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5 Tips for Affording a Home in Miami

Nicole Bacomo
By Nicole Bacomo - August 13, 2022

Are you looking to buy a home in Miami or Fort Lauderdale? It may seem as though the only way to buy a home in South Florida is by finding that pot of gold at the end of the rainbow. With interest rates on the rise, that pot of gold may not even be enough. If you are ready to make a move, the key to success is being realistic about the cost of owning a home locally. After all, we live where people vacation, literally.

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Tropical Financial understands how difficult it can be to purchase a home. We want you to be ready to make that move. The first step to start is by looking at your credit report to ensure the information is up-to-date and accurate. Download our Credit Report Guide to help you along.

Call to Action - TFCU's Your Credit Report Guide

We have all heard the horror stories of people being outbid when buying a home. If you sell your current home and move, you have a good financial cushion. If you rent and want to purchase, you must stick to a tight budget. Buying a home can be overwhelming. Figuring out the financing can be a headache. We want to help you overcome the financial worry of purchasing a home. We have put together some tips to help you start your homeownership journey.

Here are 5 tips to help you afford your new home

Tip 1: Save for the down payment and the extras too
How much should you set aside for the down payment? Experts say that you should have 20 percent set aside. It would be best if you also considered that you would need additional funds for closing costs and other fees such as inspections, paying the title company attorneys, and insurance. Sometimes buying a fixer-upper is ideal. Just keep in mind that you'll need additional funds for repairs. Check out how much homes are going for in various neighborhoods, then gauge how much money you will need to save.

Tip 2: Pay down debt
Now that you know your down payment savings goal, debt is the next thing to tackle. When applying for a home loan or mortgage, financial institutions will look at your debt-to-income (how much debt you owe compared to your income) or DTI. Paying off credit cards, car loans, personal loans, and even student loan debt will help to improve your DTI. A low DTI could mean better rates when applying for your mortgage or home loan. Better rates mean lower monthly payments, so you can have more money to take your home from fixer-upper to fabulous.

Tip 3: Learn about financing options
Speaking about mortgages and home loans, did you know there are financial options other than a first-time homebuyer or standard (fixed rate) mortgage? An adjustable-rate mortgage or ARM may be a better solution if you're planning to stay in your new home for five years or less. Tropical Financial offers a 5/6 month adjustable rate mortgage where the rate is fixed for the first five years and then adjusts every six months. Regulations and guidelines protect consumers who take out this type of loan. ARMs tend to have lower rates than traditional mortgages, which makes them a wiser financial option for a short-term purchase.

Tip 4: Look in areas that are not as popular
South Florida is full of hidden gems when buying a home. Although it may be nice to live on the beach, getting a house a few blocks from the beach could be an affordable alternative. There are pros and cons to every neighborhood. An older area could have homes within your budget. Drive through neighborhoods on the weekend to get a feel of the location. Do your research too. Some sellers want to sell to local residents and not some corporations on the other side of the country. Be positive. You never know what hidden gem may await you.

Tip 5: Be ready to make an offer (pre-approval)
Once you set your down payment aside and have improved your DTI by paying down debt, the next thing to do is get pre-approved. Having a pre-approval means you are serious about your purchase and have the funds available. Before you put in an offer on a home, make sure you make a thorough comparison to make sure it's the home you want and can afford.

There's nothing like making a house a home by adding your personal touch. Budgeting correctly can ease the stress on your finances too. We know that you may still have questions about the financial process. That's why we have a dedicated team of Mortgage Loan experts ready to answer your questions. Our team has been helping South Floridians afford a home for over 30 years. We are here to help you too. Contact us today!

*All home lending products are subject to credit and property approval. Rates, program terms and conditions are subject to change without notice.   TFCU membership eligibility is required with $5 minimum savings.  Other restrictions may apply.

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The content reflects the view of the author of the article and does not necessarily reflect the views of Tropical Financial Credit Union or its employees.
We do not guarantee the accuracy or completeness of the information presented in the article.