Florida mortgage lenders are especially busy compared to other lenders in other states. Being a retirement destination, a tourist center, and home to many millions of people, Florida mortgage lenders have to be experienced in many different mortgage products to match the broad population differences.
As you’re probably well aware, there are many different types of mortgages and related products available to homeowners, investors, and vacationers looking to secure a new property. We’ll start first with traditional mortgage lending.
The most basic form of a mortgage is a traditional home loan. Florida mortgage lenders should offer fixed- and adjustable-rate loans within the FHA, VA, or private mortgage framework. An adjustable rate loan is most common for property in Florida where real estate prices are generally expected to rise as the state demographics shift toward older heads of household. Fixed-rate mortgages remain popular, however, especially among the demographic that lives and works in Florida, and is not a resident of Florida for retirement living.
Florida mortgage lenders also offer reverse mortgages for those who want to retire in Florida. A common product for retirees, a reverse mortgage is a product that allows retirees to draw a stream of income out from their existing home equity. In a reverse mortgage, the homeowner is continuously borrowing more money each month against their home. Upon the death of the homeowner, or the sale of the property, the loan is repaid. The reverse mortgage is particularly appealing to those who have built significant home equity and who do not have enough retirement savings, or those who wish to benefit from the non-income status of debt. Whereas a job provides a stream of income which is taxable, a loan is not taxable income. Therefore, reverse mortgage payments to the homeowner are tax-free.
Finally, Florida mortgage lenders also offer a slew of investment mortgages for those who wish to buy property for the purposes of investment. A mortgage on an investment home may be had through the Federal Housing Authority with a 10% down payment (live-in properties require a 3.5% down payment). Otherwise, investors usually purchase investment property in Florida through a private mortgage lender, or private mortgage program.
The investment real estate market in Florida is particularly attractive for outside investors. With condominiums miles from the beach selling for less than $50,000, investors can buy multiple properties which cash flow at a rate of 20% or more per year. In particular, small units on the bottom floors of a condo building make excellent senior living quarters, and are a must-have investment for any real estate investor.
Working with a Mortgage Lender
Few mortgage lenders will admit this fact: all mortgage lenders are created equal. That is to say that unlike a real estate agent or real estate investor advisor, a mortgage lender is not intimately involved in each deal. Instead, it is the job of the mortgage lender to lend a borrower enough capital to purchase a property they find attractive.
In seeking out Florida mortgage lenders you should pay attention primarily to the cost of capital. Some mortgage lenders specialize in loans with no upfront costs whereas others focus on loans with upfront fees and charges known as points. Points can skew the interest rate you pay on your loan. In some cases, buying points to reduce interest charges or bid down the cost of servicing the loan will reduce your monthly payment to an extent at which the upfront cost is worth it. In other cases where points do not provide for a significant drop in monthly payments, or the amount of time you plan to spend in a home is undefined, points may not be a good investment. In general, points make the most sense for those who plan to live in or own a property with the same lender for four years or more.