What is an FHA loan? And why should I look into them?

Article posted by Joe Bartolotta, a Florida Upfront Mortgage Broker in Orlando Florida

Many people, especially first time home buyers, do not know what FHA can do. Let me give you a little history on FHA. Let's begin with what FHA stands for, it stands for the Federal Housing Authority. FHA provides insurance to lenders for single family, multifamily and manufactured homes throughout America. FHA was created by Congress in 1934 to assist Americans with the dream of home ownership.

What doesn't the FHA do? The FHA does not give the money to people for a home and it does not set the rates on mortgages. FHA insures loans for lenders against homeowners defaulting. For the best rate and terms on a mortgage, you should compare mortgages from many lenders. Make sure the lenders are FHA approved. To date, the FHA has helped over 34 million people, are you going to be next? Below are some of the commonly asked questions about FHA.

Why choose an FHA loan?
There are lots of good reasons to choose an FHA loan, especially if one or more of the following apply to you:

• You're a first-time homebuyer
• You don't have a lot of money to put down
• You're worried about qualifying for a loan
• You don't have perfect credit
• You're worried about what will happen if you fall behind on your payments

If any of the above items describe you, then an FHA loan may be right for you. Why? FHA-insured loans offer many benefits that you won't find in other loans including:

1. Lower cost: FHA loans have competitive interest rates because the Federal government insures the loans for lenders. Always have your mortgage professional compare an FHA loan with other loan types.
2. Smaller down payment: FHA loans have a low 3% down payment and the money can come from a family member, employer or charitable organization as a gift. Most other loan programs don't allow these options.
3. Easier qualification: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
4. Less than perfect credit: You don't have to have perfect credit to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan.
5. More protection to keep your home: The FHA has been around since 1934 and will continue to be there to protect you. Should you encounter hard times after buying your home, the FHA has many options to help you keep you in your home and avoid foreclosure.

What kinds of loans does FHA offer?
FHA offers both fixed rate and Adjustable rate loans in addition to those types, they also offer a rehab loan. Below is an excerpt from the FHA website.

Purchase/rehabilitation loans - These loans are becoming more prevalent in our current market. Sometimes you might see a home you'd like to buy, but it needs a lot of work. FHA's solution is called the SF Rehabilitation Loan program (203k). You can get just one mortgage loan which includes the mortgage and the cost of repairs combined. The mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. The advantage of this loan is that you can buy a home that needs a lot of work, but you still have only one mortgage payment, and you can complete the repairs after buying the home.

How do FHA loans compare to conventional loans?

Conventional loans require a larger down payment, typically 5% or more. If you have less than perfect credit you may not qualify for many conventional loans and find yourself being offered loans with higher interest rates and/or fees than you expected. The best thing to do is compare the cost of the conventional loan to an FHA loan line-by-line. What are the fees on each? What is the interest rate? How much is the mortgage insurance on each? How much down payment is required? For some borrowers, a conventional loan may be less expensive. For many others, it will be more expensive than FHA.

Compare the cost of FHA over the life of your loan and how much it costs monthly to subprime and conventional types of loans. With the protection you get with FHA - it's a fantastic deal.

The DSCR and Commercial Mortgages

Article by Joe Bartolotta, a Florida Upfront Mortgage Broker with Fidelity Mortgage Services

How does an investor know if they are purchasing a property that will give a positive cash flow? How does a lender know if the property is a wise investment for them to lend on? While there are numerous factors used to answer both questions above, one answer that is used by both is the Debt Service Coverage Ratio formula. I am sure most people do not know what a dscr is, by reading this post, I will explain how to calculate it and if the property you are interested in is a wise investment.

Debt Service Coverage Ratio

What is it?

Definition:
The debt service coverage ratio, or debt service ratio, is the ratio of net operating income to debt payments on a piece of investment real estate. The higher this ratio is, the easier it is to borrow money for the property. The phrase is also used in corporate finance and may be expressed as a minimum ratio that is acceptable to a lender…

Here’s what you need to know:
Divide your Net Operating Income (NOI) by the Total Annual Debt Service or simply stated, divide your income over your mortgage payments for the year.

Note -- Net Operating Income on a property can have numerous variables depending on the property type. If you are purchasing a commercial NNN (triple net) property, then the tenant pays for all expenses, the Net Operating Income would be the total rent.

In commercial real estate, lenders on owner occupied properties usually require a 1.0 dscr, but have been known to go down to .90 dscr. This means that the property is actually covering only 90% of the debt. On the other hand, investment properties usually require a higher dscr, the range is typically from 1.2 to 1.5, the use of the property will be a main factor in determining the dscr required. For example, an A+ office building will have less risk associated with it and therefore would have a lower dscr while a property that can be used for a single purpose would have a higher risk and correspondingly a higher dscr requirement.

In summary, I hope I have given you an easy way to help decide if a property is a good investment relative to its cash flow.
If the DSCR is less than 1 - negative cash flow - most likely a bad investment
If the DSCR is equal to 1 - you have neither gains nor losses - you breakeven
If DSCR is greater then 1 - then you have a positive cash flow.

If you like the read, grab my feed!

Joe Bartolotta is a Mortgage Consultant with Fidelity Mortgage Services in Altamonte Springs, Fl. I am honored to be a charter member of the Upfront Mortgage Brokers Association. I offer a Lender Fee Guarantee, what I disclose in the beginning is what I deliver in the end. Contact me for more details.

Reverse Mortgage payment option pros and cons

Posted by Joe Bartolotta, a Florida Upfront Mortgage Broker on September 25th, 2007


With today's cost of living increasing, a Reverse Mortgage might be a solution to some of the "baby boomers" who are not retired or retiring in the future. Most people do not understand how Reverse Mortgages work, in the article, I will explain the advantages and disadvantages of the 5 ways to receive payment from a Reverse Mortgage.

