Florida Mortgage | Loan Servicing ~ What Consumers Need to Know in this Market...

Bad economic news tops every news broadcast with big lenders like American Home Mortgage, Geneva Mortgage, Homebanc and many more completely cease all operations.  This change in the game is leaving many homeowners worried about what is going to happen to them now that their lender is KAPUT!

 Do not fret... don't worry at all... in fact, get ready to make your September payment as scheduled.  Just keep your eyes open for your letter regarding who will be servicing your loan from now on.

You see, many of the lenders that you are paying your monthly payments to are in fact only servicing your loan.  They are not holding the note, but instead they are collecting and distributing funds for the actual mortgagee - typically an institutional investor.

A lender that holds loans is called a Portfolio Lender.  Meaning that the loan is part of their investment portfolio much like we would keep stocks, bonds or a mutual fund in our retirement portfolio.  Most lenders do not portfolio loans, they sell them on the secondary market instead.

 The Secondary Market is made up of investors like Pension Funds, Insurance Companies, FNMA (Fannie Mae), and FHLMC (Freddie Mac).  These investors have contracts with lenders to service loans on their behalf.

A lender that services loans performs certain tasks for a Portfolio Lender or Institutional Investor.  These tasks are:

• Collecting Payments - the most visible function
• Collecting Escrow payments
• Maintaining appropriate Hazard Insurance - including fire, hazard, windstorm and flood
• Paying Real Estate taxes
• Collecting Private Mortgage Insurance (PMI) payments
• Paying Net Proceeds to the Investor/Lender

Other tasks that these service lenders provide that are not as evident are:

• Sending out compliance documents - like the escrow analysis forms
• Preparing Mortgage Interest Tax Deduction forms for your taxes
• Disclosing the principle and interest due and paid monthly and annually
• Dropping the Mortgage Insurance when it reaches appropriate levels
• Calculating payoff amounts upon sale

and finally... (what we're seeing so much in this market)

• Accelerating the note and foreclosing on the borrower in the event of default
• Taking title to the property and liquidating the collateral on behalf of the Investor.

So in this market when we see some big name "lenders" going under, many times they are not the ultimate mortgagee... but instead the servicing entity.  Despite the servicing entity's demise, the investor will have another lender contracted out very quickly so they do not lose the revenues.

Unfortunately, there is little or no transparency in this area of the lending industry to show you who you ultimately owe your money to...

So... as I mentioned before... be ready for your next month's payment.  It will be due to someone even if your "lender" shut its doors. 

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David A. Podgursky, MBA
The Mortgage Go To Guy!!
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

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Florida Mortgage Loans | Condo-Hotel/Condotel Rental Income Rules

Condo Hotels or Condotels continue to grow in popularity in Florida, especially in hot tourist areas like West Palm Beach, Fort Lauderdale, Orlando, Tampa, Bonita Springs and Miami.  Because of this, it is important to keep in mind what Lenders are requiring in their lending guidelines concerning this unique property type.

One major issue that comes up with Condo Hotels is the rental pool.  Part of the allure of the property is the ability to allow the hotel to rent the room out to guests while it is not being used by the owner.

Unfortunately, Lenders require that the rental pool be voluntary.  Involuntary rental pools are to be classified as Timeshares. 

What this means is that when the owner of the Condotel unit wants to rent out their unit, they must make sure they put the unit into the rental pool... it isn't automatically rented without their say so. 

Considering issues like seasonality, major local events, and discount room rates/sales, there is no valid way to forecast the actual income that will be shared by the hotel and the room owner. 

An owner that does not want to rent their Condo Hotel room at all has that option under a voluntary rental pool.   While this might bother some hotel operations that want the room to rent, this is the only way that financing can be obtained.

The voluntary rental pool also affects the potential net income.  A buyer cannot be promised $10,000 a year return on a property if they are only going to make it available for 6 months out of the years or only on weekdays.

Realtors (listing agents) and Developers are therefore strictly prohibited from advertising rates of return, cap rates or even offering investment advice concerning Condotels.  Any potential rate of return could only be hypothetically based on an assumed usage rate that may never be reached.

Because of this, any rental income will not be counted as part of the qualification income for the Condo Hotel Loan.  To the borrower, this means that their debt to income ratios will not benefit from any potential cash flows from the property. 

Given this information, it is prudent that Realtors and Mortgage Brokers advise their clients who are interested in purchasing Condo Hotel properties that they will need to be able to qualify for this purchase on its own with all their other current debt. 

If they are unable to meet the Lenders' Debt to Income Ratios with their current debts and current primary residence, then they will likely not qualify for a Condo Hotel Loan.

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David A. Podgursky, MBA
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Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

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Florida Mortgage | Fixed Rate or ARM ~ the decision depends on YOU

Fixed Rate Mortgages (FRM) versus Adjustable Rate Mortgages (ARMs) is a hot topic of debate right now. There is a camp of Fixed Rate evangelists that want to force-convert all mortgagors into their fold... all-the-while the ARM holders are scared by the news of impending doom sung from the rafters by Journalists and FRM propaganda.

So now YOU want to buy a house or refinance your loan and you're getting drawn and quartered by your "trusted advisors" about whether you should get a Fixed Rate Mortgage or an Adjustable Rate Mortgage (ARM).

