends upon the capital gain or loss made on the sale. This process takes anywhere from 4 to 6 months.
An exception to this rule is if the buyer is going to live in the home 50% or more of the time for the next two years and the amount realized is less than $300,000.00. It doesn't exempt the seller from paying capital gains taxes only from having the 10% funds withheld. If the property sold has been investment property and the seller has filed the appropriate tax returns with the IRS and if there have been rental loss carryforwards, these losses may offset any capital gains from the sale of the property.
In order to prepare the exemption request the following information is required:
1. Name & foreign address of seller and tax identification numbers (ITIN).
2. Property address.
3. Buyers name and address and tax identification numbers (ITIN).
4. What was paid for the property (substantiated with closing statement or tax rolls).
5. Capital improvements (must include invoices).
6. What the property is selling for (substantiated with closing statement or copy of contract).
7. Closing costs (substantiated by closing statement or from information prepared by the realtor).
8. Date of closing and name of title company.
Integrity Realty of Central Florida can prepare this form for a separate fee (rates provided upon request) which can be paid at the time of closing.