Before I begin, let me first say that a Reverse Mortgage is not for everyone, the Reverse Mortgage is designed for people within certain circumstances. As each client has a different set of circumstances, please feel free to contact me to talk in further detail about your situation and if a Reverse Mortgage is right for you.

Most lending institutions are encouraging senior citizens to look into getting a Reverse Mortgage. I feel that a Reverse Mortgage is great for the right people at the right time. Is it for everyone, no, but there isn't a loan that fits everyone all the time.


I'd like to educate the consumer on both the advantages and disadvantages of the Reverse Mortgages payment options. Let me explain the options of receiving Reverse Mortgage payments first. There are currently 5 options available to the person receiving the payments of the Reverse Mortgage. The options are:

1. Line of Credit - You access funds at your discretion


2. Term - You receive fixed monthly payments for a set period of time.


3. Tenure - You receive fixed monthly payments for as long as you live in the home.


4. Modified Term - Fixed monthly payments for a set period of time, plus access to line of credit.


5. Modified Tenure - Fixed monthly payments for as long as you live in the home, plus access to line of credit.

Below are the pros and cons to the above mentioned payment options.

Line of credit -Pro - 1) Flexibility- You can access funds as needed. 2) Growth feature-The unused balance grows. This does NOT mean you are earning interest. The growth factor takes into consideration that your home has appreciated in value over the past 12 months and that you are one year older.

Line of credit - Con - 1) The funds in the line of credit can be exhausted. If that happens, one option may be to refinance your reverse mortgage to gain access to additional funds. 2) To access funds, you must submit a written request to the loan servicer managing your account.

Term - You receive fixed monthly payments for a set period of time.
Pro - 1) Funds can be automatically deposited into your bank account. 2) You receive larger monthly advances compared to the Tenure payment option.
Con -1) The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change. 2) Monthly advances are not indexed for inflation.

Tenure - You receive fixed monthly payments for as long as you live in the home.
Pro - 1) The monthly advances continue for as long as you live in your home, even if the total amount you receive exceeds the value of your home. Despite this, you will never owe more than what the home is worth.
Con - 1) The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change. 2) Monthly advances are not indexed for inflation.

Modified Term - Fixed monthly payments for a set period of time, plus access to line of credit.
Pro -1) Provides two sources of available funds. 2) Combines Term and Line of Credit Advantages
Con -1) You receive smaller monthly payments because a portion of your equity has been set aside in the line of credit.

Modified Tenure - Fixed monthly payments for as long as you live in the home, plus access to line of credit.
Pro -1) Provides two sources of available funds. 2) Combines Tenure and Line of Credit Advantages
Con -1) You receive smaller monthly payments because a portion of your equity has been set aside in the line of credit.

If you enjoyed this read, grab my feed.

Upfront Mortgage Brokers article on Yahoo Finance

This article was originally published on Yahoo Finance on September 20th, 2007 by Informa Research Services. It is a fantastic article about what consumers should do when looking for a mortgage.

Which Team is Your Mortgage Broker Playing For? by Informa Research Services
Thursday September 20, 6:15 pm ET

CALABASAS, Calif.--(BUSINESS WIRE)--As the popular sports saying goes, "The best offense is a good defense." The same can be said for using a broker to get a mortgage.

Navigating the terrain of mortgages--including terminology, conditions, and the process as a whole--can be a challenge, to say the least. Thus, to help alleviate some of the pain often associated with mortgages, many homebuyers seek the help of mortgage brokers to assist in making the process a little less daunting.

While most mortgage brokers do their work in the best interest of the homebuyer, here are a few tips to make sure you get the most out of your home financing experience.

• Acquire basic knowledge about mortgages and how they work. Avoid meeting with a
  mortgage broker or loan officer without any knowledge of your own. While brokers will take the time to explain the fine (and not-so-fine) print, having basic knowledge under your belt will help you better understand the terms to which you are committing.
• Research available rates online. Brokers work with a number of lenders to offer you a wide assortment of financing options and competitive prices. There are a number of resources available online and in print that you can reference for the most current and up-to-date rates. By becoming familiar with the rates available, you will be able to better evaluate the rates you are offered by your broker.
• All borrowers have the right to full disclosure of all fees, terms, and penalties associated with their loan, so don't be afraid to ask your broker questions. These questions can range from the details of the mortgages you are considering to the nature of their fees. Asking these questions should help establish a good working relationship with your broker. Also, this should help clear up any confusion concerning your mortgage. For example, ask your broker about prepayment penalties. You may not realize that the offer of a lower rate comes with potential restrictions.

Consider seeking out an Upfront Mortgage Broker® (UMB). According to the Upfront Mortgage Brokers Association (UMBA) website, "UMBs disclose their fees...in advance and in writing and disclose the wholesale prices passed through from lenders" (Source: www.upfrontmortgagebrokers.org ). This can help ensure that both you and your broker have a clear understanding of what is being agreed upon. The UMBA also states that UMBs represent the homebuyer and the homebuyer's best interest when shopping for potential loans. Furthermore, instead of increasing their commission from rebates or concessions they receive from third parties, UMBs pass along these credits to their clients.

By taking heed and completing your own pre-mortgage training, you and your broker can be a winning team.
_________________________________________________________________________________
Source: Informa Research Services, Inc.

This article is being published on my blogsite since I am a registered Upfront Mortgage Broker, I am not implying that I am the original publisher of this article.

Fed cuts rate, what does it mean to me?

Article by Joe Bartolotta, Central Florida's Upfront Mortgage Broker
Posted September 19th, 2007

I was asked today what the Fed's interest rate cut would mean to most people. Below is my answer.

The rate cut should reduce payments on many home-equity lines of credit, credit cards and some car loans. From what I have read, some economists have said it could lead to higher rates on fixed-rate mortgages down the road if bond markets expect the Fed move will spur higher economic growth or inflation.

