As we discussed in Part 1 of the Buying a Home in Eustis, Florida, there are many options that a potential home owner has when looking for a home in the Eustis area. And like the real estate, a home owner has several mortgage programs to shop for.

Each mortgage loan that is available to Eustis borrowers has its own unique set of guidelines and characteristics. In general though, they have the same basic ground rules: must have a job, must have credit (Good to Excellent), and must be able to afford the mortgage payment.

It is from these main ground rules that lenders and programs deviate into the individual programs that are offered. ( To avoid a long, drawn out post, we will cover the individual programs in more detail in separate posts.) Here is basic list and summary of the programs that are available to potential mortgage loan borrowers: Read more.

Whether you are moving to Eustis, Florida to become a new resident or are an existing resident, here are some things that you should know when purchasing your new home. This will be a several part topic covering: real estate, mortgage, insurance, business, and local flavor.

In this first part, we are going to be covering the real estate side of buying a home. The first thing that one should consider when purchasing their new home is where in Eustis they want to live: in a community, in the country, in town, near downtown, etc. There is, despite the cities perceived small size, a large diversity in real estate locations.

The city even has elevations to chose from despite the misconception of Florida being flat. You can opt for a home at the top of a hill looking out over a lake, or you can have a home at the bottom of the hill on the lake. These are all possible locations that one can find when shopping for their new home.

Besides location, pricing has a large range. Some homes can be purchased for less than... read more.

July 1, 2009 marked the new fiscal year for SHIP (State Housing Initiative Program), a state funded down payment assistance program for low-level income home buyers. However, this year the $161 million grant used to fund this program has been cut to $30 million to fund the Florida Homebuyer Opportunity Program (FHOP).

The $30 million is split amongst the counties of Florida. Each county then distributes the money based on city/area. In most areas, this will mean that less than 10 first time homebuyers in any given city/area will receive an advance on their $8000 tax credit to use towards the purchase of a new home today.

If you are one of the lucky few to get the $8000 advance to use towards down payment, mortgage loan closing costs, or pre-pays associated with the purchase, here is what you need to know:  Read more here.

I am stealing that line from Neil Cavuto of Fox Business Network

In a recent broadcast of Fox News, Cavuto mentioned how someone asked him about mortgage rates. The person was hesitant to buy a new house because mortgage rates went back up. Cavuto asked him what he was going to do... wait to see if they go back down was the response.

Cavuto, in his off tangent thinking, begins to share how "Damn" young this guy is. But his answer to the potential home buyer was "5.25% is pretty good." Then he proceeded to tell the young man to "Shut up."

Why did Cavuto tell him to shut up? The answer is pretty simple. "5.25% is pretty good." Remember when mortgage rates were double digits. Remember when prime was over 20%. Remember when...

Most people, if they think hard enough, will remember those days. Now, doesn't 5.25% or even 5.75% sound "pretty good." Yes, it does. And yes, 4.75% sounds better. Unfortunately, those days are in the past, and soon you will be saying I remember when rates were 4.75%. For those of you who waited to see if rates would go any lower, are now going to say, I remember when rates were 4.75%, but all I got was a 5.75% rate. But you know what? That is still "pretty good" compared to what it could be.

So what is the moral of this story? It is shut up about the rates. They are going to be what they are. It is only a matter of how long does a borrower want to wait to lock in their rate. 4.75% is gone. 5%+ is in. It is still a "pretty good" rate.

Oh, and to put this into monetary terms, a $150,000 mortgage at 4.5% over 30 years has a payment of $706. The same mortgage at 5.25% has a payment of $828. That is roughly $36 per .25% increase to the rate. That breaks down to just over $1 per day per .25% increase to the rate. Can you afford an extra $1 per day to go to your mortgage if rates went up .25% tomorrow. If the answer is "No," then you need to do something today. If the answer is "Yes," then can you afford a full 1% increase (or $4/day)?

Each day you spend watching the rates go up is just another dollar that you could have been saving.

If you want to watch the Cavuto news clip, click here.

Realtor: Here it is!!!

Buyer: Where?

Realtor: There.

Buyer: What, behind the 4 bed, 3 bath, 2 car garage brand new home?

