FBC Mortgage Blog

With the large number of distressed properties available on the market today, a savvy buyer can pick up a great bargain if they do their homework and make the right choices. A short sale (where the lender agrees to forgive some of the debt owed on a home in order to sell before it goes into foreclosure) may seem like a great way to save some money.

But this type of sale involves some significant risks. Here are some important things to take into consideration when thinking about purchasing a short sale:

What Hidden or Additional Costs Will I Incur with this Purchase?

Although a short sale can potentially be a great deal, it can also carry with it hidden costs that can add up quickly. If the seller has no funds, the buyer may get stuck paying costs normally covered by the other party, such as overdue homeowner’s association fees, back taxes, or a site survey.

How Long Can I Afford to be in Negotiations on this House?

Ironically, short sales often take longer than normal sales to close and you could be going back and forth for months with the bank that financed the seller’s original purchase. If you have a moving deadline, or if you have to stay in expensive temporary housing until closing is completed, the savings you’ll have from a pre-foreclosure may be counterbalanced by the expenses you’ll incur waiting.

How Much Can I Afford in Renovations, and How Much Work am I Willing to Do?

In a normal home sale, you have the option to request that the seller make repairs or improvements based on what’s found in the inspection. In a short sale, the home is usually sold “as-is,” so any repairs or renovations would be your responsibility. It’s important to weigh what your budget is and whether the price you will be paying is worth the hassle of fixing up the home yourself.

Although there are many factors that can sour the sale of a pre-foreclosure home, there are certainly plenty of deals out there for the buyer who is willing to look around and make a smart decision. If you are considering buying one of these distressed homes, the most important thing you can do is make sure you use a mortgage lender that is familiar with the pre-foreclosure purchasing process .

What D.C. Doesn’t Understand: The Housing Fix is Easy

I recently wrote a letter to President Obama, the content of which is briefly described below. Amazingly enough, I have received no response to date. Unfortunately, homeowners in underwater mortgages continue to suffer as our unresponsive representatives in Washington lack any understanding of the U.S. housing market.

An Easy Fix to Cure the Economy

As the CFO of FBC Mortgage, LLC, Orlando’s largest privately owned Mortgage Bank, it pains me to see a clear solution as the problem worsens by the day. Problems that litter the news are uniquely correlated – the U.S. Debt Crisis, high unemployment, most underemployed workers since the Great Depression, underwater mortgages, foreclosures, short sales, U.S. GDP in free fall, stock market volatility – it just continues in a morbidly viscous circle. However, the housing fix is easy and it will quickly cure what ails the U.S. economy.

This is as basic as I can describe the fix (so Washington can hopefully understand). Allow responsible, underwater homeowners to refinance their home without an appraisal.

Appraisals of foreclosed or distressed properties continue to drag down the value of homes of those of us fortunate not to be in foreclosure. The continual declination of home prices, due to current appraisal rules, has led to the largest moral dilemma of our time, the context of which shakes the U.S. financial system to its very core. If the price of a borrower’s home declines, will a borrower repay a debt lent from a U.S. bank?

Government Programs are Not the Solution

We have seen government programs for over two years fail to counteract this dilemma. And the worst part is that Washington has encouraged this behavior while the big banks fuel the fire. Why is it that the bank will only take your call if you are behind in your payments? Do borrowers really need to destroy their credit to get someone to listen to them?

The beauty of refinancing a borrower with a high interest rate is threefold because it: (1) reduces the payments for the borrower, helping to keep the borrower in the house, (2) helps the borrower avoid foreclosure, which in turn, helps home prices stabilize and (3) funnels the savings from the reduced payments into the struggling U.S. economy.

The change needed wouldn’t take 2,000 pages from the House and Senate. Maybe five at the most. The fix is easy. But will Washington ever understand?

Dyron Watford, MBA, CPA
FBC Mortgage, LLC
Chief Financial Officer

How to Get a Mortgage Abroad

It’s no surprise that many people who vacation in Orlando fall in love with the area. With all the amusement parks, shopping, fine dining, and attractions located in close proximity, Orlando is the ideal holiday spot for all ages.

For visitors from other countries, however, the question arises on how to get a mortgage abroad to finance their dream vacation home. International visitors are probably already familiar with the mortgage process in their home country, but most mortgage companies will not finance properties outside the country in which they are based. Foreign visitors will have to use a U.S. company to finance their Orlando mortgage.