People with certain types of adjustable-rate mortgages will not see any relief. That's because the rates on their loans are tied to the London interbank offered rate, or Libor, which has jumped sharply above the Fed funds rate because of the continuing credit crunch in the markets. Just fyi, the Libor, which has drifted downward recently, is an interest rate charged by banks for short-term loans to each other.

Here what the reduced Prime Rate means for:

• Homeowners - The rate cut is good news for borrowers with home-equity lines of credit, and savings could show up as soon as the next monthly statement. Borrowers looking for a new fixed-rate home-equity loan could also see lower rates.
• Savers - Savers could soon see lower payouts on their savings accounts, certificates of deposit and money-market mutual funds.
• Credit Cards - Many credit-card customers should soon see some relief. From what I have read, about 85% of all credit cards carry variable rates.

If you like the read, grab the feed (or sign up for email notification).

Home Buying Tips

Posted by Joe Bartolotta, Florida's Upfront Mortgage Broker
September 19, 2007

Home buying tips that will make you view the home buying process through the eyes of the seller.

If you were the seller of a home and received two identical offers, which one would you take? With everything being equal, most sellers would probably accept the offer with the strongest pre-qualification letter from a reputable lender.

Understanding what an experienced home seller, and his/her agent, will be looking for during a negotiation puts you in position to control the negotiations. In today's market, home sellers will be looking for several items on your pre-qualification letter:

• Proof of down payment and closing costs, the seller and their agent want to make sure you do not need to sell your existing home in order to purchase this one.
• Sellers will look for a clause from the lender that says approved, subject to appraisal only. This shows that the buyer has taken the time to apply for a mortgage and get their loan underwritten by their lender and is a viable buyer, using a smart lender.
• Don't let your lender's letter counteract your negotiations. You should require your lender to prepare two or three pre-qualification letters. Why you ask? Let's say you find a home listed at $350,000. After speaking to your Realtor and reviewing comparable sales in the neighborhood you feel the value is no more than $325,000. You decide to offer $300,000. If your pre-qualification letter shows you can afford up to $350,000, you just potentially negotiated against yourself. An savvy seller and their agent will know you can afford more. Have your lender write your letter to match your offer and not a dollar more. Also, have them write one for $325,000 to use if a counter-offer is needed.

Customize the numbers to your deal and you will get the home at your price.

Prime Rate reduced

Another article posted by The Florida Upfront Mortgage Broker Joe Bartolotta.
Original post September 19th, 2007

The prime rate was lowered by .5% today in an effort to offer banks the ability to use mortgages as collateral. The mortgage market, as everyone is aware is flat right now, and banks cannot use their mortgage notes as collateral. The Fed put out a statement that said, in part, "Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward." In response, the markets surged.

Just a note of interest, the prime rate is for short term loans and does not directly affect the traditional 30 year fixed rate mortgages. There may be some reaction by the mortgage backed securities (how 30 year mortgages are priced) but that is typically due to market volatility.

By lowering the prime rate .5%, most people with home equity lines of credit and some credit cards will benefit from lower payments. Let's hope this reduction is not a knee jerk reaction. I'll be sure to keep everyone posted.

Blog Review, weekend living

Hello Everyone,

I came across a blog labeled everydayweekender, click here to go to the home page. I found it to be very enjoyable and an easy read. I highly recommend reading it when time permits. There was one entry that was especially useful, it deals with the ever important linkback and ways to increase your page ranking within Google. Go straight to the entry by clicking here and utilize the information supplied.

In general, the blog was created to celebrate the weekend! The articles and product information in the blog are geared toward leisurely living. Posts are written around things people like to do on the weekend and when they can set some time aside for themselves and not worry about the rat race.

The topics covered range from, spending time with friends and having fun, to enjoying the weekend at a cottage, and enjoying great food.

If you had a great read, grab my feed!

Joe Bartolotta
Central Florida's Upfront Mortgage Broker

Federal Reserve & Prime Rate

Wall Street is certain the Fed will cut rates to ease the pain of the credit crunch, but how will the market react if the cut by just a quarter of a point?

There is no mystery that the Federal Reserve is going to cut the prime rate on September 18.

Still, there is some unknown surrounding the September 18 meeting. The big question being, how much the Fed will lower interest rates.

The Fed cut the discount rate by a half of a percentage point, from 6.25 percent to 5.75 percent, on August 17, leading observers to feel that the Fed would also lower the fed funds rate by a half of a percentage point on September 18.

Still, what will happen if the central bank only lowers interest rates by a quarter of a percentage point? Fed watchers said it all depends on what the Fed says in its statement.

Chances are the market would probably not be too happy with just a 25 basis point cut at first. We will see what happens on Tuesday afternoon.

My picks for great blog sites on all topics

Take a look at the blogs/sites below as they offer great information on many different and relevant topics. If you are on this list, feel free to distribute this post throughout your community.

