Florida Mortgage Loans

Buying a home is one of the most important investments a person can make. Most people look for a mortgage or a loan while buying a house. The Florida real estate market is currently booming with falling interest rates and easy loans, and mortgage loan lenders are offering several kinds of loans and special mortgage loans to attract customers.

A mortgage rate is the rate of interest that is charged on the loan used for buying a house or a property. Mortgage rates keep changing over a period of time. A lower mortgage rate means a lesser cost of the house and lower monthly payments. A mortgage lending company looks after all the aspects that need to be considered such as the length of the mortgage period (fifteen-years or thirty-years), the kind of interest rate (fixed or variable), and even home inspections, taxes and property appraisals. Most people do not understand the typical mortgage terminology like PMI (Private Mortgage Insurance), APR, settlement costs, points etc. In such cases, a professional mortgage company would prove to be very useful. The main factors that are considered when issuing a mortgage loan are income of the applicant and his/her credit record.

Only Florida citizens are eligible to receive Florida mortgage loans. The various kinds of mortgage loans available in Florida are: FHA (Federal Housing Administration) loans, consolidation loans, land loans, conventional loans, balloon loans and refinance mortgage loans. Mortgage loans can also be refinanced. Refinanced mortgage loans have several benefits like lower monthly payments, lower interest paid, and cash equity. There are also bad credit mortgage loans that are offered at a slightly higher rate of interest for people who have bad credit records. The most popular kind of mortgage loans in Florida is the fixed rate loans- because of their predictability. The typical term of this loan is 15 years or 30 years. The ARM (Adjustable rate mortgage) loans are also popular because the interest rate is likely to decrease sometime in the future. This is generally preferred by people who plan to sell off the home in a few years time after paying off the loan. Other kinds of special Florida Mortgage loans are: hard equity loans, interest only loans, 100% cash out refinance, construction loans, commercial mortgage loans, farmer’s home loans, no PMI (Private Mortgage Insurance) loans, vacant land and acreage mortgage loans and cross- collateralization of properties.

Florida offers very competitive mortgage rates. The best way to find a good mortgage lender in Florida is to ask friends or family members for suggestions. The Internet is a great source to find good mortgage companies who are advertising extensively about good rates and terms and also best service.

Mortgage Loan Rates

There are mainly two types of mortgages – fixed rate mortgage and adjustable rate mortgage (ARM). With fixed rate mortgages, interest rates do not change with time. But in the case of adjustable rate mortgages, the interest rates are adjusted at certain intervals. Mortgage loan rates greatly differ with state, lending company, loan amount, value of the security, credit rating of the buyer and the type of the loan.

Mortgage loan rates are governed primarily by the Federal Reserve Board. So, if the board changes the interest rates, the mortgage lenders should adjust their interest rates accordingly. Mortgage loan rates are also influenced by many market and economic factors such as inflation. Generally, lower mortgage loan rates can be availed if you pay a down payment of 20% or more of the loan amount. On the other hand, if you pay a down payment of 5% or less of the loan amount, you may only qualify for a higher interest loan.

Generally, the mortgage loan rates fall somewhere between 5% and 13%. Long term loans have slightly higher interest rates than short-term loans; usually the difference is below 1%. Loan rates also differ with mortgage loan types such as commercial loans, FHA loans, VA loans, home equity loans, home improvement loans, and bad credit/sub prime mortgage loans. First mortgage loan rates are usually lower than those of second mortgages.

Many Internet sites provide comparison and reviews of different mortgage loan rates offered by lenders. Most mortgage lenders update their records and rates daily. Many Internet sites also provide mortgage rate calculators, which help you calculate the exact interest rates and monthly payment amounts. These Internet sites also provide information on loan securing points, closing costs and fees, monthly installments, and penalties.

3 Details That Affect the Mortgage Rate Offered

Everyone is aware of the rates that are offered by lenders, however, these are basically the lowest advertised interest rates available to borrowers. Very often, borrowers may feel that they have been lied to when they do not receive the rate that they are hearing or reading about. However, there is definitely a reason for this because there are 3 details that affect the mortgage rate that is offered to a borrower.

1. Debt to income – The debt to income ratio (DTI) is a calculation of the total debt held by a borrower in comparison to the total income. Mortgage products have maximum debt to income ratios that are acceptable. In addition, lenders may add their own restrictions which may further reduce the debt to income that is necessary for a particular mortgage program. Since debt to income measures the total amount of debt that a borrower has and will have with the new mortgage, it is important that as much debt as possible is reduced prior to applying for a mortgage. The higher the DTI, the mortgage rate offered to a borrower will also be higher.

2. Credit Scores – While DTI is an important measurement of debt and income held by a borrower, credit scores are a reflection of that debt and how it is managed. While both scores and credit history are considered when processing a mortgage, the actual middle score will be used when determining the mortgage rate to be offered. Borrowers who have higher credit scores, are offered the lowest rates.

3. Loan to Value – The loan to value (LTV) of a mortgage is the measurement of the loan against the value of the property that is either being purchased or refinanced. It is the final appraisal that determines the loan to value for the lender. While different mortgage programs have varying loan to value rules, such as FHA and VA, conventional mortgages require the lowest loan to value. This means that borrowers must have a larger down payment for this type of mortgage. Any LTV above 80% will require that the borrower pay private mortgage insurance. In addition, with higher loan to values, the mortgage rate will also be higher.

Lenders use rate sheets when quoting a mortgage rate to a borrower. These rate sheets have adjustments for each of these separate occurrences listed above. Each adjustment adds a certain percentage to the initial mortgage rate. For this reason, the final mortgage rate that a borrower is offered and accepts is seldom the same as the advertised rate.