We'll also explore a few family-friendly activities to keep your whole family entertained while enjoying your new home in Walton County, Florida.
Are you a first-time homebuyer? Learn more about the available FHA home loan options in Walton County, Florida.
Factors that Impact Your Mortgage Rate
Mortgage rates vary depending on the lender and your financial situation, and understanding how they're determined can help you find the correct rate for your home loan.
While it's true that your income and the amount you're borrowing will play a significant role in determining your mortgage rate, lenders consider other factors before deciding what to charge you.
Read on to learn about the primary factors that affect your mortgage rate and how they influence this critical financial decision.
Your credit score is one of the essential factors in determining your mortgage rate. A higher credit score indicates to lenders that you're a low-risk borrower, which could lead to a lower interest rate on your mortgage.
On the other hand, a lower credit score could lead to a higher interest rate and could mean you'll have to put down a larger down payment. Improving your credit score before you apply for a mortgage can save you money in the long run.
The size of your down payment directly impacts your mortgage rate. A larger down payment signals to lenders that you're less of a risk, and they're more likely to offer you a lower interest rate.
In contrast, low-down-payment mortgages are associated with higher rates because they present more risk for the lender in the event of default.
Home Price and Loan Amount
A home loan amount is a total sum borrowed from a lender to purchase a home, including the property cost, mortgage insurance, and closing costs minus the down payment percentage. The larger the loan, the higher the rate will be. The reason is simple – lenders see a higher loan as a greater risk and charge a higher interest rate to offset that risk.
Home price also plays a role in your mortgage rate. Lenders often give you a lower interest rate if you're looking to buy a less expensive home because they see it as a lower-risk investment. If you're in the market for a more expensive home, you'll need to get a loan that charges you a higher interest rate.
Interest Rate Type
The most common type of interest rate is the adjustable interest rate. Adjustable interest rates usually start lower than fixed interest rates but can increase or decrease over time. Your monthly payments could go up or down, depending on the market.
The other type of interest rate is the fixed interest rate. Fixed interest rates stay the same for the entire life of your loan, so you'll always know how much you'll need to budget for each month.
Mortgage rates can vary greatly depending on the type of loan you choose. The typical loan types in the real estate industry are conventional loans, FHA loans, USDA loans, and VA loans. Banks or private lending institutions offer conventional loans.
An FHA loan is a government-backed program with more relaxed credit requirements than a conventional loan but comes with an annual mortgage insurance premium (MIP).
A USDA home loan is typically available to those who live in rural areas or areas deemed underserved by lenders.
A VA home loan is offered to veterans, active military personnel, and surviving spouses.
Compared to most loans, FHA loans have lower interest rates, but you must pay mortgage insurance, which adds to your monthly payment.
VA and USDA loans usually offer the lowest interest rates than FHA loans, but you must meet specific eligibility requirements to get a loan.
Conventional loans are more challenging to qualify for than federal ones and generally come with higher interest rates.
The term of your loan—the amount of time you have to repay—directly affects the interest rate you pay. In most cases, a shorter loan term means lower interest rates but higher monthly payments, while a longer loan term means lower monthly payments but less interest overall.
Before you make your final decision, compare the pros and cons of short- and long-term loans to understand the option that suits your situation.
One of the most critical factors in determining your mortgage rate is the location of the property you're looking to buy. Different lenders offer slightly different interest rates depending on your state or county of residence.
If you're looking to buy in a high-cost area, you can expect to pay a higher interest rate than a homebuyer in a more affordable area (low-cost area).
Rates are typically higher for homes close to metropolitan areas because there's a higher demand. Rural areas have lower interest rates because they're not in an urban environment. Talking to multiple lenders will help you understand all your options, whether you're looking to buy in a rural or urban area.
Ways to Get a Better Rate on Your Mortgage in Walton County, Florida
Whether you're buying your first home or refinancing an existing mortgage, getting a better rate can save you thousands of dollars over the life of your loan.
So, it would help if you did everything possible to get the best rate possible. Here are five ways to get a better rate on your mortgage and save money in the long run.
Improve Your Credit Score
One of the most important things you can do when shopping for a mortgage is to ensure your credit score is as high as possible. A higher credit score indicates to lenders that you're a low-risk borrower, which could lead to a lower interest rate on your mortgage.
Here are five ways you can improve your credit score:
Pay all your bills on time each month, and don't miss payments, including utilities and other debts.
If you have credit card debt, try to pay it off fully monthly.
Don't open new credit accounts or close old ones unless necessary.
Try not to carry too much debt.
- Keep your balances below 30% of the limit on any one account.
Shop Around for a Better Rate
One of the best ways to get a lower rate on your mortgage is simply shopping around. Look at rates from several different lenders to determine which ones offer the lowest rates, fees, and terms that meet your needs, and then make comparisons.
A comprehensive comparison will give you an idea of what interest rate you could qualify for based on your financial situation.
Make a Larger Down Payment
Making a larger down payment is one way to get a better rate on your mortgage. A larger down payment means you're a less risky borrower ready to invest in your new home, which can lead to a lower interest rate.
For example, if you put less than 10% down, your interest rates will be slightly higher than with a 20% down payment.
However, if you don't have enough cash saved up for a substantial down payment, shopping around is essential until you find an option with a low-enough rate to match your needs.
On the other hand, you can apply for a down payment assistance program or get grants and gift funds from family, friends, or non-profit organizations.
