Mortgage News by Lee Maynard

The short sale has become America’s latest buzz phrase and it is being thrown around as the way to get a great deal on distressed Real Estate. Last month I described in detail what a short sale is and how the process works so I will pass on an in depth re-hashing here. That information can be found in my blog.

Realtors, unhappy with the response they have been getting with their current marketing trend have reached into their bag of tricks and come up with an attention grabbing listing that is sure to get the phones ringing again.

You may have seen a few of these while looking through the pages and pages of available properties.

“Owner Facing FORECLOSURE, In contact with the Lender "SHORT SALE" .. Big Family Bring'em on! 6 Bedroom 4 1/2 Bath Home with a Loft Has it all. Large Yard, Excellent Schools. Needs carpet, paint minor repairs and cleaned up. "SHORT SALE" The listing price may not be sufficient to cover all encumbrances, closing costs, or other seller charges and sale of the Property at full listing price may be conditioned upon approval of third parties. Call for details.”

The description above appeared on a relatively new 4000 square foot home. Listing price - $260,000.00!

Let’s do some research… The house in question was sold back in 2006 to the current owner for $476,000.00. A loan for 100% of the purchase price was taken out on the property back in the day when 100% investor purchase loans existed.

The owner, probably looking to flip the property quickly listed the property for sale 528 days ago. Over the past year the owner fell behind on their payments and the bank threatened to foreclose. No one has come forward to purchase this albatross but an enterprising Realtor has found a way to make lemonade from this lemon.

By listing the property at an unrealistic price the Realtor is guaranteed to get the attention of the bargain hunters out there who seem to be waiting behind the bushes looking for the perfect deal. The phone starts ringing and the enterprising Realtor is back in business. This is pure brilliance on the part of the Listing Agent! Sketchy but brilliant!

Having dealt with many short sale scenarios in the past year my experience tells me that the bank will not write off a loss of $216,000 on a property that is worth no less than $300,000.00. My experience also tells me that anyone submitting an offer to the bank for a short sale is in for a long wait in order to obtain an approval or in this case, a denial. This gives the listing Realtor plenty of time to direct those that are inquiring about the property to various other properties in their inventory.

Bait and Switch? Not really. I prefer to think of it as a creative way to obtain new sales prospects in a market that is seriously void of same.

Why do I want you to know this? Simple. The more educated the general public and the Real Estate community is about current market conditions the better their choices will be when it comes time to purchase a new home.

Be wary of clever sales tactics, do the research regarding the market in your area, educate yourself about the current mortgage requirements and shop with your head, not with your heart. Bargains are there for the taking.  Be smart and you will soon find a great deal!

That's the truth as I see it June 17, 2008.

Lee (Still in the Mortgage Business) Maynard

As I type this mortgage rates have dropped to a level I have only seen twice in the past ten years!

Currently I am seeing rates as low as 5.375% on a thirty year fixed and 4.75% on a fifteen year fixed.

The Florida market is shaping itself up into the perfect storm.  Housing prices have fallen, mortgage rates are at all time lows, there are 1,000's of distressed properties on the market and on January 29 ,for the very first time, we will vote to make the Save our Homes Initiative portable!

This combination of factors can put the oomph back into the market that we have all been waiting for.

All of the pieces are in place except one.  Vote yes on 1!

The constitutional amendment sponsored by Governor Crist provides us as homeowners an opportunity to take all of the savings we have accumulated in our Save our Homes exemption and apply it to any new property we purchase as our primary residence.

This is something every homeowner will enjoy.  Those that have been in their homes longer will enjoy it most of all but the fact remains...  without Save our Homes portability we are stuck in our current homes until we can afford to pay the hefty increase in taxes as the result of purchasing a new home.

Get out and vote yes on 1!  When it comes time to move you'll be glad you did.

Lee

After travelling trouble free over the Thanksgiving holiday I have come to the conclusion that the news media has finally amassed the power to create and instill fear among the American public and influence their actions accordingly.  Believe it! 

Had I listened to my local news monger I should have... pulled all of my money out of the stock market, worried incessantly about the quality of our food, truly cared about who will win Dancing with the Stars and above all stayed away from the roads and airports during the Thanksgiving holiday!

