The real estate market is booming in Florida. According to the Florida Association of Realtors, the sunshine state has seen the highest increase of single family home sales since april 2008, a whopping 37% increase.
Compared to a year ago, the state of Florida has had an increase of of 23.3% of single family home sales, from 26,611 in March of 2020 to 32,819 in March of 2021. That means that the state is definitely experiencing a seller's market and inventory is relatively low, making the competition for buyers even more apprehensive.
So, whether you are moving to Florida or already live here and is looking to buy a new home, there are couple of things that you should keep in mind before you make the big decision.
Things to keep in mind when purchasing a home in Florida
Your credit score
In order to qualify for a mortgage loan you must have a score of 620 and higher but that isn't the only criteria that is relevant in approving you for a mortgage loan. Brokers will also analyze your debt to ratio to ensure you can afford to make another financial commitment.
Before applying for a mortgage loan, it is wise that you check not only your credit score as well as your credit report at least six months in advance. A credit report is available to you from all three reporting agencies at no cost. Visit Annual Credit Report to download your annual free credit report.
By checking your credit report in advance you will have the chance to look for and fix anything that may affect your chances of getting a mortgage loan.
To find out how to improve your credit score and maximize your chances of getting a mortgage loan, check out this article on how to improve your credit score in 11 steps.
Renting vs Buying
Owning a property is a long term commitment, therefore you should consider whether it is best for your to rent or to buy a property. If you are unsure whether you will stay in your current job or if you want to continue living in your city and/or state, maybe it is best to rent until you have those situations figured out.
Not to mention that owning a home comes with extra costs that you would not have to incur if you are living in a rental, expenses such as property insurance, property taxes and even home maintenances.
If you are unsure which is the best option for you, Mortgage Calculators offers a Rent versus Buying calculator that can help you arrive at the best option for your situation.
Can you afford to purchase the home you want
Many buyers are disappointed once they find out what their income can actually afford in comparison to what they want. According to the Florida Realtors, single family home prices have increased by 37.6% (comparison done between March 2020 and March 2021). The average single family home prices in March of 2020 was $371,531 and $511,243 in March 2021 for the state of Florida.
Considering your income has remained the same as last year, that means what you could afford last year may no longer be affordable to you this year. This often happens because the inventory is low and demand is very high, making the real estate market highly competitive for buyers.
You can use a mortgage minimum income calculator to have a better idea of how much you can actually afford when purchasing a home.
Residential versus Income Property
Another criteria to consider is whether you will be using the property as a main residence or as an income property. Both purchases offer different incentives as well as tax liabilities.
If you are considering buying a property to turn it into an income property, be sure to investigate the area which you want to buy it to determine the rental availability and prices to guarantee that you can cover your mortgage and other expenses as well as make a profit.
Now, if the purchase is being made to be your residence, you should consider how close it is to your current job, the crime rate in the area, the availability of good schools if you have children or are planning to have them in the future as well as proximity to shops, restaurants and activities you enjoy doing.
Take the time to speak with people who already live in the area and ask questions about what they like the most and what they dislike about that location. A little investigation can help you tremedously in determining where you want to live or if it is a good area to invest your money.
Florida is the state where people come from all over the world to vacation. Whether it is to enjoy the beautiful beaches or to visit many of the theme parks we have available in the state. The National Association of Home Builders estimate that nearly 7.4 million homes in 2018 in Florida were second/vacation homes.
Now, if you are thinking about purchasing a vacation home in Florida then that are a couple of questions you should consider before your purchase:
Do you have intentions of renting out the property and if so, for how many weeks out of the year?
How will the property be managed while you are away?
Can you afford all the expenses related to a second home?
Is it better to rent out a vacation property rather than purchasing one?
Will other family members be using the property and would they be willing to help with expenses?
If after reading this article you have decided that buying a home in Florida is the best decision for you and your family, be sure to download the Free Complete Guidebooks for Buying Real Estate that includes a collection of how-tos, checklists, and worksheets to help buyers understand what to expect during the real estate purchasing experience.