Realtor: It is the 4 bed, 3 bath, 2 car garage brand new home.

Buyer: Silly, Realtor.

Realtor: What?

Buyer: You got me all worked up.

Realtor: Well, that is no ordinary home.

Buyer: Oh?

Realtor: That is the cheapest, newest, never-lived in, best deal in the area home you will ever set your eyes on.

Buyer: That is a shack at best. Maybe a shed in today’s market. Move on to the next house. I hope it is more in line with what I expect, or I am going to find another Realtor that can get me what I want.

Realtor: I am warning you, but do you listen to me? Oh, no, you know it all, don’t you?

Buyer: Shut up and show me the next house.

Realtor: There is no other house… this is the best house.

Buyer: Well, how much do they want for it?

Realtor: $200,000

Buyer: Let me consult with my other half. Here is our offer on moving forward: First, they must accept our first and only offer. If they don’t, their loss. Then they must drop the price $30,000. No less, but possibly more. $30,000 is the number. Not $20,000 unless they are counting up to $30,000. $40,000 will be better and $50,000 will be best. But no less than $30,000 off the price.

Realtor: Are you serious?

Buyer: Take it or leave it.

Realtor: Okay, I will put the offer in then, but I have my reservations. Have you at least been pre-approved for the mortgage?

Buyer: No, I am waiting for interest rates to reach 4% like the media says it is going to do.

To Be Continued…

(This is an adaptation of Monty Python and the Holy Grail. Any humorous events portrayed in this post are based upon REAL events as expressed from several Realtors that I have met.)

This week it is projected that mortgage rates will reach a 5 year record high. Thanks to declining markets, credit lending guidelines tightening down, banks going out of business or merging to avoid bankruptcy, and many other economic factors, potential homeowners will now be facing an even more difficult time in trying to qualify for a new home due to the sharp an sudden increase in mortgage loan interest rates.

Just last week, mortgage loan rates were in the 4-5% range. But by the end of this week, mortgage rates could be as high as 7-8%. Those people who were waiting for the right time to buy have missed that ship, as it set sail last week. The great deals of low priced houses and low rates, may never be seen again in our life time. Those who jumped on the golden opportunity have the potential of turning their gold into platinum, while those who procrastinated will struggle to even purchase cardboard box big enough to cover them from head to toe.

But in all this bad news, there is good news!!! What you have already read has not happened yet. Rates are still at all time lows. They are still in 4-5% range. There are still some 100% mortgage financing programs out there. Banks are still lending money. And homes are still being purchased at great prices. Don’t wait till the title becomes a reality.

Call your realtor today to find a deal, I mean home, that is right for you. And call us today, to get your financing in place and your rate locked in before they really do go back up. Time is not on your side

The following has been added after the initial posting due to some confussion about what they read (or did not read).

*** And just in case you did not fully understand, RATES are not at 7-8%.  I have no idea when they will go up to 7-8%.  Could they go up to 7-8%?  YES!!! Could it be next week?  I highly doubt it, but who really knows?  I just wanted you to think about the future in that your hopes of things getting better and then you buy, could go the other direction.

I often get asked, “Why should I use a mortgage broker versus going to my local bank or going through the internet?“ The latter part of the question is the easy one to answer. Unless it is a major well-known company, you are taking a big risk. Yes, I am in a way hurting myself by making that comment because Knightlines is not a major well-known company on the national level, but that has also never been our goal. In our local market, we are well-known. The risk you run is that you are giving out all your personal information (social security, bank accounts, etc.) to an unknown.

I can go on about the internet, but this post is going to focus more on the difference between broker and banker (Please note that I am not saying mortgage banker because that is a separate issue). The way I always relate the two is like this: A mortgage broker offers his/her rates at wholesale, and the bank offers its rates at retail. And then I go on… Read More.

HomePath by Fannie Mae takes on 100% Guaranteed by USDA. Both of these programs are offered by Knightlines Mortgage Services, LLC of Lake County, Florida. And both are going strong to help spark home purchases across Florida.

Before we compare these two programs, we are first going to disclose the following: Despite USDA being out of money, Knightlines has funding sources that are still able to close and fund the USDA Guarantee Loans with all the benefits of the loan.