Different people swear by different financial philosophies... the problem is they are DIFFERENT FROM YOU. The only person that knows your financial situation is YOU. The only other person who can help you decide which loan program fits you best is your Mortgage Broker.

Your Mortgage Broker will understand the nuances of your unique financial situation and will help you decide on a loan program based on your needs and preferences TODAY as well as help you plan for the future.

The information you give to your Mortgage Broker will all filter down through his/her consultative funnel and allow them to offer you two to three loan programs to choose from as well as the features and benefits of each program for you.

There are several criteria that are weighed to make the decision. A few of them are as follows:

• Your life stage
• Your career stage
• Your income and future potential
• Your family stage
• Your stability
• Your property needs

A good way to show how the decision process works is via the table below.

	Fresh out of college Just got first great job Family recommends buying not renting Single 600sq ft - 1br - Condo Down Payment Assistance from Parents
Fixed Rate Mortgage Secure - Rate is good for 30yrs Higher Payment Building Equity Assurances beyond period of time borrower will need	Adjustable Rate Mortgage Likely won't be in small condo long New job = money is tight Interest Only option helps reduce Monthly expenses No real need to "build" Equity Low cost of property means low appreciation Really this is just a step above renting
	3 years later Promotion at work Engaged - two incomes Need more space 1000 sq - 3br - Townhouse
Fixed Rate Mortgage Secure - Rate is good for 30yrs Higher Payment Building Equity Assurances beyond period of time borrower will need	Adjustable Rate Mortgage Double Income but increase in expenses Nice but small profit on other property Further from work means cost of commute Interest Only option frees up monies to repay fiance's student loans Interest Only frees up monies to pay off credit cards
	Married Husband gets promotion New Baby Refinance for Renovation of Nursery
Fixed Rate Mortgage Secure - Rate is good for 30yrs Higher Payment Building Equity Assurances beyond period of time borrower will need	Adjustable Rate Mortgage More babies in the future Space is already tight Cash is tighter Cash out with Interest Only Exit Strategy - 2 yrs Max
	Dad now Middle Management Second child First child in private school New Dog - Need a Yard Need a 5 bedroom
Fixed Rate Mortgage Secure - Rate is good for 30yrs Longer period in Home "Family Home" Salary plus investments makes comfort 30yr Hybrid with 10yrs Interest Only	Adjustable Rate Mortgage Expenses are manageable 10 year timeline unsure (max ARM length) Interest Only nice option
	Son headed away to College Daughter in Private School Mom going back to work Refinance to renovate home office Some of Cash Out used to buy 4-plex on campus for son and friends
Fixed Rate Mortgage 10yr Interest Only expires soon Double Income Investments Up Salary plus investments makes comfort 30yr Hybrid with 10yrs Interest Only Primary Residence	Adjustable Rate Mortgage Expenses are manageable 10 year timeline unsure (max ARM length) Interest Only nice option 4-plex purchased with Cash Flow ARM... increased monthly returns Investment
	Both Kids in college / Empty Nest Mom's career is taking off Dad has promotion Buying Vacation home in South Florida Buying Investment Property as well
Fixed Rate Mortgage Secure - Rate is good for 30yrs Appreciation = good equity position Investments well stocked Not sure if/when full time move to Florida Cash out of this property to buy 2nd Home another 30yr w/10 IO? - could go either way Primary Residence	Adjustable Rate Mortgage Likely won't be in House for 10 years Wintering in South Florida is great! Many friends already full time Florida residents 4plex in 1031 for 20plex Retail Strip Center Purchased where Mom's office resides 20plex bought with OptionARM Strip Center 5/1 ARM Investments
	Retirement Full time residents in Boca Raton Living on investments Sold home Up East Enjoying grandkids' visits
Fixed Rate Mortgage Timeline unknown on Primary Using monies from sale of other home to add on to retirement funds Great Ranch House in Gated Community Ability to travel Can always refinance if need for equity HELOC in place for emergencies Another 30yr Fixed with 10yr Interest Only Primary Residence	Adjustable Rate Mortgage Investment Properties 1031 Exchanged for more Properties Large Portfolio of investment properties growing Future Cash Out Refis fund purchases Cash flow establishing further income for retirement Investments restructured into LLCs to put in trust for kids/grandkids Investments

___________________________________________________

As you can see, the borrowers' unique needs changed throughout the different lifecycles that they experienced. From just starting out in a job to getting engaged and needing to pay down accumulated debt to having kids that eventually went off to school to retirement...

Even investing in rental properties posed a dilemma about which way to go - Fixed Rate or ARM.

The consensus wants to say that since there are so many Winner icons in the Fixed Rate column, that it is obviously the winner by majority rules. The problem with that philosophy is that in any case shown above, if the timeline varied just slightly, the ARM might have come back in favor.

If an ARM had been chosen over a Fixed Rate Mortgage then the timeline had run longer than expected then Mr and Mrs. Borrower would have had to refinance ahead of schedule. Although, this isn't the worst problem they could have - it could speed up their timetable for investing in other properties or other investment vehicles.

The truth is that it is hard to predict change. The best that can be done for these borrowers is to sit down and consult on:

• Where they are
• Where they are going
• What is their entry strategy for the property
• What is their exit strategy

The best mortgage vehicle is whichever plan that will give them some security to make sure that their personal and financial lives are not burdened - but instead enhanced by their Mortgage.