Blogs I recommend:

• www.theupfrontmortgagebroker.blogspot.com - Joe Bartolotta is central Florida's charter member of the Upfront Mortgage Broker Association. The UMBA is a consumer advocacy group that looks out for the best interest of the public regarding mortgages. Joe Bartolotta, a Florida based Upfront Mortgage Broker, has created his blog to educate the public on various topics about mortgages. He writes about Convention, Reverse and Commercial Mortgages. Recommended by: Joe Bartolotta
• http://ethanol-business.com/ This site has been designed to more clearly communicate ethanol’s benefits and to provide insight into this dynamic renewable fuel. Ethanol drives economic development, adds value to agriculture, and moves nations toward energy independence. It cleans the air and offers consumers a cost-effective choice at the pump. Recommended by Joe Bartolotta
• http://internetmastery.wordpress.com/ This site offers simple solutions on how to grow and build your business online. Recommended by Joe Bartolotta
• http://www.fantasyfootballfreeadvice.com/ This is a great source of information for all fantasy league players. It's great advice at a great price, FREE. Click on over before you assemble next weekends team. Recommended by Joe Bartolotta
• http://www.franchisetalk.net/ Want to be your own boss? A franchise or business opportunity may sound appealing, especially if you have limited resources or business experience. However, you could lose a significant amount of money if you don’t investigate a business carefully before you buy. This website was created to help. Recommended by Joe Bartolotta
• http://www.adsensetrack.blogspot.com/ This blog is written by an advertising student in Iowa. I like the site and she blogs about different topics, her blogs are well written and are easy to understand and relate to. Recommended by Joe Bartolotta

Posted by Joe Bartolotta of http://www.theupfrontmortgagebroker.blogspot.com/ on Sept 17, 2007

No closing cost mortgages

No closing cost mortgages and people are smart.

I see and read about these so called "no closing costs" mortgages and the commercials about how "people are smart". I don't understand how these companies can feel good about themselves with how they treat clients. In my opinion, the companies that offer the no closing costs mortgages are just ripping people off every month by charging a much higher interest rate. The companies that tout, "people are smart" commercials are the very same companies that put clients into the worst loans ever created.

Let's talk about "no closing costs". Who believes that a mortgage company is going to give away a mortgage for absolutely no cost? Who??? I certainly don't. The mortgage company is in business for the very same reason as every other company, to make money. How does a mortgage company make money, one way is by charging interest on the money the lend. Obviously, the higher the interest rate, the higher the profit.

Let's talk about the commercials that say, "people are smart". I can't get over the fact that this company is the very same company that offered the worst mortgages ever created. This company advertised extensively about getting a rate that began with 1%, did they really disclose the fact that the mortgage was having interest added on to it monthly? I do not think so. I am sure it was in the very fine print for legal purposes but did the "order takers" that answered the phone at the mortgage company make it known verbally? I doubt it!

Basically, there is no free lunch. In my opinion, you are best off by contacting an Upfront Mortgage Broker. An upfront mortgage broker will look out for your best interest and show you the wholesale and retail rates. Visit www.upfrontmortgagebrokers.org or if you are in Florida, visit www.joebartolotta.com for more information on the UMBA.

Upfront Mortgage Broker and why to choose them

There have been numerous articles written on the Upfront Mortgage Brokers in publications like the WSJ, Time, Money, SmartMoney, etc to name a few.

In today's market, it is imperative to have someone looking out for your best interests. Someone who will work for you and deliver what they promised. Someone who will guarantee their fees in writing.

Visit http://www.upfrontmortgagebrokers.org/ or if you are in Florida, visit http://www.joebartolotta.com/ and look for a registered upfront mortgage broker to assist you with your next purchase or refinance.

We are here to help.

What is an UpFront Mortgage Broker®?
The UpFront Mortgage Broker® (UMB) concept was conceived by Jack Guttentag, the nationally syndicated columnist and well-known expert on mortgage loans. Professor Guttentag developed the idea as a result of his experience as a mortgage advisor to consumers. His website contains information on UMBs and other mortgage related topics and can be found at www.mtgprofessor.com. To be an UMB, the mortgage broker must operate under specific guidelines as set forth in the Upfront Mortgage Broker Commitment.

How does a UMB differ vs. a typical Mortgage Broker?
There are major differences between a UMB and a conventional mortgage broker: UMBs disclose their fees to customers in advance and in writing, and disclose the wholesale prices (rates and points) passed through from lenders. Customers of UMBs pay the broker's fee plus wholesale loan prices. In contrast, conventional mortgage brokers (MBs) add a markup to the wholesale prices, and quote the resulting “retail prices” to customers. Most MBs reveal their markup only in required disclosures after an application has been submitted.

The UMB's Interests are fully aligned with their customers. They can thus represent borrowers in shopping for loans. In contrast, MBs shopping the market are often in a conflict situation with customers. For example:

1. The loan type that best meets the customer's needs may not be the one that allows the largest markup for the MB.
   
2. MBs may profit by ignoring customer requests to lock the rate/points, putting the customer at risk.


3. MBs often increase their markup on customers who allow the rate/points to float by not giving them the best available rate (the float rate) when the loan is finally locked.


4. UMBs credit customers with any rebates they receive from third parties. Mortgage brokers sometimes receive rebates from lenders or concessions from home sellers. UMBs credit customers for any such payments that would otherwise increase the broker’s fee beyond what was agreed upon. In contrast, MBs may or may not credit customers for payments from third parties, depending on the circumstances.

Why should a consumer choose a UMB?
Most consumers are in the market for a mortgage loan only a few times in their life, and have limited time to learn the rudiments, never mind the many nuances, of an extremely complex transaction. The basic nature of the mortgage process allows non-UMBs the opportunity to “mark up” the interest rate and/or increase the fees. The net result is many consumers end up paying more than they should for a mortgage loan.

There is no guarantee that a consumer using a UMB will obtain lowest rate or lowest fees. But, consumers who utilizing a UMB will have the best opportunity to obtain the lowest price for a mortgage loan.

Steps to getting a Reverse Mortgage

The Steps to Getting a Reverse Mortgage

1. Become Aware
You learn about reverse mortgages from a relative, friend, co-worker, news article, advertisement, word-of mouth, or by visiting www.joebartolotta.com, etc.

2. Receives Upfront Education
You contact Joe Bartolotta, Florida's Upfront Mortgage Broker or the National Reverse Mortgage Lenders Association to learn more about the advantages of reverse mortgages.

