Frequently Asked Questions About Borrowing in Florida

1. How do I know how much house I can afford?

2. What is the difference between a fixed-rate loan and an adjustable-rate loan?

3. How is an index and margin used in an ARM?

4. How do I know which type of mortgage is best for me?

5. What does my mortgage payment include?

6. How much cash will I need to purchase a home?

7. Why use a mortgage broker?

8. What is a mortgage broker?

9. What do mortgage brokers do?

1. How do I know how much house I can afford?

1. Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Try our Affordability Calculator or give us a call, and we can help you determine exactly how much you can afford.

2. What is the difference between a fixed-rate loan and an adjustable-rate loan?

2. With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.

3. How is an index and margin used in an ARM?

3. An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).

4. How do I know which type of mortgage is best for me?

4. There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Federated Mortgage Services can help you evaluate your choices and help you make the most appropriate decision.

5. What does my mortgage payment include?

5. For most homeowners, the monthly mortgage payments include three separate parts:
Principal: Repayment on the amount borrowed
Interest: Payment to the lender for the amount borrowed
Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

6. How much cash will I need to purchase a home?

6. The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
Earnest Money: The deposit that is supplied when you make an offer on the house
Down Payment: A percentage of the cost of the home that is due at settlement Closing Costs: Costs associated with processing paperwork to purchase or refinance a house

7. Why use a mortgage broker?

7. Independent mortgage brokers have had a signficantly positive impact on the lending industry. Today, the use of a professional mortgage broker is one of the key strategies used by sophisticated borrowers.

8. What is a mortgage broker?

8. A mortgage broker is an independent real-estate financing professional who specializes in the origination of residential mortgage loans. Mortgage brokers normally pass the actual funding ans servicing of loans on to wholesale lending sources. A mortgage broker is also an independent contractor working with (on average) as many as 40 lenders at any one time. By combining professional expertise with direct access to hundreds of loan products, your broker provides the most efficient way to obtain financing tailored to your specific financial goals.

9. What do mortgage brokers do?

9. In the volatile home-lending market, mortgage brokers can serve as safeguards, offering their clients security, safety, and peace of mind. One of the mortgage broker's most important functions is escorting your loan application through the entire process, constantly patrolling the component transactions for possible breakdowns. A professional mortgage broker can wade through the mountains of rate data and program options, researching current market conditions to find the most accurate and up-to-date information about cost-effective loan options.

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