What To Know About Mortgage Rates in Florida

With nearly 1,000 people moving to Florida every day, you definitely need to prepare yourself before entering the highly competitive Florida real estate market.

Mortgage rates play an important role in any real estate purchase, so here’s what you need to know about mortgage rates in Florida before you buy:

What Are Mortgage Rates in Florida?

Right now, the average mortgage rate for a 30-year fixed conventional loan in Florida is 4.125%, with a 4.197% APR. Mortgage rates are lower for 20-year and 15-year fixed-rate conventional loans, with rates around 3.625% and 3.25%, respectively.

The average mortgage rate for a 30-year FHA loan in Florida is 3.99% with a 5.06% APR and the average rate for a 30-year VA loan (for veterans and active-duty individuals) is also 3.99% but with a 4.254% APR. Finally, the average mortgage rate for a 30-year fixed-rate jumbo loan above $647,200 is 3.875%, with a 3.946% APR.

How Much Do Homes Cost in Florida?

With these interest rates in mind, let’s run some calculations to show you how much it would roughly cost to buy a home in different parts of Florida:

Miami-Dade County

Starting off with Florida’s most populated county, the median sold home price in Miami-Dade County is about $438,000. Assuming that you put 20% down on a 30-year fixed-rate conventional mortgage, your monthly payment with just principal and interest would be about $1,698. When you add $584 in property taxes and homeowners’ insurance, your total estimated monthly payment would be around $2,282.

Broward County

Moving north, the median sold home price in Broward County is about $355,000. Assuming that you put 20% down on a 30-year fixed-rate conventional home loan, your just principal and interest payment would be about $1,376. When you add $474 in property taxes and homeowner’s insurance, your total estimated monthly payment would be around $1,850.

Palm Beach County

Even further north is Palm Beach County, with a median sold home price of about $405,000. If you were to put 20% down on a 30-year fixed-rate conventional loan, your monthly payment with just principal and interest would be about $1,570. When you add $540 in property taxes and homeowners’ insurance, your total estimated monthly payment would be around $2,110.

Collier County

One of the most expensive counties in Florida is Collier County, where the median price of a house is about $600,000. With a 20% down payment on a 30-year fixed-rate conventional loan, your monthly payment with just principal and interest would be about $2,326. When you add $800 in property taxes and homeowners’ insurance, your total estimated monthly payment would be about $3,126.

Duval County

On the other end of the spectrum, the median sold home price in Duval County is about $280,000. Hypothetically, if you put 20% down on a 30-year fixed-rate conventional loan, your monthly payment with just principal and interest would be about $1,086. When you add $374 in property taxes and homeowners’ insurance, your total estimated monthly payment would be around $1,460.

Other Counties of Note

The median sold home price in Hillsborough County is the same as Broward County at $355,000.
The median sold home price in Pinellas County is $350,000, slightly lower than in Hillsborough and Broward.
The median sold home price in Orange County is $358,500, slightly higher than in Hillsborough and Broward.

Are Mortgage Rates in Florida Going to Increase?

Mortgage rates in Florida and throughout the entire country are predicted to increase. In fact, they have already increased substantially so far this year.

At the beginning of the year, mortgage rates hovered close to 3% and were only expected to reach 4% by the end of the year. However, mortgage rates increased faster than expected and reached 4% less than two months into 2022.

Mortgage rates are increasing in anticipation of rate hikes planned by the Federal Reserve. Although the Federal Reserve has not yet raised interest rates, they are expected to do so starting in March; lenders have adjusted their rates accordingly. Additionally, experts expect to see four or five total rate hikes throughout the year, with more to come next year in 2023.

What Does Rising Mortgage Rates Mean for Buyers in Florida?

So what does rising mortgage rates mean for potential homebuyers in Florida? For starters, it means that you may need to act fast if you want to lock in a favorable rate before rates rise even further.

Unfortunately, other buyers have the same mindset, which will likely result in an even higher demand for Florida homes.

Less Purchasing Power

Over time, rising mortgage rates will begin to price many homebuyers out of the market, or at the very least, cause them to make concessions on the type and size of house that they’re looking for. This is because as mortgage rates rise, buyers have less purchasing power.

