Category Archive: FL Mortgage Professional

HOA Dues Can Influence Your Mortgage Approval

Many people move to Florida or get second homes here to take advantage of the weather and the many amenities we enjoy in the Sunshine State. But if you’re buying a condominium or a home in a planned community, your homeowner’s association (HOA) fees can affect your ability to get a Florida mortgage.

If the home you want to buy is part of a multifamily community or a planned unit development (PUD), you’ll probably automatically become part of the community’s homeowner’s association. The HOA typically maintains common areas and amenities, like clubhouses, gated security, fitness centers, or swimming pools. Homeowners in that community pay dues to maintain and repair these amenities and pay for insurance for these areas. Each HOA is different based on the type of community and the amenities the community offers.

If you buy a home outside a planned community, you’ll still need to maintain and repair your home, but those costs are at your discretion. Mortgage lenders don’t factor that type of expense into your debt-to-income (DTI) ratio.

However, HOA dues are required. Every homeowner in the community must pay these fees, or the HOA will take action to collect them. For that reason, HOA dues are counted in your DTI ratio. If you’re qualifying for a Florida mortgage at the maximum DTI or debt-to-income ratio, make sure everyone is aware of the HOA dues as they may affect your ability to qualify.  This shouldn’t occur when you are in process, as this is an upfront question seasoned Loan Officers are always asking when seeking a Florid mortgage.

Getting a Florida mortgage for a property bound by an HOA can also require more paperwork. The mortgage lender may sometimes need to consider the financial health of the HOA, the ratio of owner-occupants to investors, and other factors. Typically, the lender will require the HOA to complete a questionnaire to assess the HOA’s strength. This is a common requirement when purchasing a Condominium here in Florida.

If you’re considering getting a Florida mortgage for a property with an HOA, Embrace Home Loans can help you. We have extensive experience in working with HOAs, and we’ll help you assess the HOA and streamline the qualification process. Contact us at 407-733-6425 for more information.

What a Low Credit Score Really Means for a Mortgage

If you’re shopping for a new home and exploring Florida mortgages, you need to understand how your credit score will affect your ability to get a mortgage. Your credit score is not the same as your credit report, though your credit report does determine your credit score.

Most mortgage companies look at your FICO score. FICO stands for the Fair Isaac Corporation, and FICO developed one of the earliest methods for calculating credit scores based on your credit report, and FICO scores range from 300-850. Higher scores mean you have a better credit history and also make you eligible for lower interest rates on your mortgage.

Scores can vary

Since there are three major agencies that collect credit information (Experian, Equifax, and TransUnion), your score can differ slightly depending on which agency’s data is used to develop it. Also, FICO has several different scoring models for different types of loans, so your score can also differ depending on what you’re buying (a house or a car, for example). Errors on your report can lower your score, so it’s important for you to check your report and correct any errors, ideally well before you apply for a loan. You can request a free report every 12 months from each of the major credit agencies by visiting www.annualcreditreport.com.

Credit scores affect your rates

Borrowers who have high credit scores can generally get the lowest interest rates on mortgages, which is important. Decreasing your interest rate by even half a percentage point of interest can save you thousands of dollars over the life of your mortgage. In general:

  • A credit score of 740 or higher will get you the best interest rates from most mortgage lenders.
  • A credit score of 680 is considered an acceptable score for conventional mortgages, however, the higher the score, the lower the interest rate, and the MI (mortgage insurance) if applicable.
  • A credit score of 620 or lower will make if difficult (but not impossible!) to get a conventional mortgage. You’ll face more scrutiny and pay higher interest rates, but you can still qualify. You might consider qualifying for an FHA or other government-insured/guaranteed mortgages.

Find out more

If you’re interested in Florida mortgages, Embrace Home Loans can help. We can work with you to determine your scores and find out what mortgages and rates fit your financial needs. Call us at 407-733-6425.

Home Inspections and VA Appraisals: What’s the Difference?

Home appraisals and inspections sound very similar. After all, both require someone to look over a house and report on it. The truth, however, is that these services are actually very different. And if you’re shopping for a VA mortgage in Florida, you need to understand what each of these services entails.

VA appraisals

Appraisals are a very common requirement when you’re applying for a mortgage loan guaranteed by the Department of Veterans Affairs (VA). VA lenders want to know that the property is safe, ready for occupancy, and what its fair market value is before approving the loan.

