Florida Mortgage : Learning Center

Well the New Year is upon us; and the entire mortgage industry as we know it has changed.  We have seen the repercussions of obtaining a mortgage with poor credit, or not using income to qualify buyers.  Finally everyone is starting to place debt ratios high on the list of qualifying for a new Florida mortgage loan.  We are going back to the basics in affordability.  Finally!

The New Year expectations are high for Florida Mortgage Professionals, as the House and Congress have joined hands for taking credit with resolving financial institution problems.  Next year will be a year of lower fixed interest rates and less worry about being taken in by some rogue mortgage broker or rogue banker.  There is only one problem.  Since terms of an agreed mortgage Note can ultimately be altered by politicians; Lenders are forcing thousands of would-be Florida home owners out of qualifying; by tightening underwriting guidelines for conventional mortgages.

We can only hope that the revised terms with respect to FHA loans; will help.  Lets start the New Year by saving our hard earned money and working to restore or correct our extremely important credit histories.  Buying a new home in Florida in 2008 will mean that you have thought about home ownership and actually made positive steps towards the American dream by contacting a Mortgage Professional.

Only by talking with a true Mortgage Professional can you assure yourself of affording your new Florida dream home.

I recently received my copy of the Better Business Bureau’s Central Florida Times.  One of my favorite sections is the 2007 Member Top Ten.  Of course my focus is always on the numbers of Florida mortgage complaints.  Great news in the midst of all this mortgage mayhem.

 Florida mortgage companies, lenders, brokers, etc were not in the top ten list!  It seems consumers buying a home or refinancing in Florida and working with a Mortgage Professional was more satisfying than those that made the list.  The top three industries included Florida Timeshares, Auto Dealers (new), Travel Agencies. 

Florida home owners had more complaints with the Furniture Industry, Cellular Companies, and Insurance Agencies.  A little good news for all of us Mortgage Professionals who are still providing sound Florida mortgage advice.  Hang in there.

Well, the Federal Reserve announcement of a Fed Funds rate drop of .25%; to a new 4.25% didn’t run well the Wall Street investors.  In fact, we saw Florida mortgage rates slightly increase.  I expect many in the financial markets were hoping for a larger drop or better news on future interest rate improvements.

One thing is for sure, however.  Fannie Mae and Freddie Mac have placed more restrictions on available mortgage programs.  They have even announced new additional pricing scenarios for less than perfect credit buyers.  Construction to Permanent mortgage programs have been discontinued by 2 more Florida wholesale lenders as less liquidity and fears of a recession deepen.

If you are not sure you can qualify for a new Florida home mortgage; please call or email your Florida Mortgage Professional for guidance.

I want to clear up one of the biggest differences between conventional and sub prime adjustable rate mortgages.  Of course the interest rates differ greatly; but it’s how the mortgage loan adjusts that truly makes a huge difference.  Not only for Florida homeowners but for any homeowner that obtained a sub prime type adjustable rate mortgage.

Home buyers whom, for whatever reason, chose a sub prime adjustable rate mortgage (ARM), should have been told, upfront, that the Margins with these mortgage loans are extremely higher than conventional ARM programs available from Fannie Mae, FNMA, and Freddie Mac, FHLMC.

The Margins associated with many adjustable rate mortgage loans, are fixed.  To determine the new interest rate, these fixed Margins are added to whatever variable Index the mortgage loan is utilizing; such as the LIBOR, T-Bill, MTA etc… Conventional FNMA and FHLMC adjustable rate mortgages usually have fixed margins of 2.25% or 2.75%.  However, sub prime margins run in the 5% to 6% range.  So when the rate is adjusted, the home owner pays dearly. 

 To learn how much your interest rate will adjust soon; review your adjustable rate mortgage rider that you received and signed from your loan closing when you refinanced or purchased your home.  Add the current Index percentage with the fixed Margin.  Please feel free to call your mortgage professional for assistance.

Fannie Mae, FNMA, and Freddie Mac, FHLMC, have announced new pricing requirements for any homeowner or home buyer with less than perfect credit scores.  These changes are to take place for loans they purchase on the secondary markets as of March 1, 2008.  This means Florida home buyers and homeowners, seeking new conventional mortgages, may encounter higher costs determined by their credit scores.

Generally, the adjustments in costs to the consumer is based on mortgage loans with less than 30% in down payments.  In fact, most conventional loans will cost more for credit scores under 680 and considerably more for credit scores below 620.

Up to now when someone qualifies for a FNMA or FHLMC conventional mortgage, the interest rate or cost should be the same, regardless of a lower credit score of say 620 or a higher score of 780.  It simply makes it easier for the higher credit score buyer to obtain a mortgage loan commitment.  Well all that is changing.

There are more details regarding this dramatic increase in cost to the consumer as Fannie Mae and Freddie Mac continue to adjust their qualifying guidelines to offset mortgage defaults.  It is of course very important for new home buyers to review their credit reports, correct or improve the scores if necessary, save money for reserves and down payments, and ask for professional assistance when it comes to the ever changing world of conventional mortgage loan programs

While the Mortgage Reform and Anti Predatory Lending Act of 2007 cruises through Congress; I want every Florida new home buyer to know how to separate a Florida mortgage professional from others. When you seek our new Florida mortgage, whether to refinance an existing Florida home loan or to purchase your first dream home, there are signs to watch for that ensures you are working with a reputable professional mortgage broker.

These include shopping for an experienced Florida loan originator or mortgage consultant. Without the Florida mortgage experience, you may not be able to take advantage of mortgage solutions which could save you thousands in long term interest. Or worse, get into a mortgage rogram that really didn’t suit your specific mortgage related needs.

Also, the mortgage professional will ask many questions to enable any Florida home owner to-be, to better understand and choose the mortgage program or programs that work best in any given scenario. You should receive your Good Faith Estimate and/or at least learn of the mortgage company or banks upfront costs. You should know the total dollar amount that the mortgage company or bank will earn. Just ask them.

And of course ask about the guarantee of the quoted interest rate with a lock-in commitment. If all else fails ask for referrals. The mortgage professionals that are still in business today are there because of their extended referral base over several years. If you have more Florida mortgage related questions, please call our office at 888-399-0520; or email info@beechtreemortgage.com.