Should You Rent or Buy in Florida

The question of rent vs. buy is an age-old question. There are pros and cons to each, to be sure, but ultimately, the decision rests on the state of your lifestyle, budget, community and needs. It also depends on the county you’re moving to. The Miami Herald reports it’s cheaper to buy a home than rent if you’re looking in Miami-Dade and Broward counties, even though home prices and mortgage rates have been on the rise.

Doing the Math

That being said, the advantage to buying your own home in that area, indeed throughout all of Florida, is slowly decreasing as home prices continue their upward trend. The average mortgage payment in Miami-Dade, for example, jumped from $614 a year ago to $790 a month at the end of 2013, continues the Miami Herald. Take the same house and rent it, and you’ll see the monthly cost last year was $1,539 per month. Head on over to Broward County and you’ll see a similar scenario: a monthly mortgage rose a whopping 31 percent in the last quarter of 2013, up from $695 the previous year. However, keep in mind the cost per month to rent that same house in Broward was at $1,763. The cost of a home, as well as its corresponding interest rates, has outpaced the median household income.

Florida as a Whole

This state was one of the first markets to start slipping into the most recent housing crash, according to MSN Real Estate. Contrary to what analysts were hoping, Florida has taken a longer than expected time coming out of it. However, the prospects are now looking good for home ownership overall, especially for those who are looking to stay in Florida throughout the entire year. Snowbirds who only visit Florida during the winter months are also getting in on the deal. Vacation-home sales increased by seven percent in 2011 and are only expected to continue to rise, says Market Watch. Three in four vacation homes are purchased in the south, with a vast majority in Florida. Home buyers are citing increasingly good real estate deals as their reasons for settling down in that state. Of course, the weather doesn’t hurt either! Other southern states are experiencing high homeowner rates over renting, such as San Antonio, Texas, with a price-to-rent ratio of 10, according to Time. In Phoenix, Arizona, the foreclosure rates are sky high, with the only benefit being for home buyers looking to get a great deal off that surge of new renters.

Making a Decision

The best way to make a decision on renting vs. buying is to test the waters first. Consider renting a place a few times on vacation before making the plunge to buy. Things to consider in your decision include access to good health care, safe community, available activities, and income, property and estate taxes. In making a comparison between rent vs. buy, don’t forget to include all the numbers that come with home ownership, such as property insurance, home owner association fees and maintenance. That last one can be a doozy, as you’re in charge of fixing leaky pipes and broken appliances, plus you have to purchase new furniture and lawn mowers as a home owner that you wouldn’t if you were renting, points out U.S. News and World Report. When you rent, you don’t have to worry about all those repairs, which can be a big concern especially to the aging population. Another consideration for home buyers is the high price that rentals are capturing these days. With nine out of 10 buyers planning to rent out their property within the first year, 71 percent pf those people said they were attracted to do so by the high rental income that was possible, says Market Watch.

It’s important to explore the pros and cons of each option for your individual needs when tackling this big decision. The high price of renting comes with the peace of mind of no worries about home maintenance and upkeep. However, home ownership gives you a vested interest in your own property that can gain value over time.

A Quick Homeowners Guide to Happiness

So your bags are packed and all that is left is to move into your new home. Or so you thought. Becoming a homeowner is one of the most satisfying things for a family. Still, it is a journey, and one that is littered with its fair share of red tape and stress. These three tips will make your life easier while making the transition to your new home.

1. Keep All of Your Receipts- When you sell a home you can include any costs which can help maximize your tax-free earnings when you sell your home. For instance, in 2008 you could have earned $250,000 tax free income from the sale of a home as long as you had lived there for five years. If you have a spouse you can then both receive the exemption.

So if you make $20,000 dollars in home improvements over the course of your tenure and you bought the home for $150,000, and then sold it for $450,000. You would be exempted from the $250,000 but you would have to pay taxes on the $50,000, if you didn’t not save your receipts. However, if you can prove you spent the $20,000 dollars then you only have to pay taxes on $30,000 because your home’s basis is $170,000, $150,000 for the home and $20,000 for the improvements.
2. Know the Difference between a Repair and an Improvement– Not all home expenses are treated equally by the IRS. Repairs are part of home ownership, something that is included in your home’s basis. This is something that preserves the homes original value but does not add value. An improvement is something that adds value to the home. For instance, if you bought a foreclosure and fixed it up, most of the work done would be seen as repairs and not improvements. It is only improvements, like a new roof or air conditioning unit that will decrease your tax bill in the future.

