Florida Real Estate Blog

During the real estate boom of the last few years, a brand new problem began cropping up on a regular basis whenever a lender had to foreclose on a defaulted mortgage. Every Tom, Dick and Harry with no money and no credit, but ready access to late night television suddenly wanted to “flip” houses.

There is a very real market service being provided by legitimate investors who buy distressed property, restore it to market standards and sell it through an arm’s length market transaction. Unfortunately, these investors flooding the market didn’t quite fit that description. They would make an offer on a property having no possible way to finance it or to pay cash and then go in and sweep it up and mop a little before the closing. Simultaneously, they would find some sap who didn’t really understand what was going on, agree to pay all their closing costs and down payment assistance, and get them qualified for an FHA loan. Next would follow a set of back to back closings where they would buy the property and sell it to the new buyer without ever having put up any money of their own. Often at double the price they paid originally!

These “investors” would give the new purchaser such easy terms - even in a seller’s market - that prospective homeowners would be lining up around the block. The problem was that after this had been going on for several years, many of these new home owners started defaulting on their mortgages and HUD would be required to pay off the lenders from the FHA insurance fund. These are the HUD homes advertised in the weekend papers. The giant problem developed when HUD tried to sell these houses. Turns out the appraisals on the properties were ridiculously inflated, so HUD was taking huge losses when selling the properties. This put the entire FHA program in danger.

Thus several years ago, HUD implemented their “anti-flipping” rule. Now any house that had changed owners within the previous 90 days was absolutely ineligible for any FHA financing. The goal of this rule was to make sure that homes were being sold by legitimate investors who were taking the time to actually bring the property value up before selling it and making a killing.

As is usually the case when HUD takes action, they created another problem with their solution. The new rule contained no exception for foreclosure homes being sold by the lender. This blocked out a huge group of buyers from the market and helped lower values even further. In 2006, HUD changed the anti-flipping rule to allow FHA financing on homes being sold by government sponsored enterprises and federally chartered institutions. The rule was left in place for all other sellers.

So now we are up to date. The subprime market has tanked. New foreclosure records are being set each month. Many thousands are losing their homes. At least there is hope. Many potential first time home buyers can now take advantage of this drop in home prices while FHA interest rates are down.

Smart real estate agents and mortgage originators who are up to date on guidelines release these nervous potential home owners out into the market. As they visit these foreclosed properties, they always ask whether the present owner is eligible for that financial institution exception. The lender’s real estate agent will say honestly that this home is definitely still owned by the bank and the bank is an exempt institution. Everyone completes the negotiations and gets all the right signatures to put the buyer’s mortgage in process. Everything is wonderful up to this point. As normally happens, the title examination results are faxed over to the processor and look fine at first glance. Then while double checking the details, the mortgage processor notices that the owner named on the title policy doesn’t exactly match the contract. Very similar, but not an exact match. So a call is made to the attorney/title company’s office and the processor finds out that now a subsidiary company of the foreclosing now owns the property. A fairly common practice lenders employ in managing their real estate owned portfolio.

These subsidiaries of the lenders often obtain title to the property many months after completion of the original foreclosure. The trouble is, they are not exempt from the anti flipping rule and have usually owned the property a month or less. No one in the lender’s office, or the attorney’s office every tried to mislead the buyer, but now that buyer who must move out of an apartment in a few days, must wait 60 more days to close on and move into their new house.

Loan officers must be sure to warn real estate agents and potential new home owners, about this rule. Be sure that everyone goes far above and beyond the call of duty asking questions about the chain of title of the home before setting any dates on the sales contract. This situation doesn’t cause much difficulty if caught at the beginning and planned for, but can be absolutely devastating if this detail is missed.

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The beginning of this decade saw a real estate market so hot that you barely had to mention you were thinking about selling your home to get offers rolling in. Well, those days are long gone. Now you need to focus on the details to get your home sold.

I am going to assume you have taken the necessary steps to make your home attractive to sellers. You know. Cut back the jungle in your yard. Fixed anything that needs repairs and such. Okay, so let’s talk about an aspect of marketing.