There has been much talk these last couple of days about President Obama’s $75 Billion Homeowner Affordability and Stability Plan. The plan has several keys features to it that are designed to help current homeowners that are current on their mortgage payments to take advantage of today’s rates and possibly re-structure their loans without having to miss a payment to qualify.

Here are some of the key points:

• Allow homeowners that are currently 80% or greater in debt to the value of their home to refinance through Fannie Mae or Freddie Mac
• Lower monthly payments by reducing the interest rate to where the payments represent 38% of their total monthly income. In addition, the plan would match dollar-for-dollar any monthly savings from the interest payments bringing the effective ratio to closer to 31%.
• In addition to lowering rates, lenders may reduce the principal loan amount down.
• Lenders and servicers will paid incentives to do these modifications before a homeowner misses a payment.
• Establish consistent guidelines across the board for Fannie Mae and Freddie Mac on all modifications.
• Rebuild confidence in the two mortgage giants and increase their portfolio limits.

Now, there are some draw backs to this plan. Some are addressed and some are not. The first draw back being that the low interest that one gets today under the modification will only last for 5 Years. After the initial term is up, the interest rate will be slowly raised back up to the original rate. The problem with this is that home values could continue to decline or not increase enough to where the homeowner can refinance. The other issue is that the job market could still be a huge factor to where they cannot afford the increased payments again.

Another issue it that of Mortgage Insurance. This is the insurance that lenders require a borrower to pay for any loan that is greater than 80% the value of the home. With the current plan, some homeowners could have new modified loans that are at 105% . There is no mention in the plan that mortgage insurance be waived. Now, they did say that the monthly mortgage payment must be below 38%. Typically, this means PITI(MI) - Principal, Interest, Taxes, Insurance, Mortgage Insurance. So maybe they are factoring that in, but what happens in 5 years. Now they start raising the rate again back to its original rate, but this time your payment might have MI added into it. This could cause huge payment shock to homeowners, which is what really got us to where we are today.

And then there is the double whammy issue of taxes and insurance. Many areas that have the highest foreclosure rates also saw the highest increase in taxes and insurance. The spike in these payments (which are often part of the monthly mortgage payment - PITI) created payment shock for home buyers often after the first year when property taxes were re-assessed. This plan does nothing to address these issues. States can continue their practice of charging and collecting property taxes without regard to decreasing property values if they choose. And insurance companies can continue to increase their annual premiums. The plan proposal should really include these two key factors that helped lead homeowners into their current situation.

There are many more issues surrounding this plan, some good and some bad. In the end, we all hope that this plan will be the one to stop our current housing and mortgage industries decline. If it cannot stop it, then may it at least stall the decline enough to where confidence has a chance to catch up.

To read more about the plan, visit the homeowner affordability and stabilit plan fact sheet.

Dear Mortgage Lender, Congress, and President Obama,

In the past year, the USA has spent almost $2,ooo,ooo,ooo.oo (two trillion) that we know of to bailout businesses (banks, cars, etc.) and individuals that cannot pay their debts.

In the most recent stimulus package, first time home buyers get a tax credit. What do non-first time home buyers get? Squat! People facing bankruptcy have a judge on their side to help them keep their homes by re-structuring their mortgage. What do people that pay their debts on time get? Squat! Big business just have to put their hands out and say we need money to stay open. What do small businesses that are the true core of the American economy get? Squat!

Well, I cannot speak for the rest of my law abiding, tax paying, on-time debt paying, fellow Americans, but I can speak for myself. I am tired of being the good guy and getting squatted on. Here is my stimulus package proposal to you for me as a reward for doing things the right way:

1) Mortgage lender - I want you to lock my rate into a 30 year fixed mortgage at 4.0% and recast my mortgage on a new principal balance that is 10% less than the current balance. Why? Because you are already dropping rates, re-amortizing, and doing principal reductions for those that cannot pay their mortgage. At least you know that I can afford the new payments and will pay them. Oh, and if you do not do this, then I will be the next person in line to stop paying my mortgage and then you will have to do it. And yes, my wife and I are struggling each month to make ends meet, but we do it.

2) Congress and President Obama - I want a tax credit read more: