Refinancing Your Florida Mortgage

When you compare mortgage rates, you’ll see they’re based on different factors, such as the type of mortgage, the number of years it will take to pay off the loan and points, an amount usually paid at closing to lower the interest rate. The APR is helpful when you are comparing the total cost of mortgage option among lenders as it includes estimated loan fees in addition to closing costs spread out over the length of the loan.

The simple rule of thumb for determining if it makes sense to refinance is to analyze the amount that it will cost you to refinance compared to the monthly savings you'll have by reducing your payment.

By dividing the cost of refinancing by the monthly savings you can determine how many monthly payments you'll have to make before you've recaptured the initial refinance cost. If you plan on staying in your home longer than the recapture time it may make sense for you to refinance.

The Federal Truth in Lending law requires that all financial institutions disclose the APR when they advertise a rate. The APR is designed to present the actual cost of obtaining financing, by requiring that some, but not all, closing fees are included in the APR calculation. These fees in addition to the interest rate determine the estimated cost of financing over the full term of the loan. Since most people do not keep the mortgage for the entire loan term, it may be misleading to spread the effect of some of these up front costs over the entire loan term.

Also, unfortunately, the APR doesn't include all the closing fees and lenders are allowed to interpret which fees they include. Fees for things like appraisals, title work, and document preparation are not included even though you'll probably have to pay them.

For adjustable rate mortgages, the APR can be even more confusing. Since no one knows exactly what market conditions will be in the future, assumptions must be made regarding future rate adjustments.

You can use the APR as a guideline to shop for loans but you should not depend solely on the APR in choosing the loan program that's best for you. Look at total fees, possible rate adjustments in the future if you're comparing adjustable rate mortgages, and consider the length of time that you plan on having the mortgage.

Don't forget that the APR is an effective interest rate--not the actual interest rate. Your monthly payments will be based on the actual interest rate, the amount you borrow, and the term of your loan.

Points are considered a form of interest. Each point is equal to one percent of the loan amount. You pay them, up front, at your loan closing in exchange for a lower interest rate over the life of your loan. This means more money will be required at closing, however, you will have lower monthly payments over the term of your loan.

A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. Any lender or broker should be able to give you an estimate of their fees, but it is more difficult to tell which lenders have done their homework and are providing a complete and accurate estimate. We take quotes very seriously. We've completed the research necessary to make sure that our fee quotes are accurate to the city level - and that is no easy task!

To assist you in evaluating our fees, we've grouped them as follows:

Third Party Fees
Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees.

Third party fees are fees that we'll collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees.

Typically, you'll see some minor variances in third party fees from lender to lender since a lender may have negotiated a special charge from a provider they use often or chooses a provider that offers nationwide coverage at a flat rate. You may also see that some lenders absorb minor third party fees such as the flood certification fee, the tax service fee, or courier/mailing fees.

Taxes and other unavoidables
Fees that we consider to be taxes and other unavoidables include: State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose. If some lenders don't quote you fees that include taxes and other unavoidable fees, don't assume that you won't have to pay it. It probably means that the lender who doesn't tell you about the fee hasn't done the research necessary to provide accurate closing costs.

Lender Fees
Fees such as points, administration fees, document preparation fees, and loan processing fees are retained by the lender and are used to provide you with the lowest rates possible.
This is the category of fees that you should compare very closely from lender to lender before making a decision.

Required Advances
You may be asked to prepay some items at closing that will actually be due in the future. These fees are sometimes referred to as prepaid items.One of the more common required advances is called "per diem interest" or "interest due at closing." All of our mortgages have

One of the more common required advances is called "per diem interest" or "interest due at closing." All of our mortgages have payment due dates of the 1st of the month. If your loan is funded on any day other than the first of the month, you'll pay interest, from the date of funding through the end of the month, at closing. For example, if the loan is closed on June 15, we'll collect interest from June 15 through June 30 at closing. This also means that you won't make your first mortgage payment until August 1. This type of charge should not vary from lender to lender, and does not need to be considered when comparing lenders. All lenders will charge you interest beginning on the day the loan funds are disbursed. It is simply a matter of when it will be collected.

If an escrow or impound account will be established, you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due.
If your loan requires mortgage insurance, mortgage insurance payments may be collected at closing. Whether or not you must purchase mortgage insurance depends on the percentage of the down payment you make.

If your loan is a purchase, you'll also need to pay for your first year's homeowner's insurance premium, flood and wind if applicable, prior to closing. The policies must be purchased and paid in full prior to closing and we consider this to be a required advance.

This is really up to you and is dependent on how much risk you can tolerate. As interest rates fluctuate on market conditions, those who consider themselves to be more risk adverse should probably consider locking in their interest rate. So if the rates go up, the borrower is still locked into the promised rate. But if the rates fall, the borrower will not be able to receive the lower rate.

For those who are willing to take a gamble for the prospects of a lower interest rate, floating a mortgage rate might be the best strategy. Of course, interest rates are dependent on market conditions and the borrower could end up with a higher rate when it comes time to finalizing the loan.

The interest rate market is subject to movements without advance notice. Locking in a rate protects you from the time that your lock is confirmed to the day that your lock period expires. TFCU provides borrowers with the option to lock in the interest rate and points once the file has been reviewed by the underwriting area or to float the rate and points until five days prior to closing.

Lock-In Agreement
A lock is an agreement by the borrower and the lender and specifies the number of days for which a loan’s interest rate and points are guaranteed. Should interest rates rise during that period, we are obligated to honor the committed rate and points. Should interest rates and points fall during that period, the borrower, must honor the lock. Note: Any changes to the conditions of the loan locked may affect the rates and points to be charged on your loan. These conditions include, but are not limited to: Loan-To-Value based on appraised value of the property, transaction type, property type, number of units, loan program, purpose, occupancy, loan amount and if subordinate financing applies.

When Can I Lock?
Your interest rate and points can be locked once you have submitted a complete loan application with all required supporting documents and your loan has been pre-underwritten or reviewed by an underwriter and approval to lock in the loan has been granted.

Fees
We do not charge a fee for locking in your interest rate and points.

Lock Period
We currently offer a 45 day lock-in period. This means that your loan must close and disburse within this number of days from the day your lock is confirmed by us.

Lock Confirmation
Once you have requested to lock in your rate and points, a Rate Lock-In Confirmation notice will be sent to you to review and sign. The confirmation will outline the specific details regarding your lock selection. Please read this document carefully. If you have any questions, please contact your Mortgage Loan Originator.

Lock Changes
Once we accept your lock, your loan is committed into a secondary market transaction under the terms and conditions of the loan and lock. We will not be able to renegotiate the lock commitments unless the terms and conditions on your loan request change and the changes affect the rate and/or points to be charged on the loan. In addition, it is understood that if the loan funds after the expiration of the lock-in period, that the prevailing rate and points in effect five days before my closing date or the original locked-in rate and point(s) whichever is higher will apply.