Florida Mortgage and Loan
Specialists with your home in mind.

Frequently Asked Florida Mortgage Questions

1. Questions From First Time Home Buyers
2. General Mortgage and Loan Financial Questions
3. Mortgage, Title & Homeowner's Insurance Questions
   
   Definitions (What do all these terms mean?)
   

1. Do I have to use the lender my real estate agent (or builder) recommends?
2. What is a mortgage?
3. What is LTV and how does it determine the size of my loan?
4. What types of loans are available and what are the advantages of each?
5. When do ARMs make sense?
6. What are the advantages of 15 and 30 year loans?
7. Does it help to pay off my loan ahead of schedule?
8. Are there special mortgages for first time home buyers in Florida?
9. Are there low doc or no doc loans available?
10. What size of down payment will I need?
11. What is included in a monthly mortgage payment?
12. What factors affect my mortgage payments?
13. How does the interest rate affect my Florida mortgage?
14. Should I lock my interest rate or float the rate until closing?
15. What happens if interest rates go down and I have a fixed rate loan?
16. What are discount points?
17. What is the difference between a zero point and a no cost loan?
18. What is an escrow account and do I need one?
19. What is the difference between a conforming and non-conforming (aka jumbo) loan?
20. Is there a difference rate for non-owner occupied vs. owner occupied financing?
21. What is mortgage insurance and do I need it?
22. What is the APR and how is it calculated?

1. Do I have to use the lender my real estate agent (or builder) recommends? No. Most real estate agents will provide their clients with 2-3 potential sources for financing. However, the referred lenders may not offer the best array of loan products or the lowest rates. It is always a good idea to do some loan investigating on your own, do your homework carefully before committing to any lender and always be careful when shopping that you are making a valid loan comparison (i.e. same rate, points, closing costs, rate lock duration, etc). The Florida loan specialists assigned to you on this site can taylor a loan to suit your specific needs, contact him or her today.
   
   
2. What is a mortgage? A mortgage is a loan obtained to purchase real estate. The "mortgage" itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.
   
   
3. What is LTV and how does it determine the size of my loan? The Loan To Value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $100,000, you could borrow up to $95,000 (95% of $100,000), and would have to pay,$5,000 as a down payment. The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy.
   
   
4. What types of loans are available and what are the advantages of each? Your personal loan specialist on this site, would be glad to go through the various types of loans available and find the one that fits your specific needs. Here are a few of the most common types of loans. Fixed Rate Mortgages: Payments remain the same for the the life of the loan Types 15-year 30-year Advantages Predictable Housing cost remains unaffected by interest rate changes and inflation. Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits Types Balloon Mortgage- Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is due or refinanced (though not automatically) Two-Step Mortgage- Interest rate adjusts only once and remains the same for the life of the loan ARMS linked to a specific index or margin Advantages Generally offer lower initial interest rates Monthly payments can be lower and may allow borrower to qualify for a larger loan amount.
   
   
5. When do ARMs make sense? An ARM may make sense if you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates.
   
   
6. What are the advantages of 15 and 30 year loans? 30-Year: In the first 23 years of the loan, more interest is paid off than principal, meaning larger tax deductions. As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses. 15-year: Loan is usually made at a lower interest rate. Equity is built faster because early payments pay more principal.
   
   
7. Does it help to pay off my loan ahead of schedule? Yes. By paying a little extra each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal. Most lenders allow loan prepayment, though you may have to pay a prepayment penalty to do so. Ask your lender for details.
   
   
8. Are there special mortgages for first time home buyers in Florida? Yes. Lenders offer several affordable mortgage options which can help first time home buyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities.
   
   
9. Are there low doc or no doc loans available? Yes there are many. They come in a variety of programs; some have self-employment, credit, equity or asset requirements so it may be advisable to have our loan specialist direct you to the appropriate product for your needs. There are also loans available to individuals who cannot verify either their income or assets (referred to as NINA loans). Keep in mind that these products can carry higher interest rates than that of a loan that is fully documented. A good rule to remember, the more documentation a borrower can provide for a lender, the lower the rate they will typically get.
   
