BEST REMAX
AGENT IN
BROWARD
COUNTY. Buy, sell,
real estate, houses,
homes, for sale,
Broward County,
Palm Beach county,
remax, partners,
platinum, chairman,
award, agent, realtor,
sales, top, best, #1,
Coral Springs,
Pembroke Pines,
Plantation, Fort
Lauderdale, Weston,
Parkland, Coconut
Creek, Sunrise,
Davie, foreclosures,
financing,
AGENT IN
BROWARD
COUNTY. Buy, sell,
real estate, houses,
homes, for sale,
Broward County,
Palm Beach county,
remax, partners,
platinum, chairman,
award, agent, realtor,
sales, top, best, #1,
Coral Springs,
Pembroke Pines,
Plantation, Fort
Lauderdale, Weston,
Parkland, Coconut
Creek, Sunrise,
Davie, foreclosures,
financing,
Buy, sell, real estate, houses,
homes, for sale, Broward County,
Palm Beach county, remax,
partners, platinum, chairman,
award, agent, realtor, sales, top,
best, #1, Coral Springs,
Pembroke Pines, Plantation, Fort
Lauderdale, Weston, Parkland,
Coconut Creek, Sunrise, Davie,
foreclosures, financing,
homes, for sale, Broward County,
Palm Beach county, remax,
partners, platinum, chairman,
award, agent, realtor, sales, top,
best, #1, Coral Springs,
Pembroke Pines, Plantation, Fort
Lauderdale, Weston, Parkland,
Coconut Creek, Sunrise, Davie,
foreclosures, financing,
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"I Will Renew My Lease For Another Year"
- And this could be a very expensive mistake.
Although the idea sounds romantic, and it could just happen, when you take a closer look
at the logistics, you may end up losing much more than what you thought you could save.
Here is why:
1. Intereste rates.
They are at a record braking low, the lowest for over 20 years! Historically, they have been
around 8 - 81/2%. Courtesy of the distressed economy, and Barac Obama, you can get a
loan putting only 3.5% down at 4.875%. Use the payment calculator, and do your purchase
price first at 4.875%, and then at 6.5% (6.5% is a guesstimation of what the interest rates
are going to be in a year from now). Now see the difference in the payment.
2. Property values:
It is my opinion they are also at the bottom. Although there is no certainty as to the future, I
can tell you that the inventory has been declining month after month. In January 2008 there
were 19,500 single family homes for sale in the Broward County market. Today we are at
12,000, out of which, about 4,000 are short sales, which leaves you a real net inventory of
8,000 homes!!! Prices are based on supply and demand. The supply has been declining,
and the demand has been increasing.
3. Closing Costs:
Because is a buyer's market, I am able to negotiate and have the seller to pay ALL you
closing costs, which are 6% of the purchase price. If the market changes a bit, (which it
seems to be doing that as we speak) you may have to pay some of your own closing costs.
Keep in mind that when the market was hot, it was very difficult/almost impossible to get any
Seller to pay any of your closing costs due to appraisal issues.
4. Tax Credit:
You lose the $8,000.00 CASH from Uncle Sam (goes away December 1st)
So here comes the comparasion:
Assume you save an additional $20,000.00 to use for the down payment. Assume interest
rates would then be 6.5% (they were a little lower than 6.5% not too long ago) Property
value goes up 10% from today's prices. And assume that in most cases, Seller can still pay
3% of your closing costs, instead of 6%. Assume a $200,000.00 purchase.
BUYING 1 YEAR FROM NOW:
Payment at 6.5% paying $220K with $2,000.00 in taxes and no HOA is $1,623.70
(everything included). But you put $20K down, so your payment is now $1,491.24. Seller
pays 3% of your closing costs ($6,600.00), and your total cash to close is 6.5% + give or
take $1,00.00 = $14,300.00.
BUYING NOW:
Payment at 4.875% paying $200K with $2,000.00 in taxes and no HOA is $1,289.25. Seller
pay ALL your closing costs (6%), and the total cash you need to close is 3.5% down + give
or take $1,000.00 = $8,500.00
If the above holds true, you would pay an additional $201.99 for 30 years ($72,716.40), it
will cost you $5,800.00 extra in closing costs, and you will lose the $8,000.00 from Uncle
Sam. In conclusion, your total loss would be $13,800.00 out of pocket, plus
$72,716.40 prorated over 30 years.
If you are thinking about renting, I hope you reconsider.
- And this could be a very expensive mistake.
- "I will save more money for the down payment, payoff the debt, and I will buy then."
- "If I don’t find something I like by such and such a date, I will rent for another year."
- "I will keep on renting until I can buy a X bedroom home for $X. The market is still
going down."
Although the idea sounds romantic, and it could just happen, when you take a closer look
at the logistics, you may end up losing much more than what you thought you could save.
Here is why:
1. Intereste rates.
They are at a record braking low, the lowest for over 20 years! Historically, they have been
around 8 - 81/2%. Courtesy of the distressed economy, and Barac Obama, you can get a
loan putting only 3.5% down at 4.875%. Use the payment calculator, and do your purchase
price first at 4.875%, and then at 6.5% (6.5% is a guesstimation of what the interest rates
are going to be in a year from now). Now see the difference in the payment.
2. Property values:
It is my opinion they are also at the bottom. Although there is no certainty as to the future, I
can tell you that the inventory has been declining month after month. In January 2008 there
were 19,500 single family homes for sale in the Broward County market. Today we are at
12,000, out of which, about 4,000 are short sales, which leaves you a real net inventory of
8,000 homes!!! Prices are based on supply and demand. The supply has been declining,
and the demand has been increasing.
3. Closing Costs:
Because is a buyer's market, I am able to negotiate and have the seller to pay ALL you
closing costs, which are 6% of the purchase price. If the market changes a bit, (which it
seems to be doing that as we speak) you may have to pay some of your own closing costs.
Keep in mind that when the market was hot, it was very difficult/almost impossible to get any
Seller to pay any of your closing costs due to appraisal issues.
4. Tax Credit:
You lose the $8,000.00 CASH from Uncle Sam (goes away December 1st)
So here comes the comparasion:
Assume you save an additional $20,000.00 to use for the down payment. Assume interest
rates would then be 6.5% (they were a little lower than 6.5% not too long ago) Property
value goes up 10% from today's prices. And assume that in most cases, Seller can still pay
3% of your closing costs, instead of 6%. Assume a $200,000.00 purchase.
BUYING 1 YEAR FROM NOW:
Payment at 6.5% paying $220K with $2,000.00 in taxes and no HOA is $1,623.70
(everything included). But you put $20K down, so your payment is now $1,491.24. Seller
pays 3% of your closing costs ($6,600.00), and your total cash to close is 6.5% + give or
take $1,00.00 = $14,300.00.
BUYING NOW:
Payment at 4.875% paying $200K with $2,000.00 in taxes and no HOA is $1,289.25. Seller
pay ALL your closing costs (6%), and the total cash you need to close is 3.5% down + give
or take $1,000.00 = $8,500.00
If the above holds true, you would pay an additional $201.99 for 30 years ($72,716.40), it
will cost you $5,800.00 extra in closing costs, and you will lose the $8,000.00 from Uncle
Sam. In conclusion, your total loss would be $13,800.00 out of pocket, plus
$72,716.40 prorated over 30 years.
If you are thinking about renting, I hope you reconsider.
