Orlando Mortgage Blog

"I owe more than my house is worth"

I just had a customer question arise that I could not help with today. It was typical for many folks unfortunately. Here goes:

The customer was self-employed and needed to do a no income verification program two years ago to take some cash out of the home he had owned and lived in for a number of years. He also had a middle credit score at that time that was said to be a few points below 620. He ended up with a 2/28 ARM to qualify, that already had a rate before it adjusts in two months that is over 7% for the first two years. He didn't know if there was a penalty to pay it off early (my guess is that there probably will be). The home had appraised two years ago for $240,000, but he had applied for a mortgage someplace else now and it just appraised for only $216,000. The problem is that his current mortgage balance is about $215,000. By the time you add costs and prepaids the new balance would exceed today's value. But, though he can now verify his income, his credit score is still below 620. That's a problem. I suggested he work with the current mortgage holder to try to improve his terms.

Why am I talking about this? To emphasize the importance to evaluate your mortgage needs early in today's market. Declining values in some markets can seriously hinder, if not block, moves you may be thinking about or need to consider as borrowing power or credit availability diminishes, at least until a bottom materializes. You don't even have to have credit score issues. The above example would still be a problem to a person with great credit and standard verifications.

Don't let this happen to you. Sooner or later values will turn around. But be proactive to meet your borrowing needs in the meantime. We can help you with the analysis. Call us.

Bill Wiolbanks /  www.OrlandoMortgageMasters.com

It takes a little effort to get a Great Rate!

Long story made short, waiting until the "day of" is usually not the best way to get a great or even good mortgage rate. What is? Read on...

A seller on a purchase transaction usually requires that you make application immediately, but certainly with 5 days or so of the accepted contract offer. That doesn't give you much time to shop for a mortgage or your best rate.

Rates are subject to change with market conditions at any time until locked. So, even on a refinance they can move while you are shopping for a lender. Most rate locks are 30 to 45 day locks in the market. Besides that, lenders with the best rates will most often require the completed loan package be delivered to them within 10 calendar days of the registration and rate lock or the lock is canceled. That does not give you much time unless you have planned ahead.

Smart shoppers gather their loan documentation in advance, subject to loan disclosure and the appraisal order. That way if they have not already applied with us or another firm, they have it ready to provide the day they want to lock a mortgage rate. Don't risk losing it because you can't provide a complete application package that day. Don't count on LUCK! Make your own luck. BE READY TO TAKE ADVANTAGE OF A GOOD RATE!

Bill Wilbanks /   www.OrlandoMortgageMasters.com    

Have Rate Shoppers Taken A Timeout?

It would certainly appear to be the case in the last 6 months or so. You don't have to watch the news for very long to know that the market is off in Florida this year both on purchase and refinance transactions. The talking heads certainly talk about it enough. But, there still are many refinances and even purchases taking place daily. What we aren't seeing is the typical numbers of rate shoppers. They should be shopping right now!

In my experience, an average mortgage borrower, if asked, says they got at least 3 to 6 quotes before deciding on where to place their loan. That sounds good, but probably high in reality. Though it's tough to put a number on, the number of shopper calls made to everyone I've spoken with in the business are down this year. It might be borrower burnout or malaise or even a false belief that mortgage quotes are all "pretty much the same and large lenders with household names are very competitive, aren't they"? Don't believe it. When's the last time you paid sticker price for a new car? Never...?

If you have closed a loan recently, did you really shop around? If you are in the market now, are you shopping around, and if not, why wouldn't you? Do yourself a big favor. Compare written estimates, the more the better on the same day. You'll be surprised.

Bill Wilbanks /    www.OrlandoMortgageMasters.com