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.

---

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

Technorati Tags: mortgage broker, mortgage, palm beach county, palm beach loan, palm beach mortgage, boca raton, boca raton mortgage, boca raton loan, ARM, FRM, adjustable rate mortgage, fixed rate mortgage, interest only, florida, loan, real estate

Florida Property Tax Update - UGH! The Media is messing it up again!

The PalmBeachPost.com had a new opinion piece on the state of the Florida Property Tax reforms as they stand in news releases coming directly from Tallahassee, Florida.

Here is a link to the article...Property-tax plans cut off from reality.

In this article - Glenn Henderson writes that everyone has lost their mind and that the House and Senate have proposed a scenario which would basically be the end of all state, county and city programs, jobs and infrastructure.

• What has not been recognized is that there are duplicate services and functions of governments all over the State that WILL need to be cut.
  
• What Mr. Henderson has also failed to recognize is that there is a LOT of fluff at the local level that really isn't the State's responsibility to fund.
  

What Mr. Henderson has seemed to downright ignore is that we are NOT a Socialist Government! We are a REPUBLIC and the Federal and State Governments need to be more lean for us to spend our monies in the RIGHT PLACES.

• What difference would it make if we did not cut taxes so that we have the monies for Port St Lucie, Florida to institute Juvenile Justice programs if the Juveniles' families can no longer afford to live in Florida anyway??
  
• What difference would it make if Martin County got the State funded Aquatics complex if no one could afford to live there and to swim!
  
• Who would care if the gas stations along major arteries have hurricane generators if no one lives here that needs that gas??
  

A REPUBLIC...

• A form of Government where the Federal Government provides certain services such as Law Making, Military and Foreign Relations and passes other monies and functions down to the State Governments. The monies come from Federal Taxes.
  
• State Governments have to take care of the State as a Whole and send representation in the form of 2 Senators back to the Federal Government's Senate. The State provides monies and services for Statewide programs... the best current example is State of Emergency services for wildfire fighting and rebuilding the eroded beaches from Sub-Tropical Storm Andrea. Without the rebuilt beaches, the STATE is susceptible to widespread damage from a major Hurricane in the upcoming Hurricane Season. The State must have its own tax system to fund such programs where Federal Monies don't fill in. This is where the vast majority of our property taxes go since we have no State Income Tax
  
• County Governments... in our case, Counties really have a lot of authority. They offer Sheriff services, land development services, parks, schools etc. Rich counties and poor counties are supposed to be getting equitable tax monies from the state so that all citizens get fair services.
  
• City Governments... the trickle down has slowed a lot at this point. Cities are supposed to govern only the most local needs of a city/township. Things like very local development plans, very local law enforcement and planning inside of the bounds of the County's master plan.
  
• Local Governments... these are the lowest form but serve the most specific needs. They can be community associations or minor municipalities. They can be just a citizen formed group that creates a Political Action Committee to represent a demographic area with a unified voice.
  

Under this structure... it is OBVIOUS that TAX CUTS will hurt the lowest common denominator if those upstream don't trim their fat as well.

Where the journalist falls off the horse altogether is:

Even crazier is the fact that the real estate market is taking care of itself, coming back down to the point tax bills will ease up on their own - without government doing a thing.

Ummm... don't we understand that the property tax issue is NOT self correcting like the market? Don't we see that a lot of the reasons the market is in the shape it is would be because of the tax issues? A lot of the people that are running for the hills are doing so because taxes are so high. Reassessing all the property values to bring down taxes is actually something wrapped up in these bills!

I think the State is at a crossroads... they MUST do something... and nothing will ever come without criticism.

The issue that rests on their shoulders right now is this:

• Cities and Counties had HUGE budgets over the past few years... they got spoiled.
• There was huge growth in city and county jobs... people got on board to easy money
• Everyone had the money they needed to fund street art and raise salaries to all city and county employees
• There was a lot of WASTE and important projects were put off
• Important projects are now possibly going to miss funding requests

SURE - the state has to cut the fat. But the Cities and Counties will just have to do the same.

The news is blasting that there were 12,000 jobs lost last quarter in South Florida.... well... why don't they compare that to how many people got their real estate licenses and now are filing for unemployment? Why don't they compare that to the number of developers that moved down here, hired sales teams and left Dodge.

In my eyes smaller government is better. We don't need a Minister of Sidewalk Number Painting getting $60,000 a year that will buy a police car, or books for a school, or a van for a hospice facility.

We do need our taxes to come down... if they don't then there will be a lot of employed people in foreclosure looking at some nicely painted curbsides.

---

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

Affordable Housing Initiatives in South Florida: Part 6 - The Battle for Mordor Begins

The Sun Sentinel (yes ... it is one of my primary news sources as it is the best paper down here) had a great update on where the property tax battle is headed.

Basically the scene is set that the Republicans and Democrats agree (WHOA!) that something has to be done. They also agree that their plans both have merits (WHOA WHOA!)... but the biggest changes are just not striking the fancy of either side.

State Senators seem to be tense about the entire subject but only a handful are standing up for what could be the most important legislation of their term(s) in office!

Note, the (S) was not only for those incumbents.. but for the lack of incumbents should changes not manifest.

Oddly (for Florida) the Democrats seem to be the ones with the most ideas of compromise. They're dismissing the 2.5 cent raise in Sales Tax as too high. They're offering 1 cent instead. Their reasoning is that the State needs to make back some of the revenues it is giving up by rolling back taxes.

The Democrats want to cap property tax increases and increase Homestead Exemptions to 1/2 of the MEDIAN property value of all homes in the county. This is actually an amazing idea. In Palm Beach County with the median household over $400,000, it would definitely benefit a huge number of citizens... but more importantly it would benefit the RIGHT Citizens.

Anyone who owns a house under homestead which is valued UNDER the Median will be assessed taxes on HALF the value of the improvements! This idea definitely benefits the lower and middle income homeowners as well as the seniors.

The higher income homeowners will get a break - it just won't be equitable to their lower income neighbors. There is sure to be a stink raised about this - especially by lobbyists... but it should calm down once the higher income homeowners realize that 1/2 the median property value is considerably higher than $25,000.

There will also be a cap on ALL increases that will help snowbirds and other non-homesteaded property owners.

The biggest sign of bi-partisan politics was in the area of valuation. The war between Palm Beach County and Broward County appraisers Gary Nikolits and Lori Parrish has spilled over into the capitol. Senators side with Ms. Parrish in her war of words that you cannot assess or appraise a property based on Potential Use but on Current Use. Her idea is that it is not the County's job to speculate on HABU (highest and best use) but instead to assess what is actually drawing in dollars.

Millions of dollars would be lost in revenue under this plan though. The 1% hike in sales tax will make up a portion of it but lawmakers will have to make some other concessions to be able to fund cities, counties, public hospitals, school districts and state government. Some of the things that could be affected instead of or along side sales tax are Slot Machines, Bio-Fuels, and Off Shore Drilling.

The best quote thus far is by State Rep. Carlos Lopez-Cantera R(Miami) "As far as I'm concerned, they [public agencies] weren't supposed to have this money in the first place."

On a Side note.. us Cell phone abusing Realtors and Mortgage Brokers are likely to get as much as a 30% break in taxes on our cell service... the average $50 cellphone bill has $15 in taxes! That should be cut soon! Think of how that money would help the state!

But now its time for me to go...
the Autumn moon light my way...
......
But I know I've got one thing I've got to do...
Ramble On...

Led Zeppelin