Category Archive: Florida Mortgages

Don’t Miss Out on Your Mortgage! Here Are Some Dos and Don’ts

Many people don’t realize their Florida mortgage loan can be denied, even if they’ve been pre-approved for it. In fact, the only time you can be certain your mortgage is approved is when you actually close the loan.

Some people get confused by commonly used mortgage terminology. Getting pre-qualified for a mortgage is not the same as getting pre-approved. When your lender pre-qualifies you, the lender simply looks briefly at your overall financial situation and then provides a number that they might be willing to loan you. The pre-approval process is much more in depth, and the lender looks at your credit report, verifies your income, and so on. But neither of these things guarantees your loan.

The pre-approval process can help you identify any problems with a Florida mortgage approval, help you get a real estate agent (many won’t work with people who haven’t been pre-approved), and help you focus on houses you can afford. But if your financial picture changes between pre-approval and final approval, you could be denied the loan. And with today’s low rates and lots of people buying homes in Florida, the time between pre-approval and closing could be even longer.

Changes include things that affect your credit score, or changes in income, assets, or debt levels. So, what should you avoid while waiting to close?

  • Don’t tap into your savings, transfer large sums between accounts, or make random, undocumented deposits into your accounts.
  • Don’t switch jobs. This includes moving from salary to commission or other things that affect your paycheck (raises are okay).
  • Don’t take on any new debt, like credit cards or new cars.
  • Don’t accept cash gifts without the right paperwork (talk to your loan officer first).
  • Do pay your bills on time, even if you are disputing them.
  • Do continue to save as much as possible, in case you run into other unexpected expenses. Some things may be outside your control, like losing your job or having medical expenses. You may have to buy a new appliance, make emergency home or auto repairs, or face other unexpected issues. In general, though, check with your lender first to see how these expenses might affect your loan approval.

If you’re planning on buying a home in Florida, check with Embrace Home Loans. We’ll help you with the pre-approval process, and we’re always available to answer your questions while you’re waiting to close your Florida mortgage. Call us today at 407-733-6425.

Could a Smaller Jumbo Mortgage Be an Option?

With home prices on the rise and as the market recovers from the mortgage crisis of 2008, more people are looking for larger mortgage amounts. The Washington Post reports that 23.5 percent of mortgage loans in 2014 were jumbo loans, and jumbo mortgages were up 9.8 percent in the first quarter of 2015.

The answer for some people may be smaller jumbo loans. Smaller jumbo loans sound like an oxymoron, like “jumbo shrimp.” The term, however, applies to loans that fall between the normal conventional loan limit, $417,000, and the traditional starting point for jumbo loans, about $625,500. The reason these loans exist is that, in certain high-cost geographic areas, the normal conforming limit set by the FHA is increased. In Florida, the 2015 conforming loan limit for Collier County is $448,500, and for Monroe County, it’s $529,000. These loans may also be called “conforming jumbo” loans, “agency” loans, or “high balance” loans because they still conform to Fannie Mae and Freddie Mac guidelines for purchase.

Different Standards

Typically, non-conforming jumbo loans (those that exceed the conforming loan limits) require higher credit scores than conforming loans and a standard 20 percent down payment. That’s because the mortgage company must keep the loan on their own books rather than sell it to Freddie Mac or Fannie Mae.

Conforming jumbos, however, can still be backed by government agencies and borrowers typically pay lower interest rates, have lower down payment requirements and have lower qualification requirements (these requirements vary from lender to lender). So a first-time home buyer in Monroe County who can choose between a conforming and non-conforming loan for $529,000 might very may well choose a conforming loan backed by the FHA with a 3.5 percent down payment, rather than a 20 percent down payment. A veteran eligible for a VA loan might choose a conforming jumbo VA loan.

Know Your Options

The differences between conforming and nonconforming jumbo mortgage loans can be complex, so it’s a good idea to research your mortgage options. At Embrace Home Loans, we are experts in jumbo mortgages and can help you understand what financing may be available to you. Please browse our website for more information, or call 407-733-6425, and we’ll answer your questions about mortgages in the Sunshine State.

How Does Divorce Affect Your VA Loan?

A mortgage loan guaranteed by the Department of Veterans Affairs (VA) is a valuable benefit for veterans. VA loans allow veterans to buy homes without down payments or paying for private mortgage insurance (PMI). While spouses cannot take advantage of a VA mortgage by themselves, they can contribute income and also be listed on the loan with an eligible veteran

What happens, though, if the veteran and the spouse divorce? Decisions will need to be made. An ex-spouse can only stay the home that’s financed with a VA loan as long as the veteran remains on the loan. That also means the veteran is liable if the loan doesn’t get repaid, which may be an issue for the divorcing couple. The veteran may be only eligible for one VA loan at a time, so if he or she allows the ex-spouse to stay in the VA-financed home, he or she will need to use other mortgage options to buy another home. Sometimes, there can be Entitlement left over which can be used. That is why a licensed mortgage broker can help you fully explore all your options.

Refinancing or selling are options

If the ex-spouse keeps the home and wants to get the veteran’s name off the loan, he or she will need to repay the VA loan in full, most likely by selling or refinancing the home. That will restore the veteran’s full benefit.

If the veteran stays in the home and wants the spouse off of the loan, he or she can use the VA refinance program, provided he or she has sufficient income to afford the home. The VA refinance program is a streamlined refinance which doesn’t require income documentation or a full credit report.

The divorcing couple could also sell the home and simply split the equity. The veteran would be able to use the VA loan program again to purchase another home.