When this occurs, their mortgage actually becomes a tool for their:

• wealth accumulation
• debt elimination
• college planning
• Investment strategy
• future retirement incomes

The choice between the Fixed Rate Mortgage and the Adjustable Rate Mortgage is ultimately up to the borrower. The Mortgage Broker can only advise... but a good mortgage broker can show that there are definite advantages to both programs for all borrowers.

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More Florida Mortgage and Real Estate News You Can Use From David A. Podgursky, MBA The Mortgage Go To Guy!! Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

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Florida Mortgage | Land Surveying Primer ~ Why you should order a survey every time!

ARE YOU BUYING A HOME OR AN ENCROACHMENT??

A Land Surveying Primer

Ok... I am a little biased right now. I grew up in a Real Estate Industry Family...specifically my parents own a Land Surveying Company.

• I remember at 11-12 years old going in and doing tax book research and answering phones...yes I was a master of microfiche then!
• I remember at 14-15 going to the courthouse and looking up deeds and plat maps.
• I remember at 16-17 following the field crew around and watching and helping them spot houses
• I remember at 17-18 after drafting and architecture classes at High School drawing the mortgage inspections (the simpler ones)...

I remember driving out and doing Mortgage Inspections... spotting boundaries, driveways, decks... anything that may have been added either after construction or since the last sale.

Why am I relating this to you??

Because... the mortgage industry has become cheap!

Everyone is worried about closing costs and interior inspections... but who is making sure that you are not buying a property with an encroachment?

Who is making sure that you're buying a home without a huge easement?

No one!!!

Why?? Because lenders are not requiring mortgage inspections... much less full surveys, or pins.

• Mortgage Inspections are rudimentary checks of the house to make sure that whoever built on the land colored within the lines.
• Surveys actually find benchmarks, setbacks, landmarks, centerlines and easements and detail them on paper...they are of legal record if recorded.
• A Staked Survey is when the crew marks the corners with wooden stakes or flags. They are temporary but are important for construction.
• Pins is when the surveying crew does a survey and then puts iron rods, usually capped with an orange plastic cap with the surveyor's initials and license number. These are "permanent".
• Plat... the drawing to the left is a "plat map" ... it shows all the dimensions and directions of a property including where the house sits. Note the dotted lines, those are set backs. Transits, GPS and Triangulation are used to find these dimensions and their latitudes and longitudes.

The biggest issue that arises from not ordering at least a mortgage inspection is border disputes!

What a survey or mortgage inspection helps to prove is whether your neighbor has a deck or driveway on your property and whether the area you wish to expand upon is buildable land!

If you purchase a piece of property and the neighbor has his driveway over the lot line, you can request that he move it.

If he cannot, you have to do a "sell-off" of that portion of the land to the neighbor - which leaves you with an irregular lot and some deed restrictions will not allow you to have a smaller lot than you already have ... this requires rezoning!

You can also create an easement... a legal pass-through allowing your neighbor to use that part of your property. The easement will be written for a number of years and for one specific use.

My community is Zero-Lot-Line... because of this, the Eastern boundary of my lot abuts my neighbor's house. Well... the roof line hangs over my lot so there is a legal "Overhang Easement" drawn onto my property allowing the neighbor to have his roof and a satellite dish overhanging but not attached to my property.

An easement can also be created to provide access to a lot behind another parcel that has no direct road access... and the driveway created would be the responsibility of the property owner to maintain not the person behind them.

Easements can also be for Utilities, Sewers, Phone, Roadways, access, etc...

Because of the complicated nature of land - raw or unimproved - it is up to us - the Real Estate professionals - to encourage the use of Land Surveying techniques. It is up to us to step forward and head off the purchase of land without an inspection of the parcel because then we can ensure a smoother transaction and a peaceful existence for our clients on their properties for the entire term of ownership.

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Florida Mortgage | Foreign National Homebuyers - Visa Waiver Program

When applying for a Foreign National Loan in the United States, a Foreign National Borrower must provide a copy of a valid passport and Visitor Visa for the lender to verify the eligibility of the borrower.

The Visa Waiver Program is available to residents of certain countries to come to the United States and stay for a period of no longer than 90 days without obtaining a visa.  These Foreign Nationals can come for either Tourism or Business reasons... Business or Pleasure.

Currently there are twenty seven (27) countries who qualify for the Visa Waiver Program.  They are:

Andorra	Iceland	Norway
Australia	Ireland	Portugal
Austria	Italy	San Marino
Belgium	Japan	Singapore
Brunei	Liechtenstein	Slovenia
Denmark	Luxembourg	Spain
Finland	Monaco	Sweden
France	the Netherlands	Switzerland
Germany	New Zealand	United Kingdom

In order for a Foreign National that qualifies for the Visa Waiver Program to obtain a Mortgage on a Second Home or Investment Real Estate, the Foreign National Borrower will need to obtain a letter certifying their Visa Waiver Program status from the nearest US Embassy or Consulate.

Foreign Nationals using the Visa Waiver Program as opposed to obtaining a full Visitor Visa will likely have trouble qualifying for a property as a primary residence, therefore only a Second Home or Investment Property mortgage program will work for these borrowers.

