The question that usually arises is:  “should I lock my interest rate?”

The answer is clear cut and always the same, you always “lock” your rate!

Reason is, if rates improve, just change lenders.  If rates worsen, you’ve already locked so you’re in good shape.

Never float, always lock!

...Continued

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The cause for investors concern is high foreclosures nationally.  Rising foreclosures cause lenders to stiffen their credit requirements.

You see, “exotic” is exactly what subprime lending is all about.  Subprime is non-traditional lending.  It’s sort of a risk/reward situation.

Subprime lending is good for:

• borrowers with zero down payment
• borrowers who have to utilize a relative for credit score
• borrowers with good credit but zero down and no proof of income requirement
• borrowers who have had serious credit issues but have somewhat re-established

A brief history in subprime lending

Let me regress a few years and see if we can put together what caused this whole situation in the first place; and, more importantly how it will effect todays prospective buyer/borrower.

Dateline:  July 2003 - interest rates hit 25 year lows, and everyone and his brother are refinancing in order to secure themselves the proverbial 30 year fixed rate mortgage at 5.25%.

Not everyone is enjoying the boom, the sector of the market that is not as busy are the subprime lenders. 

Subprime lending is a way to offer flexible mortgage products to clients who fail to meet “conforming” loan criteria.  Some borrowers have credit issues, other borrowers have income issues, while still other borrowers have “down payment” issues. 

In conforming lending, when a prospective borrower does not meet a particular guideline, the loan is usually declined. In subprime lending guidelines are less rigid.  Boundaries can be adjusted.  In conforming lending some guidelines just cannot be adjusted.

So back to dateline July, 2003...The market is inundated with easy to approve high credit grade “conforming” applicants and those applicants are desperate to lock in their super low interest rate.  These high credit score borrowers want to get in while the rates remain low.  Loan officers are overwhelmed with “conforming” mortgage applications.

Due to the volume of applications loan officers are ignoring “subprime” applications because of the easy underwriting and fast approvals of their “conforming” applicants.

Subprime lenders scramble to creative “inovative” products and begin to relax their requirements. By doing so, they capture the attention of the banks and brokers thereby creating opportunities for borrowers who otherwise would not have qualified for products such as zero down payment options, and loans with no income verification.

Subprime loans become the “golden child”

As interest rates climb, banks and brokers begin to see these subprime programs as much more attractive alternatives.

The same time that credit and income requirements are eased, property values begin to dramatically increase.

This already precarious territory has a new exotic product to entice back some conforming clients..enter the:  1-Month Option Arm a redhot mortgage product that allows borrowers and buyers the program to fulfill a purchase for lowest of the low payments.

Property values soaring, exotic product offerings...next thing you know, we may have a runaway market.  (Greed is the motivating factor in upruns).

What goes up must come down

During a frenzied market, the mindset becomes:  “purchase a property and double your money”. But the fact is, everyone won’t get rich.  Some buyers forgot to remember:  “what goes up; must come down”.  Tough lesson...but what’s the moral to the story?

I learned a lesson as a young bodysurfer growing up on the beaches of Encinitas, California.  The lesson is this: “big waves get small; and, small waves get big”.

Can a person still get a quality mortgage loan...absolutely.  Are the credit requirements as lenient?  No.

Are the banks taking a wait and see approach?  Yes.

Are there still exotic products in the market place?  Yes.

Can I still buy a home with zero down payment?  Yes, but your credit needs to be better than it needed to be 3 months ago.

“Are people still getting Option Arm Mortgages?” Yes!! Yes!!...I got one myself...why shouldn’t you?

Banks don’t stay in business unless they loan money.

If you thought pajama days and free gourmet food was over the top, Google’s European office, recently celebrated “Alternative Transportation Day,” by urging their employees to commute to work without the use of a car. For the special occasion, Google, offered every single of their 2,000 European employees a new bike.

Employees could choose from a mountain bike, folding bike, or beach cruiser. Below is a picture of the three models of Google bikes:

Free bikes are just one of the many perks employees have at Google.

Don’t fear the Option Arm

Recently “Option Arm” mortgages have taken a bad rap and I wish to clarify some misconceptions around a inovative product that if managed properly can be a useful vehicle to provide investment opportunities which may not have been deemed “affordable”.