VA appraisers check to see if the home meets the minimum property requirements (MPRs) established by the VA. The appraiser looks for major defects that would affect the home’s market value. They’ll also look at other home values in the area, making sure that this home falls in line with those property values.

Inspections

Home inspections, on the other hand, focus specifically on the house being inspected. Inspectors are obligated to inform their clients everything about the condition of the home, from leaky faucets to major roofing or heating/air conditioning issues. Even minor issues can be costly to repair, so the home inspectors inform the buyer about the actual condition of the property, including descriptions, photos, repair estimates, and recommendations. The home buyer can then negotiate with the seller on repair costs or the purchase price, or even decide not to purchase the home.

Which do you need?

So which of these services do you need when you’re planning to buy a home here in Florida with a VA mortgage? The short answer is both. VA lenders will typically require a VA appraisal, or they won’t issue a mortgage. Home inspections aren’t required for VA mortgages, but they’re still an excellent idea if you’re buying a home. Remember, your appraisal isn’t as detailed and in-depth as a home inspection. And the home inspector is obligated to tell you about any defects he or she finds, which helps protect you from hidden issues, like mold, dry rot, outdated plumbing, or any other issues.

If you’re planning to buy a home using your VA mortgage benefit, Embrace Home Loans is an approved VA lender that can work with you to make sure your new home is exactly what you need. Contact our experienced VA lenders at 407-733-6425.

8 Things to Love About VA Mortgages

One of the best benefits available to veterans, active-duty military, and some other eligible people is a VA mortgage loan guaranteed by the Department of Veterans Affairs. Commonly known as VA loans, these mortgages offer great interest rates, flexible guidelines to qualify, and no down payment. VA loans are available to most of the 1.5 million veterans in Florida, as well as current service members. Here are eight things to love about VA mortgage loans:

  1. No down payment. With a VA loan, you can finance up to the full purchase price of a home. If you want to make an optional down payment, you can, but it’s not required. VA loans do require a funding fee, an upfront charge that’s based on your service, the size of the loan, and other factors. But that fee can be financed with the loan so you don’t have to pay it all up front. And not all borrowers have to pay the fee as it can be waived for some borrowers.
  2. Low interest rates. VA loans are guaranteed by the VA Home Loan Guaranty Program. That means the federal government will repay a portion of the loan if you can’t make your monthly payments. The guarantee protects the lenders from the risk of default, and that means they can offer you lower rates of interest.
  3. No mortgage insurance. Mortgage insurance protects the lender in case the borrower defaults on his or her loan, and most borrowers have to pay for it. But since VA loans are guaranteed by the government, no mortgage insurance is required.
  4. Easy qualification. You’ll need an acceptable credit history and enough income to make your payments, as you would with any mortgage loan. However, VA guidelines are more flexible than those for other mortgages, so it can be easier for you to qualify.
  5. Many options. VA loans provide several options from a lot of different lenders. They can be fixed or adjustable, allow you to make repairs or refinance your existing loan, or even make energy-efficient upgrades. VA loans are offered by banks, credit unions, mortgage lenders, and other financial institutions, and each one has different rates and fees. So there are a wide variety of VA loan options from which you can choose.
  6. Low closing costs. The Department of Veterans Affairs establishes limits on the closing costs that lenders can charge to VA borrowers, another money-saving feature.
  7. No prepayment penalty. If you decide to sell your home later, VA loans don’t allow any prepayment penalty. They also don’t allow any restrictions on refinancing your home.
  8. Streamlined refinancing. The VA also offers an Interest Rate Reduction Refinance Loan (IRRRL) that allows you to refinance your VA loan to a lower rate if interest rates drop. You can also refinance from an adjustable rate to a fixed rate. IRRRLs have little paperwork and often require little to no out-of-pocket costs.

If you’re an eligible VA borrower in the Sunshine State, Embrace Home Loans can help you take advantage of your VA loan benefit. We’ll work with you to look at your VA mortgage options and figure out the financing that’s right for you. Contact us today at 407-733-6425, or browse the rest of our website, for more information on our services.

7 Deadly Sins That Can Derail Your Florida Mortgage Closing

Typically, a mortgage approval can take about a month and a half in Florida, but that’s just an average. Closing your loan can take even longer if you’re buying a short sale or foreclosure. So, what deadly mistakes should you avoid while you’re waiting to close your Florida mortgage?