For more information on the Visa Waiver Program choose one of the links below:

• Department of Homeland Security   Customs & Border Protection   website.
• Visa Waiver Program Traveler Guide

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David A. Podgursky, MBA
The Mortgage Go To Guy!!
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

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Florida Mortgage Loans | Equity Line for Hurricane Preparedness

Hurricane Season is upon us once again in South Florida.  People are checking their rations, stocking up on bottles of water, vital medicines and cans of tuna, buying batteries by the case and trying to meet the Hurricane VIP - the neighborhood roofer!  All the while they are forgetting to have ready CASH in an emergency - cash that could come from a Home Equity Line of Credit (aka HELOC).

The HELOC is a life preserver when there is a sea of people out there all clamoring to get their home repairs done.   Having ready access to cash is essential to quick repairs.  Many contractors will be very busy and turn away business if they have to offer financing.

When a homeowner does not have cash available, we see the all-too-familiar blue tarps for months until finances catch up to repair costs...

...and when there are major repairs to do, it may be hard to get financing!   A lender may not write a loan on a property in need of hurricane repairs

A Home Equity Line can solve this issue which is why I recommend one to all of my clients.

Advantages of having a Home Equity Line

Low Cost

• There are typically two options, the Low Cost Home Equity Line and the No Cost Home Equity Line.  Both have their advantages but neither will have anywhere near the closing costs associated with a Conventional Mortgage

Interest Only

• The payment is low because it is an Interest Only payment.  This helps the borrower afford the payments when cash is tight.

Easy access to funds

• A HELOC will have a checkbook associated with it and often even a credit card.  These checks and cards draw money from the line rather than a checking account.  This gives the borrower 24/7 access to their money.

Tax deductible

• The repairs are always deductible when a state of emergency is issued.  The IRS has a box to insert the repair costs due to a Hurricane.  The interest paid may qualify for mortgage interest deduction as it is technically being used for home improvement.  Consult with your tax professional to make sure.

Easy Processing

• Typically the Home Equity Line is an easier program to process with less time needed. 

Loan Amount

• The HELOC can go as high as 95% Loan to Value in many cases.  I prefer to see a 90% Loan to Value which leaves some equity in the home to pay for expenses in the case that the borrower needs to sell the property in the next few years.

You can evacuate

• FEMA guidelines are pretty strict.  If you were able to evacuate and did not stay in the home or a FEMA shelter, then you will likely be denied assistance.

 

Caveats to Home Equity Lines!

No discussion of mortgages could be complete without the pitfalls!

• The HELOC payment will be in addition to the current mortgage payment on the property so you will need to qualify for the combined payment.
  
• Using up too much your Home Equity can flip you upside down should the market drop.
  
• Almost all HELOC's have some sort of prepayment penalty.  It is usually small but there nonetheless.
  
• Home Equity Lines are Prime-Based Loans.  That means that the interest rate on the loan will be determined by what the Prime Rate is at the time.  Prime is currently 8.25%.  There are teaser rates offered by many banks but make sure to read the fine print!
  
• HELOCs are Adjustable Rate Mortgages and will adjust as Prime Adjusts.  There are loans that are fixed as well.  You should ask about fixing the rate as an option if possible.
  
• HELOCs are not ATMs.  The money should be used for home improvement or debt consolidation and should be budgetted carefully.

Don't wait until it is too late.  Consult with your Florida Mortgage Professional today to talk about your options before the storm is in the box!

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David A. Podgursky, MBA
The Mortgage Go To Guy!!
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Florida Mortgage | Foreign National Homebuyers: Europe has come calling!

Wow... the Sun Sentinel has finally caught wind of the Europeans that are buying en masse in South and Central Florida these days!

The article speaks of why Western and Northern Europeans are growing fonder of the area for both the lifestyle and climate.

They printed this map showing that most of the European Buyers are from the UK.

There are also many from Denmark and Holland.

Right now, Mortgages for Foreign Nationals are at an all time high. It is easier now than it has been in years to get financing at attractive rates.

That was actually a point missed by the journalists. Loan Programs are available from far more banks and lenders. Also there are new options in foreign exchange that are making the conversion of funds that much quicker and easier.

Some of the other factors that are influencing the current investment boom is the strong Euro. Based on the Dollar, the Euro is dominant... and the British Sterling is even stronger.

So what does this mean to Europeans? It means they're making much more on their investments than US citizens.

How? Foreign Exchange Rate Hedging...

The Dollar has long been an international standard in currency. Even people with stronger currency have a tendency to sock some away in US currency. It was actually causing a panic a few years ago when the US believed that so many bills were out of circulation and sitting in foreign floorboards and safes that we would eventually run out ourselves.

• The Dollar has also been volatile - as volatile as our politics and financial markets.



• As the dollar has dipped - much like a stock, foreign investors have bought the dollar.



• As the dollar has recovered - the investors would sell the dollar back and take the profits.



• So... while the dollar is LOW, investors are buying up Dollars with their Euros.

Then they buy a property here in the US.

Over time, the property itself increases in value. The dollar also becomes stronger over time as we recover economically.

Then when the foreign investor sells the property, they make a profit in appreciation. They then take the Dollars and exchange them for Euros and make a profit on the appreciated Dollar!

So if they buy the US Dollar and the House.

• They put $100,000 down on a $500,000 house (20%).



