Florida mortgage refinance has become a popular choice for property owners in the Sunshine State. Many homeowners hold home mortgages on investment properties used for rental and vacation homes. Florida’s declining property values and increasing property taxes have made it challenging for landlords to remain competitive in providing accommodations to tourists and seasonal residents.
Entering into Florida mortgage refinance can help real estate investors and homeowners reduce home loan payments. The average cost of refinancing mortgages ranges between 2- and 5-percent. However, when borrowers can reduce interest rates by 2-percent or more, they can save thousands of dollars over the term of the loan.
Real estate information provider, Zillow.com, reveals more than 13,000 homes are available for sale in Florida. Approximately 20-percent are bank owned homes listed below market value. In this highly competitive market many homeowners find mortgage refinance is a better option than putting their house up for sale.
Refinancing mortgages allows Florida property owners to hold onto properties until the real estate market rebounds and allows investors the ability to reduce rental rates. This strategy can be particularly beneficial to property owners offering seasonal, long-term and vacation rentals.
Florida homeowners and real estate investors should consider refinancing when interest rates drop by at least 1-percent. In order to obtain significant mortgage loan savings, borrowers should strive to obtain an interest reduction of 2-percent or more.
Florida refi also provides borrowers with the option to receive cash back. Funds can be used to pay off credit cards, make home improvements, or pay college tuition. However, borrowers must take time to determine the true cost of mortgage refinance.
Borrowers should review their original mortgage note to determine if a prepayment clause exists. FHA, VA, and home loans obtained through credit unions are exempt from early payoff penalties, but all other loans may be subjected to fees.
Mortgage lenders assess prepayment penalties according to their lending policies. Some lenders assess fees if loans are paid off within the first five years. Others reduce prepayment fees over the course of the loan. Borrowers uncertain of early payoff penalties should contact their mortgage provider to discuss refinance rates.
In addition to prepayment penalties, banks assess refinance rates. Common fees include: loan application and origination fees, lawyer review, home inspections and appraisals, loan points, and closing costs. The average cost of refinancing in Florida ranges between $2500 and $6500.
Most mortgage lenders require Florida borrowers to possess a minimum of 5-percent accrued home equity before refinancing can occur. Borrowers must also possess a high credit score and strong history of paying loan payments on time.
Florida homeowners often obtain refinancing through their current lender. However, borrowers should compare mortgage providers to obtain the lowest interest rate and refinancing rates. One trusted source for mortgage lender comparison is BankRate.com.
Florida property owners should also consider how many payment installments remain on their current mortgage note. Refinancing mortgages with less than ten years of remaining payments could be a costly mistake. Extending mortgage terms by ten or twenty years could cost borrowers thousands of dollars.
It is best to consult with a tax accountant or mortgage specialist before entering into Florida mortgage refinance. While refinancing mortgages can lower monthly payments, it may not be the best financial option. Gather the facts and determine the true cost of mortgage refinancing before placing real estate investments at risk.