VA Mortgages In Spring Hill FL

Shop For Mortgage Rates In Hernando County

Posted by :VA Lender In Hernando County On : October 3, 2011

Category: New Construction Sales In Hernando County

Here is Part 3 of our Home Financing Guide. In this segment we take a look at everything to do with interest rates, and explain the difference between an Interest Rate and an APR. Borrowers often wonder why the APR is higher than the interest rate, and we will adress that and several other key issues with regard to the rate below.

Interest rates reflect the cost to borrower money as charged by the Lender. The higher the interest rate the higher the monthly payment (given the same loan terms). Interest rates in the mortgage market tend to be pretty volatile. That means that the interest rate offered on any given day can vary from the previous day. The reason is that the perception of mortgage lending risk and the market value of mortgage investments is affected by the mood of the financial markets (just like the value of the dollar and the stock market) and therefore interest rates can change daily or even more frequently. There are laws that protect consumers from usurious (very high) interest rates but reputable lenders such as Allied are well within those parameters.

Interest rates offered can vary by the type of Loan Program, Loan Terms and the Qualifications of the Borrower. For example Jumbo loans typically include a higher interest rate than a Conforming Conventional or FHA loan. In the case of Loan Terms the shorter the loan period (e.g. 15 years versus 30 the lower the rates may be, but if little to no down payment is made on a home, the interest rate could be higher. And finally in terms of Borrower Qualifications the borrower with better credit may get lower rates than one with poorer credit. So just because one individual gets a low interest rate does not mean that another person that got a higher rate was taken advantage of.

How do Variable Rates work? A variable rate loan is one where the interest rate is subject to change based upon ‘financial index’ changes. There are several commonly used indexes but the most often used are the US Treasury Bill, LIBOR (London Interbank Offering Rate) and the Prime Rate. When those indexes go up or down that can cause the interest rate to change on the loan.
Most mortgage loans that have a variable rate have a ‘fixed period’. That means there is a period of time (usually in years) that rate remains the same as when the loan was first obtained. For example a 5 year ARM (Adjustable Rate Mortgage) will keep the same interest rate for 5 years before being subject to change.
But then the big question is “If my rate is subject to change, how high can it go?” Fortunately there are “caps” that are set to control how much interest rates can change over the life of the loan. There are three caps usually shown like this: 2-2-5. In this example the first cap is the percent that the interest rate can jump when it can first change. So if you started with a 5% rate on a 5 year ARM, then on the 6th year it is possible for the rate to move up to 7% but no higher for that year. But this does not mean that the rate will automatically jump up to 7%, that depends on whether the financial index used moved up or down; it is possible for your rate to go down as well. The second number shows how much the rate could change each subsequent period (or year in this case) so it can never go up more than 2% any given year according to this example. The last number provides a lifetime limit. In this example the interest rate can never go higher than 5% when the loan first started which in this case would be 10%.
So why would someone want a variable rate loan? Because the rate usually starts lower and the borrower is willing to take the risk that the interest rate will not be too high in the future. But some savvy borrowers know that they will not hold the loan (or property) longer than the fixed period of the loan. So they may buy a home with a 7 year ARM but know they will sell the home in 5 years. That way they were able to get a lower rate but do not worry about the possibility of that rate changing based on their plans for selling the home. ARM Loans should be considered very carefully, and not all ARM’s are created equal. If you are consindering an ARM it is important to know what the CAPS (the maximum the rate can adjust at intervals) are. Also it is important to know and understand what type of index will be used. The index will determine the rate and the adjustment period’s, and some indices are more stabe than others. For more information about ARM’s call Steve Fingerman for complete detailed explanation about the benefits and short comings and risk of an ARM. In today’s market, ARMS are very seldome being used.

