Florida Mortgage Refinance
Homeowners in the Sunshine State often turn to Florida mortgage refinance in order to reduce monthly payments. Although refinance rates can range between 2- and 5-percent of the loan value, obtaining a reduction of 2-percent can substantially reduce the overall cost of home mortgages.
By entering into Florida mortgage refinance, borrowers can sometimes obtain cash back which can be used to pay off credit cards, make home improvements, or pay for college tuition. Florida refi is also a good option for homeowners who own investment properties used for seasonal or long term rentals.
While refinancing mortgages may sound enticing, several considerations must be given to this option. Many home loans include prepayment clauses which penalize homeowners for selling or refinancing loans during the first five years.
When lenders include prepayment penalties, they must provide information within the Truth in Lending statement. Therefore, Florida property owners should review the terms outlined within their loan documents. Penalties can range between 2- and 4-percent of the loan value.
Other costs of Florida refi can include loan points, home inspections and appraisals, attorney fees, and closing costs. Borrowers are subjected to the same lending criteria and mortgage loan expenses as when they took out the original loan. The average cost of Florida mortgage refinance ranges between $2500 and $6500.
Most mortgage lenders require borrowers to have a minimum of 5-percent home equity before refinancing can occur. A home appraisal is usually required to determine the amount of accrued home equity. Many people have considerably less equity due to falling home prices. Property values have dropped by 35- to 40-percent in some areas of Florida.
Mortgage financier, Freddie Mac, recommends borrowers forego refinancing mortgages unless borrowers can achieve a 2-percent interest reduction. The cost of mortgage refinance outweighs the financial benefits if borrowers are unable to reduce interest.
With declining property values, Florida mortgage refinance could potentially yield a higher monthly payment. Before submitting a loan application, borrowers should contact their lender to discuss refinancing options.
Borrowers should also take into consideration how long they have been paying on their current loan. Refinancing a home loan with ten years of payments left could be a costly mistake if terms are extended to a 20- or 30-year note. Extending payment terms for an additional 10 to 20 years will cost homeowners thousands of dollars and does not make good financial sense.
There are advantages and disadvantages to mortgage refinance that must be explored. We invite you to begin your research by browsing our Florida mortgage refinance article library. We present tips and resources to help visitors make informed choices.
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Published on June 24, 2010 at 02:09 AM