Florida Mortgage Report

Last Post - WE HAVE MOVED TO WWW.FLMORTGAGEREPORT.COM

In case you didn't already hear it, the Florida Mortgage Report is now located at www.flmortgagereport.com.  Go there and subscribe to the feed to not miss anything else.  Thank you for your continued support.

Tomorrow is the Last Day at This Domain

I still see many of you subscribing to this feed and/or commenting on this blog.  This post is a reminder that the Florida Mortgage Report will not be located at www.floridamortgagedaily.com after tomorrow.  I will be moving my Florida Mortgage Daily (mortgage market updates) blog to this domain March 1, or shortly thereafter.

That being said, this blog is currently hosted under Typepad, so the blog will remain here for nearly a year, though no comments will be accepted (stopped 2/15/08) and the blog will not be updated any longer.  To follow my writings, please jump over to www.flmortgagereport.com and while there, don't forget to subscribe to that feed to stay up to date.

This will ensure lively discussions continue on the "hot topics" such as Money Merge Accounts and other mortgage acceleration strategies, as well as current events.  All prior posts are over there already (and some new ones), so if you liked a post (or even linked to one), check out the same post (and link to it) over at the new location, www.flmortgagereport.com. 

There are two main reasons for the change that I mentioned before in case you are wondering.  Number one is the change to WordPress to add more flexibility and control.  Since I rely on feedback from you, you can have an effect on how the site looks and its functionality.  I want it to be a very user interactive site and WordPress allows that more easily.  Number two is that I wanted to match domain names to the blog titles.  It was rather awkward, as you can imagine, say the Florida Mortgage Report was at www.floridamortgagedaily.com then turning around and saying Florida Mortgage Daily didn't have its own domain.

So, once again, please go over and visit www.flmortgagereport.com and subscribe to its feed to continue staying up to date on the Florida Mortgage Report.  If you want to see mortgage market commentary, keep www.floridamortgagedaily.com bookmarked and return in March when I have that blog up and running on this domain.  You can also check out my contributions over at Lenderama and Agent Genius.

4 Days to Destruction

If you are reading this, you may not be aware of the recent move.  Florida Mortgage Report has changed locations and has switched to a WordPress platform.  I think you will be more satisfied with the new site and I ask you head over to www.flmortgagereport.com to check it out.  Don't forget to subscribe to the RSS feed over there to keep up to speed on what I am saying.

Normal Posting on This Site is Being Discontinued

As I have mentioned a couple of times and is an "ATTENTION" in the middle column, I have been moving the Florida Mortgage Report to it's new domain, a WordPress based blog, at www.flmortgagereport.com.  The reason is I wanted more control over the design and features without getting too costly and moving off the Typepad platform to my own setup allows for that and WordPress has come a long way in recent history.

So, to assist you all in not missing anything, over the next 7 days, I will not be posting any more "normal" content at this site, only a countdown series of posts.  So, get your butt over to www.flmortgagereport.com and subscribe to the feed from that site before it is too late.  Failure to do so will leave you lost and confused, possibly leading to costly mistakes on your next mortgage decision.

Flight Planning Your Retirement (Enroute)

In my previous post on the subject, Flight Planning Your Retirement (Pre-Flight), I discussed how airline pilot's prepare for their flights and how it relates to your own financial "preflight planning".  This post will discuss how pilot's constantly monitor their flight and adjust the plans enroute and how you should be doing the same with your finances.

Now that our airplane has taken off, we know we are far from over.  During the remainder of the flight, pilots must monitor the flight, weather, systems, and more and adjust the plan as necessary.  We hope the flight will be "boring", but we plan for the worst as we go along.  By constantly monitoring and adjusting the plan, we can minimize the effects of any changes.

Now that you have implemented your retirement plan (or any financial plan for that matter), you must also monitor it.  I don't mean every day, but regularly check and make sure you are on course.  The regularity depends on you, but it should be at least once per year and any time there is a "life event", such as new child, marriage, etc.  While you certainly don't want life to be boring, you also want to be prepared for life changing events.

As happens during airline flights on occasion, things do go wrong and we have to adjust our plan accordingly.  The issues are usually minor and don't involve much more than an altitude or speed change.  Sometimes things get more dramatic, which you have likely seen on TV or in the paper.  No matter what, preparation is still key and that means planning ahead for problems along the way.

