Refinancing Considerations for S. Florida Residents

By Kelly Richardson
Local Lender Columnist
Nov 1, 2006
Oh, how just a few years can make a difference in the real estate market. From the profitable frenzy just a few short years ago to today's uncertainty, homeowners in S. Florida have seen it all. If you are considering a mortgage refinance, know what you're getting yourself into.

A few short years ago, the S. Florida real estate market was ripe for profit. Construction companies, real estate investors, and even homeowners had a multitude of ways to make and save money through a creative mortgage refinance. Mortgage holders were seeing returns on their investments that made the rest of the nation – in the slump of a recession – envious. Here were some of the region’s keys to success back when refinancing your mortgage was the thing to do:

S. Florida Mortgage Refinancing: 2002

• Promising Numbers. According to the South Florida Real Estate Journal, the tail end of 2001 saw an all-time high in real estate sales, with real estate transactions reaching the $40 billion mark.
• Winning Against the Market. Real estate investors were able to hold onto their mortgages through a creative refinance structure, keep the money tax free, and then put the property on the market later when re-sales spiked.
• Winning Properties. Class-A multi-family developments and office real estate showed the greatest turn of profit, with investors 'buying down' the interest rates.

After the disaster of 9/11, the S. Florida market slowed dramatically. Should you still consider refinancing your mortgage? Maybe, but you had better know exactly what you're into before you sign anything. Here's a look at today's market:

S. Florida Mortgage Refinancing: Present Day

• Housing Expenses Explode. As the mortgage market has cooled off, one in five S. Florida residents spend half of their income on mortgage payments, taxes, and insurance.
• Lender Flexibility. While experts recommend spending no more than 30 percent of your income on mortgage expenses, lenders are allowing up to 40 and 45 percent, putting homeowners at serious financial risk.

It's best to evaluate your personal financial situation before considering a mortgage refinance to prevent you from overextending in an uncertain market.

Sources
The Business Journal
Palm Beach County housing expenses pummel paychecks

About the Author
Kelly Richardson has over 15 years of creative and technical writing experience. He teaches secondary Honors-level English and writes ad copy for a variety of clients in specialized industries such as medicine and technology. Kelly holds Undergraduate and Graduate degrees in English and Education from Georgia State University. He is currently pursuing a Doctorate in Educational Policy & Leadership from Berne University & International Graduate School.