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Fort Walton Beach rentals | Rentals in Destin Florida | Naples Florida real estate - rainewhite.com |
Guide to Buying A House in FloridaIn the Florida real estate market; more specifically the Fort Walton Beach and Destin area, and low interest rates and increasing property values, it is sometimes difficult to decide whether renting or buying a new home is the right choice. In Fort Walton Beach and Destin markets, home sales have slowed and rental properties are numerous, so choices are even more challenging. When making what can be your most expensive decision, consider both the pros and cons of renting versus buying your next home. Up Front Costs Renting – Start-up costs for renters are usually the first and last months’ rent plus a damage deposit. You may be looking at anywhere from $3,000 to $5,000 dollars. While a steep payment to make, it is still much less than the down payment on a home that can run closer to $30,000 to $50,000 depending on the cost of the house, points, closing costs and duration of the loan. Renters should also get renters insurance to protect the contents of their home in case of fire, theft or other disaster. This is typically lower than homeowners insurance because it only covers contents; the landlord’s insurance covers the building. Extra coverage such as flood insurance should also be considered. Flood insurance is both the property owner and renter’s responsibility. If you want to protect your property, then buy coverage. If a property owner wants to protect the building, then that flood insurance is a different issue. Buying – Start-up costs include a down payment (typically 20 percent of the purchase price), points (each point is equal to 1 percent of the loan amount), closing costs (somewhere between 3 to 6 percent of the purchase price), homeowner’s insurance, plus any extra costs for flood coverage. Basic homeowners or renters insurance does not cover flood damage. In the Fort Walton Beach and Destin area, even if you are not in a high-risk location, it is important to note that 25 percent of flood damage claims occur in low to moderate-risk communities, and more than 90 percent of president-declared disasters are flood related, according to the Federal Emergency Management Agency. Check with local agents for details.On the plus side, homebuyers are in a better position to negotiate the cost of the house. Rental agreements are fairly standard, and do not lend themselves to haggling over price. A homebuyer, depending on how motivated the seller is, can bargain over the cost of a new home and pay substantially less than the asking price. In-House CostsRenting – Maintenance costs should be lower since the property owner/manager is responsible for most needed repairs and upkeep, including both home and appliance repairs, painting and carpet replacement. The downside is that you often do not have much, if any, choice in color schemes. You have to live with the color on the walls and carpeting. You may simply hate the wallpaper in the kitchen, but you cannot replace it without permission from the property owner and then it is usually at your own expense. On the up side, if you are living in an apartment or condo, lawn care is also a management expense. No more mowing the yard in the hot summer or endlessly raking leaves in the fall.Buying – The homeowner is solely responsible for upkeep of the home and property. If you are required to belong to a homeowners association, there are those annual fees.Do not forget property taxes. Renters most likely have a portion of their rent going to pay their landlords taxes, but that is figured into the monthly lease payment. Homeowners typically set up an escrow account at closing that is used to pay these taxes. The chore of carrying the cost of upkeep is counterbalanced by the freedom of putting your own personality into your home. You can choose to have cranberry dining room walls, white carpeting, or landscape your yard with gigantic rocks if you want. Long-term commitmentsRental – This is a good option if you do not expect to remain in the area for a long time. Do not think of it as throwing away your money on rent, you are still getting a valuable commodity in the form of a place to live, plus the flexibility to leave on short-term notice without further commitment. Besides, conventional wisdom says for the first five years a homeowner is really just paying interest on their mortgage loan, so it is as if they are renting from the bank or loaning institution.The flip side is that renters do not benefit from accumulated equity on their home. Once they make their monthly payment that is it. When they move, they leave the home behind and the only thing they get back is the damage deposit. And, only that if nothing is damaged. Buyer – If you plan on staying in the area for longer than a couple of years, buying your home may be a good option. Look at your available income versus a projected monthly payment. Calculate what you can spend on a purchase by basing your mortgage payments costs at no more than 33 percent of your gross income – include loan interest, principle, insurance and taxes. Stay in a house long enough and homeowners can accumulate equity on the property. That means the value of the house is more than the owner’s debt. Depending on the interest payments and other deductions, owners can also qualify for substantial credits on income tax. Be cautious when expecting a tax credit, however. To get the credit, you have to itemize your income taxes and you can only do that if you meet several stringent restrictions on allowable expenses like medical costs, property taxes on things like cars and boats, mortgage interest, state and local income taxes and charitable donations.Homeowners are also in the position, depending on the current real estate market, to profit from the sell of their house. Real estate values have continued to rise as interest rates fell, making it an attractive sellers market. Unfortunately for the buyer, costs have also steadily increased over the past few years. The trick is to sell a home while still finding an affordable replacement. For some homeowners this has been an elusive proposal and if the housing bubble bursts, they may find themselves with a mortgage that is higher than the value of their home. Perhaps another reason to rent in the Fort Walton Beach and Destin area is the current real estate market. Exit StrategyRenting – Moving from a rental property can be much easier than from a purchased home. Depending on the details of your lease, you could be gone in a matter of weeks. Be very careful to read the fine print on your contract, you may be liable for rent payments on the remainder of your lease. It may be possible to negotiate with the landlord over the amount owed, just make sure to get this in writing to avoid potential lawsuits for breach of contract. Prepare for the move by saving for new upfront expenses in securing a new home. Whether you are renting again or making the jump to homeownership, you still need those “firsts and lasts” or loan down payments.Buying – Moving from a home you own is a more of a chore. You should make sure the property is in good shape so it is an attractive purchase to prospective buyers. This could mean costly repairs or upgrades that may not be recovered in the sell of the house. It is also a very good idea to have somewhere else to move to whether you are purchasing a new home or downsizing to a rental house or apartment.When exiting a rental property, you have a good idea how much time you have to find another place to live since it is spelled out in your lease agreement. For a homeowner wishing to change locations, you are at the mercy of the market. Some homes sell within weeks or even days, while others languish on the market for months … sometimes years.Depending on the Fort Walton Beach and Destin real estate market at the time you hope to sell, you could make a huge profit on the house if the value went up or a huge loss if the market is glutted with homes, or property values plummeted. It is all a matter of timing.
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