Florida Mortgage : Learning Center

My family and I returned safely from our Tennessee vacation yesterday and the time we spent together was priceless. Of course, as with any business owner, I pondered what was happening at our office without my originating new loans for 9 days. A bit stressful.

As it turns out, I originated 2 new loans from clients who were referred to our office.  I love getting new mortgage business when I am on vacation.  Sometimes it takes a vacation away from everyday mortgage originating to realize what we have built. A Florida mortgage business that thrives from consistent repeat and referral business. After over 11 years in the Florida mortgage market; almost 80% of our new home buyers or Florida homeowners are referred.

Trust and integrity are extremely important when it comes to making it in the mortgage arena. Please take time to review an awesome article I recently read regarding mortgage broker professionals and mortgage broker bad guys. It was written by Amanda Gengler a Money Magazine Writer Reporter and can be found on CNN’s website.

Stephen Thaggard

Well, it’s that time of the year again to take off and head to the mountains. And that is exactly what our family is going to do. In fact, I hope that I can truly turn off the mortgage minded person that I am and concentrate on my beautiful wife, Karen (we’ve been married 12 years already!) and wonderful kids; Blake, Brandi, Logan and Ryan.

We are headed to Tennessee and I want all my readers to know that through all of this mortgage mayhem business; we all need to make sure we keep check on what is most important. God, family, friends, health, happiness and peace.

I will be back on July 28th. Hopefully Bernanke will have made a decision to help with the housing market sub prime mess and lower the Fed Funds Rate. Wishful thinking. Maybe…

Stephen Thaggard

Interesting things happen when home owners call us regarding mortgage financing.  We ask enough crucial questions which in turn helps educate consumers on which mortgage program best suits their needs.

Take for example the clients who called yesterday asking simply to refinance their existing VA home loan to lower the rate and consolidate some debts.  Since they were only considering borrowing  about 55% of their fair market value; it made sense to consider a FNMA conventional loan as well.

With a VA loan the advantages are; no private mortgage insurance (PMI), no prepayment penalty, and you can reduce their original 30 year fixed rate VA home loan to a 25 year term to save even more money.  The only red flag to consider with a cash out refinance using VA is the VA Funding Fee of, in this case 3.35% of the loan amount, or $3,4852.50.  This amount is added to the loan amount and the borrower would pay additional interest over 25 years.

On the other hand, a conventional FNMA mortgage offers the same no prepayment penalty, no PMI and reduced term of 25 years.  The advantage is there is no VA Funding Fee to add to the loan amount.  Our home owner now saves $3,482.50 and still enjoy the same amount of cash out they requested.  Oh, and the interest rate is lower too with conventional FNMA mortgages.

It does pay to talk to a mortgage professional  who has the experience needed to assist home owners in their mortgage decisions.  If you want to learn more about how to save money on your next mortgage search, call or email me anytime.

Stephen Thaggard 

The yield spread premium (YSP) should not be a mystery to any home buyer or home owner considering a mortgage refinance.  This includes obtaining your mortgage from directly from a bank or from a mortgage professional.
When a mortgage broker or banker sells a mortgage loan above the par rate, or the lowest interest rate a borrower qualifies for they can be compensated in the form of a yield spread premium. This is how interest rates are determined for most conventional mortgage loans.  If 6.50% is a par delivery, then 6.75% may be paying the mortgage broker or banker a yield spread premium of about 1.00%.

One of the largest mortgage industry issues is that bankers do not have to ever disclose the amount of yield spread premiums they will earn for the interest rate they have provided.  Whereas a mortgage broker must disclose this income upfront and on the HUD-1 Settlement Statement.  I personally wouldn’t have a problem if banks were providing lower or par interest rates to their clients.  But this simply doesn’t happen.

Don’t forget the advantage of having a mortgage professional assist with your home financing needs.  Mortgage brokers not only help with all of the application paperwork, they truly are advantageous in finding the mortgage program that best suits your specific financial situation.  If you need help with Florida mortgage questions please feel free to contact me anytime.

Stephen Thaggard 

When acquiring mortgage financing for either your new home purchase, or to reduce the interest rate by refinancing, one decision you may have to make is; should you pay mortgage discount points. Each borrower has the option to reduce the interest rate, by paying discount points; however, it should not be mandatory. Be watchful of mortgage lenders and mortgage brokers that insist you pay discount points.

Consider this; mortgage discount points are simply interest paid in advance. A discount point is usually 1% of the mortgage loan amount, and is used to buy-down the current interest rate by 0.25%. If you are considering paying a discount point of 1% to reduce your interest rate, think about this:

If the current 30-year fixed rate were 6.750%, with no discount points, the payment on a mortgage of $125,000 would be $810.75 (principal and interest). Buying-down the interest rate by paying one discount point, $1,250 or 1%, would reduce that interest rate to 6.500%, with a new payment of $790.09 (principal and interest).

Notice the payment difference between the two mortgages options; only $20.66. To calculate the recovery period, simply divide the cost of the discount point by the monthly savings, or $1,250.00 / $20.66. The recovery period in this scenario is 60.5 months or a little over 5-years.

What most people don’t realize is that since it took 5 years to recover the cost of paying for that discount point, it will take 5 more years to simply save that same amount of money. Moreover, in 10 years you would have saved only what you spent when you paid for the discount point.  You could consider saving the discount point money and investing it over 10 years.  Then, you could pull money out and prepay your own mortgage.  Have

It usually always makes sense to get the best interest rate available without having to pay for any discount points. Exceptions to that statement include:

• Your Tax Advisor’s or CPA’s recommendation
• If the “seller” or builder will pay them
• If your employer is paying them; usually as a relocation benefit package

Contact BeechTree Mortgage and we will provide a very accurate Good Faith Estimate and answer any questions you have regarding this article. Call now at 1-888-399-0520

Another Florida home buyer went to Google and found our web site; after obtaining a Good Faith Estimate from one of those “no closing costs” banks.  They had already figured out that the interest rate is higher, which would more than reimburse the bank especially since the home buyers have no plans on moving in the next 5-10 years.

The victim associated with gimmick advertising in the mortgage arena is unfortunately the home buyer.  Banks use the “no fee” mortgage loan to lure home buyers to call or contact them and the rest is simple.  A good faith estimate, mortgage loan application, some processing time and you close.  But did you get the best mortgage interest rate and program?  In this case it didn’t.  No one considered any other option.

It turns out that the home buyers were qualified to obtain a lower interest rate for their 30 year fixed rate mortgage.  And since the builder was contributing over $3,000 towards the buyers closing costs; it made no sense to take a higher interest rate and avoid the remaining closing costs of approximately $1,000.  The bank was raising their interest rate over the 30 year period and, in turn, would pay for the $1,000 in remaining closing costs.  It will cost you if you don’t seek professional mortgage advice and focus only on advertising gimmicks.

This is another example of how important it is to shop and find an experienced mortgage professional.  We actually take the time necessary to make sure home buyers are obtaining mortgage products that are suitable for their financial well being.  Looking for a Florida mortgage professional?  Call or email anytime.

Stephen Thaggard