This is the digital age. This means you should be posting your home on real estate sites like FSBOAmerica.org. That doesn’t mean you should ignore the basics, however. They still can make or break the sale of your home.

Using real estate signs to market your home is an old, but good, technique for generating buyer interest. Yes, those signs on telephone polls. They always generate interest even if many sellers fail to realize as much.

Most people think buyers only look at singular homes. How quickly we all forget. When we were buyers, what did we look for first? Not homes. We looked for areas that were good investments.

When buyers find an area they like, they will drive it. Always! When they are driving the neighborhood, they are very attentive. You’ve seen them in your area. They are the drivers that lurch to across the street to read a for sale sign!

The eyes are said to be a path to the soul of a person. Your signage is a path to your home. Your space is limited, so make sure to provide basic information including beds, bathrooms, price and contact information.

Keep in mind that your general for sale sign is not used to generate sales. Instead, the only purpose of the sign is to get the potential buyer to drive by the property. When they do, you’ll have another type of sign to snag them.

When selling your home, you should have a stand alone sign on the front lawn. That sign should have the basic information, but also a plexiglass box. The box should contain brochures with a full profile of your home and pictures.

Take a second and think about what those old real estate signs have done. A person who had no clue your home was for sale now has a brochure in their hand. What did it cost you? A couple bucks for signs and some time. That’s it.

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The mortgage market has changed but for many, it has gotten better. Most folks don’t know this. Interest rates have come down. Tell your friends and neighbors and be happy. Now, for those of us currently without jobs, or those that have some credit issues and no money down, the approval requirements have become a bit stricter as they should. On the flip side, new first time buyer programs have evolved that are absolutely fantastic and even offer below market interest rates. Even with all these good things happening, we find that there are many folks out there right now paralyzed by the negativity of the press. We term this analysis paralysis! Folks want to buy or refinance a home, or investment property but are scared. They don’t realize how good we have it here, especially in the RTP area which is really a bright light in the USA right now. This is a great market here. People think “I am not sure I want to sell my home right now but I really do want to buy a new home..” They may not really realize they can buy that bigger home and get a really good deal on the next house and the mortgage right now. The home they are buying is more expensive than the home they live in currently, this can be a good leverage advantage. The other thing to consider here in the RTP area is consider keeping your home, renting it and buying another home. We do have a strong rental market here. Don’t be too fearful of making a move, if you wait until everyone else makes a move, then the laws of supply and demand kick in and prices go up as demand goes up.

Here is more good news; Mortgage rates really have come down quite a bit. Most folks are not aware of this at all. Mortgage rates are at 12 month lows. It is a GREAT time to refinance, look at mortgage options and get out of adjustable rate loans. Many families are considering equity repositioning and taking cash out of their homes to buy other properties and taking advantage of the real estate market. Many investors are sitting on the sidelines waiting to pounce on every good deal they can get their hands on. There have been some excellent new loan products that have come out in the market, particularly for first time home buyers to help them get into homes. Here are a few: down payment assistance programs, bond programs with below market interest rates, programs that are 100% financing with no mortgage insurance (even if you are not a first time home buyer)! Folks are just not aware of this good stuff because the media is showing more bad things than good things right now. This scares people. Have the courage to step outside of what the press is telling you and examine what our geographic market offers. It could be huge opportunity for you.

What has changed? You want to know the facts:

1. If you have credit issues, it will be more important now to get a formal preapproval with a lender that you meet with. Allow your mortgage planner to help you get a better deal/rate by helping give you tips to increase your credit scores. We do this at no cost for our clients. Look for our credit improvement workshops on line.

2. No doc loans- These are loans where no income or no assets are verified. These have become much tougher to do in the current mortgage market. If you need this type of product, talk to a certified mortgage planner in advance of purchasing.

3. When buying investment property, you need to put down approximately ten percent. There are no PMI options only with 10% down. This is a good thing and makes more of the payment tax deductible.

