Florida Bond Program
The Florida Bond Program will help you get your Key West Florida home for less money monthly and less money up front.
You'll save money on the interest rate and on documentary stamps on the deed, and intangible tax on the mortgage. You may also be eligible for an interest free and payment free 2nd mortgage that will be forgiven after 5 years.
Normal rates with regular lenders can change every day. The Florida Bond Program offers a rate for a pool of funds - maybe 50 million dollars - and the rate is locked until the pool of funds runs out. Locking an interest rate would normally be about 3/8ths of a point so the cost to lock a $300,000 mortgage would be about $1,100.
The Florida Bond Program saves you that expense since the interst rate will not change until the pool of money runs out. The Florida Bond Program money is available on a first come first serve basis, but there are no concerns about money running out.
Right now (January 2011) the Florida Bond Program rates are 4.5% for an FHA loan, 4.125% for the Military Heros VA loan and 4.5% for a conventional loan.
Current rates with traditional lenders in Key West Florida are 4.75% for an FHA, conventional and VA loans. There is a difference in the 4.75% interest rate for the conventional loan, but it is negligible at a few tenths of a percent.
To qualify for the Florida Bond Program loan you will need a 600 credit score for the Florida First Conventional loan through the Florida Bond Program is similar to the traditional FHA loan. A normal FHA loan normally requires a 620 credit score.
The Military Heros VA loan through the Florida Bond Program requires a 600 credit score. The conventional VA loan through a typical lender requires a 620 credit score. Lenders in Key West Florida are requiring a minimum 620 credit score to get ANY loan.
The Florida Bond Program is available for single family homes and town homes, but only FHA and VA approved condominiums are financeable. In Key West Florida the Las Salinas condominium and the Salt Pond condominium are the only condo properties that qualify for the Florida Bond Program.
The Florida Bond Program is income restricted. The maximum household income is $94,680 for a household with 2 people. You will need to provide 3 years of tax returns. The maximum income for a household of 3 or more people is $110,460. Everyone in the household is included in the limit - even the 18 year with a part time job making $5,600 a year.
Your Key West home must be a primary residence. The program is for first time home buyers or a buyer who has not owned a home during the previous 3 years. You must move into the home within 60 day of closing.
Although the home must be a primary residence you are not limited to a single family residence. As long as you live in one of the units you may purchase a multi unit property.
The maximum loan limit is $802,275. The maximum loan for a 2 unit property is $1,027,620. The maximum loan for a 3 unit property is $1,242,175. The maximum loan for a 4 unit property is $1,543,740.
The loan through the Florida Bond Program will take 45 days to get approval from an underwriter so make sure you ask for 45 days to close on the Sale and Purchase contract.
A wonderful feature of the Florida Bond Program is that you will not pay documentary stamp tax on the loan or intangible tax on the loan which saves money.
Another wonderful feature of the Florida Bond Program is that there is down payment assistance of up to $7,500 as a 2nd mortgage. The 2nd mortgage will be forgiven if you keep the home for 5 years. If you sell before 5 years you will need to pay back the money.
The down payment assistance money is available on a sliding scale. If you make less money that more money is available to you. You make no payments on the principal or the interest during the term of the loan.
There is a listing in the MLS in Key West Florida offering a 4.99% interest rate through the lender that foreclosed on a property. We all see the comments on the marketing remarks on bank owned properties that you need to qualify with a particular lender before you can submit and offer. It's frustrating (and pathetic of the lender to arm wrestle you for your business) to have to constantly pre qual with lender after lender (but that's a different story for another day).
This is how the Florida Bond Program stacks up against the the interest rate offered by the lender of that bank owned property, current rates with other lenders in the Key West Florida and potential interest rate increases that may be coming in the 1st (5%) and 2nd quarter of 2011 (5.25%).
$250,000 at 4.99% = $1,340.53 (bank owned property lender)
$250,000 at 4.75% = $1,304.12 (at 4.5% you would save $36 monthly and over 30 years you save $13,107.60) (traditional lenders in Key West Florida)
$250,000 at 4.5% = $1,266.71 (at 4.5% you would save $73.82 and over 30 years you save $26,575.20) (Florida Bond Program)
Interest rates could increase to 5% in the 1st quarter of 2011 and then to the 5.25% range during the 2nd quarter of 2011.
$250,000 at 5% = $1,342.05 (at 4.5% you would save $75.34 monthly and over 30 years you save $27,122.40)
$250,000 at 5.25% = $1,380.51 (at 4.5% you would save $113.80 monthly and over 30 years you save $40,968)
If you want a loan through the Florida Bond Program you will need to attend a 4 hour face to face educational class in Miami prior to closing. The class is not offered in Monroe county at this time.
Good luck and happy house hunting!
photo credit Rev Dan Catt
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