3. Get Properly Insured– You should make sure that you own homeowners insurance to make sure that your home’s contents are protected. You should also purchase a plan that will fully replace the property in a catastrophic event of total loss. And don’t stop at homeowners insurance. You should also purchase life insurance, especially if you are living with people who depend on your income to pay the mortgage. You may also want to take out a disability policy in the event that you become injured and are unable to work.

In addition to getting the proper insurance, you should also protect your home in other ways. A home security system is a great way to give you peace of mind. Be sure to keep your company’s logos on your lawn and windows so you let any would-be burglars know that your home is not an easy target. Often ADT security systems can reduce your home insurance bill.  Make sure to check with your insurance company and look for the right plan to protect your home and save you money on insurance.

These three simple steps will allow your new move to be simple and as seamless as possible. Keep your receipts, protect your home, and carefully choose when to repair/upgrade your home and you will experience homeowners bliss in no time at all.

Top 3 Ways to Get the Best Mortgage

1.Assess your financial strengths and weaknesses.

2.Choose a standard product that fits a realistic time horizon.

3.Get a quote from more than one lender, to make sure that the rate is competitive.

Best Mortgage Rate Strategy #1: Assess your strengths and weaknesses

For the purpose of obtaining a mortgage, your financial position consists of three components:

1.Your income, which gives you the ability to make your monthly payments

2.Your savings, which allow you to make a down payment, cover closing costs, and keep some cash reserves to cover unexpected expenses

3.Your management of other credit, such as car loans and credit card balances

Your strengths and weaknesses can be gauged by looking at these components relative to one another.

Savings relative to income

The first relationship to look at as is your savings relative to your income. Add up all of the savings that you have available for a down payment, including savings accounts, mutual fund shares that you plan to redeem, and gifts from relatives that will go toward a down payment.

If your savings amount to less than 25 percent of your income, then your savings are relatively deficient. For the maximum purchasing power, you probably will require a loan with a down payment of less than 5 percent, such as those offered by the Veterans Administration (VA) or the Federal Housing Authority (FHA). Alternatively, if you believe that you have the capacity to add to your savings in the next year or two, then it may pay to wait before buying a home.

If your savings amount to more than 25 percent of your income but less than 75 percent of your income, then your savings are adequate. You probably can put down at least 5 percent of the purchase price of your home. However, for the maximum purchasing power, you probably will require a loan with Private Mortgage Insurance (PMI), which adds to the cost of a mortgage.

If your savings amount to more than 75 percent of your income, then you probably can make a down payment of 20 percent of the purchase price of your home. This will allow you to avoid paying the cost of PMI.

Debt relative to income

One way to assess your management of credit is to look at the ratio of debt payments to income. Debt payments consist of car payments, student loan payments, alimony, required payments on installment loans, required payments on credit cards where you are paying interest, and other obligations. They do not include rent, utility bills, the mortgage payment on a house that you are selling to buy a new home, or payments on credit card balances where you pay at the end of the month without owing interest.

If your monthly debt payments are more than 10 percent of your income, then debt is an area of concern. If along with this high debt ratio you have a history of sometimes missing your monthly payments, then you may have difficulty qualifying for the best mortgage rates. Even if your payment history is clean, you might benefit by paying down some of your debts before you take on the additional burden of a mortgage.

If your monthly debt payments are between 5 and 10 percent of your income, then this should not prevent you from obtaining a standard mortgage. However, you probably could benefit from reducing your debt payments, and you might be able to reduce your interest costs by taking out a larger mortgage and paying off some of your other debt.

If your monthly payments are less than 5 percent of your income, then your debts should not cause a problem with respect to obtaining a mortgage.

 Best Mortgage Rate Strategy #2: Choose a standard product to fit your time horizon

It is important to realize that the 30-year fixed-rate mortgage is not the only standard mortgage product. You can obtain quotes from many different lenders on 5-year and 7-year balloons, 1-year, 3-year, and 5-year adjustable rate mortgages (ARMs) tied to the one-year Treasury index, and 6-month and one-year ARMs tied to the COFI index (these latter loans are more prevalent in California than elsewhere).

Your time horizon should be a major factor in choosing a loan product. The 30-year fixed-rate mortgage rate tends to be higher than the rate on nearly all other mortgage products. Moreover, the vast majority of people who take out 30-year loans pay them off in less than 30 years, either because they refinance or change houses. Thus,

the vast majority of people who take out 30-year fixed-rate loans wind up throwing away money on high interest costs.

