Florida Mortgage>Florida Mortgage Information

Choosing among the many houses that may be available is hard enough -- then you need to make a choice from the myriad of mortgages and mortgage rates that are offered in today's market. So many decisions! Take heart, though there are literally hundreds of different mortgages available, they all fall into only a few basic varieties. Some may fit perfectly into your situation, others may be unwise or unattainable. By narrowing your choices, the process of picking the right mortgage becomes much easier. 

Mortgage Type - Fixed Rate or Adjustable

One of your first decisions should be between a fixed rate (the interest rate remains constant through the life of the mortgage) or an adjustable (the interest rate is adjusted--either up or down--at specified times during the mortgage term). Adjustable Rates Mortgages (ARMs) will have an initial interest rate lower than fixed rates but can adjust upward. They may be a good choice if you are sure that you will not be owning the home for an extended period (more than 5-7 years) of time.

Mortgage Terms -  15, 20 or 30 years

You will probably want to look at the shortest term that is comfortable  (and for which you will qualify). The difference is often the interest savings are enormous as the term decreases. Be sure to compare between 15, 20 and 30 year terms. The difference in monthly payments is often surprisingly smaller than anticipated. The savings over the term of the loan, however, can be substantial. For example, comparing a 15 year term to a 30 year term, $100,000 mortgage at an 8 1/2% fixed rate yields the following results.

Common Loan Types: Conventional, FHA, VA and "No-Document"

Conventional

A "traditional" mortgage, not directly insured by the Federal Government. Most conventional loans under $252,700 are administered through Fannie Mae or Freddie Mac (private corporations but regulated by the government). Those loans over that amount are designated "jumbo loans" and are funded by the private investment.

FHA

Insured by (but not funded by) the Federal Housing Administration (FHA) a division of the U.S. Department of Housing and Urban Development (HUD, and designed for, in general, low-income and middle-income borrowers and many first-time buyers. There are, however, limits (which vary from county to county) to the maximum loan amount. On January 1, 2000 HUD began insuring home mortgage loans of up to $121,296 in communities where housing costs are relatively low, and loans ranging up to $219,849 in communities where housing costs are relatively high. FHA loans have somewhat more relaxed qualifying standards and ratios than conventional loans and have the availability of both 15 and 30 year fixed as well as 1 year adjustable mortgages.

VA

For those qualified by military service, the Veterans Administration (VA) insures (but does not fund) 15 and 30 year fixed as well as 1 year adjustable mortgages with lower down payment requirements (as low as 0 down) and somewhat more lenient qualifying ratios.

No-Document "No-Doc" Loans

No-doc mortgages are general a wise choice for self-employed people, those who do not wish to verify their income. The benefits of a no-doc mortgage include a streamlined approval process because there is little subsequent verification. However, no-doc mortgages generally will be at a higher interest rate and require more down payment.

Non-Conforming Mortgages

These types of mortgages are available for those with blemished credit, or other non-qualifying circumstances. They generally require larger down payments and have higher interest rates.