Here is some advise that will help you avod this pitfall.

Don’t – allow multiple credit checks

Don’t – apply for new credit within 45 days of signing a contract

Don’t – “Shop” for new credit before closing (Furniture, cars, etc)

Don’t – Go on a spending spree (using your credit limits) to buy things for your new home.

Do – File tax returns and/or extensions

Do – Explain or document all inquiries on your credit report

Do – Disclose all Debt – even if it did not show up on your credit report

Do – Work with a knowledgeable lender

As always your Real Estate Professional and Loan Officer are there to assist you through the process and to help you avoid any pitfalls.
If you are looking for a licensed Real Estate Professional, fell free to contact me no matter where you live and I will assist you in finding the right one. Anne Ridge BA GRI CHMS CNS SFR Coldwell Banker Residential Real Estate Clearwater Fl 727-215-5485.

Even suffering through the paperwork and stress of a short sale may seem too much for an overwhelmed borrower to handle.

But Florida homeowners should be aware of unique rules in the state that make the benefits of a short sale typically outweigh the ease of walking away in a foreclosure.

“I want to be very clear on this, short sales are a better solution than a foreclosure, even when all the options in a situation where you lose your house are not great,” said Mark Greene, owner and president of Short Sale Operations LLC in North Palm Beach.

The biggest difference between Florida and many other states when it comes to losing a home is the deficiency judgment.

While some states ban lenders from collecting the remainder owed on a loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone.

In a short sale, where the bank agrees to take a lesser amount for the home than what is owed on a loan, lenders sometimes are willing to write off the deficiency on the front end.

Greene said in 90 percent of the cases he handles, the bank has waived its right to seek a deficiency.

That was the case with Jupiter resident Kathryn Lorello, who in 2008 found herself in a home she couldn’t afford.

Following a divorce, and with three children, Lorello bought a $408,000 home that she lived in comfortably for a year. But then she lost her job as a manager of a real estate company.

She remembers the day the bank served the notice of foreclosure.

“I cried my eyes out,” Lorello said. “That’s when I panicked because I really didn’t want it to happen.”

Lorello got advice from Greene on doing a short sale.

Her bank, Wells Fargo, waived its right to seek a deficiency even though it ended up taking $200,000 less than what was owed on the loan.

Also, if a bank refuses to waive the deficiency in a short sale, it still would have to go back to court to seek a judgment.

In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim.

“In the past, people just wanted to move from the property and get on with their lives and didn’t understand what the lenders’ rights were in terms of pursuing a deficiency claim,” said Paul Baltrun, director of loss mitigation at the LaBovick & La-Bovick law firm.

“I think people are more aware now about what can happen after the fact and that their nightmare can continue.”

Another consideration is the effect of a foreclosure or short sale on credit.

According to the Fair Isaac Corp., which developed the widely used measurement of credit risk called a FICO score, the negative effect of a foreclosure is only marginally worse than a short sale.

But in Florida, a deficiency judgment from a foreclosure is likely to have a much larger impact that will prohibit your ability to buy another home for many years.

Daniel Poulos, a mortgage broker with Elite Lending in North Palm Beach who has studied the effect of foreclosures and short sales on credit, said unless a borrower pays off the deficiency, it may be 20 years before someone is eligible for another mortgage.

“That’s the kind of information that’s not getting out in Florida,” Poulos said.

There are a few situations where some experts believe it is better for someone to go to foreclosure rather than do a short sale.

To do a short sale, a borrower must give all of his or her financial information to the bank before it will decide whether to allow the short sale. The idea is that if a person can afford to pay the mortgage, the short sale may be denied.

“Now the lender knows everything about your finances and they can better decide whether they will go after you or not,” said Jon Maddux, CEO of YouWalkAway.com, a company that advises people on strategic defaults.

If a lender doesn’t know your finances, Maddux argues, it reduces the chances it will go after you following a foreclosure.

“You might fly under the radar,” he said. “With the millions of people going through this, they are probably going to go after the low-hanging fruit.”

Copyright © 2010, The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.

May 20 30 yr fixed 4.84%
May 20 15 yr fixed 4.24%
May 20 1 yr ARM 4.00%

It is a great time to buy a home!

The new policy, which takes effect in July, is designed to make foreclosure alternatives more attractive. The policy applies only to Fannie Mae’s willingness to approve a mortgage, however. Homeowners’ credit scores will still take a hit following a short sale or deed in lieu of foreclosure.

To qualify for a mortgage after the two year wait, Fannie Mae says borrowers must make a 20 percent downpayment; but those who lost a job or have other extenuating circumstances will be able to make a 10 percent downpayment.

Freddie Mac – which, with Fannie Mae, insures over half the mortgages in the U.S. – currently makes homeowners wait four years after a short sale or deed in lieu of foreclosure before it will back a new mortgage. Owners who go through a foreclosure wait five years. For both Fannie Mae and Freddie Mac, the waits can be shorter in some cases if borrowers show extenuating circumstances.

