Florida Mortgage : Learning Center

Most Florida home buyers or owners actually believe that your credit score directly affects the interest rate you are going to receive.  Simply put, the lower your credit score the higher your mortgage interest rate and the higher your credit score the lower your mortgage rate; whether you’re looking for a fixed rate or an ARM.

The reality is that interest rates differ from mortgage program to mortgage program.  If you are seeking a 30 year conventional FNMA,Fannie Mae, type mortgage; your interest rate is determined by how much profit the bank or mortgage company has factored.  An example would be yesterdays conventional 30 year fixed rate at 6.125%.  The Florida home buyer or owner can obtain that fixed rate and the lender, mortgage company or bank would earn a profit of almost 1% of the loan amount.  That seems fair as long as there are no additional discount points or origination fees.

Now, the question remains; who gets that low fxed interest rate without paying any discount points or origination fees?  The answer is anyone who qualifies with income, asset and employment verification.  The only difference with a Florida homeowner or buyerwith a 620 credit score and another with a 780 credit score; is the higher dcredit score client should be easier to approve.  Remember, the lower credit score client can be approved and should receive the same low rate.

OF course if you have questions regarding your credit score when purchasing a new home in Florida or refinancing your current Florida home loan; call your Florida mortgage professional and find out more about your specific financing situation.  And always get your Good Faith Estimates in writing.

I do believe there shouldn’t exist a financial incentive for Mortgage Brokers to steer borrowers into more costly mortgage loans like the Option ARM mortgage.  However, this should not be confused with Mortgage Brokers receiving a Yield Spread Premium from lenders.  Remember Yield Spread Premiums (YSP) for Mortgage Brokers are similar to Service Release Premiums (SRP) for large Banks.  The only real difference is that large banks are not required to disclose their SRP earned income on each Florida home loan. 

When shopping for your new Florida home mortgage you might notice that banks, lenders and mortgage companies advertise different 30 year fixed rates.  In the mortgage industry banks and Florida mortgage brokers calculate their fixed rates by determining what profit they expect to earn from selling the servicing rights to an end investor. 

If an interest rate of 6.125% pays the mortgage company a YSP of say 1.25% of the loan amount; then the borrower may enjoy this rate without having to pay discount points or origination fees.  If someone is providing a comparative fixed rate of 5.75%, then you might want to compare the buy-down costs.  Banks and Lenders advertise lower rates but wait may wait until writing a Good Faith Estimate to reveal the additional buy-down costs.  By the way, I believe buying down the interest rate with discount points should be the home buyers option; not the bank or lenders requirement.  But every mortgage company and bank is different.

If Mortgage Brokers are doing an injustice by increasing a borrowers qualifying rate to earn a living; then why are bank interest rates and costs not any lower?  Stop and look at the real big picture. 

One more thought on costly mortgages.  The notorious Option ARM with it’s negative amortization, prepayment penalties and recasting in 5 years or less; pays Yield Spread or Service Release Premiums differently.  Higher fixed margins deliver higher premiums to banks or mortgage brokers.  These fixed margins are whats added to the adjusting Index to calculate the real interest rate on any given day.  Consumers never ask about this detail and mortgage professionals should provide upfront.  Most Florida homeowners would never consider this type of mortgage loan; but when someone is selling a small mortgage payment of only 1% and not disclosing advantages or more importantly, the disadvantages; homeowners will lose. 

It does pay to speak to a professional Mortgage Broker who has experience with many mortgage program types and who delivers upfront consumer information; all of it.

We obtained a VA pre-approval for one of our new Florida Veterans and were excited as interest rates slightly improved yesterday.  With his pre-approval letter in hand he found a great deal on a South Florida home and proceeded to have his Real Estate Agent submit an offer.  You’re not going to believe what happened next.

His offer was actually rejected, because the REO firm and bank selling agent, haven’t familiarized themselves with how simple VA Home Loans are these days.  They seemed only interested in Florida home buyers with Fannie Mae or Freddie Mac mortgage program approvals.  The listing agent mentioned that no one on their end has attempted a VA Home Loan transaction in over 20 years!  And that the Veteran would most likely have to consider another type of mortgage loan.  Not fair with our Veteran who already reviewed his mortgage options and chose the VA Home Loan approach.

Our Veteran home buyer would have had to take a conventional 100% Fannie Mae type loan with PMI or better yet, a higher interest rate 2nd mortgage and split the mortgage into 2 separate loans, referred to as an 80/20 program.  Is this fair treatment for our Florida Veterans?  After reviewing several 100% options, his best 30 year mortgage is to use his VA Entitlement and enjoy the benefits of no junk fees, no PMI, and a very low fixed rate.

Keep an eye out for those REO “specialists” who obviously are not up to par with today’s very streamlined approach with VA’s 100% guaranteed mortgage loan programs in Florida.  If you need more specific information regarding any conventional type mortgage such as Fannie Mae or Freddie Mac; or even your benefits of using a VA Home Loan; call our office and ask for me Stephen Thaggard or send an email.