3. Counseling
You seek counseling from a local HUD-approved counseling agency, or a national counseling agency, such as AARP (800-209-8085) or the National Foundation for Credit Counseling (866-698-6322). Counseling generally takes 60 to 75 minutes and is required for all reverse mortgages. The counseling is conducted face-to-face or by telephone.
By law, a counselor must review

1. the options other than a reverse mortgage that are available to you, including housing, social services, health and financial alternatives.
2. other home equity conversion options that are or may become available to you, such as property tax deferral programs.
3. the financial implications of entering into a reverse mortgage.
4. the tax consequences affecting your eligibility under state or federal programs and the impact on the estate or your heirs.

4. Application
You fill out a loan application and selects a payment plan, the options are:

• fixed monthly payments
• lump sum payment
• line of credit
• or a combination of these.

I will then disclose to you the estimated total cost of the loan, as required by the federal Truth in Lending Act. Next, you will provide to me the verification of your Social Security number, a copy of the deed to your home, information on any existing mortgage or mortgages, and the original counseling certificate.

5. Processing
The processing is where the lenders order the appraisal, which you pay for, to place a value on the home. The appraiser makes sure the physical condition of the property meets FHA guidelines. If any structural defects are found, you must hire a contractor to complete the repairs after the reverse mortgage closes.

6. Underwriting
After receiving all pertinent information and data, the lender finalizes loan parameters with you and I. It can take anywhere from 4-8 weeks (sometimes sooner, sometimes longer) to underwrite a loan package. Once underwriting has started, the payment option you desire will need to be decided.

7. Closing Once the loan package is approved, the closing (signing) of loan is scheduled. Interest rates are calculated. Closing papers and final figures are prepared.

8.Disbursement All existing debt on the home is paid off. A new lien is placed on the home. You may use the loan proceeds for any purpose.

9. Repayment
You don't make any monthly mortgage payments during the life of the loan. The loan is repaid when the you cease to occupy the home as a principal residence. The loan may be repaid by the homeowner or the heirs/estate, with or without a sale of the home.

Important: The repayment obligation cannot exceed the home’s value or sales price, this is why you are required to pay for mortgage insurance which is included in the closing costs. The insurance releases your heirs from any any liability above the market value/sales price of your home. If there is equity left after the loan is repaid, your heirs will receive it. It's a win win situation for you.

Things to know before buying your next home

How does someone know if they are being told the truth about the history of a house? Has the home had many claims reported on it because of natural disaster damage? Will the seller of the home disclose all the repairs done through insurance? These are all valid questions and the only way to find out is to obtain a C.L.U.E report, the bad news is, only the owner of a home can obtain the report. Before you buy your next home, especially in Florida or other natural disaster magnet states, ask the seller for a C.L.U.E. report.


Attention Home-Owners...Did you know that when you call and ask questions that some insurance companies will log it on your C.L.U.E. report? This tactic makes other insurers not want to do business with you. You can order your free C.L.U.E. report once a year just like you can with your credit report. If something on your report turns up false, you can challenge it. Visit to order your C.L.U.E. report or call toll free 1-866-527-2600. You will have to fill in some blanks and give your social security number so be prepared. Afterwards though, you can check out your personal auto and homeowners report. There is a charge if you need a homeowners report on more than one address.

Below are some of the FAQ's about C.L.U.E. reports, followed by the answers to those questions.

• What is CLUE?
• What information is included in a C.L.U.E. report?
• Is there any other information besides loss history in the database?
• How long is loss history kept in the C.L.U.E. database?
• Who contributes to the C.L.U.E. database?
• Who has access to C.L.U.E.?
• Can I order a C.L.U.E. report on property I want to purchase?
• How can I obtain a copy of my C.L.U.E. report?
• How can I correct erroneous information on my C.L.U.E. report?
• Can C.L.U.E. reports distinguish between an inquiry and a claim?

What is C.L.U.E.?
C.L.U.E. (Comprehensive Loss Underwriting Exchange) is a claims history database created by ChoicePoint that enables insurance companies to access consumer claims information when they are underwriting or rating an insurance policy.

What information is included in a C.L.U.E. report?
The report contains consumer claim information provided by insurance companies. It includes policy information such as name, date of birth, and policy number, claim information such as date of loss, type of loss and amounts paid, and a description of the property covered. For homeowner’s coverage, the report includes the property address and for auto coverage, it includes specific vehicle information.

Is there any other information besides loss history in the database?
Only loss history information is stored in the database. No other sources of data, credit reports, criminal records, civil lawsuits, legal judgments are incorporated into C.L.U.E. reports.

How long is loss history kept in the C.L.U.E. database?
The database contains up to 5 years of personal property claims history.

Who contributes to the C.L.U.E. database?
Only insurance companies that subscribe to C.L.U.E. can submit loss data and access C.L.U.E. reports. Consumers can access C.L.U.E. reports on themselves and their own properties.
Some companies choose not to subscribe to C.L.U.E. Losses filed with nonparticipating companies will not appear on a C.L.U.E. report.

Who has access to C.L.U.E.?
Insurance companies that contribute loss data to C.L.U.E. can withdraw information from the exchange. In addition, some insurance agents, with the authority of the company they represent, can withdraw data.

Can I order a C.L.U.E. report on property I want to purchase?
No. Under the federal Fair Credit Reporting Act, C.L.U.E. reports can only be accessed by the owner, insurer or lender for the property. However, you can request that the current owner of the property order a C.L.U.E. report.

How can I obtain a copy of my C.L.U.E. report?
Under the federal Fair Credit Reporting Act you can request a copy of your C.L.U.E. report from ChoicePoint Consumer Disclosure, P.O. Box 105108, Atlanta, Georgia 30348-5108, or call toll free 1-866-527-2600.

