Rent or Buy? How Does Miami, Florida Residents Decide?

At some point in life we are all faced with this question.  With today's low rates and a lot of bargain priced properties in the Miami market, makes the dream of home ownership very attractive.  The biggest concern for Miami first time home buyers is;  can I afford to buy a home?  Home ownership does come with a lot more cost when compared to renting such as:  property taxes, higher insurance premiums, higher utility cost, and maintenance of the home, just to name a few.  When something breaks there is no landlord to call to fix it, so you definitely need to have a good size emergency fund just for these expenses.  Recommended $3000-$5000; unless you are handy around the house and can fix such things as the air conditioner when it breaks.

One of the first steps in preparing to become a home owner in Miami Florida is to pay off as much debt, with the goal of being debt free if possible, before taking on the expense of home ownership. 

One of the main benefits of home ownership is that the interest portion of you monthly payments is tax deductible.  Your mortgage payment is made up of principal and interest, the interest portion is the larger of the two mainly during the first few years of the loan and this is what you will write off at the end of the year, along with you property tax payments.

Unlike rent payments, your mortgage payment will not increase every year like your rent payment, as long as you get a fixed rate mortgage.  However the expenses that you can expect to increase will be taxes and insurance and it varies depending on the area of the Miami that you live in.  Since you live in Miami, an area that is prone for hurricanes you can see a spike in your insurance premium especially when there is an active hurricane season.

Once you have been pre-qualified to find out how much house you can afford, you will decide what area of Miami you want to live in.  Other than price, other factors to take into consideration are taxes and insurance.  I normally recommend that you escrow these payments with your mortgage payment, so that you can take care of it on a monthly basis, versus having to come up with a lump sum at the end of the year.  It is not uncommon for new Miami home owner to fall behind on their taxes when they are not escrowed, in which the county will place a lien on your property.  And as far as the insurance, if you don't keep your Miami property covered, the lender will force place insurance on your property which is normally about 3 times the amount you would normally pay and this will increase you monthly payment and may cause financial hardship.

Once everything is in order and you want to start house hunting in Miami, I recommend if you are a first time home buyer in Miami to contact a real estate agent, and they can walk you through the process and it is free professional advice, at least free to you, it is the seller for the home you want to buy that will pay them.  Now you don't want to just get any agent, you need a Buyers Agent.  Why?  Because they will be working for you and not the seller, so they will have you interest in mind, where they can disclose things about the house to you that they wouldn't be able to do if they were representing the seller.

Don't try to time the market in Miami to see when it will hit the bottom, that's like trying to beat the stock market, and this can sometimes prove to be costly.  In saying that, if you find a home that is reasonably priced and it’s within you price range and you like it, go ahead and buy it.  Real Estate has been known to increase in value over time.

Last but not least, always be upfront with your lender, this way neither you or your lender will have any surprises nor you won’t waste any time or money in the home buying process.  If they know all your issues upfront they can structure the loan for you and still get you in a good loan program tailored for you needs.