Sarasota FL Mortgage Rates | The Bradenton Mortgage FL Information

One of the toughest Challenges in the market today is paying your mortgage and living the American Dream.  The Mortgage Market is a tough market these days with the rules and regulations changing almost daily.  Many consumers got talked into a “bad loan” and are now unable to make their monthly payments.  So is the answer a Short Sale?

Banks are starting to realize Short Sales aren’t the devil!  If you’re thinking about Short Selling your home just take this into consideration… the decision maker is probably a long way away from the property and has no idea about the local market conditions.  Imagine you live in New York and you’re trying to figure out how much a property is worth in Key West, FL… it just doesn’t sound realistic.  So make sure if you’re considering Short Selling your home, you do your research on MLS and gather information for the bank in regards to previous sales, comps in your area, and other homes listed for sale in your neghborhood.

If you’re looking to Short Sell your home, make sure you show the bank your willingness to pay.  Basically if you’re thinking about Short Selling, you typically have no willingness to pay… the home will most likely go into foreclosure if you don’t get rid of it ASAP. 

The key to Short Selling your home is providing the bank with a qualified buyer who has been pre-approved and is looking to purchase the property at a fair value.  Obviously the market tanked and you owe more on the home than what it is worth… but give the bank a fair offer and see what happens.  The cost of foreclosing on a property is huge, so this is your big chance to save yourself the hassle as well as the bank. 

If you’ve recently Short Sold your property and have comments on this topic please leave them below.  There are a lot of people out there that could use the information. 

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The Federal Reserve is at a tug of war with setting new Mortgage Regulations.  On one side, the consumers are stating with the new rules set to be enforced in December, there are too many loopholes that will cause consumers to continue to default and allowing reckless lending to continue.  On the other side, the lenders are stating that with the new rules it will limit them on who to lend to and will prompt them to further restrict credit.

 The Fed claims the new regulations will prevent sub prime borrowers from getting into loans they can’t afford.  With the way the rules are currently set up today, borrowers can still obtain mortgages by showing limited documentation.  Consumers are worried this will continue to hurt the economy.

Consumer’s Side 

Consumers are stating the Fed needs to enforce rules that require banks to document the borrower’s ability to pay.  Get rid of all the Stated income loans and require the borrower to prove their ability to pay.  If a consumer is looking to purchase a primary home and claim they make $100,000 a year, then make them prove this in tax returns or W-2’s. 

 The Fed needs to close the doors on fraud and misbehavior so this market can stabilize.  If the fed continues to allow borrowers to obtain a mortgage with the current rules in place, the market will continue on the road to destruction. 

Another rule consumers are hoping the fed will change is to eliminate pre-payment penalties.  Advocates cliam pre-payment penalties cause more harm than good. 

 Lenders side

Lenders claim with the new regulations, lenders will lend fewer mortgages and increase the amount of work they would have to do. 

Also lenders are stating the Fed needs to clarify the new rules on how to determine a borrower’s willingness to pay.  Even though with the new rules it still gives the lender options on how to determine a borrower’s ability to pay.

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Comparing mortgages has never been more important for first time buyers.  The importance of first time buyers for the UK housing market can not be under estimated. Without them, there would be a total collapse in the property market, from the bottom end, relatively low value property, to the top of the ladder involving properties worth millions of pounds.  The problem, and reason to be concerned is that the number of mortgage approvals are at a 15 year low, a record which is expected to be broken several times during 2008.

The reason behind the low number of mortgage approvals can be seen as a side effect of the credit crunch.  As banks have taken a severe hit through risky lending strategies focused on the Sub-Prime borrowers, the entire banking industry is now perhaps overly cautious when it comes down to lending out money.  100% mortgages are a thing of the past, with borrowers now required to put down a minimum of 10% the value of property.  Keeping in mind the average house price in the UK at the minute, deposits for first time buyers are going to be in the region of 10k – 20k.

First time buyers are required to save this money for a mortgage deposit at a time of global economic downturn. Oil prices are exploding upwards, food prices, gas and electricity prices are all rising at unprecedented levels, far above levels of inflation. Taking these factors into consideration, saving 10k – 20k for a mortgage deposit, the average first time buyer is likely to struggle.

So what kind of mortgage offers are available to first time buyers, and how do they compare? Generally speaking, an interest rate of around 7% is to be expected. On a £100,000 interest only mortgage, this would see repayments at around £580 per month. In many areas and city centres of the UK, a property for £100,000 is unrealistic. Therefore, an interest only mortgage of £160,000 would equate to repayments of around £930 per month. A 25 year repayment mortgage however, would see repayments in excess of £1100 per month.

The sums involved are staggering, considering the average UK wage is estimated to be approximately 23k, meaning that after tax, less than £1,400 will be available, assuming no student loans are to be deducted.  As the average first time buyer is likely to be earning under 23k, it makes the sums even more difficult to justify purchasing a first time property in the current climate.  With this in mind, it has never been more important to compare mortgages.