How can I correct erroneous information on my C.L.U.E. report?
If you discover an error on your C.L.U.E. report, an invalid claim report or an incorrect loss payment, for instance, you can contact ChoicePoint directly and report the problem. ChoicePoint will then contact the insurance company on your behalf and ask for clarification on the matter. The company has 30 days to respond to ChoicePoint and provide evidence that the information on the C.L.U.E. report is accurate. ChoicePoint will follow-up with the insurer after 20 days if the company does not respond and again after 28 days without a response. If the company does not respond within 30 days, ChoicePoint will remove the information from the database.

Can C.L.U.E. reports distinguish between an inquiry and a claim?
C.L.U.E. reports indicate losses by type. Consumers should be aware that contacting their company or their agent to discuss an actual loss might be considered reporting a claim, even if the company does not end up making a claim payment. This is because when a loss occurs, the policy requires the company to take specific actions within specified time frames. Consumers should be specific as to whether they are filing a claim or only making an inquiry.
For instance, a consumer may contact his/her agent to report an event, such as a broken water pipe and to determine the extent of coverage in order to decide whether or not to go forward with the claims process with the company. The insurer might not indemnify the consumer for this loss for a variety of reasons; the amount of damage may be below the deductible; the consumer may decide to pay for the damage, or there may be no coverage for such a loss under the terms of the policy.
If the consumer filed an actual claim and the insurer made no loss payment on this claim, this information would be recorded by the company and may appear on a C.L.U.E. report.
An inquiry is generally regarded as a call by a consumer to a company representative or agent to discuss terms of coverage including the extent of coverage on a specific loss. Many insurers are working on ways to inform their policyholders about the important distinction between a claim and an inquiry.

Foreclosure Scam tips

Tips on Avoiding Foreclosures, Delinquencies and "Foreclosure Rescue" Scams

If you are facing a mortgage payment that you cannot make or if you have fallen behind on your mortgage payments, the first step you should take is to contact your lending company directly.

Please do not ignore the letters or phone calls from your lender. Foreclosure on a mortgage and the loss of a home is an expensive process. The longer you wait to make the call, the fewer options you will have.

Going through the foreclosure prevention process can be complicated and you do not have to do it alone. There are legitimate organizations such as Non-Profit Housing or Credit Counseling Agencies that can help you with the following:

• Analyze your situation
• Go over your options
• Prioritize your debts
• Prepare information for your lender

For a list of HUD –U. S. Department of Housing and Urban Development approved housing counselors, please visit http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call (800) 569-4287.
Remember! Counseling services are usually free or require a small fee.

The following links provide information that may assist you.


Consumers

• Miami Herald Article: Red Flags for a Possible Mortgage Fraud Transaction
• The Department of Housing and Urban Development maintains a list of counselors approved to provide homeownership counseling.
• Florida’s Attorney General also offers assistance in choosing a credit counselor.
• ACORN (Association of Community Organizations for Reform Now)
• Borrowers in trouble may get some relief
• Bankrate.com: Avoiding Foreclosure

Industry

• CSBS/AARMR Guidance On Nontraditional Mortgage Product Risks
• Federal Agency Guidance Database
• FDIC: Statement on Working with Mortgage Borrowers
• HUD Pushes Mortgage Lenders To Avoid Foreclosure Losses
• U.S. Senate, Committee on Banking, Housing, and Urban Affairs urges the Board of Governors of the Federal Reserve System to exercise its authority under the Home Ownership and Equity Protection Act (HOEPA) to prohibit unfair, deceptive, or abusive lending practices not in the interest of the borrower.
• 2006->Chapter 494->Part IV" target=_blank>Provisions of the Florida Fair Lending Act, Sections 494.0078-494.0097, Florida Statutes, prohibit a number of predatory lending practices and apply to any person who makes a high-cost home loan or acts as a mortgage broker or lender.

Tips For Consumers On Avoiding Foreclosure “Rescue” Scams

Many Americans who have fallen behind on their mortgage payments are being targeted for so-called foreclosure “rescue” or “prevention “scams.

If you are facing foreclosure you should be wary of solicitations that offer to assist you in stopping or preventing foreclosure. If the assistance sounds too good to be true or if it sounds too simple, it usually is. You should be cautious before agreeing to or signing anything from someone other than your lender or servicer, which states they can assist you in preventing or stopping a foreclosure.

What is a Foreclosure “Rescue” Scam?
Simply put - it is where a company or person promises to help save your home from foreclosure, but is actually intent on stealing your home or most of the equity you have accumulated in your home.

There are several types of Foreclosure Rescue Scams you should be aware of:

• Foreclosure Prevention Specialist – phony foreclosure counselors.
• Phantom Help - charges high fees for work the homeowner could do themselves.
• Lease/Buy Back – homeowners are deceived into signing over the deed to their home.
• False Bailout – the homeowner is lead to believe that they can rent their home from the new owners and eventually repurchase the home.
• Bait and Switch - the homeowner thinks they are signing new mortgage documents, but are actually signing over the deed to their home.

Visit the following links for more information on Foreclosure “Rescue” Scams and how to avoid becoming a victim.

• National Consumer Law Center, Inc.’s Tips For Consumers On Avoiding Foreclosure “Rescue” Scams.
• Freddie Mac: Avoiding Foreclosure and Beware of Scam Artists
• HUD: How to Avoid Foreclosure and Foreclosure Prevention Companies
• Federal Trade Commission: Mortgage Payments Sending You Reeling? Here’s What to Do - Be Alert to Scams
• Organizations, like the Center for Foreclosure Solutions, help borrowers avoid foreclosure and help financially stressed borrowers avoid predatory foreclosure rescue scams.

The information above was obtained from the
Florida Office of Financial Regulation
200 East Gaines Street · Tallahassee, FL 32399 Website

The steps to buying your first home in Florida

The steps to buying your first home in Florida

So, you want to buy your first home. The question is, where do you start? With the right people to guide you, the process can be enjoyable!