Any of the following considerations should lead you to consider a shorter time horizon than 30 years:

  • possibility that you will change employers or be transferred by your current employer
  • possibility that your housing needs will change–because of children, for example
  • possibility that your income will increase sharply in a few years

The importance of time horizon (along with interest rate scenarios) is best illustrated by the calculator we call The Intelligent Mortgage Agent. By using that calculator, you can identify products that might be better suited to your likely time horizon.

 Best Mortgage Rate Strategy #3: Get a Competitive Rate Quote

If you are taking a standard mortgage product, then a little bit of research can help ensure that you get a reasonable deal. I am not suggesting that it is worth going to great lengths to try to shave the last 1/8 point off your interest rate. But before you go with one lender, at least find out what some other lenders are charging on comparable loans.

One difficulty that people have in comparing competing quotes is making the trade-off between up-front points and interest rates. A reasonable rule of thumb is to say that one point up front is worth about 1/4 point over time. Using this rule, for example, an 8 percent mortgage with one point costs about the same as an 8-1/4 percent mortgage with no points. The 4-to-1 rule is not a precise mathematical law, but it is close enough to give you reasonable comparisons.

Another roadblock to making comparisons consists of how different lenders handle fees. It is important to get a complete list of the fees that lenders charge, in addition to the basic quote of interest rate and points.

One advantage of shopping for a mortgage on the Internet is that online lenders realize that they are in a competitive environment so get them to compete for your business.

How to Tell When it is Time to Refinance

With interest rates today being at their lowest in the past year, you probably have wondered whether or not you should refinance your existing home mortgage. This guide can help you determine how much you will save by refinancing.

Today, as little as a 1/2% interest rate decrease through refinancing can save you thousands of dollars if executed properly and in accordance with your specific financing needs. A variety of loan terms, no-point rate options and lower closing cost loans have greatly decreased the rate difference needed to make refinancing profitable to you.

Why Should You Consider Refinancing?

In addition to just lowering your interest rate, there are eight major reasons why you should take advantage of refinancing:

1) Maximize short term cash flow with lower payments or a longer term.

2) Decrease monthly payments for as long as you plan to be in your home.

3) Switch to a fixed rate program to eliminate payment changes of ARMs.

4) Build up equity by paying down principal more quickly.

5) Match your loan term to the years until your retirement.

6) Switch out of an adjustable loan with old high lifetime payment caps.

7) Withdraw funds from the equity in your home for tax deductions.

8) Consolidate other debts to take advantage of tax deductions.

Would Refinancing Be Worthwhile?

Refinancing can almost always be worthwhile, but it does not make good financial sense for everyone. There are four main factors to analyze when determining the costs and benefits of refinancing:

1) What will be the difference between the old rate and the new rate?

2) What are the total costs associated with the refinance transaction?

3) How closely is the loan term matched with the expected holding period of the loan?

4) How comfortable are you with possible payment changes over the life of your mortgage loan?

The savings you can obtain from refinancing depend directly on the answers to the above four questions. There are numerous potential combinations of the above four areas, and there are numerous mortgage programs to meet each need.

What are the Costs of Refinancing?

The costs of refinancing have decreased greatly in the past several years. With no-point loan options, for example, borrowers can save thousands of dollars up front. Also, closing costs can be included in the new mortgage loan amount so that no cash is required to execute a refinance.

As part of a free Refinance Analysis, your mortgage lender or broker will give you a specific breakdown of all closing costs for the recommended programs. You will then be able to calculate your savings exactly. 

Difference Between a Reverse Mortgage and Home Equity

While both reverse mortgages and home equity loans enable senior homeowners to turn the equity in their home into spendable dollars, there are important differences between these two types of mortgages.

First, home equity loans require regular monthly payments in order to repay the loan. These payments begin as soon as the loan is settled. In contrast, a reverse mortgage does not have to be repaid as long as the home remains the senior’s primary residence. In other words, the loan becomes due only when the senior no longer occupies the property.

Second, home equity loans are based on the borrower’s income and credit history. A home equity loan borrower may be required to re-qualify for the home equity loan each year. If the borrower does not qualify, than the lender may require that the loan be paid in full immediately. However, income and credit are not obstacles for seniors who want a reverse mortgage because there are absolutely no income or credit requirements to qualify. It should also be noted that there are no re-qualification requirements.

Seriously, Should I Rent or Buy?