4. As with all things in our world, business cycles as does everything. This is normal and expected and necessary. We as lenders are not giving zero down loans to folks who do not have enough income or who do not have decent credit any more. It is my opinion that the mortgage market was in a way a microcosm of our economy. The market was/is looking ways to make money and just became too lenient w/ some practices. This is why the mortgage correction happened. This is a natural cycle and happens in every business. For the many of our customers there is a big opportunity to buy now. We are in a great market and many families are finding ways to take advantage of moving up, renting their existing homes and cashing in on these low rates. There is a lot of information on Real Estate Investing as a wealth building tool and you are welcome to check our website for upcoming workshops.

Talk to your real estate agent about your current situation they are great partners and can give you an accurate idea about both your current property situation and your new property scenario. They know the market better than anyone.

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There’s a handful of facts to grasp regarding reverse mortgages before choosing to apply for one. In this article, we’ll discuss the principal disadvantages of a reverse mortgage so that you are better prepared when applying for one.

First, most reverse mortgages come with flexible rates. The rates will change as the market indicators change. This can be a disadvantage because of the uncertainty on future rates. Nevertheless, it can likewise work as an advantage if the interest rates go down once you get your reverse home mortgage.

In addition, the fact that interest rates may go up is not as vital as in a typical mortgage because you are not making monthly payments. Interest rates increasing just mean that you may not be able to get as much of a monthly payment or that the equity in the house may decrease quicker than you imagined.

Since reverse mortgages function by reducing the equity in a house, you can use up most of the equity, leaving little money left for you and your heirs. Nonetheless, you need to keep in mind that a “non-recourse” condition found in most reverse mortgages prevents either your heirs or yourself from owing more cash than your property is sold for.

Moreover, beacuse you’re keeping ownership of your house, you’re accountable for the major expenses related with keeping a house: real estate taxes, insurance, utilities and maintenance.

One of the important disadvantages of a reverse mortgage is that some lenders charge inception fees and other closing costs for a reverse home mortgage. Lenders may also charge servicing fees during the duration of the reverse home mortgage. Depending on the lender you choose, the fees may vary greatly. Nonetheless, these costs are previously included in the home mortgage and don’t represent an out-of-pocket cost to you.

Also, the interest rate on a reverse mortgage is not deductible in your income tax until the loan is paid off (in part or whole.) Nonetheless, if you do not need that cash right at this moment, it can become a serious amount of cash available to you when you decide to sell off your house.

Lastly, there is normally a cheaper solution to your financial problems (refinancing, credit line, etc.) than applying for a reverse mortgage. Naturally, for a large number of homeowners, the benefits surely exceed the disadvantages of a reverse mortgage.

Several of the benefits are the chance of remaining in your own home, maintaining proprietorship of it and not having to make any monthly payments while you live in it.

To ensure you receive the best bargain available and that you get the smallest fees possible, get a reverse home mortgage using a licensed FHA reverse mortgage lender. A good reverse mortgage lender should educate you while saving you thousands of dollars and minimizing the disadvantages of a reverse mortgage in the process.

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Timber flooring, in the form of solid timber or newer veneers (also called floating timber), has long been the primary choice of people who want the warm look of wood on their floors, or who want to avoid carpet. For many years, there just weren’t any other options.

Now, however, bamboo flooring offers a comparable, environmentally friendly, durable alternative to traditional timber. Here are some facts about how bamboo flooring performs against popular floating timber floors.

Floating timber floors, unlike the more expensive solid timber type, are made of a layer of wood veneer a few millimeters thick, laminated on top of a less expensive timber, or even a composite material made from waste wood. Bamboo floors are made of solid bamboo, offering greater durability over time for less than you’d pay for a solid timber floor. Plus, bamboo is a stronger, harder to damage material than almost any wood.

Unlike floating timber floors, bamboo is attached to the surface it sits on. This means that your bamboo floor will be a lot more stable than a floating timber floor. There’s no room for the joints between pieces to open up or move around.

Unlike many timber floors, both solid and floating, bamboo doesn’t make that hollow sound when you walk on it. Bamboo flooring is also more resistant to scratching and easier to clean than many hardwood floor types.