Below, I will break down the steps so that you know what to expect.

1. Consult with a Loan Officer- Find a Loan Officer that you would like to work with by visiting http://www.upfrontmortgagebrokers.org/ or http://www.joebartolotta.com/.
Below is a list of items you will need to obtain the financing for most loan programs, especially in our current market. It would be best to gather them now, before the meeting with your Loan Officer.

• W-2's for the past 2 years for everyone on the mortgage.
• If you are self employed, you may need signed tax returns for the past 2 years.
• Paycheck stubs for the past 30 days
• 2 Months of Bank Statements for ALL accounts
• Copies of cancelled Rent checks for the last 12 months
• Make a list of all of your debts with account numbers, minimum payment & current balance owed
• Most Loan Officers will charge upfront for the appraisal. The appraisal is the valuation of the home in the current market. The estimated cost are between $300 and $400
• Copy of your drivers license or passport
• Copy of your social security card
  

After obtaining the above documents, you will then meet with the Loan Officer and sign the mortgage application. The mortgage application is then submitted with the above documents to an underwriter. An underwriter may require additional documentation or clarification on certain items, these are commonly referred to as "stips", short for stipulations. Once the underwriter has signed off on all stips, the loan is then sent to the closing department. The closing department creates a package and the package is then sent to the title company. The title company creates the closing paperwork but before the final paperwork can be signed, the loan officer must review the Settlement Statement. The Settlement Statement contains the final breakdown of all fees associated with the purchase. A good loan officer will review each and every line to insure that the fees are within estimates (for fees they estimated on the GFE) and are being charged to the correct person.

2. Consult with a Realtor-The initial meeting should go over your desired price range, the needs and wants of your home and possibly viewing a few homes via the MLS. I would like to expand on one area of this meeting, the part of needs and wants.
Determine your needs and wants- Looking at houses on the Internet is such a time saver! However, you may find that once you get inside the home you feel quite different about it. Working with an experienced professional Realtor has many benefits, one is that they often will be able to learn floor-plans of many houses and be able to show you listings that differ in their floor plans.

3. House Hunting- For most people this is the most enjoyable portion. You begin to imagine which rooms will work for what purpose, like a nursery and a home office or a media room.

4. Write an Offer-Make sure to take plenty of time going over the entire contract and all addendums. It is important to understand what you are agreeing to. You will need anywhere from $500 to 1% of the negotiated price for earnest money. The earnest money is accounted for an applied to your closing costs and/or down payment.

Negotiations-There are many points to negotiate. Not just the price. Here are a few examples:

• Earnest Money...the actual amount
• Closing Date...when is it best for you
• Closing Costs contributions....the seller of a house is allowed to pay a portion of your closing costs
• Home Warranty...historically a wise policy to obtain, it gives you piece of mind over the major systems in the house
• Misc items like a Refrigerator, Washer, Dryer, and Window Coverings
• When the contract has been agreed upon by all parties, it is then signed and considered executed.
  

5. Inspections-I highly recommend that you attend the inspection, actually, I do not know of any professional Inspector that would do an inspection without the future home-owner being present. A licensed professional inspector will go through the house inside and out, exposing the flaws and highlighting any extra features. The Inspector will write a report that will note any repairs that need to be done. These repairs could make or break a transaction. You may also be able to negotiate the need for these repairs to be completed before the closing takes place or a reduced sales price in order to cover these repairs.

6. Appraisal-The appraisal is ordered by the lender, the appraisal is the value of the home as determined by recent comparable sales within a given time frame and a given distance relative to the home you are purchasing. The appraisal is typically ordered immediately after a satisfactory inspection report. No sense is paying for an appraisal on a home that needs too many repairs.

7. Survey-A survey is required on all purchases, the survey will show all easements, building lines, and all other pertinent information that pertains to the property. The survey is typically ordered by the title company.

8. Home Owners Insurance-It is the your responsibility to obtain proper home owners insurance. Usually, you will want to obtain quotes from numerous companies. Your loan officer and Realtor may be able to assist you with reputable companies they have worked with in the past.

9. Formal loan approval- The formal approval will come after all loan application conditions have been satisfied, in addition to a satisfactory appraisal, proper home insurance coverage and clear title.

10. Final Walk-Thru-Once the home is empty you will be able to see any of the imperfections that were once covered by furniture and other items. Your Realtor will be with you to answer any questions if something has happened for example while the owners were moving their belongings out or if something has been uncovered that wasn't noticeable before.

11. Closing-After you sign all of your mortgage documents, it is time to celebrate being a homeowner.

Congratulations!
Choosing the right people to assist you makes this process much smoother and much more enjoyable. If you are looking for a home in Florida, please contact me, I look forward to hearing from you.

Respectfully,
Joe Bartolotta
Mortgage Consultant
Fidelity Mortgage Services
http://www.joebartolotta.com/
Direct 407.340.0220
Office 407.786.9500

Reverse Mortgage...Is a Reverse Mortgage right for you?

Is a Reverse Mortgage right for you?

Have you heard about Reverse Mortgage but always wondered what they were? Is a Reverse Mortgage right for you?
Reverse Mortgage Facts...

Senior homeowners age 62 and older can use Reverse Mortgages to access the equity in their homes and convert the equity into monthly streams of tax free income and/or a line of credit. This is accomplished without having to sell the home, give up title, or take on a new monthly mortgage payment. More and more seniors are faced with increasing living costs and are unable to meet the financial demands of today's world. A Reverse Mortgage will allow them to stay in their home and enjoy a higher standard of living by removing the mortgage payment they are making and allowing them to access the equity in their home to be used for any purpose.

Reverse Mortgages are becoming more popular. The FHA's reverse mortgage is a federally-insured private loan, and it's a safe plan that can give seniors greater financial security. Many seniors use it to supplement social security, or to meet unexpected medical expenses, make necessary home improvements, and more. Since your home is probably your largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you!

Borrower Requirements:

• Must be age 62 years of age or older
• Must own your property
• Live in your property as primary residence
• Participate in a consumer information session given by a HUD-approved housing counseling agency.

Mortgage Amount Based On:

• Age of the youngest borrower if more than one
• Current interest rate
• Lesser of appraised value or the FHA insurance limit

Financial Requirements:

• No income or credit qualifications are required of the borrower
• No repayment as long as the property is the primary residence
• Closing costs may be financed in the mortgage
  

What types of properties qualify for Reverse Mortgages?
Nearly all types of property qualify, from single family dwellings, two-to-four unit properties that you own and occupy, townhouses, detached homes, to units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved.

Can the lender take my home away if I outlive the loan? Simply stated, the answer is no as long as you continue to occupy the property as your primary residence, keep the taxes and insurance current and perform the other obligations of the mortgage.

What are My Payment Plan Options?

1. Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
2. Term - equal monthly payments for a fixed period of months selected.
3. Line of Credit - unscheduled payments or in installments, at times and amounts of borrower's choosing until the line of credit is exhausted.
4. Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
5. Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.

How Does the Interest Work on a Reverse Mortgage?
With a reverse mortgage, you are charged interest on the money that you receive. Most reverse mortgages charge a variable interest rate that is tied to an index, for example, the 1-Yr. Treasury Bill or the London Interbank Offered Rate (LIBOR), plus a margin.

Will I Lose My Government Assistance If I Get a Reverse Mortgage?
A reverse mortgage does not affect regular Social Security or Medicare benefits. If you are on Medicaid however, any reverse mortgage proceeds that you receive must be used the month they are received. Funds that you retain would count as an asset and could impact Medicaid eligibility. To be safe, you should contact the local Area Agency on Aging or a Medicaid expert.

When Do I Pay Back My Loan?
The loan is paid back when you choose to not occupy the home as your principal residence, whether you (or in the case of couples, the last remaining spouse) pass away, sell the home, or permanently move out. The amount you owe can never exceed the value of your home. If your home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to you or your estate.

Still unsure about what to do? Contact an independent counselor that can answer all your questions over the phone and without any "high pressure" sales tactics.

Under What Circumstances Should I Not Consider a Reverse Mortgage?
Because of the upfront costs associated with a reverse mortgage, if you intend to leave your home within 2-3 years, there may be other less expensive options to consider, such as home equity loans, no-interest loans or grants that may be offered by your county government or a local non-profit to repair your home, or a tax deferral program, if you're having problems paying your property taxes. Also, if you want to leave your home to your children, then you should consider other options, because in many cases, the home is sold to pay back a reverse mortgage.

Call Joe Bartolotta with any Reverse Mortgage questions you have for properties located in the state of Florida.
Joe Bartolotta is Florida's Upfront Mortgage Broker working at Fidelity Mortgage Services located in Altamonte Springs Florida. He can be contacted by visiting http://www.joebartolotta.com/ or by calling 407.340.0220 or toll free at 1.800.828.7357

Confused by credit come-ons? Protect your privacy.

Confused by credit come-ons? Help protect your privacy.

Joe Bartolotta Florida's Upfront Mortgage Broker 407.340.0220
http://www.joebartolotta.com/ Fidelity Mortgage Services

I am reading the "Your Money" section of the Sunday Orlando Sentinel and the title says "Confused by Credit Come-Ons?". It piques my interest so I read the entire article and decide it is a good topic to share in my blog. Anika Myers Palm, a Sentinel Staff Writer, wrote the article.

The story starts out with a woman who really wanted to buy a house. After applying for a mortgage, she gets inundated with offers from other financing companies telling her they can do better and that she isn't getting the best deal. One caller even told her that she might already be in default even though she hadn't even made her first payment.

The woman stated, "when it first started happening, I was opening the mail and I panicked".

Who is to blame for this happening to her? The mortgage company she applied to? The credit bureaus?? I guess it depends on whom you talk to, but in my opinion, the blame rests solely on the credit bureaus. I tell you why a little later.

When we (mortgage companies, loan officers) check a person credit report, our search is encoded with information that indicates the consumer is applying for a mortgage. Third party companies buy and sell this information; some people refer to this information as "trigger leads". These trigger leads are sold and other mortgage companies then call and mail the individual.

Who's to blame? Mortgage companies say that the problem is the individual may not know it is another company calling them and supply additional information to them that will in turn trigger another credit check. This potentially could throw confusion into the loan process. The credit industry says that mortgage companies are just a little bitter because the market has turned in the last few years. Regardless of who is to blame, consumers need to be aware that this takes place.

I have been charting the trigger leads generated by my own inquires. I have found that if you enter only the minimum information needed, the client receives very little contact from other companies vs. entering everything and having the client contacted by everyone under the sun. By minimum, I mean name, address and social security number. I do not enter birth date, employment info, income, etc on the application while I am pulling the clients credit report, I save that for after I have received the report.

I feel the blame lies on the credit bureaus because they are SELLING this information. They are trying to say they are giving the consumer more choices of which to choose from. I feel they are giving away someones personal information to anyone willing to pay the price but in the end, the consumer is the one that pays the price in numerous ways. Identity theft is just one way that all consumers pay the price.

There are a few things consumers can do to "opt-out", one is to call 1.888.567.8688 or visit http://www.optoutprescreen.com/. The consumer will be asked to enter some personal information, which the FTC says is confidential, and will only be used to process the request. In conjunction with opting out, the consumer should visit www.dmaconsumers.org/cgi/offmailing to remove themselves from receiving notices about new businesses in the community, coupons or catalogs unless the consumer has directly signed up for them.If anyone has any other ideas or suggestions, please feel free to share them in the comments section.