It's just about enough to make you crawl into a hole and give up! Fear not... the truth is on our side and hope is on the horizon!

The news media will have you believe that the current mortgage state of affairs is grim at best, terminal at worst.  Such is not the case...  Somewhere behind all the headlines is a story not being covered.  Mortgage rates are dropping back to their historical lows!

Believe it or not today's 30 year fixed rate notes are now in the 5% range!  Prices for homes have come back to normal and the market is full to the brim with product.  That paints a pretty nice picture for someone looking to purchase their first home or move up from their current digs.  You won't see this on TV folks!

I'm not sure how this era of media driven behaviour came about but one thing's for sure... it's not going away anytime soon.  Take the time to investigate the facts before reacting to what the anchorman is saying.  Most of the time the truth is just too boring to sell!

Lee

By burning the midnight oil and listening to the home owning populous, the Florida Legislature has finally approved a property tax initiative that stands a good chance of saving us all a few dollars and may put an end to the current stand off between buyers and sellers in the Real Estate Market.

As of midnight October 29, 2007 the Florida Legislature has struck a deal to move forward on the subject of property tax reform. This deal, announced today, will be voted on by the good people of Florida on the January 29, 2008 ballot.

The proposed plan preserves the Save Our Homes Initiative which is vitally important to homeowners who have built up a great deal of tax savings over the years and will make these savings portable to the tune of $500,000.00 on the purchase of a new home.

The plan also calls for an increase in the amount of homestead exemption available to homeowners moving the value of the exemption from $50,000 to $65,000 resulting in an approximate savings per household of $264.00 per year.

Governor Crist promised to “Drop property taxes like a rock” and has yet to succeed in doing so although this plan, devised by the Senate and cleared by the house at the last possible moment should put homeowners in a much better position should they want to buy a new home in the future. In my opinion... out of all the plans put forth by the legislature in its regular and special sessions, this one has the best chance of providing us with much needed relief.

The ballot measure will need to be approved by a 60% margin in order to become a reality but it is expected to gain support over the next few months and increase its chances of passing.

Naysayer’s are already pointing out, however, that the SOH provision may prove unconstitutional and the new proposition will open up the current law to scrutiny.

This may be the case but the current SOH provision has stood the test of time so far and hopes are that the citizen’s of Florida will fight to keep their property tax exemption in the future.

Progress... At Last!!!!

Lee Maynard

Governor Crist is at it again! This time he has a new plan to reduce property taxes after his last attempt crashed and burned in typical political fashion.

As you recall Governor Crist promised to drop property taxes “like a rock” and after two special sessions our legislature delivered a plan that offered slightly less than a pebble’s worth of savings with the bulk of the plan wrapped up in a super exemption to be voted on in January.

The super exemption measure has now been removed from the ballot at the direction of a judge who found the wording “misleading”.

Result: Back to square one

Crist’s new plan certainly shows promise on the outside but has doomsday carefully written within. The honorable Governor is proposing a doubling of the current homestead exemption from $25,000 to $50,000 with a plan to make the Save our Homes Act portable in some capacity. Also proposed is a 25% reduction in taxable value for first time home buyers and an exemption on Commercial property tax.

Words like “unconstitutional” and “court challenge” are heard amongst those in the know so it seems likely that another special session will amount to more of the same. Nothing.

The governor’s ideas are challenging and in good faith with his campaign promises but like his failed attempt at property insurance reform they are merely jousting with windmills when it comes to getting the ideas into a working reality.

Theory rarely becomes reality when put through the catalyst of politics.

On a lighter note…

My wife and I recently went shopping at our local mega mart when for some unknown reason we developed a desire for a good old fashioned frozen chicken pot pie. Searching the frigid aisles of the frozen food section resulted in the capture of four chicken pot pies. Where is this going you ask? Read on McDuff!

We took our purchase home and placed them in the freezer with visions of golden crusted loveliness complete with large chunks of chicken swimming in a thick creamy sauce chock full of English peas. It was only a matter of time before we could sit down and enjoy our culinary confections.

Alas it was never to be for a few days later I happened upon an article in the Orlando Sentinel.