Source: Wall Street Journal (04/26/10) P. A2; Timiraos, Nick

© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688

The deadline for the extended homebuyer tax credit is April 30, 2010 to be under contract and June 30, 2010 to close. This is for primary residences only but buyers may qualify even if they do not sell their old primary residence! Go to www.irs.gov for restrictions and complete details.

If you need help finding a home please feel free to contact me. I have connections in all states. Call me at 727-215-5485 for assistance.

We are still waiting to hear if the FHA will adjust the minimum down payment from 3.5% to 5% and lower the seller concessions allowed from 6% down to 3%.
Information provided by Coldwell Banker Mortgage Advisor Michelle Piccari.

Existing home sales increased 21 percent last month with a total of 11,890 homes sold statewide compared to 9,867 homes sold in February 2009, according to Florida Realtors. Statewide existing home sales last month increased 13.6 percent over statewide sales activity in January.

Florida Realtors also reported a 59 percent increase in statewide sales of existing condos in February compared to the previous year’s sales figure; statewide existing condo sales last month rose 9.8 percent over the total units sold in January.

Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in January, while all but one MSA had higher condo sales. A majority of the state’s MSAs have reported increased sales for 20 consecutive months.

In Florida’s year-to-year comparison for condos, 5,085 units sold statewide last month compared to 3,190 units in February 2009 for an increase of 59 percent. The statewide existing condo median sales price last month was $92,200; in February 2009 it was $109,100 for a 15 percent decrease. The national median existing condo price was $172,400 in January, according to NAR.

As long as the NFIP program is on hiatus, closing under the FAR/BAR-8 contract and the FAR 9 contract should not be impacted at all if the following conditions are met:

1. If the contract isn’t contingent on financing and, consequently, isn’t contingent on the buyer’s ability to obtain flood insurance. However, flood coverage is still highly recommended.

2. If the contract is contingent on the buyer obtaining flood insurance (either within a specific contract contingency dealing with flood insurance or as a condition of financing) provided the seller has an effective flood insurance policy that can be assigned to the buyer, and the contract requires the buyer to accept the assignment from the seller.

Closings will be impacted under both contracts if the following conditions apply, however:

FAR/BAR-8 Contract

The contract will not close if the home sale is contingent on the buyer obtaining financing from a lender, that lender’s commitment of funds is conditioned upon obtaining flood insurance, and the seller has no flood insurance policy to assign to the buyer.

In this case, the contract will, in all likelihood, terminate on the closing date with the deposit returned to the buyer. In Florida, impossibility of performance and frustration of purpose are well-recognized defenses to nonperformance of a contract.

However, the parties could also choose to extend the contract based on the likelihood that Congress will reinstate NFIP.

FAR 9 Contract

If the contract is contingent upon financing and the buyer’s loan commitment is contingent upon the buyer obtaining flood insurance – and the seller has no flood insurance policy to assign to the buyer – then the contract cannot close as scheduled.

In paragraph 11 (c) of the FAR 9 Contract, buyer and seller are relieved of their performance obligations if the performance is delayed, caused or prevented by force majeure.

Force majeure includes any cause not reasonably within the control of the buyer or seller. Under force majeure in the FAR 9 contract, the time periods stated in the contract are extended – not to exceed 30 days – for the period of time that the force majeure event is in place. If the force majeure event continues beyond 30 days, either party can cancel the contract without liability to the other.

Congress’ failure to reauthorize NFIP may be interpreted under the FAR 9 Contract as a cause not reasonably within the control of the buyer or seller. Therefore, the buyer and seller may be relieved of their performance obligations during the hiatus period since Congress failed to reauthorize the flood insurance program.

© 2010 Florida Realtors®

Industry experts polled by Bankrate.com this week are evenly divided on what will happen over the short term: 38% predict further increases, 31% foresee no change and 31% expect a decline.
WASHINGTON (AP) – April 9, 2010 – Rates for 30-year home loans surged last week, rising to the highest level in eight months due to the improving economy and the end of a government push to keep rates low.

The average rate on a 30-year fixed rate mortgage was 5.21 percent this week, up from 5.08 percent a week earlier, Freddie Mac said Thursday. That’s the highest since mid-August, when the average rate was 5.29 percent.

Rates had dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended last week, but the Fed left the door open to reviving the program if the economy weakens.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often tracking the interest rate paid on long-term Treasury bonds.

Treasury yields have climbed steadily in recent weeks because of weak demand. The government has had to offer a better interest rate to sell its bonds as investors shift toward stocks and riskier corporate debt.

The 10-year yield rose above 4 percent on Monday for the first time since June, but fell back to 3.85 percent on Thursday.

This week, the average rate on a 15-year fixed-rate mortgage was 4.52 percent, up from 4.39 percent last week.

Rates on five-year, adjustable-rate mortgages averaged 4.25 percent, up from 4.1 percent a week earlier. Rates on one-year, adjustable-rate mortgages rose to 4.14 percent from 4.05 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.6 of a point for 30-year, 15-year and 5-year loans and 0.5 of a point for 1-year-loans.

Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer.