Florida mortgage refinance is becoming a popular alternative for homeowners in the Sunshine State. Considered a premier vacation destination, many property owners hold mortgages on multiple properties used as rental and vacation homes. Declining property values and skyrocketing property taxes have taken a toll on landlords trying to to remain competitive in providing housing accommodations to tourists and seasonal residents.
By entering into Florida mortgage refinance property owners can reduce monthly loan installments. While the cost to refinance mortgages ranges between 2- and 5-percent of the loan value, borrowers who obtain a 2-percent interest reduction can save thousands of dollars over the term of the note.
According to Zillow.com, there are more than 13,000 homes for sale in the state of Florida. Nearly 20-percent are bank owned foreclosures which are listed below market value to entice a quick sale. In this über-competitive market many property owners find mortgage refinance a better option than listing properties for sale.
Florida mortgage refinance allows borrowers to hold onto their property until the real estate market rebounds and allows landlords to reduce rental rates. This option is particularly helpful for property owners offering vacation, seasonal and long-term rentals.
Mortgage refinancing is not reserved solely for landlords. Florida homeowners should consider refinancing when they can obtain a minimum 1-percent interest reduction. In order to achieve substantial mortgage savings, borrowers should strive to reduce interest by 2-percent or more.
In addition to interest savings, Florida refi can provide additional funds to make home improvements, pay for college tuition or pay off credit cards. However, borrowers need to review overall costs and long-term effects of mortgage refinance.
First and foremost, borrowers should review the Truth in Lending statement of their original mortgage to determine if a prepayment penalty exists. VA, FHA and mortgages obtained through chartered credit unions are exempt from early payoff penalties, but all other loans are fair game.
Prepayment clauses are often in effect for the first five years of the mortgage loan. Each lender assesses penalties according to established lending protocol. Borrowers unsure of penalties should consult with their lender to discuss refinance rates.
In addition to prepayment penalties, refinance rates can include loan application fees, property appraisals and inspections, attorney review, and closing costs. The average cost of refinancing is 2- to 4-percent of the loan value. In the state of Florida, average refinancing rates range between $2500 and $6500 in addition to early payoff penalties.
Another consideration of Florida mortgage refinance is accrued home equity. Most lenders require a minimum of 5-percent before allowing borrowers to apply for refinancing. Borrowers must also possess a strong credit score and solid history of paying home loan payments on time.
Many Florida property owners turn to their home loan provider when considering mortgage refinance. However, borrowers should take time to compare mortgage lenders to obtain the best rate.
One trusted source for comparing lenders is BankRate.com. This information portal provides a list of nationwide and Florida mortgage providers, along with current interest rates. Taking time to compare lenders can sometimes result in interest savings of 2-percent or more.
Florida borrowers should also consider the number of installments remaining on their current mortgage note. Refinancing mortgages with less than ten years of payments could be a costly mistake. Extending mortgage terms for an additional 10 to 20 years could cost property owners thousands of dollars.
Take time to consult with a mortgage specialist or tax accountant before entering into Florida mortgage refinance. While refinancing can reduce monthly payments, it may not be the best long-term financial option. Gather the facts to obtain the true cost of mortgage refinance before placing real estate investments at risk.
Sources:
Zillow.com Online Real Estate Marketplace – www.Zillow.com
Bank Rate – www.BankRate.com