Jenn? I called into the kitchen. Are those “Banquet” Chicken pot pies? Why yes she replied, why do you ask? I continued on with my research. Does the box have the number P9 on the side? Once again she answered in the affirmative. Her curiosity got the best of her and she demanded to see what I was reading.

According to the Sentinel, Banquet Chicken and Turkey pot pies had been recalled but only batch number P9. Imagine the odds… Twenty years since we’ve entertained the thought of a pot pie and now our hopes and dreams of frozen food delight are dashed. If only they were lottery tickets!

Still I can’t help but ponder the words of the pot pie manufacturer. According to the article, the problems arose from people eating these pies without properly preparing them. “This is not a ready to eat product” the representative said.

Are there really people out there opening up a chicken pot pie and hacking away at the frozen crust without the benefit of cooking? Surely not… but as I drove myself to work the next day I noticed something. Those people are all around us. You’ll find shining examples of them on every road in America! So the next time you come across someone in such a hurry that they cut you off and race through the next red light you can rest assured that they also couldn’t take the time to heat up their pot pie!

Until next time!

Lee

Update:  The Fed has cut the Federal Funds rate by 1/2 of a point.  This surprised investors and Wall street reacted with great enthusiasm. 

What does this mean to me?

Here is a quick synopsis:

For the first time in more than four years, the Federal Reserve has made it cheaper to borrow, and by an unexpectedly big margin.

Federal funds rate

The central bank's rate-setting committee lowered the target for the federal funds rate by half a percentage point, to 4.75 percent. The prime rate will fall to 7.75 percent. Consumer interest rates based on the prime rate -- mainly home equity lines of credit and most variable-rate credit cards -- will fall a half-point in coming weeks.

Yields on certificates of deposit are likely to fall, too -- especially on shorter-term CDs -- even though they're not tied directly to the prime rate.

 As for mortgages: Don't count on mortgage rates to fall. They might, but they might not.

By my calculations the 30 year fixed note rate is almost exactly the same as it was yesterday at 6.25%. 

The market trend is for people to pull money out of long term investments and capitalize on the short term boom in the stock market. This will put pressure on mortgage rates and they should stay steady.

Bernanke is showing a lot of Moxie and I believe that he has more up his sleeve so stay tuned.

Lee

10:00AM Tuesday September 18 

In what could arguably called Ben Bernanke's most closely watched action since taking control of the Federal Reserve Board investors are tuned in across the country to see what will happen.

Today at 2:15PM Mr. Bernanke will let the cat out of the bag and let everyone know whether he will cut the Federal Funds rate by 1/4 of a percent, 1/2 of a percent or let things stay as they are.

There seems to be universal acceptance that he will lower rates ( the first such cut in four years ) but by how much is still in hot debate.  Market expectaions favor the 1/4 point reduction while others are calling for a full 1/2 point.

Look for mortgage markets to remain stable if he calls for a 1/4 point decrease as the pricing on mortgage products moves more on rumor, innuendo and hearsay than actual events.

If he holds steady or reaches deep in his bag of tricks for that 1/2 point decrease look for the mortgage markets to react quickly and substantially to make up for the cloudiness in the investor's crystal balls.

Mortgage rates historically are unmoved when the Fed cuts the overnight rate unless something unexpected comes out of these meetings although rates on adjustable rate mortgages are certainly affected if their indexes are tied to the Federal Funds rate.

I'll keep you posted.  Stay Tuned!!!!!!

Lee Maynard

Make millions in today's foreclosure market!  Loans are defaulting and banks are selling homes for pennies on the dollar... or so the pitch goes on the late night "get rich quick" station.

I wager that there will be someone making money hand over fist as a result of the current rise in foreclosures but it won't be those buying the latest greatest foreclosure madness program from their favorite loud mouthed huckster.  It will be the huckster carting off millions and laughing all the way to the bank!

Historically speaking we've all been told that banks are in the banking business and have no desire to be in real estate.  As a person who has seen countless offers rejected by bank's REO (real estate owned) departments I can tell you that this simply isn't true.

Banks know the value of real property.  They pay an awful lot of people to get the most from their investment and protect them from loss.  Foreclosed properties generally sell at or near their current market value making the entire process of purchasing a foreclosed property an ordeal envisioned only by the likes of Rube Goldberg!

