Factors To Consider When Determining The Budget Of Your Luxury Home
Sales of luxury homes are on the up. 6% more properties have sold for $1 million or above this year compared to 2017, according to Builder Online. Things are looking rosy in Miami too. The number of Miami beach condos sold during the first quarter of the year increased by a staggering 92%. However with the median price of a luxury single-family home in sunny Miami coming in at $1.415 million, having a well thought out property plan alongside a strict budget is essential.
How much down payment do you have?
In most cases, the down payment you can come up with will dictate the budget of your luxury property. It’s highly recommended that a down payment of 20% is offered. Therefore, you should be looking to have $283,000 in savings, as well as extra for realtor costs, legal fees and moving charges. However, there’s no need to worry if you can’t secure this much of a deposit as prestige properties in South Florida can be picked up for less than the current median sold price. Additionally, The LA Times reports that 60% of homebuyers put down a down payment of just 6%. So, there is plenty of opportunities to adjust your final budget accordingly.
Consider other financial commitments
A mortgage on a luxury property will be the biggest financial commitment you’ve ever had. But, when it comes to setting the budget for your new home, it’s essential you consider your other financial plow to ensure that you can comfortably afford your repayments. If you’re one of the 107 million Americans who has an auto loan, consider ways to pay it off quicker. One way to cover this personal expense is to use a credit card which offers a 0% APR period as this will help to lower your monthly interest rate. Alternatively, it might be worth dipping into your down payment savings to eradicate the commitment. By doing this, you’ll know exactly how much cash you’ve got to plough into your new luxury accommodation.
Know which outgoings will increase
If you already own a property, you’ll likely know how much your bills cost each month. However, your new luxury home will be larger and grander and will cost more to run. Therefore, on paper it might look like you have a bigger budget than you realistically do. A typical American home spends $104 a month on electricity, according to The Nest. In a condo, electricity costs can easily be double this depending on the overall square footage. Similarly, your other utilities, including gas and water, will be more expensive too. Therefore, it’s worth speaking to condo owners to find out what they pay. Utility providers should also be able to provide you with projected costs for your new luxury home too.
Buying a luxury home in South Florida is an exciting experience. However, it’s essential you spend time creating the budget for your new property to ensure that you continue to live within your means. Therefore, be sure to consider how much down payment you can pull together, your other financial commitments and plan for increased living expenses.