Lower interest rates shouldn’t always end up being the deciding factor on accepting a loan. For example one could pick a variable rate program because its interest rate was lower to start with than a fixed rate loan (e.g. 5.0% versus 5.5%). But since the variable rate loan can increase their interest rate in the future, that same 5.0% loan could be 7.0% or higher in the future depending on the financial markets. That person may want the security of a fixed rate and therefore is willing to have a slightly higher rate than an Adjustable Rate Mortgage may provide.
In many cases the Borrower has the ability to “buy down” the interest rate either on a temporary or permanent basis. Obviously the term buy down means that the borrower has to pay for the advantage of a lower rate. In those cases the borrower needs to do their homework to see if the buy down cost versus the monthly payment savings is worthwhile for them to buy down. As a rule of thumb the shorter one plans to stay in the mortgage or home, the less worthwhile buy downs are. But if it will be a many years then the cumulative savings overshadows the initial cost. Be sure to look closely at interest rate buy downs (or Discount Points). A lower rate may not be worth the extra cost.
Sometimes borrowers will choose use a slightly higher interest rate on a loan to cover their up front (closing) costs. To them the initial costs including a down payment are more of a challenge than the monthly payment so they are able to slide the interest rate up a bit to cover their out of pocket costs. For others a quick refinance to take advantage of lower market rates may not utilize the lowest interest rate that is available just so there are no out of pocket costs to conduct the refinance, but they know they will begin saving money right away with the refinance and are not concerned.
“Why is my APR higher than the interest rate that was quoted to me?” APR is the calculated Annual Percentage Rate based on a complex formula. It is not the same as the interest rate you actually pay but it includes the interest rate as part of the calculated number. (The good news is that Mortgage Loans use what is called a Simple Interest which means the interest is not Compounded like a credit card is which makes credit card interest so high. It’s not unusual to see credit card APR’s around 20% or more!) APR includes in its calculations all of the costs of the loan in addition to the interest rate and divides than into the loan amount reduced by the costs. That may not be easy to understand but the end result is that the APR on a mortgage loan is usually always higher than the true interest rate of the loan.

For More Information regarding Interest Rates or buying a home in Hernando County, and how they can effect your loan please contact me directly and I will be happy to review all of your options with you. I look forward to hearing from you soon.

Steve Fingerman
Branch Manager

E Loans Mortgage
4117 Mariner Blvd.
Spring Hill FL FL, 34609
Office 352-688-7949
Cell 727-946-0904
Spring Hill FL Mortgage Lender

FAR and FAR/BAR Contracts

Posted by :VA Lender In Hernando County On : October 3, 2011

Category: New Construction Sales In Hernando County

THE FAR/BAR “AS IS” RESIDENTIAL CONTRACT:

A Comparison to the FAR Residential Contract With an “As Is With Right to Inspect” Addendum*

In the sale of REO properties by banks (“REO” means “Real Estate Owned” by the bank, typically as a result of a foreclosure), many banks are insisting that their REO properties be sold using the FAR/BAR “AS IS” Residential Contract (hereinafter referred to as the “FAR/BAR Contract”). On the other hand, Realtors® primarily use the FAR Residential Contract, and, if the real property is being sold “AS IS,” they simply add the FAR As Is With Right to Inspect Addendum.

The FAR/BAR Contract was drafted and promulgated by a joint committee of The Florida Bar, representing Florida attorneys, and the Florida Association of Realtors® (“FAR”), representing Florida Realtors®. The FAR Residential Contract with an As Is With Right to Inspect Addendum (the latter Contract with its Addendum being hereinafter referred to as the “FAR Contract”) was drafted and promulgated by the Florida Association of Realtors® only. This article will attempt to compare and cross-reference the provisions of the FAR/BAR Contract to those of the FAR Contract. Remember, throughout this article, references to the FAR/BAR Contract and the FAR Contract refer to “AS IS” contracts.