Mortgage Rates Today - Where They Are and Why
If you're in the market to buy a home, or you already have one and looking to refinance, you've likely been keeping an eye on mortgage rates lately. The mortgage industry has been fierce in the last few years, and the turbulence has significantly affected the mortgage rates today.
Rates are currently low and high, depending on your state. It's relatively hard to predict when they'll rise or drop again and how far they will rise or drop—if they will at all.
Read on to discover why mortgage rates are where they are today and what factors affect them.
Inflation and mortgage rates are closely linked. As inflation increases, interest rates rise to keep up with the dollar's value. In other words, when inflation increases, it becomes more expensive for lenders to fund mortgages because the amount of money necessary for lending also increases. In periods of low inflation, mortgage rates tend to stay constant or slightly fluctuate.
Before COVID-19, the inflation rate was around 1.23% to 2.44%. With the pandemic, the inflation rate has increased to 9.1%, caused by supply chain problems, rising production costs, and other factors. The Federal Reserve raised rates in March 2022 to avert inflation. Interest rates are currently at 4.6% for 15-year and 5.3% for 30-year fixed loans.
The Federal Reserve
The Federal Reserve does not set mortgage rates, but it influences them. The Federal Reserve controls short-term interest rates, which increase and decrease based on the economy's health. Although mortgage rates are not directly tied to the Fed's rate, they tend to coincide shortly after the Fed's rate changes.
When the Fed chooses to restrain the money supply, it will raise the Federal Reserve rate (Fed Rate). Since banks and lenders use these rates as a point of reference, they'll adjust their mortgage rates to align with the change.
The Bond Market
Bond prices and mortgage rates typically move in the same direction. When bond prices rise, mortgage rates usually fall, and vice versa. The reason has to do with demand.
Bonds called mortgage-backed securities (MBS) or mortgage bonds are bundles of mortgages sold in the bond market. They affect mortgage rates depending on their demand.
High demand for mortgage bonds (usually when the stock market achieves poorly) causes mortgage rates to increase, and a low demand causes mortgage rates to decline.
Typically, mortgage rates go up when the economy is doing well, such as when unemployment rates are low and consumer spending is high. Mortgage rates tend to go down when the economy is not doing well, especially when facing high unemployment rates.
The economy is slowly recovering from the pandemic, but there's still a long way to go. The mortgage rate is one of the most important indicators of the economy's health. The current mortgage rate is low compared to a few years ago, which is suitable for buyers but could rise as the economy improves.
The Secured Overnight Finance Rate
The Secured Overnight Financing Rate (SOFR) is an interest rate that sets a benchmark for the cost of overnight borrowing for banks.
It's typically used to set the interest rate for mortgage loans, depending on the type of home loan. SOFR came into play when London Interbank Offer Rate (LIBOR) was phased out in 2021.
Family-friendly Activities in Walton County, Florida
Regarding family-friendly activities, Walton County, Florida, offers just about everything you could want. Whether looking for something fun and exciting or educational and enlightening, Walton County has no shortage of attractions to keep everyone entertained throughout your stay.
Below are the top five family-friendly things to do in this beautiful county:
Walton County Heritage Museum
The Walton County Heritage Museum is a great place to learn about the county's history and culture. The museum has a variety of exhibits on topics such as the Civil War, the Choctaw Indians, and early settlement.
Plus, the museum offers a variety of educational programs for children of all ages and interests. The museum is located in historic downtown DeFuniak Springs and is open Monday from 10 am to 4 pm to Saturday from 1 pm to 4 pm. Admission is free for children and adults.
Santa Rosa Beach
One of the popular family-friendly activities to do in Walton County is visiting Santa Rosa Beach. With its sugar-white sand and emerald green waters, it's easy to see why this is one of the most popular beaches in the area.
Plus, there are plenty of activities for the whole family to enjoy, including swimming, surfing, beach volleyball/soccer, sandcastle building, boating, etc. This clean, free-of-trash beach is always a fantastic experience for families.
Visit the Alaqua Animal Refuge
Alaqua Animal Refuge is a no-kill animal shelter that provides refuge and adoption services for all kinds of animals, including dogs, cats, horses, goats, and even turtles.
The refuge also offers educational programs and tours, making it a great way to learn about animal care and maybe even adopt a new furry friend. The best is that admission is free for kids and adults.
Banana Boat Rides in Miramar Beach - Sandestin Area
What's more fun than a day at the beach with your family riding a banana boat? The Miramar Beach-Sandestin area is famous for its beautiful beaches, and banana boat rides are a great way to enjoy the coastline.
These boats hold six people maximum, so grab your friends and family members and hop on board. Whether you're looking for a little adrenaline rush or want some time out on the water, this is an activity that can't be missed.
Falling Waters State Park (Chipley)
Falling Waters State Park is one of Florida's most popular state parks. The park features a 71-foot waterfall, the tallest in the state. Visitors can also enjoy hiking, camping, picnicking, and fishing. The park also has a butterfly garden and an interpretive center.
There are also restrooms, water fountains, picnic tables, grills, and pavilions for visitors. The park is open year-round, but certain areas are closed during different seasons.
Choosing the right mortgage lender and mortgage plan to suit your needs can be tricky, especially if you don't have the basic knowledge of how mortgages work. However, with an in-depth understanding of the current mortgage rates in Walton County, you'll have everything you need to make the best decision for your unique financial situation.
From learning about the factors that impact your mortgage rate to comparing interest rates on various loans, take your time to educate yourself on all aspects of finding and applying for a mortgage with the best possible rates in Walton County, Florida.