Let me relate a recent personal experience:  In July 2006 I purchased a property which I felt was listed well below “market”.  I wanted low payments. In my business some months alot comes in; others not so much.  Having the “option” to make a very low payment anytime I want, is valuable to me.  Also, I like buying properties for 65% of their value.  When I do that, I am awarded the equity and I immediately improve my net worth and/or cash flow.

My mortgage is for $191,500 my (minimum) payment is $617.55 (i love that).  My house is worth $265,000, I paid $192,000.  A $265,000 house was not affordable to me given normal mortgage product offerings. 

I shopped.  I didn’t so much shop for mortgages (i am supposed to already know about them); I shopped for a great property and an excellent value.

What I am saying here is if you know you’ve got the right property located, and you’re buying it well under market price, then get a mortgage which makes the monthly payments affordable so you can realize the windfall of the “instant equity”.

Would you consider a mortgage of $200,000 for a payment of $642.00?  Sure you would.  Now lets talk…

A question I’m often asked is, how can I buy my Florida home and have a stable, low monthly payment for the first 5 years? 

Would having an opportunity to make a super low house payment anytime you wanted for the first 5 years be helpful?

You buy (or refinance) a house for $100,000 that’s worth say $125,000.  You pay $504.79 for the first 12 months at the end of 12 months you owe $103,000.

If this sounds interesting,...we have nationally recoginized banks with mortgages, offering borrowers the opportunity of making payments anywhere from a 1% rate upward. GreenPoint Mortgage has rolled out a 5 year Option Arm Product that’s guaranteed to be 3% under the market rate for the first 5 years.

Countrywide offers a 1% start rate for the first five years which is another spin on the same concept.

What does that mean to the person interested in purchasing a property with a mortgage of $450,000?  For one thing it means a guaranteed minimum payment requirement requirement of only $1,446 per month for the first 5 years. 

Another benefit of this product is there is no increase in interest rate for “stated income” borrowers.  (Stated means you don’t have to prove your income.  If it’s a reasonable amount that you state, the lender will take you at your word).

Option Arm Mortgages are good for:

• persons who manage their finances well
• persons who are buying a property that is too expensive for their budget; but, is too good an investment to pass by
• persons who are only buying to resell and they’re absolutely certain of making a good profit in a very short term.

Option Arm mortgages are bad for:

• people who consistently spend outside their means
• people who do not manage themselves well
• people who are about to lose a large segment of their income

I may or may not be an expert in what mortgage offerings best suit anyones needs; however a product which is at an interest rate 3% under the prevailing market is worth some further review and consideration.

Should you wish to discuss “lower interest rate” products, or mortgage scenarios in general, feel free to contact me.  Your dollars are always guarded.

Long ago a trusted associate said to me:  “Want to look like a great salesman?  Then, sell a hot product.”

South Florida, in good times and in times of market correction is:  “a hot product” (no pun intended).

If you’re a person who truly enjoys seeing others succeed, you may be a candidate to earn 10 times what you’re earning and work one half the hours.

If you’re a great waiter, a fabulous window washer, an excellent housekeeper, a porter, a car salesman, a good son or daughter, there is a gathering
each week in five different locations around Miami-Dade which might be the vehicle which transforms you into a real estate/investment mogul.

This isn’t an attempt to convince you that you should rush down and become a real estate agent, or mortgage broker, or licensed real estate appraiser.
What I am attempting to do is to awaken you to the fact, one of the greatest products of all time is sitting right in front of your eyes.

Look at the panorama.  From almost any vantage point in Dade County are incredible structures which persons purchase.  These “persons” come from
all over the world to own property in Miami.
You may be the person who needs to fulfill the need to match them to what they already want:  FLORIDA REAL ESTATE

Here’s an ongoing 63 hour course, it’s called go to school, become a licensed real estate agent, and make alot of money.

What could be more simple?

Gold Coast Schools who’ve been around for 10 years and trained thousands of persons say that in 63 hours they can have you ready to score high enough (70 is passing) to become a licensed Florida real estate agent.
Real Estate Sales Associate Requirements

Obtaining a sales associate license is a three step process:

Step 1: Submit a state application. The application can be obtained from any Gold Coast location. The application must be notarized.
The applicant must be at least 18 years of age, and have a high school diploma or equivalency. Questions must be answered regarding any criminal background, and licensing history for any other professional licenses. An application fee is also required.