Both the FAR and FAR/BAR Contracts are derived from their respective organizations’ regular residential contracts. In revising its regular residential contract, FAR simply provides an addendum to convert that contract to an “AS IS” contract. The FAR/BAR Contract actually incorporates the revisions into its standard residential contract, bolding the revisions to indicate where they are located within the contract. Both the FAR Contract and the FAR/BAR Contract delete the regular contracts’ limited inspections for, and seller warranties against:1 (1) termites

1 The FAR Contract’s Paragraphs 6 & 8(a) are deleted, and the FAR/BAR Contract’s Standard N is deleted.

© 2008. Barnes Walker, Chartered. All rights reserved. E:MARKETINGFAR Contract v. FAR-BAR ContractFAR-BAR AS IS Contract Handout.doc* This summary is based on the 2/08 revision of the FAR/BAR “AS IS” Contract and the 4/07 revision of the FAR Residential Contract and “As Is with Right to Inspect” Addendum. Please note that these forms and the provisions they contain may be modified or revised after the preparation of this summary. and other wood-destroying organisms;2 and (2) the property’s structures, appliances, a/c,

electrical, and plumbing systems not being in “working condition,” as the latter term is defined in the Contracts,3 along with (3) deleting the seller’s monetary obligations to repair or remedy defects found by the inspections up to an agreed-upon maximum amount.4 Both the FAR and FAR/BAR Contracts replace these deleted rights with a general inspection right regarding any and every aspect of the subject property, although the FAR Contract has certain limitations on this right. In both Contracts, if the buyer is not satisfied with the results of the inspection, the buyer may cancel the Contracts and receive a return of the buyer’s deposit.

Following is Table 1, which is a table of key, deal-point provisions5 of both the FAR and FAR/BAR Contracts where the provisions differ from each other, with the table indicating how they differ. (Keep in mind that the parties can amend either Contract’s provisions to read as the other’s provisions do or in a completely different way). Table 2, also following, cross- references, between the two Contracts, where corresponding provisions are located in each Contract.

2 The FAR Contract’s Paragraph 8(b) is deleted, and the FAR/BAR Contract’s Standard D is deleted. 3 The FAR Contract’s Paragraph 8(a)(1) is deleted, and the FAR/BAR Contract’s Standard N is deleted. 4 The FAR Contract’s Lines 68-72 are deleted, and the FAR/BAR Contract’s Paragraph XII is deleted. 5 Minor differences or differences in legal “boiler-plate” provisions are not addressed here.

TABLE 1

DIFFERENCES BETWEEN:

THE FAR/BAR CONTRACT

THE FAR CONTRACT

PROVISION

LOCATION & SUMMARY OF DIFFERENCES

Assignability of the Contract

Paragraph X:

The parties must choose one of these three options: (1) allowing the buyer to assign and be released from the Contract; (2) allowing the buyer to assign and not be released from the Contract; and (3) not allowing the buyer to assign.

Paragraph 14:

The buyer may not assign without the seller’s written consent.

Attorneys’ Fees

Standard R:

In case of a dispute, the losing party has to pay the winning party’s legal fees &

No reference:

No such provision is included or resulting deterrence provided. All

costs. This helps ensure that parties abide by the Contract and do not initiate lawsuits without merit.

parties pay their own legal fees & costs.

Building Permit Representation

Standard W(4):

Seller represents that seller has no knowledge of any repairs or improvements made to the property without compliance with governmental regulations, or building code violation notices that have not been already disclosed to the buyer. If the representation proves to be untrue, buyer can sue seller.

No reference:

Unfortunately, the F AR AS IS Addendum, by replacing Paragraph 8, deletes both: (1) seller’s requirement to prove that all building permits have been closed and all improvements permitted, and (2) the obligation to close out any permits found to be open or obtain permitting for any non- permitted improvements. The buyer, if the buyer discovers these problems, has only a right to cancel.

Coastal Construction Control Line (CCCL) Requirements

No reference:

A separate Addendum provision must be added regarding these requirements.

