All too often those promoting Florida real estate make it sound cheap and easy. It's true that Florida
real estate prices and mortgage rates are at all time lows and home ownership is more affordable than ever. In many cases you can by a home for less than you are paying in rent. However, unless you are really aware of all the costs involved in owning Florida real estate and have created a budget you could find yourself in a tough financial situation.
First and foremost you need to make sure you are aware of all of the monthly costs involved in buying a home and owning a home. This means making sure you know what costs are involved in not only financing the home, but also the utilities and upkeep of the home after you have closed.
Keep in mind if you are not placing a large down payment on your purchase, besides the monthly principal and interest payments on your home loan you may have to pay for private mortgage insurance (a.k.a. PMI, or sometimes referred to as MIP). This additional insurance does not stay on the loan forever but check with your mortgage broker to get more details on this.
You should also avoid maxing yourself out and keep in mind your other monthly obligations including items like cable or satellite television, Internet, electricity and water. Many of these you may be paying for already, others you may not. Ask the seller or your Florida real estate agent if you can get copies of the last couple months bills for a property so you can see exactly what they have been.
Florida real estate taxes may be included in your monthly mortgage payments, but not always. FHA loans require not only your property taxes be part of the loan but also the homeowners insurance. This is very helpful for many homeowners on a budget for the monthly mortgage payment includes all four items, called P.I.T.I. (Principle, Interest, Taxes, Insurance) and one payment is easier to manage monthly.
If your loan does not include property taxes, however, the last thing you want is a surprise bill for a few thousand dollars. Not paying your Florida real estate taxes could result in you losing your home. Insurance is also important, not just because your lender may insist on you having it but to protect your investment in case of disasters. This may include flood insurance and if you are close to the water, hurricane and wind insurance too. Talking to an insurance agent early on can help as they will be able to advise you how you can lower your insurance cost by putting in an alarm system, getting hurricane shutters and more. If you are buying a condo or a home that is part of an association you may also have monthly association dues to consider.
These are the basics but you also need to prepare for any other expenses that can occur later on. This can include special assessments from associations and money need for repairs. If you haven’t put money aside for replacing items like the air conditioning, kitchen appliances and more you could find yourself pulling your hair out. Create a savings account for these items and put some money into that account every month. You may also want to talk to your real estate agent about get a home warranty, there are several reputable companies out there and for a very affordable yearly cost you can have peace of mind that your big ticket items are covered should they need repair or replacement should they break down.
Don’t let all of the above scare you away from buying a home in Florida or anywhere else. It is much better to be prepared than surprised and there is no doubt that buying a home especially now could easily be the best investment opportunity of your lifetime.