Florida Mortgage : Learning Center

Most of the Florida mortgage originations our office processes are conventional type programs; that is, FNMA (Fannie Mae) or FHLMC (Freddie Mac), the government sponsored agencies that buy loans on the secondary market.  New home buyers with questionable credit histories, I beleive, should seriously consider repairing their credit prior to shopping for a home.

The alternative in focusing on your credit profile first; is obtaining a less desirable mortgage from a sub-prime lender.  These usually are presented with the same basic ingredients; low start rates that are fixed for only 3 or 5 years;  prepayment penalties for 3 or 5 years; and high fixed Margins so that when the loan adjusts, the new interest rate is very high.

Buying a home, especially your first, is a major decision in life.  Always seek the best terms available that fit your specific needs by contacting a mortgage professional.  And if your credit history is less than perfect; please take the time to investigate and repair your credit.  You will be happy you did and so will your wallet since you will be able to pay a lower interest rate on your home mortgage.

Stephen Thaggard

While you shop diligently for your mortgage financing from mortgage professionals; remember that accuracy is everything regarding Good Faith Estimates. For example, a Florida mortgage Good Faith Estimate should include every detailed cost a Florida home buyer may incur at closing.

At BeechTree Mortgage, we disclose everything from the Lender fees, Title insurance costs, Florida State taxes and more. The truth is in letting the home buyer know, in advance, all of the costs associated with their new home purchase. With accurate Good Faith Estimates, ho0me buyer in Florida would be able to shop and compare various mortgage financing programs, interest rates, and closing costs.

When you find the mortgage financing program you prefer; ask the mortgage professional some additional questions for accuracy. Ask why this particular mortgage program is the best recommendation? Or is there another loan program to consider? Can you lock-in the illustrated interest rate? Will there be any additional costs from anyone that may show up on the HUD-1 Settlement Statement at closing? How much money will the mortgage company earn based on this Good Faith Estimate? Getting that answer, separates the professionals from the rest.

Have fun while shopping and make sure you get your Good Faith Estimates upfront so you can shop fairly. If you ever have questions regarding your Good Faith Estimates, please contact me at 888-399-0520 or email. I would love the opportunity to assist in reviewing with you.

Stephen Thaggard
BeechTree Mortgage, Inc.

Generally, an adjustable rate mortgage (ARM) is a great mortgage program choice for some who have plans on keeping their home for a short period of time.  However, most homeowners I talk to regarding refinancing out of an adjustable rate mortgage; have had a change of plans.  With today’s higher interest rates does it really make sense to jump in and pay closing costs and start a property tax and homeowners insurance escrow account all over again with refinancing?  Check how your interest rate will adjust first.

Did you know that some, conventional, 5/1 and 3/1 adjustable rate mortgages have interest rate Caps of just 2%?  This means your current low interest rate cannot increase by more than 2% during the first adjustment.  You might want to compare what your adjusted interest rate would be and compare it to today’s fixed rates.  Many home buyers obtained interest rates in the 3.5%-4.5% range over the past few years. Even if their rates adjusted they may still be lower than today’s fixed rates.

To learn what your newly adjusted interest rate would be; simply add the (fixed) Margin to your (variable) Index. The fixed Margin can be found on your Adjustable Rate Rider that you signed at closing and is usually 2.25% – 2.75%. A popular Index is the LIBOR, London Inter-Bank Offered Rate, which can be found on the same Adjustable Rate Rider.  If you need help in determining if refinancing is the best option; make sure you contact a mortgage professional for advice.

Here we are years later and shopping for a mortgage when considering to refinance is fiercely competitive.  How can we homeowners narrow the playing field while searching for our refinance mortgage.  First off, make sure the mortgage professional you are talking with is one who believes in true upfront disclosure.  This includes all closing costs fees that may be incurred, choosing the right mortgage program and why, and prepayment penalties; if there are any.

You should never find out later that you discovered there was a better mortgage loan you could have considered.  Or that you had a choice in paying discount points or not; and that there a different types of prepayment penalties.  Did you know some prepayment penalties reduce the penalty over the 1st 3 years and some allow you to sell your home without having to pay the penalty altogether.

The truth is, when you are seeking to refinance your current mortgage; call a mortgage professional.  You can separate a mortgage professional by listening to the questions he or she is asking.  Mortgage professionals want to know why you are refinancing, how long you plan on staying in your home, etc….

Upfront verbal communication between the moprtgage professinal and the homeowner is what we need more in today’s mortgage arena.  If you need mortgage professional advice with your refinance questions send me an email at refi@beechtreemortgage.com.

Stephen Thaggard

Finally the Federal Reserve held a hearing yesterday specific to improving sub-prime mortgage guidelines.  These include verifying income for home buyers, guarantees that homeowners insurance and property taxes are paid, and no prepayment penalties sub-prime mortgage loans. 

As a seasoned mortgage professional I believe that home buyers with less than perfect credit should take the time necessary to improve their credit.  We have helped many clients with their credit profiles and with a little care and patience were able to provide FNMA conventional type mortgages with no prepayment penalties and of course lower fixed interest rates.  The alternative would have been for these buyers to look elsewhere for a sub-prime mortgage.