U.S. Citizenship Not Required to Get a Mortgage in the U.S.

Luckily, you don’t have to be a US citizen to get a mortgage in the United States. International applicants have to meet the same requirements as a US citizen to qualify for a mortgage. This includes passing a credit check and providing sufficient proof of income and assets. Applicants can also expect to need at least 20% of the purchase price for a down payment. Some companies require 25% or more for a second home or investment property.

Qualifying for a Mortgage in the U.S.

The process for qualifying for a mortgage in the U.S. is similar for a citizen or an international visitor. Foreign applicants, however, have a few extra items to consider in their decision to purchase a vacation home in Orlando.

Purchasing property in the United States does not afford residency status to the purchaser, so it’s important to be mindful of the restrictions of the visa held by the traveler. Since a foreign national can’t live in their second home full time, utilizing a local property management company to rent the home out as a vacation spot for part of the year is a great way to subsidize payments.

There are no limitations on international buyers becoming landlords, but these owners may need to apply for a US taxpayer identification number to pay taxes on any profits.

Finance a Mortgage in Orlando with a Skilled Company

Calling another country home doesn’t exclude a buyer from having a little piece of the magic of Orlando all their own. Although the process of getting an Orlando mortgage is the same no matter what the nationality, an international buyer should work with a mortgage company or real estate agent who has experience working with foreign buyers.

One thing that you probably need to do after getting a divorce is to refinance your home. Your ex is going to want to get the mortgage out of his or her name as soon as possible. Therefore, you want to refinance so you can afford to stay in the home. There are several things that you need to do when refinancing after divorcing your spouse.

Check Public Records

First, make sure that your spouse filed the necessary paperwork that deeded the property over to you. You will not want to begin the refinancing process until the property is in your name only. Once you know that you rightfully own the property, you can begin the process of mortgage refinancing.

Choose a Mortgage Lender

You might have a current lender that you know and trust, but it will not hurt to shop around for a better deal. Interest rates are very competitive now, so a lower interest rate and lower closing cost can save you thousands of dollars. You should compare transaction fees and the other fees that refinancing will cost you. You should also check your credit score.

Contact a Mortgage Lender

Once the quit claim deed has been filed, you can contact a lender to ask about refinancing. In many cases, you will be asked to supply a copy of the Final Judgment and the quit claim deed to prove that you solely own the property. Your ex might need to sign paperwork closing out the original mortgage, and it may be necessary for him or her to be present at the time of closing. However, in some states, this is not required.

Make sure that you collect the proper documents. Most lenders will want to see your tax returns for the previous year, as well as your W-2 and 1099 forms. You probably will also need to provide proof of employment, such as pay stubs or other documentation from your employer.

After everything is in place, you will hopefully be approved. The last step will be to show up at the closing and sign the paperwork. Your refinance will then be complete.

Refinancing after a divorce could be the first step in helping you regain control of your life. You need to protect yourself and your credit; so get your home refinanced, and then you can start looking toward your future.

The housing industry has been supported and partially subsidized by the government since the Great Depression. Today, people looking to buy their first homes can take advantage of loans guaranteed or insured by the federal government.

The Department of Housing and Urban Development, acting through its subsidiary the Federal Housing Administration, can help new borrowers. The Federal Housing Administration (FHA) offers insured mortgages for borrowers who qualify. Private lenders are relieved of the risk of lending to these borrowers because the FHA insures the loans. This can be a great boon to borrowers with less than perfect credit or who may need a gift to close.

Veterans Administration

Government home loans can help people buy their first home even if they have a checkered credit history. Government loans do this through programs like the Federal Housing Administration insured mortgage program. The FHA is not the only agency that is in the business of providing home loans. Other government agencies and departments can help borrowers obtain their first home.

The Veterans Administration and the United States Department of Agriculture also offer these programs. The Veterans Administration (VA) helps discharged and active members of the U.S. military find homes. The VA offers both zero down payment and low down payment options, accommodating both savers and non-savers.

Department of Agriculture

The United States Department of Agriculture (USDA) offers zero down payment options for civilians. In fact, the Department offers a loan option where borrowers can receive financing equivalent to 102 percent of the purchase price. The extra 2 percent goes toward home repairs, which can be completed either before or after the sale.