• The House appreciates 15% over 5 years to $575,000.



• and the Dollar gains 5%, to $105,000 (equity CAN appreciate in this instance).



• The combined profit is $80,000 on $100,000 invested or 80% in 5 years!



• subtract out the debt service and depreciation to get a true IRR

How's that for some fancy European Math!

So... who wants to start marketing overseas with me??

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David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Florida Property Tax Update - How the Retiree Community may get helped and hurt

Florida has long had a reputation for Shuffleboard and the Early Bird Special to contrast the month of March when the state is riddled with High School and College Co-ed Debauchery, namely Spring Break.

The State has grown up a lot in the past 50 odd years though... and growing pains have left us where we are now - in the middle of a huge tax dilemma.

One demographic that has been brought to the forefront of this debate is that retirement community that the State may be neglecting in their planning as thus far nothing in the news has touched on how they will benefit directly.

Sure, they'll get a tax break with possible double homestead exemptions and rolling back taxes to their assessed levels of 4-5 years ago... but some of these people have been in their houses for 20+ years and the caps on their taxes have certainly been broken a few times...

Think about it... if you get a 3% maximum increase yearly over 20 years, you're talking some major compounding!

So now with Grandma and Grandpa as Art Blanchet and Bill Quigley refer to them well past the days when their pensions ran out and living on a VERY fixed income are watching their taxes go up and their crown molding fall down... how do they deal with the idea of higher taxes on their everyday shopping AND the fact that maybe their kids who are about to retire may not be in a place to join them in Del Boca Vista (Seinfeld-ism)?

The fact is... they ARE paying more than their fair share right now. They are not making an active income yet they are getting taxed on their properties in lieu of income tax.

Then with the measure to raise sales tax, their cost of living will be somewhat contained but their fixed income is still getting taxed despite the fact that it isn't taxed directly.

Many Florida homeowners simply have it easy. WHAT?!? Blasphemy!

NO... listen up... Florida has no State Income Tax so many people come here because Property Taxes are much lower than they'd pay if they stayed in their home-state or even home-country! I said it! YOU HEARD IT! Millionaires and Foreign Investors!

For instance... American Express was the subject of a news story specifically regarding the Centurion Card. No...99% of the people in the world have NO clue what I'm talking about. Some people have heard of it but think it is an urban myth... I know it exists. Why? Because I've held them in my hand. Yes - I've touched several REAL Black Amex Cards. There are only 1500 in the world... why do I bring them up? The highest concentration of Black Amex Holders in the world live in Palm Beach County, Florida.

What in the world does that have to do with nothing whatsoever?

well... Grandma and Grandpa live in a $125,000 condo that they paid $30,000 for 20 years ago. They're paying $2500 in Income cum Property Taxes to live there...

But... Millionaires with great credit - because that's what you have to be to get an invitation to apply for a Black AMEX after 5 years of spending $5-10K minimum PER MONTH on a Platinum AMEX - don't pay income tax on their passive and active incomes. And they live in $12.5Million Condos on the Beach... 100 times the pricetag but making FAR more than 100 times the income in MANY instances.

Oh... that's just a drop in the bucket sayeth Lawmakers.... yeah... they're right... THEIR BUCKETS.

(Ironically while this is up for debate, Former Congressman Mark Foley is paying for his defense with the millions of dollars in leftover campaign monies... why aren't those going back into the state since he's NOT campaigning?!)

Let's say ONE Black Amex holder at $5000/mo spending has to pay 2% more sales tax... Write it on paper with me people!... yes... that's $100 more per month. Oh... yeah.. .they'll feel that.... but $100/month times 12 for a year is $1200/year or Half of What Grandma and Grandpa pay in taxes! Oh yeah... and the IRS lets you deduct State Sales Tax if your State has no Income Tax!!

These people are SPENDING more in two weeks than Grandma and Grandpa are being Taxed!

So it is boiling down again to the Haves vs the Have Nots.

Grandma and Grandpa HAVE NOT so they're Taxed in their Retirement...

The HAVES are still going to get tax breaks regardless... and the net effect of their increased spending being taxed will really not amount to much at all.

So why go that route?

Because there is no State Income Tax to identify where monies are really coming from.... what?!

The Millionaire demographic is harder to identify than Grandma AT THE STATE LEVEL.

No... I'm not pretending to be Robin Hood... I don't wear tights. What I'm saying is that the issue isn't property tax, nor is it sales tax....

it isn't about EQUAL treatment of all citizens... it is about EQUITABLE treatment...something far different and far harder to create except in Utopia... an island off of Never Never Land.

That's where lawmakers just can't seem to dig in this... how do you identify taxpayers that should be paying more or less?

Income Tax

Believe me... I don't want to pay it either... but it is definitely a place where a RETIREE EXEMPTION Could be enforced!

Your Mortgage Advisor is WHO???

Today's Mortgage Industry is a vast, complicated landscape of amortization, interest calculations, equity lines and bond prices.

People are clamoring to get in on the profession but soon find that it is far more education intensive than they ever would imagine.

Just keeping up with the ever changing progams offered by the major lenders is a challenge, but to keep up with a whole slew of smaller, more diverse and cutting edge lenders and the effect the mortgage backed securities market has on their rates is something better left for a pro.