As you go through life, your financial plan will change also.  Besides normal life events, chances are good that you will encounter some sort of financial crisis.  It may be minor, or it may hit you hard.  Again, planning for those types of events is a huge part of ensuring your financial success.  Hopefully, you will not see your house get destroyed by fire, tornadoes, or hurricanes, but what if it does?  Plan ahead, just in case.

Sometimes pilots have to divert and get the plane on the ground quickly to handle an emergency.  That does not mean it is the end of the flight, though you will likely have a change of airplanes and/or crew.  But once that is completed, your flight will likely continue to its destination.

You may encounter major problems in your financial picture along your journey as well, causing a divert of sorts.  It may require you to change your thinking, re-diversify your investments, or completely rework your plan altogether.  Just be ready to get together with your team and do what is necessary when a major problem hits, and remember that while you may have to delay arrival a bit, you will get their if you plan accordingly.

Now that we are well under way along our route, we have to begin preparations for our arrival.  Yes, more planning is involved, frankly it doesn't end until we have left the aircraft.  As we get closer to the airport, we are setting up for our landing and arrival at our destination.  The next post will cover your financial approach.

Who Do You Trust?

It never ceases to amaze me how people go about purchasing their home, getting financing, handling title, and even getting their appraisals.  Most will just trust those who they are working with, friends, family, or even their boss at work.

The video below is a marketing piece put out by the union I am again a proud member of, the Allied Pilots Association.  Before you think I am simply pushing our agenda as pilots, look at it in a different way.  Look at the video, granted it is a somewhat biased look, and see how people from both sides push their own agenda, trying to get their way.  Then look at who you would likely trust with the decisions affecting your life.

(video produced by the Allied Pilots Association)

Take a look at what airline pilots do, what has been happening over the last five years, and answer the question at the end, "who do you trust?"  I would venture to guess I would say you answered "the pilots", but that is for you to decide. 

Why do I say the pilots?  Yes, I am one, but it is based on the fact that every time you step into an airplane, you are putting your lives in their hands.  Now that is trust.

The same thoughts you may have had when watching the video and answering the question can be taken over to the real estate, or any other transaction, for that matter.  Who are you trusting to get your advice? 

Do you trust those which do the work day in and day out, proving their expertise or do you simply take the referrer's word for it?  Or even worse, simply find a home and lender, etc. on the Internet through a simple search engine website, where "lender's compete"?  You need to understand the true cost of seeking "lowest rates and fees" versus getting the best advice.

Why Are Americans Afraid of ARMs?

Despite all of the media blasting Adjustable rate Mortgages (ARMs), and the fear of foreclosure if you don't refinance, ARMs may actually be a better deal for you, especially now that mortgage rates are headed higher again.

That's right, I will be the first to tell you if an ARM is better for you and that you shouldn't refinance (unless of course it is your best interests overall).  With LIBOR and CMT down, what most prime ARMs are based on, the fully indexed rates may be even lower than the recent lows on the 30-year fixed.  And guess what, those indexes will likely go at least a little lower in the near future.

So why are so many switching to fixed rates right now.  In fact, Freddie Mac reported yesterday that 92 percent of Americans with 1-year ARMs refinanced to a fixed rate, and 89 percent of those with hybrid ARMs did the same during the 4th quarter of 2007.  So, they were rushing to refinance from an ARM to a fixed at a time when their ARMs could be going lower.  Make sense?

Of course, fear of where they will be next year or beyond can drive people to the wrong decisions.  The media, your friends, neighbors, family, even Gene Simmons will probably tell you you need to refinance and get a fixed rate mortgage instead.  So, it begs to question whose advice your going to follow.

Don't count on most mortgage professionals either, as most are hurting financially themselves and may put their interests above yours.  There are several I would highly endorse, such as Brian Brady, Rhonda Porter, and a few others who have shown their ethics to be above all others.  Even financial planners sometimes miss the mark. 

The best way to ensure your financial success, including getting the best mortgage product for your overall financial situation is to do your research and work with a team of professionals that can guide you properly.

Robbing Peter to Pay Paul?

There are many things in life that catch my eye and this one scares me.  In a MSNBC article, it discusses the fact that more and more Americans are taking loans out against their 401(k)s and even stopping contributions.  The reasons for doing this are varied, but some are doing it just to keep up with their lifestyle instead of making necessary changes.  That is just scary.

Why would you want to sacrifice your future to live in the present?  Do you plan on dying early?  This is backwards thinking as any sacrifices should be done now, even if it means moving in a down market.