How can I take advantage of the opportunities available in this distressed market without working through the bank's REO department?  Funny you should ask.  For $199.95 I will send you a tape that will unlock the secrets of the pros... just kidding!!

Here's how.  There are more than 20,000 homes listed for sale in the Orlando market.  Some have been listed for nearly a year  This is where knowledge and research come into play. 

As you shop for a home you will need to have your Realtor provide you with a list of homes that have been on the market for 6 months or more in an area that you find attractive.  Take the list and decide for yourself what a fair price would be for each property.  Follow that list of homes for a period of time and see how the prices match up to your expectations.  If one sells look it up in public records.  How much did it sell for?  If a seller decides to drop the price then compare that to your list.  Eventually you will figure out what the market is commanding for the properties you've selected and perhaps you will find that one property with a seller desperate enough to match your price.

There's no insider's foreclosure list!  No magic formula!  Just good old fashioned research with emotions kept in check.  That's how you find that little gem of a home at your price.  It's a buyer's market out there!

But...

Don't forget to consult with your lender before hand.  You don't want to discover any surprises when it's time to purchase that home you've worked so hard to find!

Lee

One has only to read a newspaper or watch the evening news these days to see that the mortgage industry is in a world of dissaray.  Over the next few posts I will attempt to make some sense of the headlines and keep you informed as to how your finances may be affected.

100% Financing

For years 100% financing of real property was virtually unheard of.  Recently though, we have seen several products created that cater specifically to the zero down crowd.  Lender competition and "irrational exuberance" (thank you Mr. Greenspan for your creative language skills) led the drive to finance more and more properties for more and more people regardless of their qualifications. 

As competition grew between lenders the underwriting guidelines dropped and approvals rose at an incredible rate. This spiral put lenders completely at risk if the borrower defaulted but the strong housing market presumably gave  safe haven to the investors should anything negative happen to the borrower.

Guess what?  Those risky investments came back to bite the investors in the arse!  Their dreams of an ever appreciating real estate market have been shattered along with their bottom lines as more and more of these loans move toward foreclosure.

Result: 100% financing is on its way out.  Buyers will have to pony up a down payment in the very near future as lenders pull back and lick their wounds.  Currently Fannie Mae and Freddie Mac still have 100% offerings but the underwriting guidelines have tightened to the point where those that truly need this type of product won't qualify.

How does this affect you?  If you have built a great deal of equity in your current home you will be able to access the required down payment needed when it is time to buy your new home.  Life goes on as before.  But...

If you are a first time home buyer... there will still be products out there to assist you but they will require a great deal more in the credit and asset department to obtain.  From this point on all free lunches are hereby cancelled!  A clean credit rating and work history are now required for home ownership.

This market correction is actually a positive step toward a safer and more stable pool of money from which to support the mortgage industry.  The more conservative lenders with strong portfolios will survive and those that jumped on the crazy express will fall with the speed of a dot com investor in the late nineties.  Hopefully this market cleansing will correct our current position and the supply of funds available for home purchasers will remain affordable and available for years to come.

More on the mortgage industry in another post.

That's the truth as I see it.  August 13, 2007

Lee Maynard

In today's high tech world of communication nothing can match the pure unadulterated pleasure of receiving a hand written "Thank You" note delivered by the U.S. Mail.

As a society we have moved away from slow moving forms of correspondence and replaced them with email and text messaging.  While these are perfect for most dialogue they truly fall short when it comes time to express your thanks for someone's thoughtfulness or extra effort.

Imagine trying to convey your sincere thanks in an email that shows up in the recipient's inbox sandwiched between messages promising increased libido and growth enhancing hormones and you get the idea.

A properly written and delivered thank you note will help you stand out from the others and receiving the same will make you feel like a million bucks.

Invest a few dollars in some nice generic Thank You cards and send them out to your friends, coworkers and mortgage professionals (shameless plug)whenever you feel that they deserve a little extra recognition.  You'll be amazed at the results! 

Lee Maynard

What the Heck??? is the name of my new series designed to answer some of the age old questions concerning the mortgage industry.  To that end I submit the first of many such articles...

What the Heck is Title Insurance???