My main concern as a Mortgage Broker is... who are borrowers going to for their mortgage advice?? and why aren't they mortgage brokers?!

They say you can't spend 10 minutes in a restaurant in Boca Raton, Florida or any other volatile real estate market without hearing some conversation start up about real estate. From the first time homebuyer to the retiree living on rental incomes from an industrial park complex, everyone wants to talk about it.

The thing is... that's GREAT for me... it means that there are people thinking about transacting and I want to know them!

The problem is... when everyone is talking about it - no one is LISTENING about it!

Far too often I'm hearing someone call me to tell me what loan fits their needs rather than going through a brief but thorough fact finding mission to determine which of the THOUSANDS of loan products out there fits their needs best.

• All I want is a 30 year fixed, no points, 5.5% on a Mobile Home
• Don't even bother me with that talk about Interest Only
• Option ARMs are only talked about by Thieves
• I don't want any of that Negative Amortization stuff
• My friends went bankrupt because of their ARM

WHOA... hold the bus!

It is GREAT to know what you want... and to do some research into different loan programs... but I don't operate like that. Why? because you are UNIQUE and my goal is to take your unique financial situation and pair it with a specific loan program that will effectively and efficiently meet or exceed your needs for the entire life of the PROPERTY - NOT the just Loan!

HOGWASH!? NO... and don't listen to anyone that tells you otherwise! I MEAN IT!

Look... here's the skinny.

• Who are you?
• How old are you?
• What stage are you in your life?
• What stage are you in your family?
• What stage are you in your career?
• What is your salary like today... and next year?

Those are all things that all your research can't help you distill with the help of a Banklate or SpendingTree. They are questions that I, your friendly neighborhood Mortgage Guy will ask you.

Wikipedia, MSN Money, Mortgage-X... none of them can help you sort through who YOU are to arrive at the right program for you... instead they let you bring your biases and those of your trusty advisors with you.

You know... Mom and Dad, Your friend the family attorney, Your grandfather's accountant, your rich older (much older) sibling, your family's stockbroker, your Realtor... all the people that would answer all the questions above VERY differently than you.

So why are THEY telling you which loan to get? How are they, all of a sudden, masters of the information that will help you get the program that fits YOUR needs properly?

Well...sorry to say... I'm BLUNT so I'll say it anyway... THEY ARE NOT the people you should be listening to for Mortgage Advice. Most of the time they aren't even the ones you'll tell about your credit and salary issues when you're NOT buying a house!

Let's look at the facts.

• Mom and Dad are 50-60s, settled down, may have one more house in their future and it is likely smaller than this one, they have savings, pension, security and retirement planned. Even better, they have YOU out of the house so you're not draining their disposable income away from their leisure. So how are they poised to help someone starting out? much less understand one in this economic time/market?
• Your family attorney, in his 60's in his prime earning years, has a huge house on the affluent side of town, a condo by the beach, and a timeshare in Ireland for when he really needs a Guiness and a Sweater. He's got a few million in assets, partially liquid and his house is long paid off. How does HE know what you, the newly hired salesperson is going to need to get into the house and afford to stay in it??
• Grandfather's accountant... When I was your age, I paid $1,200 for my first house and I paid CASH because that's the way we did it! - do I need to continue??
• Your much older sibling, mid 30's, two cars, two incomes, two kids, too many credit cards...too condescending... you don't really talk to him about anything anyway!
• Your family stockbroker/financial planner... PLEASE... this is your home, there is no return on the equity in a home so leave it alone! We haven't covered that yet, sorry... Every dollar you put in that house is a dollar you're not putting in a mutual fund with him....move along.
• Your Realtor... well... they should at least be versed in mortgages to some extent, but the best Realtors won't talk loans with you because it is illegal and unethical for them to do so because of license laws!

What have I just illustrated?? There is an impartial person who has good advice, who knows the markets, who knows the products, who is just waiting for you to call and let him do his job... but... and this is a BIG BUT

But you've got all the advice you can handle in what is already an overwhelming and stressful life cycle event!

So... who do you listen to? Do you consider the scrutiny you'll endure if you pick something outside of what everyone else thinks is right for you?

DO YOU CARE?

Remember... everyone says, "Buying a home is the single, biggest investment you'll ever make..."

So why are you buying with other people's own needs and experiences when they probably do not reflect what YOU need??

Look... it is simple. I'm not telling you to tune them out and only talk to me. That's unreasonable. What is reasonable is to tune everyone out for a little while. Let them know you'll get to them. Then take the evidence to them that your Friendly Neighborhood Mortgage Go To Guy (or Girl) has to offer.

Relate to them the reasoning behind why you may want to consider an ARM, or the benefits to YOU of Interest Only, or the easy to afford minimum payment on the Option ARM, or the versatility of the Hybrid that is a combination of two or three loan programs.

Better yet, show them that there is someone else out there with your best interests in mind that is an expert in that field... nay a guru that you're willing to trust and so should they.

I'm not saying they'll trust me too... but with proof and logic, we can at least make them understand why the program I offer fits you better than the program they think you should have.

And isn't compromise what good, lifelong relationships are about?

So when the time comes that you're thinking of buying your first home, relocating to Florida, buying a Second Home with a Beach View, buying an investment property, buying a property to grow your business... call me...

We'll sit down and have a coffee... and I'll LISTEN...