Foreclosures are at all time highs and I am glad to see tightening in mortgage guidelines.  Pretty soon even first time home buyers will need to prerequisite there mortgage financing search with saving money, providing and proving stable incomes and perhaps reviewing their own credit reports.  Of course if you ever have questions regarding qualifying for your first home, please call a mortgage professional.  

Stephen Thaggard

You just spent time researching the Internet and asking for your friends favorite mortgage professional.  You have applied for your new home mortgage financing and recently received your mortgage loan disclosures and must sign each and every one.  It may seem a bit intimidating especially if you are a first time home buyer.  Who knows what these actually mean; what is a 4506-T form or a servicing disclosure statement, etc…?

The best way to understand any detail on these mortgage loan disclosures is to simply ask your mortgage professional.  If he or she does not know the answer then maybe you should reconsider who you are entrusting your biggest financial decision.  There are many Federal and State laws cover consumer disclosures but none enforce explaining any of them upfront to consumers.  We need to make sure every first time home buyer knows the mortgage program they have selected by explaining each disclosure.

It should be the mortgage professional’s responsibility to make sure each home buyer knows the details of their financing prior to closing.

Stephen Thaggard

I often hear from new home buyers who were given Good Faith Estimates which included 1 or 2 mortgage discount points.  If you are searching for mortgage financing when acquiring your new home or regarding mortgage refinancing; remember that paying discount points is solely your decision.  If you come across a mortgage company or bank that didn’t provide their lowest interest rate, without charging discount points; I’ve got great mortgage advice.  Call the mortgage loan officer and ask what would the interest rate be if you chose not to pay the proposed discount points.  This is never asked by consumers when shopping for mortgage loans and it’s a very fair question that needs an answer.

Remember discount points are reserved for you to consider to pay and buy down your interest rate.  Your biggest financial concern is the recover period involved.  In most cases paying one discount point or 1% of the loan amount will buy down your interest rate by 0.25%.  When you divide the amount of motnhly savings by the amount of the discount point paid you are calculating the recovery period.  The recovery period is important because you want to make sure you at least recover the money you paid.  Discount points are simply an interest payment in advance to the bank.

As always call a mortgage professional and unlock the mysteries surrounding discount points and make a better informed decision.

Stephen Thaggard

If you are considering buying your first home, please consider the following as they will dramatically affect your mortgage program options and corresponding interest rate.  They are credit history, stable income and savings.

When was the last time you reviewed your own credit history?  You should know where you stand by contacting all 3 credit bureaus; Experian, Transunion and Equifax.  Call a local credit repair agency or your favorite mortgage professional for advice.  Improving your credit scores may improve your chances of obtaining a favorable mortgage program with lower interest rates.

Don’t quit your job.  Stability in source of income can make the difference when determining mortgage risk.  Long term employment in the same line of work may offset other issues regarding a mortgage approval.

And finally, save your money.  It is a pleasure to talk to new first time home buyers who actually took the time to save before seeking a mortgage approval.  Just because there are mortgage programs available with no down payment; doesn’t mean there are no additional costs; inspections, appraisals, taxes, insurances, etc…

Be prepared for your new venture.  Homeownership can be wonderful.  Just make sure you recognize that credit, stable income and savings play a big part of your mortgage financial success.  When in doubt or have questions; always call a mortgage professional.

We are assisting another homeowner who fell victim to non-disclosure in the mortgage industry.  This homeowner was contacted by an Option ARM guru who apparently sold them on a lower monthly payment.  But again either the homeowner didn’t ask enough questions or the loan officer didn’t verbally disclose the risks.  Disclosures should be explained upfront prior to choosing any recommended mortgage financing.

The risks of an Option ARM are two-fold.  The first of these is the “recast” feature” which dramtically changes the payment.  The payment during “recast”, usually in year 5, is raised to an amount that will allow the loan to be paid off within the remaining term, 25 years.  This will happen regardless of the “payment” cap of 7.5%.  The second once when the loan balance exceeds the maximum amount of usually 100% of the original loan amount borrowed.  THe result is the same payment adjustment as described above.  The loan must become fully-amortized.  Either way the homeowner suddenly discovers a huge payment shock through “recasting” or negative amortization.

The best way to protect yourself from these risks is to ask questions.  Why is the mortgage loan officer not showing other financing opportunities?  Is the loan officer asking me questions about where I want to be in 5, 10, 20 years?  What is the Margin for this or any adjustable rate mortgage?  Always call a mortgage professional.  I love answering questions and explaining upfront disclosures and risks prior to jumping into any mortgage scenario.

Hurricane season is here once again here in Florida. Please take time to call your homeowner’s insurance agent and review your existing policy before the storm. Make sure you have enough coverage to match the value of your home. Since property values may have slightly decreased in your area; you may save some money with smaller coverage. Also, ask if you have actual cash value or replacement coverage for your belongings. Actual cash value coverage pays only the depreciated value of your property.

Tropical storm Barry has come and gone but the 2007 season predictions for more storms could be troublesome. Remember, once a Tropical Storm Watch or Warning is in effect, you will not be able close on a new home purchase mortgage loan. Review your policy with your homeowners’ insurance agent now and put your insurance policy in a safe place.