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Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They’ve reportedly wiped out 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren’t enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.

This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago.

How did this happen?
The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or “exotic” mortgages.

These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.

Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today’s tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we’re now experiencing.

Unfortunately, it’s going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.

What does this mean to you and your mortgage?

Sellers: If you’re planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.

Buyers: Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it’s taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don’t do anything that could negatively affect your credit, and make sure you get all your documentation in on time.

ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don’t let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.

Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.

Finally, there’s an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we’re experiencing now – while it seems harsh and could get much worse – is, in a sense, “natural” and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.

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Well, we all know the economy is going through some issues, and being in the mortgage business we’re always hoping things will change.  The key to staying successful in this business is keeping a positive attitude and making yourself an expert.  You want to be the GO TO person when someone has a question about financing, and the reason why I’m saying this is because you need to learn about Foreign National lending.

Foreign Nationals are buying real estate over here in the U.S. for two reasons.  For one, their currency has an exchange rate that almost doubles the U.S. Dollar.  Right now the Euro is worth just over $1.50 and in the Pound is currently worth just under $2.00.  So for an English investor to come over here and purchase a $200,000 home, it really translates into them buying a $100,000.  Why wouldn’t a European come over here and buy a beautiful second home they can visit at anytime?  Their money is worth double the amount… if they want to go to Disney world and spend $100 on tickets, it really means they’re only spending 50 pounds.

Another reason why Foreign Nationals are coming over to the U.S. and buying real estate is because it’s a buyers market.  Homes that were selling two years ago for $400,000 are now listed for $250,000 and will most likely go for less than that.  This is the type of market where the old saying “The poor get poorer and the rich get richer” except this translates into countries.  Right now the U.S. is in a lot of debt and the government is trying to fix this but it’s not something they can do over night.  In the mean time other countries are coming over and buying property, businesses, etc. at a discount price and in turn will cash them in when the time comes for a higher profit.  It’s all relative. 

 Here’s the way I look at Foreign Nationals and the Mortgage Market:  Yes, I know home values are going down, and yes I know a lot of home owners are losing a lot of money, but the only good thing coming out of this is First Time Home Buyers, Investors and Foreign Nationals.  As long as they are buying up the market, it’s going to create transactions that fill the pockets of Real Estate Agents, Mortgage Brokers, Banks, Title Companies and this in turn will create more spending which will boost the economy.  Every little bit helps!

If you’re in the Real Estate world and wondering why it’s important to look at the Foreign National world, just know they’re going to continue to buy, and you might as well be a part of the transaction.  Now is the time for them to buy and they’re not even hesitating to stroke a check.  This is their market!

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In today’s tough market many banks are closing doors and others are struggling to survive.  The banks that decided to offer “specialized” financing are now wishing they hadn’t and for the banks that stayed on the straight and narrow are glad they did. 

The real estate world is going through what many would call a “Tough Time.”  Most people in the Real Estate profession  have either retired or found new jobs because the last year and a half home sales have dropped more than 40% in some parts of the Nation.  What has the government done to try and fix this?  Well the fed has tried numerous times over the past six months to stabilize rates by lowering the fed funds rate and create a turn in the market to get things back on track.  So far none of those attempts have worked because we’re still dealing with declining home prices and banks are still having a hard time lending money.

Just recently, the Fed started allowing big firms to temporarily borrow money from the Fed for emergency financing that only large banks had access to previously.  These actions have caused many to protest and raise concern because many believe the Fed is putting tax payers hard earned money at risk by simply bailing out Wall Street.  The Bush administration and Fed Officials state this is an action they needed to take to prevent an economic meltdown.  Analysts believe the way the first three months of this year have gone, we’re heading towards what many would call a recession.

Despite all the negatives associated with today’s market, there are a number of positives that we’ve noticed take place during this time.  For the people losing homes to banks and dropping prices on their homes, there’s always new purchasers out there looking for a good deal.  Now is the time for First Time Homebuyers to start buying their dream homes.  Two years ago a home that was going for $250,000 is now going for $150,000.  Despite what people may think, there are still a number of programs out there for First Time Homebuyers.  There’s been a large increase in local and state grants that are strictly for First Time Homebuyers that gives them a chance to own a home and afford it.

Another positive that has been a result of today’s tough market is lowered interest rates.  The Fed has desperately tried to stabilize this market and it hasn’t had much affect on the market so far, but one thing it has done is helped out home owners who have a Home Equity Line of Credit.  Two years ago the prime interest rate was somewhere around 8.25% but over the past year the Fed has dropped that rate and is currently at 5.25%.  This has saved many home owners hundreds of dollars which has created a little relief. 

It’s a tough market but if you can get through the “Tough Times,” just think about how nice the good times are going to be.  Also just remember, you’re not the only one going through “Tough Times,” the whole Nation is.

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