You can also speak with a local mortgage loan expert or submit a mortgage pre-approval request online if you have a real estate purchase agreement. You'll be informed of the interest rate if your request gets approved.
Are you a first-time homebuyer? Learn more about the available FHA home loan options in Pinellas County, Florida
How will the mortgage rate I receive be determined?
Your mortgage rate will be determined based on personal information, such as your income and credit score, but that's not all. The property cost, the down payment, and the type of loan are also considered when purchasing a property. Here is a thorough look:
A good credit score indicates that lenders view you as less risky to lend to because you make on-time payments on your debts and avoid using credit cards excessively. Lenders consider you a responsible client with a minimal probability of defaulting on your mortgage.
That means they can give you a better rate on the mortgage, i.e.; you'll see that the rate you're offered is closer to the advertised figure. On the other hand, borrowers with poor credit scores force lenders to take measures to compensate for the higher probability of default. That means offering higher mortgage rates.
Individual lending programs establish their minimum credit score requirement. Conventional loans typically set their minimum credit score requirement at 620. On the other hand, government-backed or insured loans lower the score requirement a bit. For example, an FHA loan requires at least a 580. All in all, the better your credit profile, the greater your negotiating power.
Lenders usually require proof that you put some money down on the house and aren't relying entirely on borrowing money. Your mortgage default risk decreases as your investment in the home grow. So, the more money you put down from the beginning, the better the rate you'll get on the loan.
On the other hand, putting down a lower down payment may make lenders force you to get mortgage insurance. Of course, down payment requirements vary by loan type.
Additionally, lenders assess your loan-to-value ratio, which is the ratio of the loan amount to your down payment. Your LTV increases as you put less down on the house, which puts the lender at greater risk, meaning they have to compensate by raising your rate or requiring mortgage insurance.
So don't just look at the down payment; consider the loan amount because LTV matters. As previously stated, lenders believe your risk of defaulting on your mortgage decreases as your investment in the home increases.
Whether the home you're buying will serve as your principal home, a second home, or an investment property matters to mortgage lenders. Primary homes attract better rates because you live in them, and lenders assume you are motivated not to default and risk repossession.
If you own a second residence or investment property and are struggling financially, you run a higher chance of defaulting on your home loan, exposing the lender to risk. To offset this risk, most lenders impose higher mortgage rates on mortgages for second homes or investment properties.
Mortgage loans can be classified into various categories: traditional, FHA, VA, and USDA. Lenders choose which mortgage products to offer and the qualifying conditions.
Depending on the sort of loan you select, rates can vary greatly. Speaking with several lenders will give you a better understanding of all your options.
Many financial institutions offer relatively different mortgage rates depending on the state and county where you reside. For instance, if you want to purchase a home in Pinellas County's rural area, you might benefit from a low-interest USDA loan (usually available at a 3 percent rate).
Different lenders offer different terms and rates on their loan products. However, you should compare rates from several lenders to see if you can find a better deal. Whether you want to buy a home in a rural or metropolitan region, speaking with many lenders provides an accurate picture for better decision-making.
The time you want to repay the mortgage will also affect its interest rate. Lenders charge higher rates on longer-term loans to compensate for interest fluctuations and an increased risk of default.
On the other hand, short-term loans attract slightly lower rates.
Interest Tate Type
Interest rates can be fixed or adjustable. Over time, fixed interest rates remain constant. On the other hand, adjustable rates have a short time in which they stay fixed and then fluctuate each period, depending on the market. So, while an adjustable rate may be lower than a fixed-rate loan initially, it may rise dramatically.
Now, the above mentioned factors are just assumptions lenders use to position borrowers on a risk spectrum and determine what rates to charge individuals.
Usually, riskier borrowers get higher rates and vice versa. But the assumptions differ from lender to lender, too. And when assumptions change, so do the rates. So, it's wise to compare rates from different lenders.
Additional Considerations - Discount Points and Lender Credits
The above mentioned factors will determine your par rate, which can be adjusted using discount points and lender credits.
As you hunt for a mortgage, you'll notice that some loans have different points and, therefore, different rates. Generally, you can negotiate your loan rate and closing fees using points and lender credits.
If you are sure you will keep the mortgage for longer, using points to lower the interest is smart. Discount points lower your rate in return for a one-time upfront fee. Paying points results in a higher initial payment but a lower rate on a loan, lowering your overall costs.
- Lender credits do the opposite, instead of lowering your loan rate. That means that, in exchange for paying higher interest, the lender offers you an upfront sum to offset closing costs. However, not all lender credits result in higher interest rates; some are unrelated to the rate—for instance, a one-time offer or lender credit to compensate for an error.
Of course, lender credits and points are optional. For example, you can choose to pay points at closing in exchange for a better rate. Alternatively, you can opt not to pay or receive points at all. The same goes for lender credits.
Market factors that explain why interest rates are where they are now
Additionally, while all the above mentioned may be within your control, many other factors determine why mortgage rates are where they are today. These extra factors are not within your control at all. These are called market factors.
One of the main things that influence mortgage rates today is the market. The Federal Reserve, the Secured Overnight Finance Rate, the bond market, the Constant Maturity Treasury, the state of the economy, and inflation all impact mortgage rates.
The Federal Reserve
It's a common misconception that the Federal Reserve establishes mortgage rates today. Although it doesn't, the Fed does have an impact on rates. The Fed regulates short-term interest rates by raising or lowering them per the economy's health. While there is no direct correlation between mortgage rates and Fed rates, lenders raise their prime mortgage rates whenever the Fed rate increases too.