Paragraph 7(g):

The Contract contains a provision dealing with these requirements.

Delay of Closing for Acts of God (See also Force Majeure & Risk of Loss Provisions)

Paragraph VI:

In the event of extreme weather or other “force majeure” events, closing can be delayed until: (1) utilities are restored, and (2) building insurance is available, with (3) a time limit inserted by the parties, which, if left blank, is 14 days by default.

Paragraph 4 & 11(c):

1. If insurance underwriting is suspended at closing, the closing can be delayed until 5 days after the suspension is lifted.

2. Otherwise, all time periods, including closing, can be delayed up to 30 days for acts of God.

Dispute Mediation, Arbitration, & Forums

Standard S:

State or federal court for all disputes. Note, however, that most court systems require the parties to attempt mediation of their claims before trial.

Paragraph 16:

1. For deposit disputes, mediation first, then, as determined by the escrow agent, arbitration, a Florida court, or The Florida Real Estate Commission.

2. For all other disputes, mediation first, then arbitration in the county where the property is located.

Financing Contingency

Paragraph IV:

1. The contingency specifically defines whether the interest rate will adjust, the interest rate %, and the loan

Paragraph 3:

1. The contingency does not specifically define in advance what loan will be acceptable to buyer, so

term, which then makes clear in advance whether the loan that is approved will be acceptable to the buyer and satisfy and eliminate this contingency.

2. If buyer receives loan approval, buyer must deliver written notice of loan approval to seller within loan approval period. If buyer fails to do so, seller can give buyer notice of 3 days to waive the contingency or the contract will be cancelled. Regardless of notice, if the loan is not approved, either party can cancel the contract. If the contract is cancelled as a result of buyer failing to obtain loan approval, buyer will receive the deposit, provided that buyer used due diligence in seeking the loan.

buyer has the right to reject any offered loan, no matter how attractive, and thereby cancel the Contract and receive a return of the deposit.

2. If buyer does not receive loan approval, buyer must deliver written notice of failure to obtain an acceptable loan to seller within the loan approval period. If buyer fails to do so, and the sale does not close, seller will receive the deposit.

Flood Zone Advisory

No reference:

No such optional advice is provided to the buyer.

Paragraph 7(c):

The Contract contains this optional advice to the buyer.

Force Majeure

(See also Delay of Closing & Risk of Loss Provisions)

Paragraph VI:

If force majeure conditions continue beyond time limit set by the parties, either party may cancel the contract. Who receives the deposit is not mentioned, but it is presumably returned to buyer.

Paragraph 11(c):

If force majeure conditions continue beyond 30 days, both parties are excused from having to perform and either party can cancel. Buyer will receive a return of its deposit.

Inspection

Paragraph XIV:

This is a general inspection right of every aspect of the real property with no limits or restrictions.

AS IS Addendum:

This inspection right is limited as follows: (1) the inspections must be conducted by licensed professionals; (2) the buyer may not cancel unless the cost of repairs for discovered defects exceeds a certain monetary limit ($250 if left blank), and (3) written inspection reports and repair estimates must accompany any cancellation.

Prorations & Credits

Standard L: 1. Taxes must be prorated based upon

the discount for early payment. 2. Any advance rent and security

Paragraph 5(d):

1. No such requirement for consideration of the early payment discount.

deposits must be credited to buyer and charged to seller.

Other items listed are also subject to proration.

2. No such contract requirement, but landlord/tenant law requires a credit.

Other proratable items are the same.

Realtor® Protections

Standard Z:

Buyer and buyer’s successors & assigns waive all claims against the Realtor® for defects or damages that may exist at closing but are subsequently discovered. This is a somewhat limited protection.

Paragraphs 15, 16(b), 18, & 19:

1. The Realtors® are expressly entitled to receive 50% of the deposit if buyer defaults and the full commission if seller defaults.