Step 2: Take and pass the required 63 hour course. Passing grade is 70%. Students can miss no more than 8 hours of classroom time, due to illness or family emergency. Any missed classes must be made up within 30 days of the scheduled course completion.

Step 3: Upon approval of the application, Promissor will send an approval letter to the applicant. The applicant then calls to schedule a state examination date. The applicant must pass the examination with a score of at least 75%.

Real Estate Broker Requirements

Obtaining a broker license is a three step process:

Step 1: Submit a state application. The application can be obtained from any Gold Coast location. The application must be notarized.
The applicant must be at least 18 years of age, and have a high school diploma or equivalency. The applicant must have been an active sales associate for at least 12 months within the past 5 years, with a broker, or approved government agency.

Note: If the applicant is licensed in a state other than Florida , he or she must obtain a history letter from the state or province that he or she is licensed in. The license history letter must state:

- Applicant’s name, employer, business and residence address.

- Must indicate applicant’s license was held active for at least twelve months within the preceding five years.

- Type of real estate license held by the applicant and the real estate license number.

- Date of licensure and expiration date of real estate license.

- Complete record of any disciplinary action. Questions must be answered regarding any criminal background, and licensing history for any other professional licenses. An application fee is also required.

Step 2: Take and pass the required 72 hour course. Passing grade is 70%. Students can miss no more than 8 hours of classroom time, due to illness or family emergency. Any missed classes must be made up within 30 days of the scheduled course completion.

Step 3: Upon approval of the application, Promissor will send an approval letter to the applicant. The applicant then calls to schedule a state examination date. The applicant must pass the examination with a score of at least 75%.

Out of State Licensees

Florida has “mutual recognition” agreements with other states. If you are licensed in GA, KY, OK, MS, NE, ID, CO, TN, AR or AL, you may be eligible to receive a license through mutual recognition. Please visit the Division of Real Estate website, or Gold Coast for more detailed information.

If you’re ready to embark on a fun process, take it slowly, enjoy other people and the company of winners, please accept my personal invitation to
become a licensed Florida real estate agent!!

Here’s how this success story happened:

A fine lady comes to Miami to help her Peruvian company in some business dealings.  When she first arrives she stays in some “executive” apartment rentals and goes about doing what her company sent her to do.

While “visiting” she decides to invest in a couple of cheaper properties and gets (2) rentals for about $85,000 each (this was like 7 years ago).

The “executive” apartment rental company where’s she stays get bought out by the company who sent her here and now they need her to come here on a more permanent basis.

She’s now saved up about $60,000 and decides to put it down on a property in Pembrooke Pines that sells for about $440,000.

Chase Mortgage gave her a mortgage in the past, and even though she made every payment on time, Chase somehow neglects to post any of her mortgage history to her credit profile. 

After many telephone calls and repeated requests from my office, Chase mortgage finally realizes that it’s in everyones best interest to post this fine lady’s two previous mortgage accounts to her credit profile.

The new home is purchased for $440,000, the seller agrees to pay $10,000 toward closing costs, and suddenly we have an appraisal for this property at $450,000.

Long story short is:  Lady visits USA, lady does excellent work, lady saves her money, lady purchases a home which she is delighted with.

Life is beautiful, shop around see what’s out there...work hard, and own a fine home.

Citizen, foreign national, non-resident alien, internationl investor, what’s the difference...real estate/homes are true collateral.  The risk for the lender is minimal because homes are not moved from one location to the next, they are permanent structures. In most cases the loan is made primarily to the collateral with the borrower promising to make good on the “houses loan”.

If you have been around a couple years, and you’ve got an income, it is not top priority for the bank to know by what means you earn your income. You do not have to be a United States citizen.  If you meet your obligations and have a verifiable asset, you can buy the property you want and deserve!  In some cases the “asset” requirement is less than $4,500

A Non U.S. citizen can easily buy homes in Florida.

Google sure knows how to keep their kids happy.

Here are some more perks being a Googel employee.