For example, let’s say that earlier this year, a buyer could afford to purchase the average home in Palm Beach County at $405,000 when interest rates were closer to 3.5%. If the buyer was to put the minimum 3% down on a conventional loan, their monthly payment with principal and interest alone would be around $1,764.

With property taxes, homeowners’ insurance, and private mortgage insurance (PMI), their total monthly payment would be around $2,628.

Let’s say that the same buyer is looking to purchase the same house using the same type of loan but with the current interest rate of 4.125% instead of 3.5%. Using these numbers, their monthly mortgage payments with principal and interest would be around $1,904, and their total payment with insurance, taxes, and PMI would be around $2,768 — a $158 difference.

Slower Market

Since rising mortgage rates will price some buyers out of the market, the home buying market in Florida may slow down a bit. However, that’s not to say that it will completely change into a buyer’s market.

Instead, you should expect to see fewer bidding wars with multiple offers and houses that go for around the asking price or slightly above instead of 10% over. You should also expect to see houses stay on the market for a bit longer instead of hitting the market and going under contract on the same day.

While mortgage rates will be higher and purchasing power will be decreased, waiting it out may be worthwhile to some buyers who aren’t able to compete in a Florida real estate market that’s flush with buyers who are willing and able to offer all cash over asking price, with all contingencies waived.

Still No Crash

For the buyers who are waiting for a crash in the Florida real estate market due to an alleged housing bubble, you’re likely going to be waiting for a long time. While the Florida real estate market has seen unprecedented appreciation, there are no indications that this appreciation will crash and home values are going to experience a double-digit drop. Rather, it’s more likely that the real estate market will stabilize, and homes will start to appreciate at lower rates that are closer to normal.

This is because the real estate market in Florida and other competitive locations throughout the country is nothing like it was back in 2008. Mortgage lending is much more regulated these days. Lenders only provide mortgages to highly qualified buyers with employment histories, credit score histories, and assets to back up their loans.

Another key difference in the market is that home prices are rising due to an imbalance between home supply and demand. The United States has been underbuilding new homes for over a decade since the previous market crash in 2008, and it’s just now catching up to us as young adults begin to enter the market for the first time.

As a result, the country is short more than five million homes, an amount that will take several years to build.

And last but certainly not least, even with rising mortgage rates, they are still historically low. While rising mortgage rates tend to impact lower-income borrowers, relatively small increases in rates of 0.5% to even 1% aren’t likely to affect a majority of buyers who are determined to buy a house in the Sunshine State.

How To Get a Good Mortgage Rate in Florida

Even though there’s not much you can do about rising mortgage rates in general; there are still things you can do to get a good mortgage rate when buying a house in Florida.

Here’s what you need to do:

Prepare To Borrow Ahead of Time

While it may be tempting to jump into the market with no preparation, it’s always a good idea to take a more measured approach to lending and home buying. The good news is that you’re already taking steps to prepare yourself by researching mortgage loans, interest rates, and home prices.

Research Different Loan Types

Figure out which types of loans you’re interested in, as there are tons of different options out there that you may not even be aware of.

Take bridge loans, for example. Bridge loans are short-term loans that are designed to bridge the gap between closing and securing permanent financing. Bridge loans can be closed very quickly and are perfect for the competitive Florida housing real estate market.

Figure Out Your Budget: Mortgage Calculator

Next, figure out what you can afford to spend on a home based on estimated interest rates. There are several different ways to determine what you can technically afford to spend.

For instance, some experts say that you shouldn’t spend more than 33% of your monthly budget on housing expenses. Others say that it should be closer to 25%. You may have also heard that you’re able to spend three to five times your total household income when buying a house.

At the end of the day, it doesn’t really matter what these experts say that you can technically afford. It’s up to you to determine what you’re comfortable paying based on your debts, priorities, and overall lifestyle.

Work With an Experienced Mortgage Lender

Finally, you should work with a lender that’s well-versed in the Florida real estate market if you’re looking to purchase the best house at the lowest interest rate. Vaster has extensive experience with lending in the Sunshine State, specifically in South Florida, and provides loans for residential properties, commercial properties, and even land.

Final Thoughts: Mortgage Resources

While we may not be able to completely predict the future of Florida mortgage rates, Vaster is here to help guide you through an intimidating and fast-paced market. Reach out to our lending experts today to start the journey of buying a home in Florida.