Brickell Living: Buying vs Renting. 5 easy tips you should know

Buying Vs renting
August 12, 2020

Buying vs Renting in Brickell

While getting pre-qualified for a mortgage and saving for the down payment are the obvious steps when planning to buy a home in Brickell or any other area in Miami, take these 5 steps to get you closer to your closing.

buying versus renting in Brickell1- UNDERSTAND THE FULL COST OF OWNERSHIP

When you buy a condo in Brickell, your monthly obligations are divided into principal, interest, taxes, insurance and association fees while as a renter you only pay one single rental fee. The difference is that as a renter that fee goes to pay someone else’s mortgage. You are basically creating equity for someone else. When you own, every payment you make goes towards your own equity.

This is how your monthly payment is divided:

  • Mortgage: Principal and interest.
  • Property taxes: Assessed by Miami-Dade County (not by the bank).
  • Insurance: The building’s insurance policy is limited and you will need your own insurance policy to protect the rest. For example, the master policy may not cover certain issues that may occur specifically within the unit, such as:
    • Accumulation of water or sump pump failure.
    • Theft and vandalism.
    • Personal belongings, including furniture, clothing and electronic items.
    • Liability Protection for injuries and accidents occurring within Your Home.
    • When buying a condo you will need an HO-6 Coverage. This is a personal protection policy that provides coverage for your belongings and liability insurance coverage for the owner of a unit within a real estate complex with common areas. The HO-6 policy is intended to be used in conjunction with the association’s master policy to ensure complete coverage.
  • Association fees: Charged monthly by the condominium for building’s maintenance. Brickell buildings have tons of amenities, from pools to jogging paths and beach volleyball. The more amenities the building has to maintain, the higher the association fees.

tax advantage of buying a Brickell condo2- KNOW YOUR HOMEOWNER TAX BENEFITS

Mortgage interest and property taxes are deductible when you file your annual tax returns, and reduce taxable income.

These deductions significantly lower your cost of home-ownership. For example, for a $300,000 home with 20 percent down and a 30-year fixed mortgage at 4 percent, monthly payment is about $1,545. Tax deductions reduce this total housing cost to about $1,215.

Rental fees are not deductible.

mortgage vs rent3- BUY A HOME VS RENT MATH

The cost of renting in Brickell is pretty high. If you buy a condo instead, your monthly payment could be even lower than your rental fee.

The New York Times has this awesome calculator to do this math and make the decision of buying vs renting, you’ll be surprise!

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

4- IDENTIFY A MORTGAGE THAT FITS YOUR NEEDS

“Going to my bank because I have been a customer for 10 years” is NOT the smartest option. Banks have different departments and the mortgage division has absolutely nothing to do with checking or savings accounts. Your bank will NOT give you a better deal just because you have a saving account there.

To buy a condo in Brickell, you need to shop around and inquire about mortgage programs from different lenders. You can also meet a licensed mortgage broker who has business relations with multiple banks and could give you better options. For example, lower or higher down payment, escrows or no escrows, interest rates, 20 vs 30 years mortgage, etc.

In Brickell there are buildings in which you can finance with only 5% down or even with an FHA loan through a process called FHA SPOT APPROVAL.

buying vs renting in Brickell5- CREDIT SCORE

Have you checked your credit lately? if not, you should do so before starting looking at condos for sale in Brickell.

Here is a true story that just happen to a friend/client. I suggested a friend to get pre-qualified (includes credit check) before wasting time visiting condos but he is a bit stubborn and he didn’t. He found the perfect condo in Brickell for him and his family and submitted an offer that was accepted. The unit was a steal. The contract stated that he had to apply for financing within 3 days after acceptance and so he did just to realize that his credit score was not as good as he thought it was and he didn’t qualify for the mortgage he wanted.

He has a pretty common name and some creditors were negatively reporting accounts that belong to another person. It took him 6 months to fix this problems and remove those negative accounts from his credit.

Credit scores are critical for getting the best mortgages with the lowest rates. Lenders want reliable on-time payment history as well as credit depth. Check your credit before you start searching for condos for sale in Brickell. We can help you with this process. Contact us!

Brickell condos that can be financed with low down payments

Brickell buying vs renting

For years, renting  was considered cheaper than buying. However, that may not always be the case anymore. Shifting real estate markets mean it may be cheaper to buy than rent in certain areas like Brickell where the high demand in rentals have changed the conversation.

Even the money needed upfront could be less than what you expect. We can help you figure out the numbers but the right option for you, either buying or renting, is the one that best fits your goals and finances.

Many people have found out that buying a condo in Brickell is the best financial option for them. Let us help you find out what works best for you.

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