Almost everyone that owns a home also has some form of title insurance.  Since nearly all of us have it perhaps it would be a good idea to have a better understanding of it.  What is it?  Where does it come from? and How does it protect me? are questions I have been asked over and over again.

For those of you who prefer the cliff notes please read the following:

Title Insurance protects you, the owner, as well as your mortgage lender from anyone exercising a claim against your property.  If the claim is found by the courts to be legitimate your title policy will reimburse you for the loss of your property due to that claim. 

End of Cliff Notes.  Here... is the rest of the story!

Let's start with the basics... Title Insurance can be thought of as an insurance policy that protects those with an interest in clear title to real property.  Boy, that sure clears things up!  Not really so I'll continue.

Title insurance will protect (indemnify) those that have a bona fide interest in real property by insuring against the risk of a previous interest.  Property owners of record and mortgage lenders both have a bona fide interest in making sure that the property they own and/or lend money on has clear title.

Clear title can be described as a title free of any encumbrances.  An encumbrance can be described as anything that would allow someone else to have an interest in your real property.  Liens, mortgages, judgements and prior sales are just some of the encumbrances that can be found when the public records are searched to determine whether a property has clear title.

Since clear title is desirable and clear title can only be obtained if the title is free from encumbrances then how do we determine that there are no encumbrances?

Title companies employ searchers that comb public records to determine any claims that may have been recorded against your property. Their report to the title insurance company will determine whether or not the company will insure your title and warrant that is free of defects.

Lenders require a "lenders policy" that protects them in the event that someone produces a claim against the title.  This policy is a requirement by all lenders and is the sole reason that title insurers have really nice houses!

Owners policies are not required but most title companies will provide this coverage to the new owner for a nominal fee.

In today's litigious society title insurance is a necessity.  It adds a great deal of cost to the real estate transaction but when weighed against the risk involved by not obtaining title insurance the benefits far outweigh the risk.

Wake up!  Nap time's over!

Until next time, I hope you have enjoyed this installment of What the Heck???

Lee Maynard        

How will you know when the market is on the rebound?

10.  Your Realtor has removed the pizza delivery sign from the top of their car

 9.  "For Sale" signs in your neighborhood no longer block out the sun

 8.  Your mail box is no longer stuffed with Real Estate Flyers  

 7.  You see your mortgage lender back at Happy Hour

 6.  Your Realtor no longer refers to their Hyundai as "Green Friendly"

 5.  You finally admit that you invested in condo's in 2006

 4.  Sign twirlers go back to hawking pizzas and cell phones

 3.  Someone actually purchases the condo they contracted for in 2005

 2.  Your crazy neighbors finally move

 1.  Your mortgage lender actually buys you a drink at happy hour!!!

The above comments bear no resemblance to any person living or dead... 

Unless, of course, you think it's you!!!

Lee

As I type this our wonderful Florida legislature is busily voting on a property tax reform bill that does little to assist property owners and falls far short of their promise to drop property taxes "like a rock".

It appears that the initial cut for the 2007 tax year will amount to about $137.00 per household across the board.  Using the Orlando Sentinel's tax cut estimator my personal property tax savings for 2007 will amount to a whopping $41.20 or the equivalent of about one gallon of gas per month.

In addition, the legislature through a combination of special sessions and closed door deal making, has decided to take the next step (replacing the Save our Homes Initiative with a larger homestead exemption) to the voters in a January 29th election.

This election will need a 60% majority to pass.  In this day and age I can only think of one issue where the Red and Blue voters can agree enough to support 60% of the vote.  If you're thinking "Keep Paris in Prison" you win a prize.  This issue is bound to die an ugly death at the polls whereby the politicos can stand back and throw the blame right back at us.

This "deal" is very much like hiring someone to rake the leaves in your yard. 

If, after spending countless hours moving the leaves from one side of the yard to the other they stop, call their work a success and let you and your spouse quibble over the method for removing said leaves then I submit to you that the people you hired to address the problem have failed.  The leaves are still in your yard and you, not the person you hired to correct the situation, must find the solution within yourself.

I wonder why this chaps me so much.  When property tax reform was first bandied about I assumed that it would become a political football and nothing, in the end, would become of it.  I made the mistake of believing in the lawmakers and their convictions.  It turns out that I was right all along.