   
10. What size of down payment will I need? There are now mortgages that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you may also need money for closing costs.
    
    
11. What is included in a monthly mortgage payment? The monthly payment mainly includes principal and interest fees. But most lenders also include local real estate taxes, homeowner's insurance, and mortgage insurance (if applicable).
    
    
12. What factors affect my mortgage payments? The amount of the down payment, the size of the mortgage loan, the interest rate, the length of the repayment term and payment schedule will all affect the size of your mortgage payment.
    
    
13. How does the interest rate affect my Florida mortgage? A lower interest rate allows you to borrow more money than a high rate with the some monthly payment. Interest rates can fluctuate as you shop for a loan, so ask your loan specialist if he or she can offer a "rate lock" which guarantees a specific interest rate for a specified period of time. Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the interest rate because it also includes the cost of points, mortgage insurance, and other fees included in the loan.
    
    
14. Should I lock my interest rate or float the rate until closing? The answer depends on one's outlook for interest rates, whether you are satisfied with the current rate being offered, how far out the closing date is and whether or not a rate increase could effect your ability to qualify for the loan. With a purchase, there is a contractual obligation to close on a specified date. Some lenders try to take the guess work out of the process by allowing borrowers to lock and then float the rate down one time during the loan process. Some lenders require a lock fee to insure the transaction will in fact close.
    
    
15. What happens if interest rates go down and I have a fixed rate loan? If interest rates drop significantly, you may want to look into refinancing. Most experts agree that if you plan to be in your house for at least 18 months and you can get a rate 2% less than your current one, refinancing is smart. Refinancing may, however, involve paying many of the same fees paid at the original closing, plus origination and application fees.
    
    
16. What are discount points? Discount points allow you to lower your interest rate. They are essentially prepaid interest, With each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage, the interest rate is reduced by 1/8 (or .125) of a percentage point. When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases With each point paid. Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment. Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.
    
    
17. What is the difference between a zero point and a no cost loan? With a zero point loan, a borrower has opted not to pay points to buy their interest rate down but will still be paying for their base closing costs (i.e. appraisal, credit report, lender doc fees, title and escrow, etc.). With a no cost loan, a borrower has accepted a higher interest rate, (typically .25%-.375% higher than on a zero point loan) with the trade off that the lender or broker will pay for all their non-recurring closing costs (all base closing fees except for interest, taxes and insurance due).
    
    
18. What is an escrow account and do I need one? An escrow account is a place to set aside by your lender to hold the portion of your monthly mortgage that covers; annual charges for homeowner's insurance, mortgage insurance (if applicable), and property taxes. Escrow accounts are a good idea because they assure money will always be available for these payments. If you use an escrow account to pay property tax or homeowner's insurance, make sure you are not penalized for late payments since it is the lender's responsibility to make those payments.
    
    
19. What is the difference between a conforming and non-conforming (aka jumbo) loan? A conforming Florida mortgage is one that does not exceed the maximum mortgage limit of the two primary GSE's (Government Sponsored Enterprises), Fannie Mae and Freddie Mac. Therefore a jumbo mortgage is one that has a mortgage amount exceeding the GSE's limits. The interest rates on jumbo mortgages are typically between 1/4-5/8% higher than on conforming mortgages.
    
    
20. Is there a difference rate for non-owner occupied vs. owner occupied financing? Conforming non-owner occupied rates are typically 3/8% higher than owner occupied interest rates. The down payment or equity requirement is usually higher for non-owner occupied loans as well, typically 20-30%+.
    
    
21. What is mortgage insurance and do I need it? Please see the insurance section on our website.
    
    
22. What is the APR and how is it calculated? APR stands for annual percentage rate and its purpose is to give borrowers a truer representation of the effective interest rate on their loan. APR factors in certain closing costs and fees and spreads these costs over the life of the loan, along with the note rate, to arrive at a more accurate annualized percentage rate than the note rate alone represents.
    
    
23. More Questions? Please contact your personal mortgage loan specialist, assigned to you here on this site, don't hesitate to ask any questions you may have.   Top