Understanding Mortgage Rates
Just like in New York City, Floridians love to analyze real estate. All things real estate are discussed from beaches to boats and everywhere in between. Before discussing the unique position Florida has not only as a desired location, but its place in the real estate market it might be wise just to have a bit more background on the matter. A mortgage rate is the rate of interest on a set mortgage. Lenders determine the rate, which can be either fixed or variable. A fixed rate remains steadfast for the term of the mortgage. In contrast, adjustable or variable rates are based on a benchmark interest rate. Mortgage rates and interest rates ride the same financial wave, which either can positively or negatively affect the homebuyers’ market. Your personal credit score influences the rate on a mortgage, which ultimately determines the overall mortgage cost and the monthly billing. It goes without saying that you should seek the lowest rate possible.
The Uniqueness of Florida Real Estate
The reason why interest rates exist in the first place is because mortgage companies or lenders make money by collecting interest rates on your loan. Longer loans mean more profit. In Florida, it is more expensive to refinance than in any other states. Therefore, mortgage rates are lower in the Sunshine State. Floridians pay higher state taxes and higher title insurance rates. Our mortgages last longer than in other states, which come into play with interest rates. Florida is unique in that it has extra closing costs. These costs can put off potential residents; however, mortgage companies can still make money even with lower interest rates. It takes Floridians significantly longer to pay off their mortgages.
Now that the ins and outs of mortgage rates have been laid out, the most applicable knowledge will be what this means for current and future homeowners. According to HSH.com, there is good news. As a trusted source in mortgages, they have been studying Florida’s market for over thirty years and have projected into May 2015. The good news is that there have not been any wild fluctuations, which marred 2008. That horrid year saw the markets crash and homeowners desperate to unload their homes. On the bright side, rates have seen very little fluctuation between May 2014 and May 2015. In fact, it has decreased slightly which is expected to drop a bit more over the continuation of the summer when most relocations occur and some residents simply move into their summer homes in Florida. While Florida has higher closing costs, it is still one of the most desired states to reside in as a whole. If you are seeking a renew residence or to refinance, now and the upcoming summer months would be the most ideal time to delve into the real estate market.