Orlando Florida Real Estate Resource

Taming the Jumbo Mortgage in the Orlando Florida Real Estate Market

Everyone knows the jumbo loan market has been out of whack for nearly 18 months. "Jumbo" loans, those amounting to more than $417,000, took it on the chin, especially in Orlando Florida's real estate market, when mortgage investors stopped buying subprime and alternative loans. For that reason, jumbo rates can be as much as 1.50 percent higher than conforming rates. Historically, jumbo rates were only about a quarter of a percent higher than a conforming rate, but this new spread has kept many out of the Orlando Florida housing market: especially those that we refer to as, "just jumbo."

So what exactly is "just jumbo?" It's a loan amount that just exceeds the conforming limit of $417,000 and typically reflects a sales price in the $500,000­­-$600,000 range. The Orlando Florida Real Estate market offers many homes in this price category, but the marked difference in rate from conforming to jumbo is slowing down Orlando's real estate sales. What is the difference in payment between a conforming loan at 6 percent and a jumbo loan at 7.50 percent? On a $500,000 jumbo loan, mortgage payments jump from $2,997 to $3,496 a month. That's almost $500 more!

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Orlando Florida Real Estate Resource

Fannie Mae Announces Single National Down Payment Policy;
Replaces Policy Regarding Markets Where Home Prices are Declining

The following post was provided to us by Nate Morris of First Horizon Home Loans

WASHINGTON, DC -- Fannie Mae (FNM/NYSE) today announced a new, national policy on down payment requirements for conventional, conforming mortgages the company will purchase or guarantee. Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter^® (DU^®) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States, including Orlando Florida. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining...such as Orlando Florida has done recently.

"As another part of our 'Keys to Recovery^TM' initiative, we are today announcing that we will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, Senior Vice President, Single-Family Credit Policy and Risk Management, said. "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."

The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences. Down payment requirements will vary for other occupancy, property and transaction types. The company will implement systems and operational changes over the summer to accommodate the new national policy.

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Orlando Florida Real Estate Resource

Orlando, and Lake Mary Mortgage Rates

Photo by Paul Moody

An Inverted Yield Curve:
What It Means to Mortgage Rates & Programs

The U.S. economy, interest rates, and the housing market are frequent topics on the nightly news. Viewers are told about leading economic indicators, how the stock market has performed, and whether the Federal Reserve is planning on changing interest rates. What isn't explained is how these items are interrelated and how they may impact which home loan is best for you.

The Federal Reserve attempts to keep the U.S. economy healthy through its use of monetary policy. As fears of inflation increase, the Fed will raise certain short-term interest rates such as the federal funds rate, which is the interest rate banks pay each other for overnight loans. Such an increase causes a ripple effect, with banks raising their prime lending rate. This, in turn, causes an increase in Adjustable Rate Mortgage (ARM) rates and the indices they're tied to, such as the 12-Month Treasury Average (MTA), the 11th District Cost of Funds Index (COFI), and the 1-Month London Inter Bank Offering Rates (LIBOR).

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Seminole County Florida Real Estate - Homes, Townhomes & Condos

Specializing in Seminole County Real Estate,
Orlando Real Estate and Orange County Real Estate in Florida

Should I wait for prices to drop further, before buying a home in Seminole County or Orlando Florida?  This is a question we hear repeatedly.

The headlines are saying "wait!" because Seminole County and Orlando Florida Real Estate prices are expected to decline even more.  How much?  No one can say for sure. Well, I'm here to tell you to IGNORE THE HEADLINES!  Yes, prices will probably drop more, but this doesn't necessarily mean you'll get a better deal.  You see, too many buyers are focusing on home prices and waiting, worried that the home they buy today will be worth less tomorrow.  What they're missing is that rising mortgage interest rates are a huge concern, and many would be buyers will find themselves out of luck if they wait much longer.  And to top it all off, mortgage lending standards are tightening, leaving fewer and fewer Seminole County and Orlando Florida home buyers unable to qualify.  While almost anyone could get 100% financing 6 months ago...today, there are only a couple of programs allowing you to buy with no money down, and qualifying standards have gone way up.

There's little doubt that waiting for the perfect time to get into the market will cost you more in the long run. As Jim Svinth, chief economist at mortgage firm Lending Tree has said, "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher."  Any saving you see from falling prices will be offset by rising interest rates!

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Seminole County Florida Real Estate - Homes, Townhomes & Condos

Specializing in Seminole County Real Estate,
Orlando Real Estate and Orange County Real Estate in Florida

Even though interest rates currently make conventional loans more available to more Seminole County home buyers, seller financing is still a very good option for both buyers and sellers in Seminole County. It can really pay off, if you hold the right cards. That's why home buying transactions involving seller financing of some sort can be attractive - more attractive in some areas than others, and it's a great incentive in Seminole County due to local market conditions and new tightened lending standards.

• Here's how "seller financing" works.

A second mortgage offered by a home seller is usually a short-term "balloon" note, with the home buyer making fixed-rate monthly payments and paying off the balance within 3, 5, or 7 years. One very common seller financing arrangement is 10% of the purchase price, with the buyer putting down 10% cash and assuming the seller's existing loan for 80% of the home's value (figures will vary).

• This is what seller financing can do for a Seminole County home seller.

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