After that, we'll know your entry strategy, exit strategy and have a good idea of what you want life to be like in your new loan. Then I'll get you pre-approved so you can call your favorite big sister/new realtor and let her drive you all around town to find you a new property!

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More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Florida Property Tax Update - HOUSE BILL REJECTED!

Breaking News from the SunSentinel.com regarding the Florida Property Tax: This didn't take long at all. Instead of waiting until this morning to make a resolution on the Florida House's property tax reform bills, the Senate rejected them all yesterday morning as their first order of business!

I guess the State Senate read my post yesterday about how I felt the House did not understand the "Time is of the Essense" clause of Real Estate!

The Florida State Senate has decided that perhaps the House plan is a little too radical and offsets the property tax with too high a state sales tax.

So the Senate's bill would work like this:

1. Roll back taxes to the 2003-2004 level (sound familiar) instead of 2000-2001
2. First time homebuyers that have been left in the lurch for so long would get a double Homestead exemption for a total of $50,000
3. Businesses (woo hoo!) would get a $25,000 Tangible Property Exemption which definitely helps the small business owner and since 90% of jobs are created by small businesses i.e. middle income business owners, this should offset the burden that was going to plague small businesses
4. Portability! Biggest YAY of all. Meaning that people can carry their tax basis with them. If someone is in a $200,000 start home and moves to a $500,000 family home, then they will not have a 250% higher tax basis any longer! This especially helps the struggling middle class! This will also help people that have been in their homes for a long time to move without taking the burden of today's property assessments with them which also benefits the retirees.

Now the House and Senate will be sitting down to try to work out a compromise between their plans. Their goal is to complete their unified plan by May 4th when they are supposed to Adjourn for the summer.

The issues on the table that I believe will be most likely to carry through from this plan will be

• Double Homestead
• Compromised Roll back
• Portability
• Maybe the business tangible tax exemption

The bills from the House that will likely carry through are

• Sales Tax Hike - but likely compromised
• Assessment practices is definite
• Cap on Local government add-ons

In other news that could benefit a more aggressive plan, in a former post I noted Gov. Crist was signing a pact with the Seminole Nation to secure more slot machines with them in return for tax monies from them... a first for the Seminole Tribe in Florida. Now it appears that the State and Gov Crist are looking to expand gambling in the state, further expanding the taxable revenues from these casinos! This should definitely help with the revenue crisis that these tax bills are sure to create by providing more money to schools.

Still what is really interesting is that Republican Governor Charlie Crist has not weighed in officially...

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More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Florida Property Tax Update - Republican Bill Passes in the House

Breaking News from the SunSentinel.com regarding the Florida Property Tax resolutions are still not addressing the immediate needs of those hardest hurt by the high cost of property taxes throughout the state.

 

 

As the Republicans control the Florida House, there was little doubt that their bill would get the majority.

Unfortunately, the "Time is of the Essense" clause of Real Estate did not seem to compel these Florida Law Makers to affect a change any sooner than 2009 if this becomes a true Amendment to the Florida Constitution. 

The Florida House, in its infinite wisdom has proposed the Florida Tax Bill go on the ballot in the 2008 elections if it gets passed by the State Senate... which it probably will as they're a Republican Majority as well.

The Republican Bill centers around the now notorious Property Tax for Sales Tax Swap that Art Blanchet focused a post on... the actual impact of this PHASE of the Tax bills in session would cut $25 to $35 Billion from the State revenues over the first five years.... and this is even with the proposed sales tax increase!

The article in the SunSentinel.com noted that this Amendment would officially make Florida the ONLY State with no Property Tax AND no State Income Tax!.... but it would also be the State with the highest Sales Tax!

The other bills in session? (HB=House Bill)

• HB7001 - would roll back property taxes to their 2000-2001 levels and cap them.  This bill passed unanimously.
  This would have a dramatic effect on the ability of people to upgrade from a starter home to a family home.
• HB261 - this one affects Nick M The Appraiser ... it modifies assessment practices. 
  In a prior post I mentioned the feud between the Palm Beach County and Broward County appraisors over assessing property "As Developed" the Broward County Stand vs "Potential Use" or Highest and Best Use as the Palm Beach County Stand.  Obviously assessing a house for its current usage rather than future (potential) usage will mean that the property is valued more fairly.  The problem really lies with lower income areas where eminent domain is an issue.  A property that houses Section 8 might be in the Path of Progress and all of a sudden the people can't afford to hold the property and rent it out because taxes are too high.  The property is still worth what it is worth but all of a sudden the land is worth a fortune.
• HB1483 - this limits local governments abilities to increase taxes.  This is in reaction to several municipalities with add-ons to the main city or county taxes. 
  There are several municipalities (like Greenacres) which are more highly taxed than areas just 1-2 blocks away!  This is an unfair practice and creates undue financial strain on property owners in those areas.

All four of these measures go to the State Senate next...

But that's not the end of it!

The State Senate is voting on Friday on its own plan.  It would not be as sweeping as the House bill as it would only save $12.3 Billion in its first five years.  The plan would roll back taxes to their 2003-2004 levels instead of all the way to 2000-2001.

Now... here's where it gets really interesting. 

Bills are passed - Amendments are elected....