As home prices fall and banks tighten lending standards, more people are doing the same thing: raiding their retirement savings just to get by and spending their nest eggs to gas up SUVs, pay mortgages or put food on the table.

I purposefully underlined the gassing up SUVs comment as SUVs are a luxury and there are many cars out there that are just as well suited for your needs and have better gas mileage, but lack "status".  Chasing "status" will destroy your finances and I see that everyday in South Florida, where BMWs and Hummers account for a large portion of the automobiles.

Charlton and his wife used the retirement money and $7,000 from savings to pay down their credit card debt. They also cut monthly expenses by pawning a diamond ring and selling camera equipment he owed money on. And he's looking for someone to take over his $550 monthly payment on a gray BMW 335i he leased last April.

Need I say more?  Well, yes I do as he makes a very common thought process...

"I made the best decision I could," he said. "I keep hearing about bankrupting your future retirement. But I feel like it's far enough away that I'll be able to save up enough."

The time value of money went from working side by side with him to against him, though he does not realize it.  That is a common problem with Americans all across the country.  Focusing on paying down debts, especially mortgages, can be detrimental to your financial health overall.  Not setting up emergency funds and doing other financial planning is what leads to these problems to begin with. (check out my "Flight Planning Your Retirement Series")

There is also an important tax issue for those deciding to get a loan against their retirement account...

Consumers who tap their retirement accounts can take a loan from their 401(k) accounts worth up to $50,000, or 50 percent of the amount invested, whichever is less. There are no tax consequences for a loan in good standing. But if a borrower defaults, the loan is considered a withdrawal and subject to the same tax penalties.

Taking out a loan against your retirement account can have dire consequences.  Besides the tax issues above if you default, if you fail to contribute to your account for five years, you can expect nearly 20% less money available for retirement if you are 40 years old already.  That could easily spell financial disaster for you in the long run.

Flight Planning Your Retirement (Pre-Flight)

Flight planning and retirement planning are very similar in what it takes to achieve success.  Flying requires excellent planning, modifications to the plan enroute, a proper vehicle, and constant monitoring to ensure we reach our destination.  Retirement planning, will also require proper planning, proper vehicles, modifications to the plan along the way, and regular monitoring to ensure you reach your destination.  In fact, the only real differences are the time it takes and the fact one destination is a location and the other is a financial goal.

There is an old saying about the 3 most useless things in flying, which are:  runway behind you, altitude above you, and fuel left in the truck except when you are on fire.  While those rank high on the list, failure to plan is another, and proper planning will ensure the other 3 don't matter.  The same will hold true in your retirement planning.

Before a pilot even gets out to the airplane, he is already preparing his plan.  Keeping with the airline style flying, we will plan along with several other "team" members.  Our team includes dispatchers, load planners, air traffic controllers, and more.  Most of the time, our team members have the flight plan set up for us when we get to work and we likely agree with the plan to start with (we have a good team at American Airlines). 

When working your retirement plan, you will need a team also.  That team should include financial advisors, insurance agents, mortgage planners, tax advisors, and anyone else that can help you make your destination.  You will work together to develop your specific plan to get you started, ensuring everyone is working together to get you to your destination.

The next step for the pilot is to preflight the airplane and make sure it is ready for its flight.  "Walk-arounds" are down to make sure the vehicle doesn't have any exterior problems, while interior checks are performed as well.  If any issues are found, modifications to the plan are made to ensure safety, including switching aircraft if necessary. 

Your pre-flight retirement planning will cover types of investment vehicles that can help you attain your financial goals and which ones to use.  While flying requires only one vehicle, investments should be diversified for better chances of success.  This could include stocks, bonds, mutual funds, currency exchanges, options, real estate.  Then you can wrap those up into IRAs, 401(k)s, 1031 Exchanges, or other "vehicle" to get you there.  Choose your option wisely and minimize "overlap".

The remaining portion of a pilot's pre-flight is to ensure adequate fuel to get there, have an alternate (or two), and more to deal with problems that may arise enroute.  We also get a clearance for departing, get in position and go.  Thus, we have done the best we can to ensure a safe completion of that flight at our destination.

The final preparation of your retirement plan will be to bring it all together and implement it.  No investment ever pays off if you don't put any money into it, so get your plan together, make sure it looks good, and get it going.

Now, that we are on our way, the next part of the series will cover handling problems enroute and making adjustments along the way.

Training is Now Completed...