Decades after the phrase “The American Dream” was first coined, owning a home is still among the lifetime achievement goals held by most individuals and families. The purchase of a home may also be viewed as a very important investment.

In most areas around the country, the value of a house tends to increase (or appreciate) over time. In contrast to rental payments, monthly mortgage payments build into property ownership called equity, which the home owner can convert into cash through refinancing or selling. Equally important, home owners are entitled to tax advantages that are not available to renters. In most instances, the interest paid on a home mortgage is tax deductible (consult your tax adviser), which can result in savings each year on a home owner’s federal tax returns. Unlike rent, which usually increases every year, the payments of fixed-rate mortgage programs stay the same for the entire term of the loan, allowing a home owner to make long-range financial plans.

Once potential home buyers considers how much they pay out in rent, the question becomes this: How can one afford not to buy a home? Only in a few cases, such as for employees who expect to relocate in less than three or four years, does renting make better financial sense than owning. Unless a renter falls into one of these few categories, he or she should consider buying a home.

Today’s first-time home buyer loan programs enable renters to enjoy the benefits of home ownership for not much more ­­ and in some cases less ­­ money than they are paying in rent. “Many lenders offer affordable loan programs with low or no down payment requirements that feature reduced closing costs, relaxed qualifying guidelines, and, with adjustable rate mortgages (ARMs), below-market introductory rates,” explains John Gray, SVP of BankAmerica Mortgage. “Options such as government loans, zero points, or a pre-payment fee in exchange for a reduction in points means renters need less cash to close on a home of their own.”

But before taking immediate advantage of the opportunity, do some research first. Most prospective buyers find a home before they consider their financing options. Talk to your local lenders and find out how much home you can afford. A mortgage specialist will pre-qualify buyers so they can shop confidently, armed with the knowledge of how much they can afford to borrow. Everyone wants to experience that sense of privacy, stability and community that accompanies a permanent address; they wish to share special family moments and milestones in their own kitchens and backyards. Homeownership frees renters to make personal lifestyle statements and to know the satisfaction that comes from owning their own home.

2012 Trends in Real Estate

While most aspects of the United States economy remain somewhat bleak, there have been increasingly positive signs, as well as indications from some economists, that the worst is over, and that the economy as a whole is going to begin creeping back toward a more positive position. Still, most with knowledge of the trends and developments caution that the progress will be extremely gradual, and may take a while to make a real difference in many fields. One area in which people are particularly curious as to what will happen in the near future is the real estate market, which has been low and stagnant for years now. So, what trends are we expected to see throughout the remainder of 2012?

To begin, it should again be stressed that any progress we will see in the housing market will be slow – even if the overall economic rebound is swifter than expected. This is because, with the market down, people have had to accept lower prices for their homes, and buyers are unlikely to accept higher prices willingly. So, even if the economy begins to speed up, buyers will continue to push for the low prices that have been more common in recent years, meaning that it may be some time yet before homeowners are able to significantly raise asking prices.

Additionally, homeowners will likely be doing all that they can to enhance their own real estate values, whether that means improving existing properties or adding additional properties. Particularly if the economy does begin to improve on a greater scale, homeowners may begin to feel as if they can spend a bit more money. Thus, while the home buying market catches up, homeowners will be inclined to purchase additional properties cheaply, and/or enhance their own properties, both as an alternative to changing home locations and as a means of enhancing their own property values.

Ultimately, the main thing to keep in mind as you try to project the real estate market for the coming year is that people will continue to serve their personal interests first. This means that homeowners will try to drive prices up, while buyers will attempt to keep benefiting from low prices – naturally, this is a contradiction that will likely slow the recovery of the housing market on a grand scale. Many people make the unfortunate error of directly equating economic recovery with real estate status, when in fact the recovery of one will not necessarily coincide directly with changes in the other, at least in the immediate future. So, while there are signs of improvement, and while buyers can still take advantage of the current market, the real estate world may yet take some time to return to balance.


Atlanta Real Estate

Atlanta, Georgia is an incredibly desirable place to live, with a nearby airport, a means of ground transportation as well as tropical climate and a deep, cultural history. The availability of land for development in Atlanta enables home buyers to find virtually any kind and price of housing they desire. Depending on what type of housing you are looking for, a lender can help you with whatever your mortgage needs may be. Atlanta mortgage rates have been competitive whether you’re looking for a simple first time mortgage loan, refinance, construction loan, home improvement loan or a bad credit mortgage loan.

Nearby cities in Atlanta, Georgia include Athens,  Augusta, Columbus, Macon, and Savannah. Buying a home can be a stressful time in your life, but a mortgage broker can help take care of the complications and make your mortgage process carefree and rewarding.

When searching for a home in Atlanta, there are a few things to keep in mind. Knowing how much you can afford and the type of home you want should always be at the top of your list. Once you’ve found a home that suits your needs, you need to make an offer. Sometimes this process can go on if the buyer and seller can’t agree on a price, but be patient and try to work things out. Your next objective should be to get a home inspection done on the home to ensure that you won’t be stuck with a home that needs major repairs. After the signing process you will finally be able to enjoy your new home! Get started on your Atlanta home buying adventure today by first getting pre-approved for a loan.

No Cost Refinance

Many people start out with an adjustable rate mortgage because the payments are very low at first. However, if they keep them long enough they can end up paying too much. After an ARM is for 2 or 3 years old, it may be adjusting to as high as 9.0% in today’s rate environment. You don’t have to accept this rate increase.

The “No-Cost” program will lower your rate at no cost to you. The broker usually pays for all of the closing costs: title fees, appraisal fees, and credit report fees. There are no loan fees or prepayment penalties, and nothing is added to your loan balance.

This is a true “can’t-lose” situation for you as a homeowner. You get the benefits of a lower interest rate of while incurring no costs to refinance. In many cases you can actually tap into the valuable equity that you have accrued on your home by taking “cash-out” in the refinance.

No Cost Mortgage Refinance is also known as “No Fee Refinancing”, “Zero Closing Costs Mortgage” or “No Closing Costs Refinancing”. Mortgage refinance have appended costs such as:

  • Title Insurance
  • Escrow Fees
  • Appraisal Fees
  • Loan Origination Fee
  • Processing Charges
  • Lender Fees
  • Broker Fees
  • Credit Report Fees etc.

These fees are usually added to your loan amount to derive the total amount of loan. In case of a “no cost mortgage refinance,” the loans are charged a relatively higher interest rate but do not include such costs in the total value of loan. The No Cost Mortgage is a type of loan wherein the value of your loan amount does not increase by fees and charges otherwise levied on other mortgage schemes.

No cost mortgage is a wise option for those who have an adjustable rate mortgage. As interest rates rise, one can adopt a no cost refinance mortgage which will help fix the rate of interest over the decided term at no additional costs. The value of the new mortgage does include loan fees, charges or prepayment penalties. This implies that you can take advantage of a lower rate of interest without incurring additional costs ordinarily bundled with a mortgage scheme.

No Cost Mortgage Refinance is suitable:

If homeowners plan to sell their house in a few years.

If the current mortgage rate of interest is higher than that available on a no cost refinance.

Invest In Real Estate For Your Retirement Fund

Saving for retirement can be difficult after all with all the expenses and the cost of raising a family what’s left? Consider investing in real estate for your retirement fund.

The time to start thinking about your retirement is as soon as you start working. Because of your age you have more disposable income. Your healthy, no family responsibilities so why not start now?

Here’s something else to think about. You have to live somewhere right? So why not start saving for a down payment on a house. You can start small – older home, condominium, you’ve got lots of options. By thinking ahead you are setting yourself up for the future.

You buy that first house and a few years later you find the person you want to spend your life with. Next is marriage and before you know it children are in the picture. Now it’s time to look for a larger home.

But wait over the years your first house has gone up in value by 50%. Wow! Inflation combined with demand and you’ve got a winning equation.

So you sell, buy a home large enough for the growing family and live happily ever after. The kids grow up and get married and retirement sneaks up on you.

You’ve put some money aside but the big win is in your home. You sell your home for almost 200% more than what you paid. You pick up a nice little cottage in the country and pocket enough money to live comfortably for years.

There is no better way to guarantee that you’ll have a sizeable cash amount for your retirement. In fact there is no better investment platform than real estate.

You get tax breaks and as long as you continue to invest in your principle residence you continue to get excellent breaks. Over the years you can flip properties continuously increasing the value and making excellent money. Timing is everything!

One of the reasons houses are increasing in value so rapidly is because of supply and demand. There is only so much land to go around which keeps demand up and when demand is up prices continue to climb.

By investing smartly you can not only give you and your family a beautiful home to enjoy and live in you can prepare yourself for a comfortable retirement.

Invest in real estate for your retirement is one of the smartest investments you’ll ever make.