HB7001 could be immediate... but if voters in 2008 decide they like the forthcoming Amendment better than the bill, they can vote the Amendment in, which would immediately supercede the bill!  So if the Senate Plan passes as an Amendment, then the tax roll back would be defeated.

Getting back to Sales Tax... The immediate Sales Tax hike would be 1% going towards schools.  Then local governments would have the option of raising it another 1-1.5% depending on their needs.  The highest Sales Tax would be is 8.5%.

Now... I wonder how this will play out in the Senate on Friday!

The really interesting part is that the Democrats have the more sweeping ideas and favor a larger cut in taxes... The Republicans a smaller... but Republican Governor Charlie Crist has not weighed in officially... but sources have quoted him as saying "The Bigger the Better" (paraphrase)

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More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Florida Property Tax Update - Several New Ideas!

The news yesterday and today shows the heat is rising in the debate over how to "fix" Florida's property tax problems.

In short, the middle class is being choked out of Florida property. The reason is because there is no state income tax so there is a higher property tax. The Middle class is the upwardly mobile group that is upgrading from starter homes at 3bedrooms 2bathrooms to the family home at 5bedrooms 3 bathrooms... That jump in property NEEDS creates a new price point at which they can be taxed.

The method I've become comfortable with using to calculate property tax on a single family home is:

• Purchase Price - 20% for land = Improvement Taxable Base - Homestead $25,000 = Taxable Base x 1.75% (millage) = Annual Taxes


• For a condo, subtract only 15% for common area...

This debate is coming at a pivotal time for Florida and could cost the state hundreds of millions of tax dollars if instituted improperly.

What's on the Table:

• Republicans in the State Senate have proposed to roll back taxes to the 2001 levels. This would bring the taxable bases down significantly AND take off the 3% max annual increase for the past 6 years for another 18% potentially. This bill is seen to be controversial because some areas would see bigger drops than others due to appreciation, local millages, and local improvement. This is an interesting compromise to what I will detail below in the unrealistic area.


• Democrats are saying that the Republicans have a stupid idea and they need to have more time to review all options... Republicans are saying that further review increases suffering and stalling is actually hurting everyone. Democrats' assertions are that sweeping tax cuts will just hurt local services like libraries, police and an already hurting school system.


• Democrats announced yesterday that their solution is to reduce property taxes 30% across the board and raise sales tax 2%. That would put sales tax as high as 8.5%... which while reducing PROPERTY taxes, Renters will suffer as will small businesses renting office, retail and warehouse spaces. Services across the board could remain unhurt but big ticket product vendors might get squeezed.


• Republican Governor Charlie Crist wants to be very careful and look at other forms of income for the state so there is no huge drop in budget dollars. One thing that is in the works is a lawsuit against the US Government by the Seminole Indian Tribe. Currently gaming regulations have not allowed them the same gaming rights as their local competitors. In Florida, the Seminole Tribe owns 8 casinos - 4 in South Florida. Their most recent acquisition has been the entire chain of the Hard Rock Cafe, Hotels and Casinos brand. They have two such resorts in Florida - Tampa and Hollywood/Ft Lauderdale. In their casinos they are only allowed poker, video poker and bingo style slots - they are suing for equal rights to Las Vegas-style slots which will allow them to gain some of the casino-dollars lost to the local off and onshore slot machine venues like Gulfstream and Calder Racetracks. Gov. Crist is backing their claims of unfair competition and in return he hopes to work a deal to acquire tax rights to the new Vegas-style slot machines that they install. Currently the state has a 50% tax on Slot machine profits statewide ... except at Seminole Nation Casinos. This would be a first level of gaming taxation the Seminoles would accept but would ultimately profit their enterprises and the State of Florida.

What's Unrealistic:

• Leaving taxes where they are is creating a brain drain in several ways. First, the middle class is creating a virtual exodus to surrounding states where they can be transferred and have more space and not be burdened by such high cost of living due to property taxes. It is also creating a drop in enrollment in colleges statewide due to high housing costs around college towns.


• The first bill which saw praise but was incredibly unrealistic was to do away with property taxes altogether and just raise sales tax 2%. The estimated loss in revenue would be $800,000,000 to the state budget!! How much could 2% make up for that enormous a loss! That would require $40,000,000,000 in taxable goods and services sold just to come up with that many tax dollars....

What's an outside hope:

• President Bush arrived in Sao Paulo, Brazil yesterday to widespread protest. One of the best bits of news for Florida in this trip is his negotiations to create a Bio-Fuel Alliance with Brazil - the world's largest producer of Sugar, a by product of production is Ethanol from the leftover Cane. In Brazil, I saw Ethanol sold at all the same stations that sold gas ... and for 1/2 the price. As Florida is also a huge Sugar cane producer, the alliance would provide the Ports of Miami and Port Everglades the opportunities to receive the importation of Ethanol fuels from Brazil to sell in the US. This will create a new Biofuel Trade Zone and Mini-Economy based in South Florida! Taxes could be levied to benefit the State and as the FlexFuel industry grows - so shall the tax dollars for Florida.

There is a lot at stake in these debates. The issues are stifling but the Republicans are seeing this as an opportunity to make sweeping changes prior to the 2008 elections which would not take effect until Jan 1, 2009. In the 1.75 years until then, the whole state will feel the pressure - and this is what lawmakers are trying to relieve.

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More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida