- May 31, 2017
- Posted by: steve
- Categories: compare mortgage types, mortgage articles, mortgage news, refinance
Are you a Florida property owner? Curious about refinancing? There’s a lot to know. That’s why we created this guide to refinancing mortgages in florida.
Have you been wondering if refinancing your mortgage is the best option for you as a Florida homeowner?
If so, we’re here to help.
Keep reading, and we’ll take you through all the information you need on refinancing mortgages in Florida.
What Is Refinancing?
Refinancing happens when you pay off your current mortgage and start a new one.
Why Do People Refinance?
There are lots of reasons why people choose to refinance their mortgages in Florida, including the following:
Lower Interest Rates
If interest rates have lowered since you first bought your home, refinancing your mortgage can help you pay less each month.
With a lower interest rate, you may also be able to build equity in your home faster than you were before.
Your interest rate may be lower now than it was when you first bought your home if your credit score or overall market conditions have improved.
You can’t really control the housing market (unfortunately), but if you have worked to improve your credit score, refinancing your home might help you get an even better handle on your finances.
Increase Or Decrease The Length Of A Mortgage
Refinancing can allow you to shorten or lengthen the term of your mortgage. There are benefits and drawbacks to both of these options.
When you increase the term of your mortgage, you can lower the amount that you pay every month. Basically, you pay less money for a longer period of time.
While this is attractive to some people, keep in mind that when you do this, you will end up paying more in the long run towards interest.
When you decrease the term of your mortgage, you can lower your interest rates and pay off your loan sooner. Your monthly payments will be higher when you take this route, but you will end up reducing your total costs as a result.
Change Mortgage Type
When you refinance your mortgage, you can change from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. You can also switch to an ARM with better terms.
If you have an ARM, your monthly payments will increase or decrease along with current interest rates.
It is generally easier for borrowers to initially qualify for an ARM than to qualify for a fixed-rate mortgage.
However, if your situation has improved and you want a consistent monthly payment, you may be able to switch to a fixed-rate mortgage.
This is also a good option if you think that interest rates might increase in the future.
In addition to switching from an ARM to a fixed-rate mortgage, you can also switch to a different ARM with better terms.
Perhaps you can get a new loan that offers smaller interest rate adjustments or lower payment caps to decrease the size of the fluctuations in your monthly payments.
Need Cash from Equity Built Up in the Home
If you refinance your mortgage for a greater amount than what you currently owe on your home, you can receive the difference in cash. This is known as cash-out refinancing.
This is an option for people who need extra funds. However, it is important to remember that, if you cash out, you own less of your home. This means you will not make as much money after selling it.
Refinancing Programs for Mortgages in Florida
When it comes to refinancing mortgages in Florida, there are a couple of different programs you can take advantage of.
Florida HARP Refinance
The Home Affordable Refinance Program (HARP) was introduced as a way to improve the housing market and make it easier for homeowners to refinance, even if they owe more than what the house is worth.
You can take advantage of this option if you meet the following criteria:
- Your loan is guaranteed by Freddie Mac or Fannie Mae
- You have not been more than 30 days late on your mortgage payments for the last year
- You did not already finance under HARP after May 31, 2009
Another option for refinancing mortgages in Florida is a government program known as the Federal Housing Administration streamline refinance.
This program is available to you if you already have an FHA loan and want to lock in a new, lower monthly rate.
The benefits of an FHA streamlined refinance include not needing a property appraisal or income verification. Lender credit is also allowed to cover closing costs, which cuts down on your out-of-pocket expenses when refinancing.
The Cost of Refinancing Mortgages in Florida
Although refinancing your mortgage can help you save money in the long run, there are some associated costs that you ought to be aware of, including:
- Appraisal fee: This covers the appraisal of your home to ensure that it is worth at least as much as the loan.
- Attorney review/closing fee: This covers the costs of the lawyer or the company that actually does the closing for the lender.
- Homeowner’s insurance: You are required to have homeowner’s insurance as part of your loan.
- FHA, RDS, or VA fees: You may have to pay these fees if your loan is insured by the FHA, RDS, or VA.
- Title search and title insurance: This covers the cost of searching property records to ensure you are the owner of your home.
- Survey fee: A survey may be needed to confirm the location of your home.
When all of these fees are added up, they usually total about 3 percent of the total amount of your loan.
No Closing Cost Refinance
If the idea of paying all the fees listed above makes you anxious, don’t worry. They might not all apply to your specific situation.
Keep in mind as well that, when refinancing your mortgage, you might also have the option of a no closing cost refinance.
Although it would be nice if this were the case, a no closing cost refinance doesn’t actually get rid of your closing costs. It does, however, give you some different options for paying them.
If you cannot pay your closing costs upfront, you may able to choose from one of the following options:
- Lender absorbs the cost: If you choose this option, your lender will absorb the closing costs and will in return increase your loan’s interest rate.
- Lender adds costs to the loan balance: This option lumps the closing costs in with the loan balance, which will result in a higher monthly payment.
Remember that every lender is different and will have unique conditions for no closing costs refinances.
When Should I Seek a No Closing Cost Refinance?
One of the options described above may work best for you if you have a short time frame for paying back your loan.
When it comes to refinancing mortgages in Florida, a short time frame would be five years or less. If you can pay off your balance in that time period, you will not be as severely impacted by higher monthly payments or interest rates.
A no closing cost refinance is also a good option for those who need the money from their refinance for something like a home remodel or extensive renovations. Remodels and renovations add value to your home and could give you the opportunity to refinance again later on.
Preparing to Refinance Your Mortgage
You are almost guaranteed to have a better experience refinancing your mortgage if you take the time to prepare before meeting with a lender. Some steps that you can take beforehand include:
Think About How You’ll Repay the Loan
You don’t need to have every little detail figured out; however, you should still have a basic idea of what you’re going to do to repay the loan. This is especially true if you are going to use the money from refinancing for something other than increasing the value of your house (credit card debt, education, a new car, etc.)
Contact Your Mortgage Company
Find out what options your mortgage company has available to you before you make your final decision.
It’s also important to shop around and see if other mortgage companies have different or better options.
If possible, Hire an Attorney
If you have the means available to hire an attorney, he or she can make the process of refinancing mortgages in Florida much simpler. They know how to decipher the complicated paperwork you will be presented with and can make sure you get the best deal possible.
Contact Us to Learn More
Now that you know a little more about what mortgage refinancing is and the different options available for refinancing mortgages in Florida, it’s time to take a closer look at your specific situation.
Every homeowner is different, and it’s important to talk to a professional about your individual needs before making a decision.
Contact us today to learn more about your options for refinancing mortgages in Florida.
You can also take a look at our mortgage calculators to get a better understanding of what your specific mortgage will look like.