The USDA program is designed for lower-income borrowers. The Department stipulates that borrowers must not exceed 80 percent of the median income for their area. This program is one of the few government-backed home loan offerings that does not require mortgage insurance. This saves the borrower hundreds of dollars each month.

Select the Government Program That’s Right For You

Each government program is right for different borrowers. The veterans program is only open to current or past members of the military. USDA and Federal Housing Administration loansare the best government home loans on the market for non-military buyers. Credit has become so important that borrowers without a high enough credit rating essentially get locked out of key markets. These government programs help them break the credit barrier to homeownership. Usually they have low rates, and programs that require mortgage insurance are often less expensive than private options. These programs are a great boon to first time home buyers.

FBC Mortgage, LLC is an award winning company that specializes in government home loans for first-time home buyers. To find out which government home loan is right for you, click here to schedule your free mortgage consultation.

Prospective homebuyers received good news earlier this year when the 2011 Federal Housing Administration loan limits were announced. Each year, the department of Housing and Urban Development (HUD) sets FHA loan limits for the year and they are specific to each county within each state. For 2011, the loan limits remained at the same levels they have been, despite the mortgage meltdown of the past few years.

Additionally, since the credit restrictions on conforming loans have been increased, the more lenient standards of the Federal Housing Administration are very attractive to prospective homebuyers in all demographics. Several new home loan programs are available to assist homeowners in refinancing their current loans as well as preventing foreclosure. These programs include:

•FHA
•FHA 203 K
•Reverse Mortgages
•Fannie Mae
•Freddie Mac
•VA
•USDA

Since the Federal Housing Administration rates are still at record lows, the higher loan limits maintained for 2011 mean that more borrowers will be able to afford homes; loan limits for 2011 start at $271,050 and super jumbo loan limits for high cost areas are in excess of $1 million.

Advantages of These Loans

•Smaller down payments
•Lower interest rates
•More lenient credit requirements
•First time home buyer program
•Assumable loans with qualifications

Compared to conventional loans, Federal Housing Administration home loans require as little as 3-1/2% down. Although 2011 saw the institution of a minimum credit score requirement, government loans remain easier to qualify for, with the minimum credit score being at 500 although most lenders require a 620 score to qualify for a Federal Housing Administration home loan.

Federal Housing Administration interest rates currently hover between 4% and 5%, depending on the length of the mortgage desired, which is considerably lower than conventional rates. Loans are available as either fixed or adjustable rate mortgages.

The mortgage crisis affected FHA loans as well as conventional, but credit requirements are still less restrictive for this type of government loan than for a traditional conventional mortgage loan. In addition, the substantially lower interest rate enables prospective homebuyers to qualify for more home for their money.

First-time buyers, even those with damaged credit, can utilize these government loans to realize their dream of owning a home.

Prospective home buyers interested in obtaining a Federal Housing Administration home loan can click here to research FHA mortgage limits.

10 Questions a First-Time Home Buyer Should Ask

There are so many important things to remember when buying a home that you really can’t ask too many questions. If you’re a first-time home buyer and you want to get the best home for your money, then here are the top 10 questions you should be asking.

1. Do I need a real estate agent?

You don’t need an agent, but they can be very helpful especially if you are a first time buyer. Real estate also may be able to show you properties that you may not know about and can help negotiate the price potentially saving you money.

2. Do I need to be pre-approved for a home loan?

Technically, you can shop for houses without being pre-approved, but most sellers will not take your offer seriously without a preapproval –letter. We recommend that buyers get preapproved prior looking for a house. This way you know exactly how much you qualify for.

3. How long will it take to close?

This can depend on the seller and sometimes on the seller’s bank. Typically contracts are written anywhere from 30 to 60 days. If you are dealing with a distress sale sometimes the process may take longer.

4. How much will I have to pay in closing costs?

Buyers closing costs typically run about 2-4% of the purchase price. You may also be able to negotiate with the seller and have them pay all of the closing costs, which can lower your cash out of pocket.

5. How much are property taxes?

The amount you pay in property taxes depends on the value of the property and the local tax rates. You can check on the county website where the property is located for an exact amount.

6. Will I have to have homeowner’s insurance?

The short answer is yes. The bank will require you to have insurance.

7. What if the home inspection doesn’t go well?

If problems turn up during the home inspection, then you can either negotiate to have them fixed, or walk away. Make sure you do all of your inspections within the time frames allocated on your contract.

