FAQ About Mortgages for Real Estate in Florida

Question: My dad tells me that I should tell the lender that I want a 30 year FIXED rate mortgage.
Is that the best type of loan for me??

Answer: It depends. How long do you plan to stay in the home you are purchasing?
Some examples of home buyers who would NOT benefit by using a 30 year fixed loan are:

* Active duty military who will be transferred out of the area in 2-5 years.
* First time home buyers who will buy a small home now and plan to move up in a few years.
* Buyers who are buying a temporary home while looking for a permanent new home site or builder.
* Buyers who are planning to retire in a few years and will be buying retirement property or moving away.

The 30 year FIXED rate loan is expensive. Lenders charge higher interest rates for loans that are locked in for long periods of time. If the lender takes that risks that rates will go up during the life of the loan, they insure themselves a reasonable rate of return by locking in a higher interest rate in at loan origination.

If, on the other hand, a buyer knows that they will be selling the home in 3-7 years, it makes sense to get a shorter term loan with a lower interest rate.

Question: What is an ARM – Adjustable Rate Mortgage?
Answer: Loans that are fixed for varied periods of time. Loans may be fixed for as little as 3-6 months and then adjust to a higher rate. Most ARMs are fixed for 3, 5, 7, 10 years and then adjust to a market rate with a 1 Year ARM, which would adjust every year.

Example: 1 Year ARM 5%
3 Year ARM 5.5%
5 Year ARM 5.75%
7 year ARM 6%
30 year Fixed 6.5%

Other factors that affect mortgage rates are the amount of down payment. The model for rates is the 5% Down loan the meets Fannie Mae guidelines. However, you may also qualify for a 100% Down loan with good rates IF your credit scores are above 670. Contact us and we’ll get the information to you
from an experienced local Florida lender.

There are a number of ARM types. Your  buyer’s agent will introduce you to lenders in the Florida real estate market area that are familiar with local rates and requirements.