Mortgage 101

Mortgage Basics: What Every Florida Homebuyer Needs to Understand

Most buyers spend more time picking a paint color than understanding how their mortgage works. That's a problem. Here's what actually matters.

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30 years

Most common loan term

3.5%

Minimum down on FHA loans

620+

Conventional minimum credit score

14 days

Our average closing timeline

The Basics

What a Mortgage Actually Is (and What It Isn't)

A mortgage is a loan secured by real estate. The property itself is collateral. You borrow money from a lender, agree to pay it back over a set term (usually 15 or 30 years), plus interest. If you stop making payments, the lender can foreclose.

Key components of your mortgage:

Principal: the amount you borrow
Interest: the cost of borrowing. This is how lenders make money
Escrow: property taxes and homeowner's insurance collected monthly and set aside in an account
PMI: private mortgage insurance, required if your down payment is under 20% on conventional loans

Here's the important part: most people think about the purchase price, but the monthly payment is what you're actually living with for 15 or 30 years. Know that number before you start searching.

Want to see how your rate affects what you'll actually pay each month? Use our mortgage calculator to see your real number.

Key Terms

The Terms You'll Hear Most Often

APR vs Interest Rate

The interest rate is what you're charged on the loan. APR (Annual Percentage Rate) includes fees and gives you a fuller cost picture. Always compare APRs, not just rates.

Escrow

Your lender collects a portion of your property taxes and homeowner's insurance each month. These go into an escrow account and get paid on your behalf. Your monthly payment includes principal, interest, and escrow (PITI).

PMI

Private mortgage insurance is required on conventional loans when your down payment is under 20%. It protects the lender, not you. It can be removed once you reach 20% equity in your home.

Points

You can pay "points" upfront to lower your interest rate. One point equals 1% of the loan amount. Whether it's worth it depends on how long you plan to stay in the home.

Loan Types

The Six Loan Types We Work With

FHA Loans

3.5% down, 580+ credit score. Great for first-time buyers who don't have a large down payment saved.

Conventional

3-20% down, 620+ credit score. No mortgage insurance once you hit 20% equity. Often the most flexible option.

VA Loans

0% down for qualifying veterans, no PMI. One of the best programs available if you've served.

USDA Loans

0% down in qualifying rural and suburban areas. More of Florida qualifies than you'd expect.

Jumbo Loans

For amounts above conventional limits. Florida's luxury markets often require jumbo financing.

DSCR Loans

Investment properties qualified on rental income not personal income. LLC-friendly for investors.

Fixed vs. Adjustable

Fixed-Rate vs. Adjustable-Rate Mortgages

Most buyers in Florida go with a fixed-rate mortgage. Here's why and when an ARM might make sense.

Feature	Fixed-Rate	Adjustable-Rate (ARM)
Payment Stability	Same payment for entire loan term	Changes after initial fixed period
Interest Rate	Locked at closing, no surprises	Lower initially, can rise significantly
Best For	Long-term homeowners who value rate certainty	Short-term owners planning to sell or refinance in 5 years
Risk Level	Low. Your payment never changes.	Higher. Depends on index movement.

ARMs aren't inherently bad. They can save you money if you're selling in 5 years. But most Florida buyers buying a primary home do better with a fixed rate. You'll sleep better knowing your payment won't spike in year seven.

The Pre-Approval Process

What Happens When You Apply

You Submit Your Application

You'll provide income, assets, employment history, and ID. We're thorough here because lenders want to verify everything.

Hard Credit Pull

One inquiry won't ding your score significantly, especially if you're comparing lenders within 45 days. Multiple inquiries in a short window count as one.

Desktop Underwriter (DU)

Your file goes through an automated underwriting system that evaluates your loan. This is where your numbers get tested against actual lending guidelines.

Pre-Approval Letter

You'll get a letter showing sellers and agents you're a serious, qualified buyer. This carries real weight in competitive markets.

File Ready to Move

When your offer's accepted, the bulk of the work is already done. You'll move straight into appraisal and final underwriting.

At 14 Days To Close, we target a 14-day close from accepted offer to funding. When your file's clean and you're ready, we get there. Most closings take 30-45 days. We work differently.

Start With a Pre-Approval. Know What You Actually Qualify For.

It takes a few minutes. You'll know your real number, not a guess.

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