8. What is the cost of maintaining a home?

The cost of maintaining a home depends on the home’s size. The bigger your house is, the more you’ll have to spend to maintain it.

9. How much will I have to pay for utilities?

This will also depend on the size of the home.

10. Will I need a down payment?

Most loan programs require some type of down payment. However VA loans and USDA loans do not require down payments. These loans have specific qualifying criteria.

Buying your first home can be a joyful experience or a major headache. The more questions you ask, the better off you’ll be. Ready to fulfill your dream of buying your first home? Click here to start your loan application.

Many people take advantage of USDA, or United States Department of Agriculture, loans. They offer a low-cost insured mortgage with no mortgage insurance and no down payment. In fact, with the exception of the VA loan, USDA loans are the only mortgages available that require no down payment.

The USDA Rural Development does not fund the loan, but rather they have certain lenders who will loan the funds with a repayment guarantee from the USDA.

Who Qualifies for an USDA Loan?

The USDA provides loans for individuals who have a low-to-moderate income to buy rural housing. USDA publishes maps that show which areas are eligible for financing. The areas change over time and vary by county in every state. You can check the USDA website to see which areas qualify for these loans.

Benefits of USDA Loans

The main advantage of a USDA mortgage is that no down payment is required. You can get a mortgage up to 100 percent of the appraised value of the home and if the seller pays closing costs you may have no money out of pocket. They are 30 year fixed loans.

There is also no monthly mortgage insurance with a USDA loan. Mortgage insurance premiums can get expensive, so with no monthly mortgage insurance, you have lower payments.

USDA loans normally have very competitive interest rates, making these loans a great option.

USDA Loan Requirements

To be considered for a USDA loan, your monthly payment must meet a certain percentage of your annual income. Most USDA lenders normally require a credit score of 640 or higher.

What is the Maximum USDA Loan Amount?

Loan amounts for USDA loan may go as high as $417,000. Lenders will first pre-approve you to make sure you meet USDA income and credit guide lines. The maximum USDA loan for a rural area is 102 percent of the appraised value of the home.

Many people have already benefited from a USDA loan. Now it’s your turn. Get started on the path to owning the home of your dreams. Contact FBC Mortgage today to see if you qualify for a USDA loan.

Orlando mortgage lender FBC recently released their Central Florida Mortgage Report for May 2011. All of the data contained in the report is compiled from financed properties located in Orange, Seminole, Volusia, Osceola and Lake Counties and excludes condos and distressed properties unable to obtain financing.

• Year over year purchase prices for financed single family residences decreased by 7.5% averaging $146,000. This is the lowest average price in the last two years.
• The average income of buyers was $6,200 per month– 17% higher than last year.
• Rates continue to decrease, averaging close to 4.75%, nearly a quarter point drop from last month.
• Credit scores for home buyers averaged 735 for the Quarter, 20 points higher than Q1 2010.
• Down payments on FHA and Conventional loans were significantly higher than they were at this point last year.
• The average loan amount was $138,000, a slight decrease from last month and 5% lower than last May.

“Overall, the real estate market during the month of May was weaker than anticipated. Florida is still considered a declining market by Fannie Mae and other housing agencies, which is leading to stricter underwriting criteria than the rest of the nation and shrinking our eligible buyer pool,” said Rob Nunziata, Co-CEO/President of FBC Mortgage, LLC.

Nearly 60% of all home buyers in Central Florida are paying cash. This is a staggering statistic considering for the last 15 years it has averaged closer to 12%. With housing inventory at record low levels and rates close to 4.5%, we expected that prices would bump up—however this will not happen until underwriting guidelines are eased and more eligible buyers are able to obtain financing to purchase a home.

Based on financed transactions, FBC population size and sample size, FBC Mortgage, LLC believes the report has a 95% confidence level.

About FBC Mortgage
FBC Mortgage, LLC is an employee and community owned retail mortgage banker affiliated with the Florida Bank of Commerce. Headquartered in Orlando, Florida, with branches across the State of Florida and Mississippi, FBC Mortgage lender provides low rates on home loans (FHA, VA, Conventional, USDA), construction and 203k rehab loans. The award-winning company also specializes in refinancing home loans. Visit us on the web at www.fbchomeloans.com or call us at 1-866-413-2563 to schedule your free mortgage consultation.