Changes in income

Of course, divorce typically means there will be changes in income. Anytime your financial situation is altered, it can affect your ability to get a VA loan approved. If a two-income family is reduced to one income, it could become harder to meet the VA’s debt-to-income (DTI) ratio. Also, VA loans require a specific residual income, defined as the amount left over after the homeowner has paid his or her monthly bills. Sometimes called “discretionary income,” this requirement is unique to VA loans and varies by location and family size. For example, in Florida, the residual income requirement for a family of one is $441. For a family of five, it’s $1,039.

Paying alimony and/or child support will obviously reduce the veteran’s income, making it harder to meet DTI and residual income requirements. On the other hand, if the veteran is receiving alimony and/or child support, that can help meet those requirements. Mortgage lenders can’t require you to give them information about receiving alimony or child support, but if you willingly disclose this income, it can count toward qualifying for a VA loan. Different VA lenders handle this type of income differently, so you’ll need to work with your lender.

Talk to the experts

Divorce is a difficult and challenging process, and deciding what to do about your home makes it even more difficult. If you have a VA mortgage and are divorcing your spouse, contact the mortgage specialists at Embrace Home Loans. We can help you evaluate your options and work toward a resolution. Please call 407-733-6425 for more information.

Get the Best Rates on Jumbo Loans with These Tips

Jumbo mortgages are any mortgage loan over the conforming loan limit set by the Federal Housing Finance Agency (FHFA). Currently, that limit is set at $417,000 in the contiguous United States. So, if you’re borrowing more than that to finance a house, you’re looking for a jumbo mortgage.

In a lot of Florida markets, $417,000 won’t get you very far. According to the Coldwell Banker Home Listing Report, the average home price in Palmetto Bay is $499,559, with Weston following at $462,636, Fort Lauderdale at $453,155, and Davie at $437,092.

Fortunately, jumbo mortgages are widely available, but they are generally more expensive than conforming loans. That’s because conforming loans are often backed by government agencies like Fannie Mae, Freddie Mac, the Office of Veteran’s Affairs (VA), or the Federal Housing Authority (FHA). Mortgage loans backed by the government are less risky, so lenders charge lower interest rates.

Tips to Reduce Your Rates

If you’re in the market for a jumbo loan, what can you do to make sure you get the best rates? Here are some ideas:

  • Make a Bigger Down Payment. The best way to lower the risk to your lender is to put as much cash down as you can. A 20 percent (or more) down payment can significantly lower your rates.
  • Submit a Squeaky-Clean Mortgage Application. Scrutinize your mortgage application carefully, and make sure it’s accurate. Get your credit report and check it carefully. The better your credit is, the better your interest rates will be.
  • Use a Licensed Mortgage Broker. A broker can help you find the best possible deals for your mortgage, and increase your options.
  • Shop Around. Jumbo mortgages are private-market lending, and every lender will have different terms and rates. With the help of your broker, compare as many loan options as you can.
  • Compare Closing Costs. Some lenders may offer lower rates but will try to make it up by charging higher closing costs and fees. Compare fees and costs just as carefully as you compare interest rates.

Get Our Perspective

At Embrace Home Loans, we can help you shop around for a jumbo mortgage that meets your needs while keeping your interest rate down. We’re experts in the Florida real estate market, and we’ll work with you to find the financing you need. Call us at 407-733-6425, or browse the rest of our website for more information.

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.

How to Clean Up Your Credit to Qualify for a Florida Mortgage

You probably know that it’s a good idea to check your credit report when you’re planning on making a big purchase, like a house. However, that really isn’t enough for most people. Mistakes on your credit report can take months to correct, and that means your purchase could be delayed or even completely derailed if your lender doesn’t like what’s on your report.

    • Start by Requesting Your Credit Report: The three major credit agencies, Equifax, Experian, and TransUnion, are required to provide you with a free credit report every year. You can easily request them online. You can request one from each company, or all three at once. If you’ve never done it before, you should probably request all three at once. People who are familiar with their reports often space them out, ordering one every few months, to keep tabs on their credit.
    • Check Your Personal Information: It seems obvious, but many people don’t verify their names, address, Social Security numbers, and account numbers.
    • Verify Your Accounts: Make sure that every account is actually yours and doesn’t belong to someone else. Check all the balances as well; an unusually high balance could be a simple mistake, or something more serious, like identity theft.
    • Watch for Old Information: Negative credit information (including Chapter 13 bankruptcies) stays on your report for seven years, and Chapter 7 bankruptcies stay for 10 years. With Chapter 13 bankruptcies, you repay at least a portion of the debt, so they are removed sooner. If there’s old negative information on your report, ask to have it removed. Closed accounts in good standing, though, don’t need to be removed. They can help your credit score.
    • Double-Check Double Entries: If one of your accounts has been sold to a collection agency, it could show up on your report twice. If it was resold several times, you may have several entries.
    • Dispute the Errors: All the credit agencies have online dispute forms, which is usually faster than phone calls or postal mail. If that fails, you may need to contact the lender directly, but start with the credit agency. Follow up to make sure the correction was made, and document any conversations you have with the credit agency or lenders.
    • State Your Case: If you disputed an item and it wasn’t resolved, you can add a 100-word consumer statement to your credit file, explaining disputes or problems. Anyone who looks at your file will see your explanation.
    • Making the Grade: If you’ve corrected your credit report, you should receive a free copy of the correct report. In addition, the credit agency must send corrected reports to anyone who inquired about your credit in the last six months. Cleaning up your credit report can help your score, which in turn will improve your ability to qualify for a mortgage loans and help get you a better interest rate.

 

 

If you need more information about your credit score, your credit report, or qualifying for a mortgage, call Embrace Home Loans at 407-733-6425, or contact us online.

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.