Category Archive: Top Stories

Benefits of Home Ownership

Many people who are renting homes or apartments in Brevard County want to eventually qualify for a Brevard County mortgage and buy their own homes. There are many benefits to owning a home, even beyond having a place to live.

It’s a Good Investment

According to Zillow.com, Brevard County home values have increased by 11.4 percent over the last year and are projected to continue to increase by 4.1 percent next year. That’s a significant return on your investment.1 Furthermore, when you’re paying for a home, you’re building equity every time you make payments. Renters aren’t accumulating any wealth. When it’s time to sell, your options for a new home will be much greater than if you would have continued renting.

It Gets Easier

Mortgage payments typically don’t increase, as long as you have a fixed mortgage. Rent, on the other hand, tends to go up steadily. In that case, even if you’re making more money, you’re paying more in rent. Because mortgages are steady, they are easier to plan for. As you grow in your career, paying for your home will likely take up a smaller portion of your budget.

It’s Yours

There is nothing like putting your personalized touch on the property you are living in. If you want to redecorate or renovate, that’s up to you, not your landlord. If you have specific preferences, like taller countertops or a walk-in shower rather than a tub, nothing will hold you back from implementing them.

It Provides Tax Breaks

In general, mortgage interest is tax-deductible, and mortgage insurance and property taxes may also be deductible, reducing your tax bill. Also, the tax breaks are bigger in the early years of your mortgage when you’re paying more interest.

It Improves Your Credit

Landlords don’t often report rental payments to the major credit reporting agencies, but regular mortgage payments will drive up your credit score. When purchasing other items, like a new car, your credit will reflect your responsible mortgage-paying habits.

If you’re currently renting but want to experience the benefits of home ownership, call Embrace Home Loans at 407-733-6425. We’ll work with you to qualify you for a Brevard County mortgage and help get you into a home you love.

1 http://www.zillow.com/brevard-county-fl/home-values/

Why VA Home Loan Use Continues to Increase

The home loan guarantee program overseen by the Office of Veterans Affairs (VA) was created in 1994 as part of the GI Bill. The reason for VA mortgages is that veterans don’t have an opportunity to build savings and establish credit while serving, which makes it difficult for them to get conventional mortgages. Since that time, the VA mortgage program has guaranteed over 22 million home loans, and that total is increasing steadily. In fact, VA purchase and refinance mortgages have increased from about 135,000 loans per year before the recession (2005/2006) to more than half a million loans each year in 2013 and 2014.1

Why are VA mortgages so popular?

Available only to eligible active-service military and veterans, VA mortgages have a number of advantages over other mortgage programs:

  1. Because the loans are guaranteed by the federal government, VA mortgage rates tend to be lower than those of conventional loans. That can save a borrower thousands over the life of the loan.
  2. No down payment is required as long as the purchase price of the home doesn’t exceed the appraised value. That makes it easier for qualified veterans to buy a home.
  3. No private mortgage is required on most VA loans, which saves borrowers even more money.
  4. Closing costs are strictly limited.
  5. Credit qualifications are more lenient than those for conventional loans.

How do you find a VA mortgage?

The VA doesn’t actually lend money to qualified veterans. Instead, it partially guarantees the VA mortgages and VA refinancings that are made by private mortgage lenders. Because of the guarantee, those private lenders can offer better terms for VA mortgages than for conventional loans. VA loans can be used to buy or build a primary residence (not a second or vacation home) or can be used to refinance existing mortgages. Moreover, you can use your VA mortgage entitlement over and over, as long as you pay off each loan. If you’re a veteran and are thinking about buying or building a home, call Embrace Home Loans at 407-733-6425. We can help you use your VA mortgage benefit to make your dream of home ownership a reality.

1 http://www.ruralhome.org/storage/documents/publications/rrreports/rrr-vethomeloanmortgage.pdf

Traditional versus Non-Traditional Credit

If you’re trying to get a Brevard County mortgage, you’ll need to prove that you can handle it by showing a solid credit rating. Typically, mortgage lenders pull credit reports from the three main credit reporting bureaus – Experian, TransUnion, and Equifax – and use the middle score as your qualifying credit score. This is called a “tri-merge credit report,” and it’s the traditional way to provide a very clear picture of your creditworthiness.

But what happens if you don’t have much traditional credit? Traditional credit includes credit cards, bank loans, auto finance companies, and mortgage lenders, all of which report your payments to the three main credit bureaus. However, many people have non-traditional credit, which doesn’t show up on the traditional credit reports. And that means your Brevard County mortgage application could be questioned.