 

  • Don’t Change Jobs: If you get fired or laid off, that’s beyond your control. But this is not the time to go job hunting. Wait until after you close. Besides, you don’t want to try to get time off to move when you’ve just started a new job.
  • Don’t Open New Credit Accounts: Even if you don’t charge anything, every time your credit is checked by a lender, you could lose points from your credit score.
  • Don’t Close Any Credit Accounts: If you close an account, you will lose that available credit, and that could affect your debt ratio and hurt your credit score. It could also reduce the length of your credit history.
  • Don’t Max Out Your Credit Cards: This is not the time to go on a spending spree. Try to keep all your card balances below 30 percent of their available limits at all times. If you do decide to pay down cards, spread your money across all your cards to bring all the balances down equally.
  • Don’t Make Late Payments: A single late payment can knock points off your credit score.
  • Don’t Buy or Lease a New Car: Again, if your car dies, you may not have a choice. But try to avoid any large purchases or new financing.
  • Don’t Make Large Deposits into Your Accounts or Accept Large Cash Gifts: If you’re getting help from family, you need to follow your lender’s procedures to document it.

 

A good rule of thumb is to check with your mortgage lender before you do anything that will affect your credit score. Your Florida mortgage professional can help keep you from making a mistake that could delay or even revoke your loan. At Embrace Home Loans, we are happy to work with you to help make sure your closing doesn’t get off track. Please call us at 407-733-6425, or contact us online.

What Should You Know About FHA Loans?

FHA loans are an extremely popular Florida mortgage option, and there are a lot of reasons why. Generally speaking, a mortgage loan insured by the Federal Housing Administration (FHA) is one of the easiest types of mortgages to qualify for because it requires a low down payment and your credit doesn’t have to be perfect. If you’re considering an FHA loan, here’s some things you should know.

  • Attractive interest rates. Because the loan is insured by the FHA, lenders typically offer lower interest rates for FHA loans than conventional mortgages. The lenders face less risk so they don’t have to charge as much in interest.
  • Lower minimum credit scores. A perfect FICO (Fair Isaac Corporation) credit score is 850, but very few people have perfect credit. In fact, the Fair Isaac Corp. estimated in 2010, only 0.5 percent of consumers have a perfect score. With an FHA loan, though, you don’t need perfect credit. Borrowers with a score of 600 can qualify for an FHA loan with a low minimum down payment of 3.5 percent of the purchase price. People with credit scores at 580 can still qualify, but will need a down payment of at least 10 percent.
  • Required mortgage insurance premiums (MIPs). These premiums are required for FHA loans. They are charged as an up-front premium of 1.75 percent of the loan, and there is an annual premium that you pay on a monthly basis. The up-front premium can be paid as part of the closing costs or rolled into the mortgage. The annual premium is based on the borrower’s loan-to-value (LTV) ratio, the amount borrowed, and the length of the mortgage.
  • Closing costs may be covered. With an FHA mortgage, lenders, builders, or the seller are allowed to pay some of the closing costs, like appraisals, credit reports, or title expenses.
  • Cash available for home repairs.  The FHA typically requires that a property meets certain standards to qualify for a loan, but it also offers a special loan for people who are buying fixer-uppers. You may be able to finance up to $35,000 for non-structural repairs.
  • Maximum mortgage limits. There are FHA loan limits that vary by state and county. In Florida, for example, limits range from $271,050 for a single-family home to $529,000.
  • Other requirements. Some other typical requirements include a steady employment history (at least two years), at least two years out of bankruptcy with good credit reestablished, and at least three years out of foreclosure with good credit reestablished.

Getting an FHA loan

The FHA doesn’t make loans, it insures them. And only FHA-approved lenders can make FHA loans. So if you’re in the market for a Florida mortgage, you’ll need to find an FHA lender. Remember that different lenders offer different interest rates, costs, and other charges, even on the same FHA loan. It’s worth your time to shop around. If you’re interested in learning more about FHA loans, Embrace Home Loans can help. We’re experts in Florida FHA lending. Please browse the website for more information, or call 407-733-6425.

Do’s and Don’ts When Getting a Mortgage

A Florida mortgage is the biggest financial commitment most of us will ever make, and you need to take it very seriously. Mistakes could cost you tens of thousands of dollars in higher interest rates, or even disqualify you for loans. Here are some mortgage do’s and don’ts that you need to remember:

DO

  • Establish a credit history. In general, you’ll need at least three lines of credit with a minimum of two years of history on each. Many people avoid credit, but without documented credit, you’re at a disadvantage with lenders.
  • Make sure you’ve got two consecutive years of employment. Lenders want to know that you’ll be able to pay them back.
  • Figure out how much you can afford before you start looking. Getting pre-qualified or pre-approved can save you a lot of time and avoid disappointment.
  • Shop around for your mortgage. You wouldn’t buy a car or a computer without comparison shopping, so make sure you find the best deal.
  • Lock in your mortgage rate. An adjustable rate mortgage (ARM) can go UP as well as down, and that could cost you dearly. There are some situations where ARMs make sense, but make sure you know exactly what you’re getting into.

DON’T

  • Make late mortgage payments. These show up on your credit report and can disqualify you with some lenders. And though it typically goes without saying, don’t declare bankruptcy or foreclosure if you can possibly avoid it. You won’t get a mortgage for several years.
  • Apply for a mortgage without 12 months of documented housing history. Lenders want to know you have a stable track record for your housing. However, if you do not have 12 months of documented housing history, but instead have been putting that money into savings, that could replace the 12 months of housing history. For example, if someone lives with their parents and doesn’t pay rent, and has evidence of savings over that period of time (for a new home), would work.
  • Apply for a mortgage with collections and charge-offs on your credit report. Many of these things can be fixed. Check your report regularly and dispute any issues.
  • Open new credit cards or borrow large sums before and during your mortgage application process. Changes in your debts and/or income could disqualify you.
  • List your property for sale and then try to refinance when it doesn’t sell. Lenders will check Multiple Listing Services (MLSs) and they often don’t want to loan money on a property that you don’t actually want.

If you have questions about the things you should and shouldn’t do when shopping for a home, please browse our website, or call 407-733-6425. We can provide you with helpful advice and suggestions to help you navigate the home buying process and help you obtain a Florida mortgage. Call us today.

Buy or Rent a Home? That Depends on You

Buying versus renting is a complicated question for most people. Your decision depends very heavily on your immediate needs and future goals. But there are some things you should ask yourself before making the decision to obtain a FL mortgage:

Why Rent?

  • Do you need flexibility? As a renter, you can’t get “stuck” in an area any longer than your lease extends. And, in fact, you can break the lease or sublet if you absolutely have to move. For example, you may accept a new job you can’t pass up, or you may lose the job you currently hold.
  • Can you handle home maintenance? Typically, as a renter, you’re not responsible for maintenance and upkeep of the property.
  • Do you have bad credit? If your credit is tarnished, renting may be your only option. The good news is that on-time rental payments will help you rebuild your credit.
  • Are your savings limited? Renters typically only have to come up with the first month’s rent, the last month’s rent, and a security deposit. No down payment is required.

Why Buy?

  • Are you ready to settle down? Buying a house is a commitment, and selling and relocating can be time-consuming and potentially expensive. As a general rule of thumb, you should plan to stay in your property for five to seven years. That gives you the best chance to accumulate equity in the home.
  • Do you want to accrue equity? When you rent, you’re putting money in your landlord’s pocket. When you buy, your home actually becomes your property and adds to your personal net worth.
  • Do you want to personalize your home? Renters can only make limited modifications to the property. As an owner, however, you have complete control. You can paint, decorate, re-carpet, add rooms, or do whatever you want (subject to local ordinances).

Consider the Pros and Cons

As you can see, these questions aren’t always easy to answer, and the answers are different for everyone. Cost is always an issue – in some areas it may be cheaper to rent than own, while in others it may be cheaper to buy a home. You can deduct your FL mortgage interest and property taxes if you’re buying your home, which reduces the homeownership expense. However, you’ll be responsible for maintenance and repairs, which increases your costs. You may also need to pay homeowner association fees or other costs. However, with a fixed mortgage, your payments are locked in, and can’t be increased, unlike your rent.

If you’re weighing the pros and cons of buying versus renting, please browse our website, or call 407-733-6425. We’ll review your financial situation and help you review your options and make the decision that’s right for you.

Tips for Central Florida Homebuyers

The housing market in Central Florida is looking up, according to OrlandoRealtors.org, home sales shot up by 22% in August 2015, and the median home value has increased by 11% to $182,000. If you’re among the many people currently shopping for a home, here are some tips to help you:

  • Check Your Credit: A solid credit score could save you thousands of dollars in interest over the life of your mortgage. Your score is calculated by the major credit-rating agencies (Experian, TransUnion, and Equifax) based on your credit history. Borrowers with low scores usually face higher interest rates. Order a free copy of your credit report, and check it for mistakes.
  • Save up Your Down Payment: A substantial down payment saves you money by reducing the amount on which you’ll be paying interest. If your down payment is 20% or more, you may also be able to avoid private mortgage insurance (PMI). And the less you owe on your house, the more easily you’ll be able to sell it if you need to relocate.
  • Get Preapproved: A mortgage preapproval shows sellers that you’re a legitimate homebuyer. More importantly, it shows you how much you can afford, so you’re not wasting your time with homes that don’t fit your budget.
  • Plan for Your Home: Think about exactly what you need from a house. It’s tempting to get the biggest house you can afford, but that may not make sense for you. Remember, you’ll be responsible for maintenance and upkeep, and you’ll be paying for any major repairs your home needs. A popular rule of thumb says you should set aside 1% of your home’s value each year for ongoing maintenance. So if your house costs $180,000, you should plan to spend $1,800 annually on maintenance.
  • Research, Research, Research: A home is probably the biggest purchase most people will ever make. It only makes sense to research locations, schools, roads and transportation, local amenities, crime rates, and anything else that will affect you. You’ll also need to research your mortgage options, particularly if you qualify for Federal Housing Administration (FHA) or Veteran’s Affairs (VA) mortgages, down payment assistance, or other programs.

Talk to the Experts

If this seems like a lot for you to handle, talk to the experts. At Embrace Home Loans, we’ve worked in the Central Florida real estate market for years, and we can help you review your options and plan your purchase. Call us at 407-733-6425, or browse the Embrace Home Loans’ blog for more information.

Buying a Home in Florida: How Much Income Do You Need?

Home sales are growing, and home prices are increasing. In fact, according to the National Association of Realtors®, in July existing home sales in the South increased by 4.1% annually, and the median house price in the South was $203,500, up 7% from a year ago.

With home sales on the upswing, many people are considering home ownership, and wondering how much income they need to qualify for a Florida mortgage. It’s a good idea to get pre-qualified before you start shopping for a new home, and your mortgage lender will ask you questions about your employment and finances to help you find out how much home you can afford.

Crunching the Numbers

Generally speaking, your housing expenses (which include your mortgage payment, insurance, and property taxes) should not exceed 28% of your gross income. This rule isn’t absolutely fixed, and your lender will also look at other long-term debts, like car or college loans. Ideally, your lender will want your total debt-to-income ratio to be 36% or less of your gross income.

Let’s look at a simplified example. Assume you’re looking at a house that is exactly the current median value for homes in the South, $203,500. You’ve saved up a 5% down payment, $10,175. So you need to borrow $193,325, and you find a 30-year mortgage at 4.5% fixed-rate interest. If you have no significant debt liabilities, your required annual income would be $41,981, and your maximum monthly payment (including principal, interest, tax, and insurance) would be $979.55. It can get complicated to calculate these numbers, but there are a number of online calculators you can use.

Altering the Variables

Any other debt would change that picture. If you have a car payment of $350 each month, with a student loan payment of $200, your required annual income would go up to $50,985, with a monthly payment of $979.55.

Any of these variables are subject to change, of course. An FHA loan may require less than a 5% down payment, for example, or you may have found a lower interest rate. You may have additional debt, like credit cards, but you also may have a co-borrower who has his or her own income. You may be able to provide a larger down payment. All of this information will factor into the income you need to qualify for your mortgage.

Talk to Your Lender

While all this may seem intimidating, particularly if you’re a first-time home buyer, your mortgage lender can help. An experienced mortgage lender will help you organize your financial information and work with you to reach a monthly mortgage payment that you can afford. At Embrace Home Loans, we work with Florida home buyers every day to help them find a Florida mortgage that meet their needs. Call us at 407-733-6425, or browse our website to find out more.