Since there’s little to no movement between pieces of bamboo flooring, you can easily refinish your floor. Bamboo provides a better surface than solid timber, and veneered timber can’t be resurfaced at all!

Instead, the damaged portion of the timber floor needs to be replaced. Bamboo can be resurfaced many more times than other types of floor, and could last another five to ten years longer because of it.

Those who are worried about the environment will probably choose bamboo over timber. Both are natural, renewable resources, but timber takes a long time to replace itself. Veneered timber flooring uses less hardwood, but other woods are still used, and composite fillers often involve toxic glues.

You’ll find these kinds of practices mostly in China and other countries where regulation is minimally enforced. Fortunately, it takes only a little research to tell you if you’re getting some of the large percentage of products made from sustainably produced bamboo.

Compared to hardwood, bamboo will last a lot longer, and stand up better to daily wear. For those who are still concerned about the life of their bamboo floor, warranties are available. Remember that you get what you pay for - buy a product that’s made to last, rather than a bargain.

Where contraction and expansion due to weather are problems, bamboo holds up well. Compared to a hardwood veneer, it can be resurfaced more often, and needs no treatments or waxing to keep looking good. However, some products do contain environmentally unfriendly glues - look for nontoxic types when you buy your flooring.

If you’re interested in finding out how hardwood flooring and bamboo compare, an online search will quickly tell you. You’ll be able to view a wide range of products and see what all your options are. Bamboo could be the right floor for your home.

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There’s a handful of things to know about reverse mortgages before choosing to get one. In the remaining of the article, we’ll explain the main disadvantages of a reverse mortgage.

For example, most of reverse mortgages have changing rates. The rates will fluctuate as the financial indicators change. This may be a disadvantage because of the uncertainty associated with it. Still, it can also work as an advantage if the interest rates decline once you get your reverse home mortgage. In this case, you’ll get more money.

Furthermore, rates going down are not as important as with a traditional mortgage because you’re not making recurring payments. Interest rates going up just mean that you may not be able to receive as much of a monthly payment or that the remainding value in the house may go down faster than you thought.

Since reverse mortgages function by decreasing the equity in the house, you may spend most of the value of the home; leaving very little money left for you and your heirs. Nevertheless, you need to remember that a “non-recourse” clause existing in most reverse mortgages prevents either you or your heirs from owing more money than your home is worth.

Furthermore, beacuse you are retaining ownership of your house, you are accountable for the major expenses associated with keeping a house: taxes, utilities, insurance and maintenance.

One of the main disadvantages of a reverse mortgage is that most lenders charge inception fees and other closing costs for a reverse mortgage. Banks may also charge servicing fees during the duration of the reverse mortgage. In addition, the fees charged may vary greatly depending on the lender you choose. However, these costs are previously included in the mortgage and don’t mean an out-of-pocket cost to you.

In addition, the interest rate on a reverse home mortgage is not deductible in your income tax return until the mortgage is paid off (in part or whole.) Still, if you don’t need that money right now, it can be a large amount of cash available to you at the time when you sell your house.

Lastly, there is normally a cheaper solution to your financial problems (refinancing, credit line, etc.) than applying for a reverse mortgage. Naturally, for a large number of homeowners, the benefits surely exceed the disadvantages of a reverse mortgage.

Some of the advantages are the chance of staying in your own home for as long as you want, maintaining ownership of it and not having to make any recurring mortgage payments while you stay in it.

To make sure you get the best available deal, apply for a reverse mortgage employing a licensed FHA reverse mortgage broker. A professional reverse mortgage broker will advise you while saving you thousands of dollars at the same time and minimizing the disadvantages of a reverse mortgage.

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Things you ought NOT to do if you want to stop foreclosure on your home

Life is full of uncertainties and any event such as job loss, divorce, relocation, prolonged sickness, etc. could adversely affect us. The financial repercussions of such unfortunate events may force you into a situation where you are unable to make your monthly homeloan repayments. If you are a victim of such unfortunate circumstances, and have already missed three or more months of homeloan repayment, you could be faced with a foreclosure on your home. Before things go this far, let’s take a look at a few precautions to help you prevent a foreclosure.

