Financing Settlement

Real Estate Financing and Settlement in Florida Exam: Florida Real Estate Salesperson Last Updated: June 2026 --- ## Mortgage Basics A mortgage in Florida is a two-document instrument: - Promissory note — the borrower's promise to repay the debt - Mortgage — the security instrument that pledges the real property as collateral Florida is a lien theory state: the borrower holds title during the loan, and the lender holds a lien on the property. (In title theory states, the lender holds title until payoff.) > Exam Tip: Florida is a lien theory state. Foreclosure in Florida is judicial — it must go through the courts (unlike non-judicial "power of sale" states). This is a key state-specific fact. --- ## Types of Mortgage Loans ### Conventional Loans - Not insured or guaranteed by a federal agency - Conforming loans meet Fannie Mae/Freddie Mac guidelines - Jumbo loans exceed conforming limits - Typically require 20% down to avoid PMI (Private Mortgage Insurance) - PMI required if LTV > 80% ### FHA Loans (Federal Housing Administration) | Feature | Detail | |---|---| | Down payment | Minimum 3.5% (with 580+ credit score) | | Mortgage insurance | MIP (Mortgage Insurance Premium) — upfront + annual | | Loan limits | Set by county; Florida varies by area | | Property requirements | Must meet FHA minimum property standards | | Who qualifies | Broader income/credit qualification than conventional | > Exam Tip: FHA does NOT make the loans — it insures them. A private lender makes the loan; FHA reimburses if the borrower defaults. The lender's risk is reduced, allowing more flexible qualification. ### VA Loans (Dept. of Veterans Affairs) | Feature…