As many of you know, we expanded the Van Leeuwen & Company presence to Palm Beach, Florida. I myself relocated as a full-time resident. I’ve spent a few decades helping others with the move, and now that I’ve been here a while myself, I’ve heard far too many stories of pitfalls when retirees move here.
What I've noticed over the years is that the most expensive mistakes happen before anyone picks up the phone to call a mortgage professional. They happen when buyers are still working off assumptions from wherever they moved from, assumptions about how taxes work, what insurance costs, whether a mortgage even makes sense, or whether they can qualify at all.
This is the conversation I wish more clients had earlier.
The First Question: Purchase Intent
Before rates, before neighborhoods, before open houses, the most important question is simple: are you buying a primary residence, a second home, or an investment property?
It sounds like a formality, but for planning purposes, it isn't. The answer affects your loan products, your income requirements, your timeline, and how you'll be taxed. Florida's Homestead Exemption, for instance, applies only to primary residences. The rules around qualifying for a mortgage on a vacation property are different from those for a home you're moving into full-time. Additionally, if you're coming from a state where certain assumptions about real estate transactions are just baked in, like the role of attorneys at closing, which is standard in the Northeast but not required in Florida, those assumptions can create unnecessary confusion or cost.
Get clear on what you're buying before you get clear on anything else. It directs the rest of the conversation.
The Two Costs that Shock Almost Every Out-Of-State Buyer
I've had this conversation enough times to know where the surprises land. It's almost always taxes and insurance.
Property taxes in Florida vary more by county than most buyers expect. Palm Beach County runs about 1.7% of the purchase price annually. Martin County, one county north, runs closer to 1.4%. On a $700,000 home, that's a difference of over $2,000 a year*, and that's before you factor in something most online calculators miss entirely.
When you buy a home, the assessment resets to the current market value, regardless of what the prior owner was paying. A seller who has homesteaded for 20 years may be paying taxes on a $400,000 assessment while the home trades at over a million. Your bill won't look anything like theirs.
Insurance is often the bigger shock. Florida homeowners carry two policies that most of the country doesn't: a standard hazard policy and a separate wind policy for hurricane season. The single biggest variable in what you'll pay is the age and condition of the roof. The same $600,000 home can run $125 a month in insurance if it's new construction, or push past $600 a month if you're inheriting a 25-year-old roof. That spread of nearly $500 a month doesn't show up in any mortgage calculator I've ever seen.* It needs to be part of the conversation before you fall in love with a property.
The Homestead Exemption: How it Works & Why it Matters at Closing
Florida's Homestead Exemption is one of the better deals in residential real estate, but it only works if you understand it before you close, not after.
Here's how it works. When you establish a primary residence in Florida and file for Homestead, your assessed value gets locked in at the year of purchase and can increase no more than 3% per year going forward. You also get a $50,000 reduction to your assessed value for tax calculation purposes. It doesn't take effect until January 1st of the year after you buy, which is worth knowing for timing.
The practical consequence is significant. A seller who homesteaded in 2000 and originally paid $300,000 for their home might be paying taxes today on a $500,000 assessed value of $500,000, even if the home is now worth well over a million. When you buy that house, your assessment resets to today's market value. Their $5,000 annual tax bill can become your $17,000 annual tax bill overnight.* Use estimates based on the purchase price you're actually paying, not whatever the current owner is paying now.
Cash vs. Mortgage
This is one of the questions I spend the most time on with clients, and the instinct to pay cash just to avoid debt is understandable. It's also often the more expensive choice. If your portfolio has historically returned 9 to 11% and the current fixed mortgage rate is around 6%, some clients may be inclined to keep their assets invested in pursuit of arbitrage.
There's a second argument that's easy to overlook. A fixed-rate mortgage is repaid in future dollars, adjusted for inflation. At 4% average inflation, a $300,000 loan is effectively worth about $150,000 in today's purchasing power by the time 18 years have passed.* The debt effectively shrinks in real terms every year you hold it.
For clients with portfolios that have significant embedded gains, the picture gets sharper still. Liquidating taxable assets to fund a cash purchase can trigger capital gains taxes of 20% or more. The seemingly simple option of writing a check and owning it outright can easily cost an extra $100,000 or more in taxes before you even close.* The right answer depends on your philosophy, your cash flow, and your broader plan, but it's a conversation worth having before you decide.
The Retirement Mortgage Myth
One of the most widespread and costly misconceptions I hear is the assumption that retirement eliminates your ability to qualify for a mortgage. For the right client, that's simply not true, and believing it can lead to decisions that cost real money. This is where having a knowledgeable, capable mortgage broker makes a world of difference.
Asset-based lending programs, governed by Freddie Mac and Fannie Mae guidelines, allow qualified borrowers to use portfolio assets in place of W-2 income to establish a qualifying income figure.
Freddie Mac, for example, allows borrowers aged 62 or older to take all of their eligible accounts, divide the total by 240 months, and use the result as qualifying monthly income. Setting up a recurring draw from a retirement account, documented at least once before closing, can also work as direct qualifying income. Portfolio lenders offer additional asset-depletion programs with different division windows for clients whose situations don't fit the standard guidelines.
For the right retired client, my preferred local mortgage lender has told me this process is often more straightforward than a traditional income-based loan. If you've dismissed this option without talking to a mortgage professional who actually knows these programs, it's worth another look.
Rent First or Jump In?
I get this question a lot, and I'll give you the honest answer rather than the careful one.
If you know the area, have a specific reason to be in a particular part of town, and plan to stay for five years or more, it often makes sense financially to buy. The Florida market has a history of rewarding buyers in almost every five-year window over the past two decades, and waiting has its own cost that isn't always obvious until you look back.
That said, six months of rent is cheap compared to a transaction gone wrong. If you're uncertain about the community activities, the neighborhood, or whether the lifestyle matches what you're imagining, take the time to find out. Moving to Abacoa and realizing six months later that you want to be downtown West Palm Beach is a fixable problem when you're renting. It's a significantly more expensive problem when you're not.
What to Watch Out For, Especially with Condos
Short holds are expensive in any market. Transaction costs on both ends mean you need meaningful appreciation just to break even, so if there's a real chance you're relocating within three years, plan around that before you commit.
Condos deserve particular attention right now. Since 2023, HOA costs, reserve-funding requirements, and insurance expenses have risen sharply at older buildings across Florida. Evan has seen dues go from $400 to $1,100 a month in under three years at the same building, driven by insurance increases and state-mandated reserve contributions following Florida's updated structural requirements.* Before you commit to a condo, look carefully at the reserve study, the association's financials, and its history of special assessments. The purchase price is only part of what you're agreeing to.
If You Want To Go Deeper
We will be releasing within the next month an interview that I did with my mortgage lender in Florida, who helped me with the purchase of my home as well as a number of our clients. If you'd like to receive it, send us an email and I'll make sure it gets to you.
Reachouttous, and we'll send both when they are ready.
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Traditional IRA account owners have considerations to make before performing a Roth IRA conversion.Theseprimarilyincludeincometaxconsequencesontheconvertedamountinthe year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
*Illustrativepurposesonly.Numbersapproximate.