Don’t take a second mortgage or equity line of credit: If you have equity on your home you may qualify for a second mortgage or equity line of credit in order to consolidate bills. No doubt, this will momentarily improve your financial situation in an emergency, but don’t forget that you are foolishly incurring greater indebtedness. Never add to your existing debt unless you have an effective plan for meeting these new obligations during your depleted financial phase.

Don’t create a record of unexplained chronic late payments: Lenders foreclose only as a last resort to limiting further losses on a defaulted loan, as foreclosures cost them more than it can compensate. No wonder, when homeowners fall behind on payments, lenders take the initiative to work with them to bring the loan current. However, your lender’s willingness to help you out with your current problems will depend considerably on your past payment records. If you have been consistently making timely payments without any serious defaults your lender will be more than willing to cooperate and help your tide over your present crisis. Therefore, it is crucial that you don’t create a record of unexplained late payments. Always stay in communication with your lender about your financial situation.

Don’t think of leaving your home: The prospect of foreclosure is such a trauma that many homeowners overreact by deciding to just pack up and leave. Vow and resolve to face up to this problem head on rather than thinking of running away. Such determination is crucial to stop mortgage foreclosure before it happens. You must realize that there exists several effective ways to stop mortgage foreclosure. Remember, once you fail to stop mortgage foreclosure, this will always be reflected in your credit record. On the other hand, if you succeed in stopping mortgage foreclosure, not only will you be able to keep your home but also have a positive credit rating for future.

Don’t hide your financial facts from your lender: If you find it difficult to make your regular mortgage payments, communicate this to your lender at the earliest. With their cooperation you may qualify for assistance. For instance, there may be another loan better suited to your needs. They may help you out with a special repayment plans, temporary suspension of mortgage payments, mortgage modification, etc. All this will depend upon how transparent you are with your lender about your financial status, which you can substantiate by furnishing complete proof of your income, expenses, and debt.

It is never too late to start taking precautions. Your home is precious to you, so don’t let any opportunity slip by to improve your finances, rather than face the ugly prospect of a foreclosure.

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As a starting point, you want to consider that no all reverse mortgages are the same. Before applying for a reverse mortgage, you need to ensure that you are choosing the correct kind. The 2 major types are the private reverse mortgage and the FHA backed reverse home mortgage.

In a private reverse mortgage, there are essentially no limits on how much money you can be charged. Anytime you hear of horror stories of homeowners who got a reverse mortgage and ended up being charged too much money is because they elected this type of home loan. Keep away from this home loan.

With a FHA backed reverse home mortgage, there are plenty of regulations that lenders must abide by. FHA regulates this kind of reverse mortgage and sets the costs that reverse mortgage lenders may charge you. Obviously, you invariably want to choose this kind of reverse mortgage.

Similarly, with a FHA backed reverse mortgage, you have the right to a no-cost advising session. During this session, you may ask all the questions you have. Write down all your concerns before the session so that you do not forget later on. Take full advantage of this session.

A different one of the pitfalls of a reverse mortgage is when a lender is too eager for you to apply for a reverse home mortgage in order to pay for something else: a second home, an investment tool, etc. Usually, be aware of lenders who appear to be way too eager about you applying for the reverse mortgage.

Additionally, remember that even though you will not have to make any recurring payments, you are nevertheless responsible for the traditional expenses related with the title of a home: real estate taxes, regular maintenance, insurance, etc.

You may choose to use a portion of the money you get from the reverse mortgage to pay for these costs. This way, you can ensure that you will stay in your home for as long as you choose.

Furthermore, a reverse mortgage may not be the most inexpensive solution for you. You may contemplate to refinance or to sell the house. Naturally, a reverse mortgage may be the best answer for you if you want to stay in your home and do not want to make any monthly payments or if you need a continuous “additional source of income.”

In conclusion, try to choose a FHA insured reverse mortgage lender. In addition, keep enough funds to pay for the maintenance costs and ensure that a reverse home mortgage is the cheapest or more appropriate solution for you. That way, you can be sure to minimize the pitfalls of a reverse mortgage.