Tampa, Florida is located in Hillsborough County and was originally a United States Army outpost named Fort Brooke. In fact, the original settlement spot was located right where the convention center is today. Tampa also boasts three major sports franchises, the Tampa Bay Buccaneers, NHL’s Tampa Bay Lightning and the Tampa Bay Rays.
Tampa is one of three Florida cities that make up the Tampa-St. Petersburg-Clearwater Florida Metropolitan Statistical Area, which is home to more than 3 million residents. Tampa proper has approximately 400,000 residents and covers approximately 175 square miles.
The real estate environment in Tampa has been very favorable for both residents and real estate investors as well. Tampa, Florida real estate is easily one of the most affordable in the state where the median home price in Tampa is around $140,000. This is an increase from the first part of 2018 when the price was closer to $130,000. That’s to be expected somewhat as home sales typically stall during the winter months but since then have been on a continuous rise.
Today, the real estate market in Tampa is brisk. For instance, the inventory of listings this summer is at its lowest in nearly three decades, which has been a driving force in home values. Tampa is the currently the fastest growing city in the entire state. There are three primary factors at work which help feed the healthy real estate market- the lower entry price for homes, its ideal location and the interest rate environment where rates are still at relative lows.
Mortgage rates in general bottomed out a few years back and have been on a gradual increase since then. As for 2018, most analysts agree that while the Fed will likely make one or two more rate hikes before the end of the year, consumers need to be aware that what the Federal Reserve does is not the same action that lenders take when setting their interest rates each day.
Mortgage companies set their rates based upon a specific set of indices. For conforming interest rates, banks and lenders refer to the price of the FNMA 30-yr mortgage bond. Like all bonds, when the price of the bond goes up, the yield, or the rate, goes down. When investors feel the economy is headed for a downturn they tend to place more of their funds into the safety of bonds and less in stocks and mutual funds.
As the economy has been on a steady recovery for the past few years and investors feel more confident about the economy, less money will be placed in bonds. This lower demand then lowers the price which has an adverse effect on rates.
The current FHA loan limit for Hillsborough and Pinellas counties is $294,515 for a 1 unit property. Conforming loan limits in the area are currently set to $453,100, and anything above that is considered a jumbo loan. Jumbo loans will have rates that are slightly higher than conforming ones but the spread between the two is much lower when compared to years past. Jumbo loans will be used to finance higher-end homes located primarily in the southern coastal areas of Tampa and St. Petersburg.
Yet as the economy continues its positive path jumbo lending guidelines have returned to a more common-sense approach. As a plus, there is no longer a need for a sizable down payment to qualify for a jumbo mortgage. Just a few years ago a buyer financing a higher end home would be expected to put down at least 20% of the sales price before a jumbo mortgage application could be approved. However, today buyers that want to finance a luxury home in Tampa have jumbo loan options without 20% down payment. Approved buyers can make a down payment of as little as 5% of the sales price of the property.
In this fashion, the buyers will take out two loans instead of one. The first loan will be at the maximum conforming loan limit of $453,100. This in return will have conforming rate options instead of jumbo rates. For instance, consider a home listed at $650,000.
A traditional 20% down payment would mean the buyers would have to pull $130,000 out of their checking or savings account for the down payment. This, of course, is in addition to closing costs and cash reserves needed. This scenario would mean a first lien of $453,100 and a second of $66,900. Compare a down payment of just 5% and 20% and you can easily see how much savings can be found using two loans instead of one.
Learn more about Jumbo financing programs in Tampa here. Home buyers can also call Jumbo Mortgage Source at ph: 800-962-0677 to learn more.