To regulate the money supply, the Fed controls short-term borrowing costs. It lowers the rates when the economy isn't doing well and vice versa. These aren't the rates offered to consumers; they are the rates at which lenders can borrow funds to make loans to customers. When the Fed raises the cost of Fed borrowing, banks move to raise their cost of lending too, and so mortgage rates rise.
The Bond Market
Although it is widely believed that mortgage rates are correlated with the 10-year Treasury note, they are somewhat correlated with the bond market.
Bundles of mortgages are usually sold as mortgage-backed instruments, also known as mortgage bonds, on the bond market. The demand for these bonds affects interest rates on mortgages.
For example, investors shift to bonds when the stock market's performance decreases because they're secure. This increase in demand for mortgage bonds increases mortgage rates.
The Secured Overnight Finance Rate
SOFR is a replacement for LIBOR (London Interbank Offer Rate), which was abolished in 2021. The SOFR is a rate determined by the cost of overnight bank borrowing. Lenders frequently use it to set the base interest rate on a mortgage, depending on the type.
The Constant Maturity Treasury Rate
CMT rates are yields calculated by averaging the yields of various U.S. Treasury security instruments with various maturities and then adjusting for a range of time horizons.
Some creditors will use this rate to compute the interest on adjustable-rate mortgage rates. Of course, if your loan rate is based on CMT, then it goes up when CMT goes up and vice versa.
The Health of the Economy
When the economy is kickass, unemployment rates are down, and people's spending rates are high, so mortgage rates rise. The opposite is true; mortgage rates decrease when the economy isn't doing well, so more borrowers can afford homes.
Inflation and mortgage rates often go up in tandem. Interest rates rise in response to rising inflation to keep pace with the dollars' worth. Mortgage rates fall when inflation declines. Mortgage rates today typically remain stable or marginally change during low inflation.
How often do interest rates change?
Banks get rate sheets every day. Although this does not imply rates change every day. However, sometimes they do change many times in a day.
The smart move is to negotiate for a lower rate and then speak with the lender about locking it in before it increases. Of course, several strategies exist to negotiate for lower mortgage rates today.
Shopping around to compare mortgage rates and overall expenses from different lenders.
After finding the best deal, please return it to your lender and ask them to match it. If they don't, you can always change lenders.
Work to improve your credit score. Having a decent credit score will give you more negotiating power. So, pay your bills on time, pay debts in collection, reduce outstanding debts, work to earn more, and maintain active accounts to build a more robust credit profile. You should also watch your credit reports for mistakes and fraud.
Put down a more significant down payment.
- Pay points at closing to get a lower rate
Local info about Pinellas County, Florida
Pinellas County is among the most populous counties in Florida and is a part of the Tampa statistical metropolitan region. The county has a little under a million residents.
Since its establishment in 1912, Pinellas has been impacted by the Tocobaga Indians and the Spanish and British conquistadors who initially inhabited the area.
The county's name is derived from the Spanish word Punta Pinal, meaning "Point of Pines." Various fascinating plants and animals live here because of the humid subtropical environment. Fruit trees like coconut and palms thrive here, as do animals like manatees, stingrays, sea turtles, and white-tailed deer.
There are 15 Pinellas Public Library Cooperative branches here, plus cultural attractions like the Florida Holocaust Museum and the Salvador Dali Museum. Sports teams that call St. Petersburg home include the Tampa Bay Rowdies soccer team and the Tampa Bay Rays major league baseball team. The Toronto Blue Jays and the Philadelphia Phillies also hold spring training camps.
Five great activities for children in the county include:
Standing Ovations, an annual sand sculpture tournament, is held at Treasure Island beach and is accompanied by food, live music, and other festivities. The Master's Cup competition, which takes place every fall, welcomes master sculptors from all over the world to compete for the best pieces of art.
Similarly, in the spring, the annual Pier 60 Sugar Sand Festival includes 17 days of excitement with over 1,000 tons of fine sand in a 21,000 sq ft exhibit. The festival offers a play area for kids, street entertainers, local craftspeople, and firework displays. Feel free to enroll in a sand-sculpting class.
The Pinellas County gulf coast has over 42 reefs, extending from St. Pete Beach to Tarpon Springs. Enjoy some fishing and scavenger hunting outings with your family.
Explore and get inspired by Pinellas County's story from unique programs, exhibits, and collections at Heritage Village. There are two museums in the ground, a native plant trail, and a gift shop. Let your kids go on an adventure with Ali, the gator!
Book Time at Brooker Wee-Time at Weedon
Introduce toddlers to the wonders of nature at the Weedon Island Preserve Cultural and Natural History Center every 2nd and 4th Thursday. Bring your kids along for stories and crafts that focus on nature.
After that, you can go on a guided tour of the boardwalks and pathways to see different animals, like birds and insects.
Kids' camps are available at numerous locations, including Brooker Creek Preserve Summer Camps and Weedon Island Preserve Summer Camps.
These well-liked, immersive, science-oriented nature day camps are created for children interested in the outdoors. Campers will work alongside trained Florida Certified Naturalists to explore magical Florida.
The Bottom Line
Various factors determine mortgage rates today. Knowing what factors are within your control and which are not will help you prepare better for rate negotiation. And once you've secured a lower mortgage rate, move to lock it down to avoid volatility.
Pinellas county, Florida is a haven for nature lovers. Families here have the most fun. If you wish to settle in the county, you will need help securing a great mortgage deal. There are various mortgage loans available in the county. Get in touch with us for help navigating the county mortgage market.