Mortgage rates are at their lowest levels in 18 months. More single-family homes are up for sale. And the Federal Reserve cut interest rates by a half of a percentage point in September, the first cut in four years. All point to a resurgence of home sales in South Florida. If you have been playing a waiting game of whether to buy, it’s time to get active.
Several forces are improving homebuyer prospects. On Sept. 12, the Freddie Mac average rate on a 30-year fixed-rate mortgage slid to 6.20%, down from a peak of 7.79% on Oct. 26 of last year. The monthly payment on a $320,000 mortgage is now $200 less than it was then.
According to the Miami Realtors, the number of homes on the market in South Florida and Martin and St. Lucie counties was higher in July than the same month of the previous year. In Miami-Dade County alone, there were 4,700 more houses for sale this July than the same time last year, according to Realtor.com.
As you think about buying a new home, your instinct may be to start researching prices. That could be a mistake. Your first move should be to find out how much house you can afford.
A Tropical Financial Credit Union mortgage loan officer will sit down with you to review your income, expenses and credit score. From those numbers, you’ll learn how much you can afford to borrow and cover expenses such as insurance and taxes.
If you have been out of the home market for a while, you may be shocked at how much prices have climbed. Are they out of reach? No. If you bought a home in Miami-Dade five years ago at the asking price, you can list it for 37% more. When you sell your home, that appreciation will help make your new residence more affordable.
Here's what to do when shopping for a home:
- Do pay down your credit cards. Why? Your increased credit capacity – the difference between the credit limit and the balance -- will raise your credit score.
- Do Not close credit card accounts. You want not just that capacity and to show that other creditors consider you a good risk.
- Do set aside more money for closing costs. Title insurance and related expenses are a percentage on the amount borrowed, which will probably be higher than before.
- Do brace yourself for higher property taxes. The seller’s bill probably doesn’t reflect the home’s current market value. Yours will.
- Do be prepared for higher insurance premiums. Much will depend on location, building construction, roof age, and storm protections like hurricane windows.
- Do consider renting your home rather than selling it. You may earn more than you pay to live there, and the rent will count as income when you apply for a mortgage.
- Do be prepared to make an immediate offer. Homes are selling fast, with a median of 29 days on the market in Miami-Dade and 30 days in Broward County before a contract is signed.
The speed at which you can sign papers depends on how well you prepare. Let a Tropical Financial mortgage lender help you make a qualified offer.
