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Which is better: Renting or Buying?

If you can pay rent in Florida, there’s a good chance you can pay a mortgage in Florida, too. Monthly mortgage payments can work out to be the same amount as your current rental payment, with the money going to your own equity rather than a landlord’s pocket. Rent money is gone forever but mortgage payments are an investment in your future.

To decide whether taking out a Florida mortgage is right for you, consider things like your current rent payments, your existing debt, your income and your future plans. Another thing to consider is real estate prices in your neighborhood: are they stable? Are they skyrocketing? Is the market in your area out of control right now? Like any market, the real estate market is subject to inflation, buyer frenzy, and trends. It’s even possible that renting could be the right choice right now, if your neighborhood’s prices are over-inflated, especially if you don’t plan to stay there for very long.

I don’t know what price range I’m eligible for…

Use the affordability calculators to plug in the amount of monthly payment you can budget for housing. This amount might be close the amount of rent you’re now paying. Use the calculator tool to convert this monthly figure into a total loan amount that fits your budget. When you apply for a loan, lenders will use a similar calculator and return a maximum figure that they are willing to lend to you, the borrower. However, it’s not always in your best interest to borrow the maximum amount. In fact, as a general rule it’s not a good idea for most borrowers to borrow the maximum amount. Remember, lenders affordability calculators will tell you how much you can borrow, but not how much you should borrow. And the more you borrow from a lender, the more money that lender can make from your Florida mortgage.

I know how much I can afford, but how do I choose a Florida Mortgage?

Mortgages are offered through several types of lenders-- commercial banks, mortgage companies, and credit unions. Different lenders may quote you different prices, so you should apply through several different lenders for comparison. You can also work with mortgage brokers. Brokers arrange mortgages for you rather than lending money directly, as would a bank. Brokers access multiple lenders so you may have a wider selection of mortgages and terms to choose from. Brokers Keep in mind that if you do work with brokers, you should consider contacting more than one. This is because brokers are not obligated to find you the best mortgage deal. In other words, a broker isn’t working for you unless you specifically contract one for that purpose. A broker’s loyalties are rooted in getting the most commission for him or herself, so compare brokers, too.
Sometimes it may not be obvious to you whether you are dealing with a lender or a broker. Some financial institutions operate as both lenders and brokers. Be sure to ask whether a broker is involved, when you’re shopping around. This is important because brokers are usually paid a fee for their services that may be separate from and in addition to the lender’s origination or other fees. A broker’s “fee” may be in the form of "points" paid at closing or as an add-on to your interest rate, or both. You should ask questions so you don’t have surprise fees in the end, at closing.

Once you’ve found a lender or broker you can work with, you’ll need to know what type of mortgage you’d like. Home loans come in all varieties, for all types of borrowers and scenarios. As with each step of the home-buying process, only you can make this decision because it’s based on your personal situation. One major decision to make is whether you’ll want a 15-year or a 30-year loan. A 15-year mortgage means you’ll be paying less interest over the life of the mortgage whereas the 30-year variety means lower payments but more interest over the life of the loan.

Then there’s the fixed-rate mortgage versus the adjustable rate mortgage (A.R.M). The A.R.M. starts out with a fixed lower interest rate for some years, usually 5 years. After the initial period, the interest rate becomes adjustable, depending on market conditions. Whatever type of loan you choose, you can lower your interest rate if you pay a fee up front, at closing. This type of fee is called “points”. So, if you pay points, you can get a lower rate. You have to calculate whether the extra expense of “points” is worth it to obtain the lower interest rate. Once again, your personal financial situation will determine whether this is a good idea for you. Only you can make this decision. When shopping for a mortgage loan, some advertised interest rates may depend on your paying points, so be sure to ask about points.

Also, remember that lenders can have several rates and may offer different rates and terms to different customers. This is affected by several factors like how much you down payment is, your credit history, or your income. When discussing mortgage loans with a loan officer, exploring various options can save you money.