April 2nd, 2012:

Risk Determines Rate

Apr 2nd, 2012
by edsmith.
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Regardless of what a lender quotes on mortgage rates, the actual rate paid by a borrower is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved. Some of the most important considerations:

Loan amounts – conventional loans for more than the conforming limits set by Fannie Mae are considered jumbo loans and generally have a higher interest rate. Many loans in the Destin and South Walton markets exceed those limits.

FICO score – the lowest interest rate is reserved for the highest credit scores; the lower the score, the higher the rate borrower will pay.

Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.

Loan purpose – purchase transactions generally have the lowest interest rate while refinancing a home is often higher. Real estate purchases for use as second homes or for investment (as is so common for this market) will command a higher interest rate and higher down payment requirements as well.

Debt-to-Income ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.

Loan-to-Value ratio – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.

Any combination of these factors could limit a borrower’s ability to secure a mortgage at the rate initially quoted. Being pre-approved by a trusted LOCAL mortgage professional is the best way to know what rate you can expect to pay. We say local because many properties in this market are considered non-warrantable. Only certain lenders have investors for properties so designated. The “banker back home” is unlikely to have any sources for financing properties in Florida. Please call us for recommendations!

The Joys of Home Repair

Apr 2nd, 2012
by edsmith.
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Have you ever had a service company to your home to repair something and find out that it really wasn’t “broken”? It probably conjured up ambivalent feelings of joy that it wasn’t something serious and frustration that you had to pay a service call for something so simple. Before you call the repairman next time, keep these things in mind to see if it is something simple:

Disposer not working – check to see if the reset button has been thrown. It is usually on the bottom of the disposer. If the disposer is making a humming sound, the blades may be stuck. While the disposer is turned off, use a wooden broom handle as a lever to gently rotate the blades. Remove the broom handle and turn on the disposer to see if it works properly.

Air conditioner not working – check to see if a breaker has thrown on your electric panel. You might need to flip the breaker completely off and flip it back on.

Electrical outlets not working – Electrical plugs in bathrooms or outside, especially on a porch or patio, are many times connected to a ground fault interrupter. While the GFI circuit is sometimes controlled by a special GFIC breaker in your panel, it may also be a special GFI wall receptacle/outlet that may be located in a bathroom, near a sink, or even in the garage. Locate the outlet and reset the button that may have tripped. Note:  Most homes have more than one GFI circuit.

Clogged drain – a simple way to correct a slow or clogged drain is to use the water pressure from a garden hose. You’ll need a helper to turn on the water full-blast once you have safely placed the hose in the drain and are holding a hand-towel around the hose to direct the water to the drain. Be prepared to tell your helper to turn off the water when needed.

Whether it’s preparing a home to market or arranging repairs required by the sale, we know reputable, reasonable and reliable local service contractors. We’re here to share our contacts with you to help make home ownership better!