Someone get me a list of names because elections are coming up soon and I am ready for change!

End of Rant 1 Side A

Lee

In an article dated May 29, 2007 the Orlando Sentinel examined the "No Fee" mortgage advertised by Bank of America.  The purpose of the article was to determine whether "No Fee" really meant no fee.

The answer, surprisingly enough, was No.  The "No Fee" mortgage was another reincarnation of the old marketing concept designed around prices that are artificially high but discounted in such a way that the consumer feels that they are getting a good deal.  In the business this is called perceived value with an emphasis on perceived.

Let's take a look at an example.  I'll use a loan amount of $250,000.00 and closing costs of $5,000.00. 

Lender A will have you pay the closing costs and allow them to be rolled into the loan amount therefore your loan amount increases to $255,000.00

Lender B of A will pay the closing costs for you and your loan amount will remain at $250,000.00

Lender A will charge a 6.30% rate for their fixed rate thirty year loan (according to the article).

Lender B of A will charge you a 6.80% rate for the same thirty year fixed rate loan (also according to the article).

Let's compare monthly payments of Principal and Interest on each loan:

          Lender A                                      Lender B of A

    $1,586.21 / month                            $1,669.51 / month

That equates to a difference of $83.30 per month or $29,988.00 over a thirty year period.  Ouch!!!

The article closes with a very important point.  Do the research, crunch the numbers.  Not all is as it seems in the mortgage industry.  By educating yourself and becoming a more informed consumer you can avoid being trapped in what looked like a good idea at the time.

These articles are my way of assisting you to make the right decisions when it comes time to purchase or refinance your home.  As always I will continue to tell you the truth as I see it. 

By the way, if you would still like one of these "No Fee" mortgages call me, I could use the extra money!

Lee

Here is a link to the article.

The answer is... CRIAP.

The question is:

    A. What is found in the bottom of a bird cage?

    B.  What was the first word out of your mouth when you noticed that you locked your keys in the car?

    C.  What is a mortgage acronym?

If you picked C you are correct!   Boring but correct!

CRIAP stands for the four most important factors an underwriter considers when approving a mortgaged Real Estate loan.

CRedit: Your credit report and score are indicative of your attitude and responsibilities toward taking on new debt.  The credit report is a reflection on how you have managed your debt over a period of time and can be very useful in determining how you will manage any new indebtedness.

Income: Your income is documented so that your ability to take on and support additional debt can be assessed.

Assets: Savings, Retirement and Stock portfolios are examples of your ability to save money.  If you're saving then obviously you are not spending more than you take in.  Assets are required when you must provide a down payment and cover all or some of the loans closing costs.  They can also be used as an excellent source of reserves if you run into future financial difficulty.

Property:  This is the actual home that you will be providing as security for the mortgage loan.  The property must be in good livable condition with noe deferred maintenance.  A current market value will be established to provide the underwriter with the security that if all else fails the property can be sold and the loan paid off with the proceeds.

I like to think of CRIAP as sort of a table.  Four legs provide a stable platform but you can also get by with only three.  Just like a table, when one leg is taken away the others must be strong enough to support the load.

Credit problems can be overcome by excessive strength in Income, Assets and Property.

Income problems can be overcome by excessive strength in Credit, Assets and Property.

You get the idea. 

So the next time you find yourself preparing for a new home purchase ask yourself...  Do I have my CRIAP together?

Take Care,

Lee

Great Loans Mortgage Funding Inc.

FACE IT! Home prices have skyrocketed in the past few years. For those of us lucky enough to have owned property during this time we have bankrolled a ton of equity. Good for us!!

But… What about the people that are currently looking to purchase their first home? With prices this high, how can they possibly afford to step into the home buying arena?

Here’s how… The mortgage industry is constantly working to make buying your first home more affordable. It all started many years ago with the development of FHA, Fannie Mae and Freddie Mac. Although technically not competitors, they do compete for market share. This competition keeps pricing low and moves these entities to develop products that encourage and assist people in purchasing there first home.

New programs have been developed that allow 100% financing along with large seller contribution amounts and reduced mortgage insurance. You get all of this and a 40 year term. Stick around long enough and they may even throw in a set of Ginsu knives!

Seriously though, the industry recognizes that first time home buyers need creative products if they are going to enter the market and they are developing new ideas and products daily.

Lending is a quirky business. I like to use the term “selling money” to illustrate the loan transaction. As long as there is money to sell, the industry will find a way to sell it. Whether it be interest only loans, Zero down payment products or 40 and 50 year terms the mortgage industry will always try to make home buying more affordable.

Until next week,

Lee Maynard

Please join me in celebrating the arrival of Larry Joseph Andre IV! Larry was born to our administrative assistant Leslie and her husband Larry Joseph Andre III on Saturday September 1, 2006.

TO BUY OR NOT TO BUY…. That is the question I am asked over and over lately.

Everyone, by now, has heard that we have entered a buyers market. What does that mean and how does that affect me?

Simply put a buyer’s market is a market in which the buyer has more control over the transaction than the seller.

For the past few years we have experienced a strong seller’s market. Buyers were pitted against each other in a bidding war for any property that came on the market. Typical market time was counted in days rather than months and properties sold for more than their asking prices in many cases. Think of being the seller with thousands of buyers trying to outwit, outlast and outbid their competition. You get the point.

Now comes what the media and industry analysts are calling a buyer’s market. Currently in the Orlando area there are over 19,000 homes for sale. Compare this with just 4,500 this time last year and you can see that the sellers are getting a bit nervous. The once almighty seller has been forced to bow down to the buyers that, only a year ago, were catering to their every whim. Radio ads from builders claiming price reductions and large allowances for closing costs are currently the norm. Condominium developers are flat shaking in their boots! Sellers are finally coming down off their high horses and working with the buyer to arrive at a fair market price.

Interest rates are currently low (30 year fixed rate notes go for about 6.375%). The Fed has temporarily halted rate increases and is expected to hold steady in the short term. As inflation fears grow this may not be the case in the long term. I wish I could more clearly read my crystal ball but the indications are that rates will continue to rise.

The market for home buyers is better than we have seen it in the past few years. Prices have stabilized and interest rates are still historically low. I can’t say in every case whether to buy now or wait on a price decrease that may never come but I can say that in my years as a mortgage professional (those of you who know me know how funny that sounds) that the most important factor in the home buying equation is the monthly payment. With interest rates currently in the low sixes and new mortgage products that allow for larger seller contributions and 40 year terms the time may just be right for that next move!

Until next week!

Lee

“Bou 149” in flight

Those of you who know me are at least somewhat aware of my love for aviation. This passion has recently taken me in a direction previously unknown. I, along with others, have taken on the challenge of maintaining and flying a Vietnam era aircraft that my father flew into harms way right around the time I was born. The Army Aviation Heritage Foundation owns this aircraft and relies on volunteers to keep it flying.

Sounds like a good time right?

Well, after countless hours of work and a bit of “large aircraft” flight training I was selected to fly as copilot on Caribou N4149HF or “Bou 149”. This accomplishment should have been the crowning event of my aviation experience to date short of being accepted as pilot in command.

I was wrong…

My interactions with the gentlemen who served on these aircraft and the history lessons learned from them have turned out to be the real treasure.

I recently spent a weekend with these men at a reunion of old Army pilots. Stories were told, friends were remembered, lives were relived and B.S. flowed like a river. I was, at many times, aware that the service these gentlemen gave to their country and the life changing events that followed may all be forgotten when the last two members of this organization sit down to toast their fallen brothers with a bottle of Cognac already selected for the occasion.

Stories about acts of bravery as well as acts of stupidity went hand in hand. Lessons of history were there to be learned and the wisdom of having “been there done that” was ripe for the picking. I learned a lot that weekend and realized that the legacy of these men flies with me and old Bou 149. That, my friends, tends to put a lot of things in perspective.

We can all learn from those who have gone before us. I was lucky to have found this group of men. We encounter these people every day without knowing. Take the time to listen and get to know those around you. You never know what you’ll find.

Until next week!

Lee

If you are reading this email then chances are you were one of my clients over the past few years and chances are also good that none of you are currently in a loan that started at a low, low 1.25% interest rate.

How can this be you ask? The reason is simple. I have only written two of these notes over the years and through a good bit of education managed to steer most of you away from this potential lending nightmare.

