When Buying…

When transitioning from a tenant to an owner remember to factor into your expenses some these other costs:

  • 20% cash down avoids paying Private Mortgage Insurance (PMI).  It is the amount paid by a private insurance company to a lender in order to prevent losses, in case a borrower defaults on his mortgage payments. When a borrower pays less than 20% of the appraised value or sale price as the down payment on a house, he is required to pay the costs of this insurance.  Once the loan to value ratio reaches 20%, PMI is terminated.
  • Insurance: Windstrom – approximately 1 to 1.5% of the purchase price, annually. Have an additional cash reserve  in case of  hurricane related damage to pay the windstorm deductible, which is typically 5 percent of the home value.  Homeowners Insurance is additional and varies based on structure and content. 
  • Closing costs and prepaids – approximately 3% of the purchase price.  Always obtain a good faith estimate from your lender for more accurate expenses.
  • Condominiums:  maintenance fees and special assessments.  Check with the condominiums management company for accurate information.

Real estate has become more complex and technical and has its own industry vocabulary and language.  Here’s a link to mortgage terms that will help you navigate the  terminology:  http://www.mortgagefit.com/terminology/

Know the market, call Sheryl DiCarlo 305.332.3256 before making your next real estate move.

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