The Lowest Rates In Town

By: Denise Hostetler


RATES as LOW as 1.25% Cut your House Payment in Half !!
5.5% Fixed Payment !! 3% Interest Only !!
1.00% Mortgage Program..CALL AND ASK HOW – RIGHT NOW

These come-on statements are from flyers that I have received at my own home to solicit mortgage business. Why don’t I ever send you this type of offer with my marketing pieces? I do have these loans available.

If you are like most people, you might be curious about these heavily marketed low rates. If these are so good, then why doesn’t everybody have one of these mortgages? Let me explain how these loans work and then analyze who benefits from this type of mortgage. Maybe it will be your best option. If nothing else, it will satisfy your curiosity when you get one of these “EXCITING” opportunities in the mail.

These low rate loans are known as “Negative Amortization” or “Deferred Interest” loans. The payment is set at the low rate, but the rate is only locked for the first few months (usually 3 months). As the rate moves up, the difference between the payment and the interest rate is added to the principal balance of the loan. Thus the terms, negative amortization or deferred interest.

Let’s say you have a mortgage of $100,000 and a starting rate of 1.25%. Your starting payment will be $333.25 per month (without taxes and insurance). After 3 months, your rate will adjust to the current adjusted rate, but the payment will stay the same. So a good estimate of the adjusted rate would be about 7.5%, which would make the interest only payment at $620.70. Now let’s say you make the minimum payment of $333.25 every month for the first year. After the twelfth month, your mortgage balance would be $101,964.65. As you can see, your loan balance increases instead of decreasing.

Now who will benefit from this kind of loan program?

This type of loan is an excellent choice for real estate investors that look into buying “fixer uppers” or properties in distress. The deferred interest will enable an investor to utilize that cash flow to pay for repairs over the next couple years and then regain the equity lost on the sale of the property.

Another group of people who benefits from this program would be individuals with an irregular source of income. The low payment option during your slow months will allow you to keep your payments to a minimal until your big commission. Once you receive that additional income, you can bring your loan balance down.

Hopefully, this entry will satisfy your curiosity in when you receive one of these flyers. There are a lot of factors that need to be taken into consideration when you are shopping for a loan program. It is important to find a program that best fits your needs. Choosing the right loan program is a key element in the success of homeownership.

© Denise Hostetler 2007

About the Author: Denise Hostetler began her real estate career 20 years ago andspecialized in mortgages for over 16 years. Ms. Hostetler engaged inextensive training in construction-permanent financing. Currently working as a mortgage broker for First Florida Home Loans. Denise can be contacted at 407-822-8886 or denise@firstfloridahomeloans.com

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FL Existing Home Sales Pace Slows in Jan 07

ORLANDO, Fla. – Feb. 27, 2007 – The pace for Florida’s existing home sales remained slow in January, though the inventory of homes began to drop in many markets across the state, according to the Florida Association of Realtors® (FAR). Statewide, sales of single-family existing homes totaled 9,382 last month compared to 12,906 homes sold in January 2006 for a 27 percent decrease.

Existing home sales likely will gradually rise this year and into 2008, according to the latest housing outlook from the National Association of Realtors® (NAR). “Home sales may appear weak in comparison with the record surge in 2005, but they will be sustained at historically high levels that are in line with long-term demand,” says NAR Chief Economist David Lereah. As inventory levels become more balanced over the next few months, analysts also expect to see some modest price gains.

Florida’s median sales price for existing single-family homes in January was $239,300; a year ago, it was $243,200 for a 2 percent decrease. The median is the midpoint; half the homes sold for more, half for less.

In January 2002, the statewide median sales price for single-family homes was $128,900, which represents an increase of about 85.6 percent over the five-year-period, according to FAR records.In December 2006, the national median sales price for existing single-family homes was $221,600, unchanged from the previous year, according to NAR. In California, the statewide median resales price was $567,690 in December; in Massachusetts, it was $335,000; and in Maryland, it was $304,789.

Sales of existing condominiums in Florida also decreased last month, with a total of 3,007 condos sold statewide compared to 4,279 in January 2006 for a 30 percent decline, according to FAR. The statewide median sales price for condos last month remained stable at $209,000; a year ago, it was $212,000 for a 1 percent dip. NAR reported the national median existing condo price was $227,000 in December 2006.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.22 percent, up slightly from the average rate of 6.15 percent in January 2006. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s larger markets, the Jacksonville Metropolitan Statistical Area (MSA) reported slower sales of single-family homes in January, though more existing condos changed hands. A total of 783 existing homes sold last month compared to 938 homes sold a year ago for a 17 percent decrease.

The market's median sales price for homes was $185,000; it was $194,100 in January 2006 for a 5 percent decline. A total of 152 existing condos changed hands in Jacksonville last month, a 10 percent increase over the 138 condos sold the previous year. The existing condo median sales price in January was $147,600; a year ago, it was $170,000 for a 13 percent decrease.

“The Jacksonville area continues to offer some of the best values in the state for housing opportunities – what buyers can get for their dollar is a strong draw for our market,” says Hank Oltmanns, president of the Northeast Florida Association of Realtors and broker-owner of A Broker’s Choice Realty.

“We’re the largest geographic city in the lower 48 states, the land prices here are better than in many other areas and we still have room to grow; all of these factors give us a depth of market variety. Plus, our strong diversified labor market and business base is a definite asset.”

Among the state’s smaller markets, the Pensacola MSA reported a total of 279 homes sold in January compared to 317 homes a year ago for a decrease of 12 percent. The existing home median sales price rose 1 percent to $159,200; a year ago, it was $158,100. A total of 27 existing condos sold in Pensacola last month compared to 43 condos the previous January for a 37 percent decline. The market’s existing condo median price rose 13 percent to $195,000; a year ago, it was $172,500.

Doug Gooch, president of the Pensacola Association of Realtors and office manager for Palm Realty of Pensacola, says people are drawn to the area's scenic beauty and more relaxed lifestyle. “We have some of the most beautiful and pristine beaches in the state," he says. “Plus, we offer buyers a variety of housing options in different price ranges to suit their budgets. It’s a great place to live, and with mortgage rates continuing to be so favorable, right now is a great time to buy.”

© 2007 FLORIDA ASSOCIATION OF REALTORS