In CNN’s mortgage section on CNNMoney.com I found this headline:

Tick. Tick. Beware the mortgage time-bomb

That ridiculously low-rate ARM seemed like such a good idea at the time. But now, payments will be coming due in a big, big way.

The article goes into great detail regarding the concept of variable interest rates, negative amortization and recast payments but the bottom line is this…

You did not get stuck with a loan whose payment and payoff are about to adjust upward by a huge amount.

Thanks for listening at the time and please remember me when your friends start complaining about having to refinance because they can no longer afford the payments on the loan the “other guy” gave them.

I appreciate all referrals and will continue to give my clients the truth as I see it.

Until next week!

Lee

Here’s a link to the article:

http://money.cnn.com/2006/10/09/real_estate/arms_nightmare/index.htm?postversion=2006100911cnn=yes

It’s been a busy month but my long awaited email ramblings are finally here!

Enough small talk let’s take a look at the market:

There are more houses on the market than ever.

New home builders will do almost anything to sell their current inventory

Mortgage rates are still low (low to mid 6’s on a 30 year fixed)

Current home values are expected to slip slightly

So… what have I been doing lately? I have been working with people settling in for the long haul. They are renovating their homes, adding on pools, consolidating debt and waiting for the next market turn. They want to be ready when it comes time to sell and move or simply relax and enjoy their newly remodeled current home.

Second mortgages are becoming more popular than ever. Most everyone has a phenomenal rate on their first mortgage (if not call me!) and the thought of refinancing it makes my skin crawl. Second mortgages, as opposed to lines of credit, are fixed rate products which take the volatility out of the mix. These notes are currently available on a 30 year term at rates as low as 7.65%. This is well below the current prime rate of 8.25%!

If you are looking to tap into the equity of your current home please consider these fixed rate notes. They offer the same no closing cost option as the lines of credit but without the excitement factor inherent in a variable rate.

Until next week,

Lee

1/12th of 2007 has come and gone!

Its February folks so it’s time to do a little mortgage management.

Now that everyone has received their W-2’s (they were supposed to be in your hands by January 31) it’s time to start assembling your tax return documentation. All of you homeowners should have received a Statement of Mortgage Interest and Annual Taxes outlining the amount of interest and taxes paid out in 2006. This document should be submitted to your tax preparer along with all of your income and expense documentation. If you have not received one please contact your mortgage servicer directly.

Homestead. The deadline for filing is March 1, 2007. Do not miss it! In addition to saving approximately $500.00 per year in taxes the homestead exemption will also trigger the Save our Homes initiative which keeps your property taxes from rising more than 3.4% per year. This can be huge savings over a period of time and can not be done retroactively.

PMI. You may have heard that mortgage insurance will be deductible in 2007. It is but only on new loans originated in 2007. Check with your accountant for more details. Remember, I am only the messenger!

Real Estate Taxes. Check the online records search for each county to verify your 2007 tax rate. Chances are your property has been re assessed and your property tax bill may have increased. With taxes being paid in arrears you may have a shortage in your escrow account. It’s best to be prepared!

I am available if you have any questions on the items covered in this article or any other mortgage / real estate questions you may have. Please keep me in mind when you are thinking about purchasing or refinancing.

Until next time,

Lee Maynard

Links for Homestead Exemption Information:

Seminole County: http://www.scpafl.org/scpaweb05/index.jsp

Orange County: http://www.ocpafl.org/docs/hxbro.html

Lake County http://www.lcpafl.org/homestead_exemption_qualify.asp

 The mortgage world has embraced this pipe dream for years but without much progress.

Until Now!

We have finally been able to create a system that allows you to apply for a loan, sign all of the required disclosures, upload your income and asset documentation to your loan file as well as access all of these documents on line.

No more dead trees in our office!

This means that the entire loan process with the exception of closing can be done in your pajamas (or what ever your personal choice of sleep ware may be) in the comfort of your own home at the hour of your choosing.

This is a major breakthrough for an industry that still relies on the “Stone Tablet and Chisel” method of loan processing!

If you or any of your friends are considering a purchase or refinance in the near future please contact me. You’ll find it to be the quickest, easiest mortgage solution in town.

Thanks for reading!!!!

Lee