What types of non-traditional credit might you have, and how can you get your mortgage lender to consider it? One way is to document your payment histories.

Here are some tips:

Rental Payments

Often, single-family rental homes are owned by individuals who don’t report rent payments to the credit bureaus. If you’re in that situation, pay your rent by check, and keep at least 12 months of canceled checks that you can show to lenders. If you haven’t done that, check with your bank. You can obtain copies of canceled checks if you need them, and if you use online banking, you may be able to access them easily at no charge. If you pay with cash, get a receipt (which you should do anyway) and keep at least one year’s worth.

Utility Bills

While credit reports are increasingly including power, cable, and telephone payment histories, it’s a relatively new development. Again, keep one year of canceled checks to prove you’ve made all your payments, or check with your bank to verify how you can document your payments. Document cash payments with receipts.

Savings Deposits

A pattern of regular saving can also be considered when you’re applying for credit. Periodic wage deposits into a savings account can be documented to prove financial responsibility.

Check Your Credit

You can request a free credit report at www.annualcreditreport.com, and check it to see how your credit stacks up. Make sure you dispute any errors and omissions with the credit reporting agencies.

If you’ve got a “thin” credit file, check with your Brevard County mortgage lender, and ask if you can provide non-traditional credit documentation. At Embrace Home Loans, we’re experts in mortgage lending. We can help you review your credit and determine if you can qualify for a mortgage with non-traditional credit. Call us today at 407-733-6425.

Qualifying for a Jumbo Loan

More and more Florida mortgage lenders are now willing to offer jumbo loan mortgages to borrowers who are trying to finance larger homes. A jumbo mortgage is one that exceeds the “conforming loan limits” set by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. These limits represent the loans the GSEs are willing to purchase from approved mortgage sellers. In Brevard County, like most of the country, the conforming loan limit is $424,100 for a single-family home. The limit is higher in some more expensive counties, like Monroe County ($529,000) and Collier County ($450,800). A mortgage loan that exceeds those limits is called a jumbo loan.

After the 2008 financial crisis, many lenders reduced the amount of jumbo loan mortgages they would issue, but now that the market has improved, jumbos are also making a rebound. In the past, jumbo loans had much higher interest rates than conforming loans, but jumbo rates have been dropping down closer to, and sometimes lower than, conforming loan rates. Overall, jumbo loan mortgages are becoming easier to manage.

Making the Grade

While jumbo loan mortgages are increasing, the rules for qualifying for a jumbo loan are pretty basic. To qualify for a jumbo loan today, you will probably need:

  • A minimum 20 percent down payment, keep in mind some lenders allow as little as 10 percent down payment.
  • A credit score of 720 or higher, though some lenders allow scores as low as 620
  • Thoroughly documented income
  • Your new monthly mortgage debt and other monthly debts should not exceed 43% of your gross monthly income.

Shop around

Just because one lender turns you down, that doesn’t mean you can’t get a jumbo loan mortgage. Requirements and interest rates for these “portfolio loans” can vary between lenders, so it’s a good idea to check with more than one lender. If you’re planning to finance a larger home, Embrace Home Loans has extensive experience with jumbo lending. We can help you get the financing you need to make your dream home a reality. Call us at 407-733-6425.

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.

Benefits for Veteran and Military Homebuyers

People who serve our country make many sacrifices. One benefit that they earn through their service is access to VA mortgages, which are home mortgages guaranteed by the Office of Veterans Affairs (VA). The VA loan program helps make buying homes more accessible to veterans and their families and offer many benefits including:

  • Flexible credit requirements
  • No down payment requirement
  • Lower interest rates
  • Limited closing costs
  • No mortgage insurance requirement

VA loans are available for people who have served 90 days of active duty during wartime, 181 days of active duty during peacetime, or at least six years in the National Guard or Reserves. One important point about VA mortgages is that military personnel who are currently deployed can still take advantage of the program now, rather than waiting until they are discharged.

VA mortgages do have some restrictions, but there are ways that active-duty personnel can address those restrictions. Since these loans are focused on getting VA borrowers into homes in which they’ll live full-time, you are required to live in the house you buy. But for active-duty military, a spouse and/or children may be able to fulfill the occupancy requirement.

Active-duty military members who receive a monthly basic allowance for housing (BAH) can use this money to qualify for a VA mortgage. In addition, active-duty personnel who have a VA loan and are facing financial stress can take advantage of the Servicemembers Civil Relief Act (SCRA) which protects active-duty military and their families from rising interest rates, foreclosure, eviction, income tax payments, and other unexpected challenges. Active-duty personnel can find out more about the SCRA from their local Armed Forces Legal Assistance office.

Military personnel who are currently deployed away from their families and aren’t available to manage the loan process can typically assign a specific power of attorney to a member of their family, allowing that person to sign loan documents and complete the loan process.

If you’re active-duty military who would like to find out more about getting a VA mortgage, contact Embrace Home Loans today at 407-733-6425. As a VA lender, we can help you with the process of getting a VA loan and put you and your family on the path to homeownership.

Five Ways to Become More Creditworthy in 2017

If you’re planning on applying for a Florida mortgage, your credit score is going to strongly affect the success of your application, the interest you pay, and the down payment that may be required. Many people don’t know how their credit scores are calculated and don’t understand how their actions can affect those scores. In fact, there are five categories involved in your credit score. Let’s look at the categories and what you can do to improve them.1

Payment History: 35 Percent of Your Score

The best way to affect this portion of your score is to pay your bills on time. Rent, car payments, credit card bills, and any other important bills will affect your credit rating if you pay them late. Consider signing up for online bill payment rather than mailing checks – it’s faster and more secure. If you have trouble remembering, you can create reminders or have funds automatically withdrawn to pay your bills.

Amounts Owed: 30 Percent of Your Score

Don’t max out your credit cards! Keep your balances low and pay more than the minimum payment. But be careful – don’t close unused credit cards. That can actually lower your score (see below).

Length of Credit History: 15 Percent of Your Score

This is why you don’t want to close unused accounts – that can lower your average account age. By the same token, don’t open lots of new accounts, because that will also reduce your average.

New Credit: 10 Percent of Your Score

Don’t apply for every credit card that offers a good deal. Your score will be lowered by a flurry of new credit applications. If you don’t have credit, you’ll need to open some new accounts and pay them off responsibly to raise your credit score over the long term.

Credit Mix: 10 Percent of Your Score

In general, having a mixture of types of credit, like credit cards and installment loans, and making timely payments, will improve your score. For example, someone who has a car loan but no credit cards will have a lower score than someone with both a car loan and credit cards, if they’re both making regular payments. But don’t run out and open lots of credit card accounts – it won’t help your score in the short term.

At Embrace Home Loans, we understand how your credit score can affect your ability to get a Florida mortgage, and we can help you “put your best foot forward” when you’re ready to buy a home. For more information, contact us today at 407-733-6425.

1 http://www.myfico.com/credit-education/whats-in-your-credit-score/

Four Myths About VA Mortgages

Home mortgages guaranteed through the Department of Veterans Affairs, better known as VA mortgages, are one of the best ways for qualified veterans and military families to finance the purchase of a home. In fact, more than 630,000 veterans took advantage of the VA loan program in 2015, and another 415,000 have already used their loan benefit as of May of this year.1 With a program this popular, it’s hard to understand why some eligible veterans might not apply for a VA mortgage. Let’s look at some VA loan myths that might keep veterans from using their loan benefits:

VA loans are more expensive: In fact, nothing could be further from the truth. VA mortgages were designed to help veterans purchase homes. The fact that VA loans are guaranteed helps keep their interest rates low. According to the September 2016 Ellie Mae Origination Insight Report2, the average 30-year rate for a VA loan was 3.52 percent in September, compared to 3.73 percent for FHA loans and 3.81 percent for conventional loans.

VA loans are slow: Again, this simply isn’t accurate. VA loans that closed in September took an average of 51 days, compare to 49 days for FHA loans and 48 days for conventional loans, according to Ellie Mae. In fact, Embrace Home Loans is known to close VA loans in under 30 days

VA loans are risky: This myth stems from the fact that VA loans don’t require a down payment. In fact, VA loans have the lowest foreclosure rate of any mortgage, according to the Mortgage Bankers Association.3 As of the first quarter of 2016, only 1.24 percent of VA loans were in foreclosure. In contrast, 2.41 percent of FHA loans and 1.63 percent of conventional loans were in foreclosure.

VA loans require perfect credit: Again, VA loans are intended to help veterans, so they have much more flexible credit guidelines. Ellie Mae says the average FICO score for a VA loan to purchase a home in September of this year was 708, and many lenders will accept scores as low as 620.

Separate fact from fiction

At Embrace Home Loans, we’re experts in VA mortgage lending. We can help you understand your VA mortgage benefit, and we’ll work with you to get the financing you need for your new home. Call us today at 407-733-6425 and get the facts about VA mortgage loans.

1 http://www.benefits.va.gov/HOMELOANS/documents/docs/2016_newsletter.pdf

2 http://www.elliemae.com/origination-insight-reports/Ellie_Mae_OIR_SEPTEMBER2016.pdf

3 https://www.mba.org/2016-press-releases/may/foreclosures-continue-to-decrease-delinquencies-flat

Four Ways to Tell if a VA Loan is Right for You

Mortgage loans guaranteed by the Department of Veterans Affairs (VA), or VA mortgages, offer a number of incredible benefits including no down payment, no mortgage insurance, flexible underwriting, and limits on closing costs and fees. Other mortgage options typically can’t match these benefits. If you’re a Florida home buyer, how can you tell if a VA loan is right for you?

You’re eligible: For starters, you have to be eligible. Typically, that means you’ve served in the military for 90 consecutive days during war, 181 consecutive days during peacetime, or at least six years in the National Guard or Reserves. There are some other beneficiaries, like surviving spouses or cadets at different military academies, so you should double-check if you think you might be eligible. You’ll need to get a Certificate of Eligibility (COE) from the VA, but lenders will often help you get the COE.

You plan to live in the home you buy: The VA loan program is for people who plan to live in the homes they buy full-time. You can’t use VA loans to buy investment property or vacation homes. However, in some cases, your spouse may be able to fulfill this requirement.

You don’t want to make a down payment: The main benefit of a VA loan is buying a home without a down payment. You also won’t have to pay mortgage insurance. If you want, you can certainly make a down payment. But it’s not required.

You don’t want a fixer-upper: VA loans require safe and structurally-sound houses, and there is an appraisal process to verify that the home you’re buying meets the minimum property requirements. So, you can’t buy a fixer-upper property with a VA mortgage.

Learn more about VA loans

If you fit the profile outlined about, give Embrace Home Loans a call at 407-733-6425. We’re experts in VA mortgage lending, and we’ve helped veterans in Florida determine their eligibility and obtain VA loans. We’d be happy to answer your questions and work with you to get the financing you need for your home.

Challenges First-Time Home Buyers Face

First-time home buyers are on the rise. According to Realtor.com1, in August of 2015, 35 percent of buyers said they were first-time buyers. Jump forward to August 2016, and 51 percent of buyers identified themselves as first-time buyers. But buying a home and getting a Florida mortgage for the first time comes with a unique set of challenges. Here are some of the things first-time buyers in Florida will face:

  • Down payments: The biggest challenge faced by most first-time buyers is coming up with enough money for a down payment. For conventional mortgages, many first time buyers believe they need to come up with a 20% down payment. On a $200,000 house, that’s $40,000. However, if those same buyers pursued a mortgage that’s insured by the Federal Housing Administration (FHA), they only need a down payment of 3.5 percent. On a $200,000 house, that’s $7,000. In fact, well qualified first time buyers can consider a Conventional loan with as little as 3% towards down payment.
  • Credit scores: Mortgage lenders depend on your credit score to determine who will get mortgage loans and what rate they’ll be charged. FICO scores range from the high 300s to the low 800s, and first-time buyers often don’t have long, established credit histories. That can mean a lower score. Lower credit score buyers should consider the credit flexible FHA loan approach and perhaps even compare it to a Conventional mortgage option, although conventional programs generally require stronger credit profiles and scores.
  • Employment history: Mortgage lenders prefer borrowers who have worked for the same employer for at least two years. This can be a problem for first-time buyers, who are still establishing their careers and may have changed jobs recently. Some first time buyers may qualify for an FHA with as little as 6 months with current employer.

Know your options

At Embrace Home Loans, we work with all kinds of borrowers in Florida, including first-time buyers. We can suggest strategies that will help you meet the first-time buyer challenges, including:

  • Low-down-payment mortgages or down payment assistance programs: In addition to FHA loans, which require a lower down payment, there are a number of down payment assistance programs available in Florida.
  • Financial organization: You can improve your FICO score by staying organized, paying your bills on time, and double-checking your credit for errors.
  • Steady income: While mortgage lenders like to see steady employment, many will overlook a short job history if you can show a steady source of income that will cover your mortgage payments.

Find out more

If you’re a first-time home buyer looking for your Florida mortgage, contact Embrace Home Loans at 407-733-6425. We’re experts in mortgage lending, and we can review your financial situation and help you find ways to improve your credit, locate a loan that’s right for you, and find a new home.

1 http://www.realtor.com/news/trends/first-time-home-buyers-face-different-challenges/?is_wp_site=1