The most frequently asked questions about financing real estate in Florida

What properties can Florida financing cover?

• Purchase or construction of a vacation home or second residence
• Purchase of an apartment for personal use or as a rental
• Refinancing of an object
• Refinancing with "cash out" (A property free of encumbrances is mortgaged).
• Anything closely related with a property, such as a pool, a boat dock, a canal wall, etc., but not transportable property, such as furniture, a vehicle, or a boat.

What is the maximum amount that a Florida property may be mortgaged for?

In most circumstances, up to 70%, with a maximum of 65 percent for new construction finance. The American bank employs the lower of cost or market idea, which indicates that the lower of the current market value and the purchase price is used.

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What are the terms of a loan in Florida?

• 30 years for apartment and home (includes new construction), unless you agree to a 15-year fixed rate, in which case the duration is of course 15 years.
• Balloons = long-term amortization, period = medium-term amortization, e.g. 5 or 7 years
• In Florida, there is no prepayment penalty, which means that no penalty interest is imposed if the loan is repaid early. This means that the loan can be repaid at any moment if liquidity conditions alter or the dollar exchange rate improves.

On a Florida mortgage, what type of rate lock may I use?

• There are two types of mortgage financing: "ARM" (Adjustable Rate Mortgage) financing, which has a variable interest rate, and "Fixed Rates" (i.e. fixed interest rates for e.g. 1, 3, 5, 7, 10,15 or 30 years).
• Interest rates can rise or decrease with floating rates, but the borrower is safeguarded from rising rates by so-called "caps."

What documentation does the American bank want from me?

In most circumstances, they are as follows:

• Income documentation (letter from employer or tax advisor)
• a letter of recommendation from the home bank (the credit intermediary will be happy to provide you with samples in German)
• Bank statements demonstrating equity and adequate funds for closing charges, reserves, and so on.

How long can I expect the Florida finance process to take?

• The time it takes from loan application to final provision is generally between 4 and 6 weeks, depending on the loan type you pick and how soon you can produce the relevant documents. As a result, it becomes sense to begin compiling the documentation before traveling to Florida, which will decrease the processing time and enable you to focus on selecting the property.

Do I need to be in Florida for any of the dates?

• There is no need for you to be in Florida at any moment. Of course, you pick the property on the spot, but it is not required after that, not even for the closing, because everything may be done via the phone, email, or courier.

Can I apply for a loan and then sign a purchase contract for a home in Florida once it has been approved?

• No, because all financing in Florida pertains to a property, you must have a signed buy or construction contract before you can begin the loan application process. This contract of sale must include a "Finance Contingency," which is a financing contingency that permits you to withdraw from the contract of sale if the financing is not authorized and receive a full refund of your down payment.

What are the unique characteristics of Florida construction financing?

• In general, there is little interest in the provision.
• Before distributing the next section payment to the contractor, the bank checks and monitors the progress of construction with its own inspector. This guarantees that payments are paid only once the performance is complete.
• The bank also investigates the building company's creditworthiness in order to maintain it as a variable and potential risk of default as low as feasible.
• Because the equity is utilized first, then the debt, you don't pay interest directly after the first construction phase payment, but only when the construction reaches the point when the loan must be used.

Do you wish to be guided by a specialist with experience in international financing? Then we propose that you meet with one of our International Financial Advisors for International Financing in Florida for an introductory consultation.

This information does not constitute financing advice, but is intended only as a general overview. All necessary details should be verified with a professional.