Veterans deserve more, and as far as our client goes; he just called and will be writing a contract on another home. 

One of the benefits a Veteran receives when utilizing his or her VA Entitlement towards purchasing a new home; is to not incur any mortgage, lender or bank junk fees.  This can reduce the cost for a home buyer by approximately $750 – $1,000.  But Veterans should know the catch usually attached to this benefit.

Some mortgage companies recapture that loss of revenue with one of two methods.  These mortgage lenders or banks will either charge an origination fee or discount point; which VA allows.  Or just as bad, they will charge these fees to the seller which makes negotiating a contract difficult for Veterans.   So the Veteran doesn’t truly enjoy the total benefit or has to approach the seller with the fact that the seller may have to pay for more fees than if the buyer were not a Veteran.

That’s nuts!  Discount points are reserved for the Veteran to choose only if he or she wants to buy down the interest rate.  And the benefit of no lender junk fees was never mean’t for the Seller to have to pay them.  At BeechTree Mortgage you can rest assure that when you want to use your well deserved VA Entitlement to purchase a new home; we will not charge the Veteran origination fees or discount points to cover junk fees.  We will also not charge the seller. 

Veterans choosing to purchase a new home in Florida or refinacing their current Florida VA mortgage; will know that BeechTree Mortgage is different.  It’s the way VA Home Loan financing should be.

Since the unexpected 3rd quarter earnings results from BOA were released combined with the Jobless Claims increase a few days ago; the mortgage markets have slowly improved.  That is, banks are once again expecting the Federal Reserve to lower the Fed Funds rate at the end of October; thereby, lowering current rates.  Here we go again.

This expectation  has recently improved available Florida fixed mortgage interest rates.  We have seen the Fannie Mae conforming 30 year fixed rate drop from 6.375% to almost 6.125%.  All without charging any discount points or origination fees, of course.  The greatest move recently in Florida mortgage interest rates is the Jumbo fixed mortgage rates.  Our available rate dropped by almost one full point!

It seems the markets may soon be getting back in line with lower interest rate sand more importantly; more mortgage products to assist almost every Florida home mortgage seeker.  Need clarity on which mortgag eprogram best suits you?  Call your local Florida Mortgage Experts at BeechTree Mortgage.

The Christmas season has already begun here in Cocoa Beach.  I listened to 2007’s first Christmas jingle over the radio yesterday.  It was for a mortgage company advertisement that is being drilled into the minds of many.  A lot has changed in the mortgage industry this year so I thought it would be a great time (since I have more lately) to build my Florida Mortgage Wish List.  I wish these things for every homeowner, even if you’re not in our Sunshine State:

1. I wish homeowners or buyers would ask for an upfront Good Faith Estimate to empower them with fair comparison while shopping for their new mortgage.
2. I wish new home buyers or homeowners Settlement Statements or HUD-1’s, actually matched the original Good Faith Estimates provided by mortgage company or bank employees. 
3. I wish mortgage terms provided by banks or mortgage companies; were explained upfront and thoroughly with each and every borrower. 
4. I wish Florida mortgage shoppers asked questions from experienced mortgage professionals; or at least asked about the level of mortgage experience first.
5. I wish all Good Faith Estimates were provided with no discount points and no origination fees.
6. I wish every business owner would take a few minutes of their time and call On Target Web Solutions and see just how much business they are missing. 
7. I wish someone would open a new home owners insurance company and simply undercut the entire Florida market with lower, affordable premiums.  Florida residents are leaving Florida.
8. I wish big banks had to disclose their SRP (service release premiums).  Mortgage brokers are required to disclose theirs and its called YSP (yield spread premium).
9. I wish Veterans received even more discounts from VA regarding their VA Entitlements to purchase a home.  They have earned it.
10. I wish everyone buying or refinancing their Florida home would call BeechTree Mortgage, Inc. and discover the refreshing true perspective with mortgage shopping.

Merry Christmas 2007 : Happy mortgage shopping.

We have been providing Florida construction to permanent financing with new home builders and buyers for over 12 years.  However, we are quickly getting used to the tremendous shift in construction financing availability.

Over the past 6 weeks; several large lending institutions (that is, the ones that are still in business) have either rewritten the underwriting guidelines for these construction loans or have dropped the availability completely from their menus of loan programs.

Of course after closing on your “one-time closing” construction loan; the homeowner begins to make interest payments due based on the outstanding builder draws.  A typical build time period is 12, 15 or 18 months; and if you exceed this period there may be additional extension fees to be paid.  But since delinquency numbers were small; there was no realized loss.

Lately, due to the number of US home foreclosures; lenders have decided that the construction to permanent loans that required extended build times, were truly considered “delinquent”.  Well who wants to buy delinquent type mortgages even if they are strong borrowers with great credit scores and cash reserves?  The answer is not many investors.

We too are redeveloping how we structure these construction to permanent programs for our current Florida home buyers and their future referrals.  We will keep everyone up to date with construction loan availabilities as our research continues.  Please call or contact your mortgag eprofessional with any questions regarding Florida construction to permanent loans.