Many of you have been wondering why my posts have been somewhat less in the last two weeks or so, and that has been due to my changing of aircraft at American Airlines, my "other job".  I have now completed the transition from the Boeing 737-800 back to the Boeing 757 and Boeing 767 aircraft and will return to the "line" after a trip across the pond later this month.

Now that the training is over, I will resume posting as often as I can, with a little catching up to do and continued tweaking of the new Florida Mortgage Report site.  Please remember that I will be switching domains and also design at the end of the month.  I know many of you are already reading these posts at the new location, but I still see the vast majority are on the old domain/feed, so please make the switch.

I still have big plans for this year and I am both excited and, dare I say, a little fearful about what lies ahead.  I will keep you all posted as the changes move forward and new projects are ready for announcement. 

I would also like to thank you all again for taking time to read the posts, comment, and subscribe to the feed.  You all are the reasons I keep posting and will continue to provide education and insights, dispel myths and provide assistance to those looking for sound advice.

Are You Getting Reliable Information?

The Internet is a wonderful tool to do research, after all, you found this blog via the Internet, right?  Well, don't scan the Internet doing research and rely on the information you received, even if it looks like it is from a reliable source.  Failure to do that can prove very costly, especially as it relates to your mortgage.

This morning I was reading an article from my CNN Money feed that showed how wrong they could be and very subtly at that.  Here is the blurb that caught my eye...

(Fortune Magazine) -- For many house hunters, these are good times. Home prices have fallen 10% or more in once-hot markets, and interest rates on mortgages of $417,000 or less have sunk to their lowest levels in four years. Today a family with solid credit and enough cash for a 20% down payment can lock in a rate of only 5.9% on a 30-year mortgage, according to Bankrate. Thank you, Ben Bernanke!

Did you see catch it?

In case you missed it, it all was in the last statement; "Thank you Ben Bernanke".  Here is a source people read regularly and take as a reliable source, yet they give credit to Big Ben for something he didn't do, at least not directly, so they are subtly misleading their readers.  Big Ben, as I have said before, does not directly control mortgage rates!

Mortgage rates on your primary loans are driven by mortgage backed securities, nothing else.  ARMs do get driven by their indexes (plus margins) when they adjust, but their initial rates are driven by market forces. Mortgage rates on residential homes are not even driven by the 10-year note which I still see people, even mortgage professionals, relating to.

Now, look at what Big Ben and his buddies are doing, they are cutting rates still.  But what is happening to mortgage rates?  That's right, they are climbing higher.  Does that sound like this writer should be thanking Big Ben for lower rates on conforming mortgages?

I do not want to discredit the entire article though as he does provide some good thoughts, such as getting an ARM instead of a fixed rate and seeking a mortgage broker to find the best deals, but the vagueness of his suggestions leave the ability to screw yourself as well.  I can see people taking the advice and incorrectly applying, subsequently becoming another statistic in the future.

The point I want to stress is that you must ensure you are getting you information from sources that understand how mortgages work, and those sources are not as abundant as you may think.  In fact, a lot of mortgage professionals across the realm don't even know, so be careful.  Doing your own research and not relying on anyone is the best way to protect yourself and save money.

Is Bernanke Dazed and Confused?

If you think the markets are screwed up, wrapped in fears of recession and wondering whether they should buy or sell, you are not alone.  Why?  How can they expect to know what to do when Big Ben can't even tell what is going on?

In three separate articles I read this morning, each breaking down what Bernanke (and Paulson) said, each focused on a different part of what Bernanke mentioned, and all lead to different conclusions on the economy. 

CNN Money highlights Bernanke and Paulson's comments stating that the economy will not see a recession because of the Fed's actions.  Here is the opening remark...

Treasury secretary and Fed chairman say rate cuts and rebates should keep economy out of downturn.

Bernanke even opened the speech with this statement...

"At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt,"

That sounds like he is no longer concerned with the economy and, in fact, expects it to grow reasonably later this year.

Then there is this article, put out by MarketWatch, which talks about how Bernanke and his buddies stand ready, willing and able to cut rates further.  Why would there be a need to cut rates again if the cuts already in place will keep the economy from recession and return growth toward the end of the year?

Federal Reserve Chairman Ben Bernanke said Thursday the central bank was ready to cut interest rates further if fresh signs of a weaker-than-expected U.S. economy emerge.

So, should we fear recession, or as I have mentioned numerous times, inflation?  Bernanke and his buddies have been putting recession fears ahead of inflation, even saying inflation is a "non-issue", all the while the CPI and PCE numbers were ticking higher.

And then we head over to the Miami Herald which headlines reads "Bernanke warns economy worsening"...

Federal Reserve Chairman Ben Bernanke told Congress Thursday that the country's economic outlook has deteriorated and signaled that the central bank is ready to keep on lowering a key interest rate - as needed - to shore things up...

"The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said. "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so."

So, which is it?  Which should we be fearing more?  Recession or inflation?  I guess he is just doing a little CYA maneuvering right now because he probably is just guessing at this point. 

Still wondering why there is so much volatility in the markets today?  Still wondering why housing is so screwed up and failing to correct itself in many markets?  Big Ben and the government gang have the answers, right?  Don't count on it.

Economy Gets Stimulated: So Are You Excited?

President Bush signed into law the economic stimulus package we have all heard about.  Even the IRS said today that they will begin mailing checks in May for those who filed 2007 taxes, so make sure you file this last year if you haven't been.  It is "free" money after all, right?

Are you excited to get your money and rush out and spend it?  Are you excited that you can turn your jumbo loan rates into a new conforming loan (limited time offer, contact me for application), maybe even take some equity out so you can rush out and stimulate the economy even further?

I don't know about you, but my money is not going to be spent, rather I will invest it wisely, that way it will actually mean something in the future.

So, what changes occurred that Floridians should know about?

Well, you may qualify for up to $1,800 rebate, or more.  That's pretty cool, even if the rebate is only $300.  So, you need to decide what you "should" do with that money and not just blow it.

Conforming loan limits have been temporarily increased.  That means you may qualify for refinancing your high jumbo rates for a lower "conforming" rate.  I would be happy to help you determine if this is truly in your best interests, as it may not be in reality.

I am not going to get into the nitty-gritty details here as the post would just drag on.  If you want to know more on how the stimulus package can benefit you, especially as it pertains to your mortgage, contact me and I will be happy to assist you.

Florida Cities Take 6 of the Top 25 Spots in Foreclosure Stats With Miami in Front

RealtyTrac released their year-end 2007 Metropolitan Foreclosure Report, and while not on top, Miami was leading the state, passing by Ft. Lauderdale.  Back in November, the rankings were different, with Ft. Lauderdale leading the state and ranking 4th in the nation.

The foreclosure rate for the total US came in at 1.033% of households, with the foreclosure rate of the top 100 metro areas coming in at 1.382%.  Detroit led the nation with a rate of 4.918%, fueled by economic chaos in that area.  The remaining top 5 were (in order):  Stockton, CA (4.866%), Las Vegas/Paradise, NV (4.228%), Riverside/San Bernardino, CA (3.826%), and Sacramento, CA (3.189%).

As far as Florida goes, South Florida still leads the pack and 6 Florida cities made the top 25 rankings.  Here is a breakdown of the Sunshine State:

Rank	Metro Area	Foreclosure Rate
8	Miami, FL	2.724
10	Ft. Lauderdale, FL	2.632
20	Orlando, FL	1.932
21	Palm Beach, FL	1.924
23	Tampa/St. Petersburg/Clearwater, FL	1.908
24	Sarasota/Bradenton/Venice, FL	1.840
27	Jacksonville, FL	1.748

As you can see, all the major metro areas in Florida made the top 30.  What does that mean to you?  Great news if you are a buyer, especially an investor.  Bad news for Florida homeowners as the rates will keep pressure on the declining home prices.

Can 'Asses or Elephants Really Save Homeowners' Assets?

It is a political year for sure and your vote counts.  Just don't screw it up over something neither candidate can truly fix. 

The housing crisis is all over the news, Internet, even on your toilet paper.  The political candidates know your fears, your "buttons" that need to be pushed to get you to push their button.  But, can they really do anything for you, or any other homeowner?

Think about it.  First off, they will not be in office until next year to begin with and whatever is happening will likely be a non-issue by then.  Next, they cannot do anything by themselves (thank God), and will have to get whatever they want accomplished pushed through both the House and Senate as well, a difficult task to say the least.

Add to that the fact they the government tends to overreact when faced with a crisis as we have already seen them scrambling to do something, yet can't fix anything going on right now.  Proposed laws do more harm than good overall and need to be amended if they will have the desired effect.

So, quit focusing on the today issues that most likely won't be there tomorrow and get them to spill their guts on the deeper issues, which they seem to want to avoid right now.  When you go to the polls later this year, vote for the "real" issues instead of the candidate who proved nothing more than how to take a current event and play it for all it is worth.