Should You Opt For an Interest-Only Florida Mortgage to Buy a Condo?
Columnist Lew Sichelman addressed the following question in his recent mailbag: if a person has a condo for sale with no Florida mortgage, and anticipate selling within the next 12-24 months, should he/she opt for an interest-only mortgage?
Assuming the credit union offers a 5/1 interest-only Florida home loan, and knowing they can pay the note off as soon as the condo is sold?
The answer, in light of today’s Florida condo market - almost regardless of what city or town we’re talking about - experts aren’t too terribly confident of being able to unload a condo any time soon.
Even when looking to the next two years (or perhaps longer), don’t get your hopes up about a sale, at least not without taking a significant hit price-wise.
The condo market is terribly, woefully overbuilt in the Sunshine State. In Bonita Springs, just north of the Naples housing market, it’s bad news if you’re in a bind to sale.
As for which loan to take on the property, an interest-only mortgage only makes a good deal of sense when prices are rising.
Unless you can afford to pay nothing more, look at something that pays down your principal amount so you have home equity to play around with when the time comes to sell.
You can either take the hit gradually over time with a higher Florida home mortgage payment or all at once when you sell.
Either that, or at least be sure you can handle the cost of a Florida refinance if you take the risk of the low home loan rates now.
June 4th, 2007 at 10:55 pm
I have been following the unit sales of every unit in several high rise condo buildings on A1A in Pompano Beach and Lauderdale-by-the-Sea where we would like to buy when the market has adjusted to 2002-2003 levels. So far, in the past 2 quarters I observed a selling price decline in these 2 buildings of an average of about 14% per quarter over the past 2 quarters, but that leaves the prices only down to 2005 levels and he big jump in prices took place at the end of 2003, but largely in 2004, increasing 30% in 6-8 months. Curiously, there are a large number of $900,000 - $1.5 million units in the neighboring new and largely empty buildings, yet I have not seen evidence that these units are coming down in price. Why havn’t we seen a major price decline of 30-50% or higher when there are so many units for sale and so few buyers? What is the 1-2 year outlook for this area?