2. If the Realtors® are a part of a dispute, the Realtors® must consent to arbitration.

3. Both parties expressly agree that the Realtors® have advised them to verify all representations and to seek legal and other professional advice.

4. Buyer agrees that the Realtors’® representations are based upon seller representations or the public records and agrees to rely upon other parties for verification of the property’ s condition, square footage, and value.

5. Both parties agree to indemnify the Realtors® against and release them from: (a) all expenses and costs, including those of attorneys, resulting from the parties’ Contract breaches or misrepresentations; (b) the Realtors’® performance of tasks beyond their scope of services; and (c) other vendor services, products, or payment.

6. The parties expressly direct the escrow agent to disburse the commissions at closing.

Rented Property Provision

Paragraph VIII & Standard F:

The Contract covers: (1) the required disclosure of the terms of any existing lease, tenant estoppel letters, and other relevant lease matters, and (2) any occupancy of the property by the buyer in advance of closing.

No reference:

A separate, but more comprehensive, F AR Rental Addendum must be attached, which covers these issues and more.

Risk of Loss

(See also Delay of Closing & Force Majeure Provisions)

Standard O:

If the property is damaged by casualty and repair costs do not exceed 1.5% of

Paragraph 9:

If the property is damaged by casualty and the repair time does not exceed 45

the price, seller must repair and buyer must buy. Otherwise, buyer may: (1) cancel and have its deposit returned, or (2) take the property AS IS with a credit for the 1.5%.

Note: The language of this paragraph, together with the language in Paragraph VI regarding delay of closing and force majeure, may create certain conflicts within the contract regarding the parties’ rights in the event that acts of God delay closing or damage the property.

days, seller must repair and buyer must buy. Otherwise, buyer may: (1) cancel and have its deposit returned, or (2) take the property AS IS, and seller must credit the deductible to buyer and assign any unexpended insurance proceeds to buyer.

Note: The language of this paragraph, together with the language in Paragraphs 4 & 11(c) regarding delay of closing and force majeure, may create certain conflicts within the contract regarding the parties’ rights in the event that acts of God delay closing or damage the property.

Seller Financing Provision

Standard B:

The Contract provides provisions for seller financing.

No reference:

A separate Seller Financing Addendum must be added.

Seller Protections

Standards W(2) & Z:

1. Seller makes no warranty or representation regarding the physical condition or history of the property.

2. Buyer and buyer’ s successors & assigns waive all claims against the seller for defects or damages that may exist at closing but are subsequently discovered.

AS IS Addendum:

Seller makes no warranties, except marketability of title.

Special Tax Assessments

Paragraph XI(a):

Regardless of whether the assessment is certified, confirmed, ratified, pending, or payable in installments at the time of closing, the parties simply agree on whether seller or buyer will pay.

Paragraph 5(e):

If the assessment is certified, confirmed, and ratified, seller will pay. Otherwise, the buyer will pay.

Survey Deadline

Standard C:

The survey must be obtained and reviewed within 5 days after the time allowed for the delivery and examination of the Title Commitment.

Paragraph 10(c):

The survey must be obtained and reviewed prior to closing.

Time Calculations

Standard I:

Time periods of less than 6 days do not include Saturdays, Sundays, or holidays.

Paragraph 11(b):

All time periods are computed in business days.

Title Defect Curative Period

Standard A:

Seller has 30 days to cure, but buyer has the ability to extend the Curative Period for another 120 days or less, within which time seller must continue to attempt to cure.

Paragraph 10(b): Seller has 30 days to cure.

Title Insurance Commitment Deadline

Paragraph V & Standard A:

The parties insert how many days (but not less than 5 days) prior to closing the Commitment must be delivered.

Line 250:

The Commitment must be delivered 10 days prior to closing.

Title Insurance Payment & Selection of Title Agent

Paragraph V:

If seller pays the premium, seller selects the title agent. Conversely, if buyer pays the premium, buyer selects the title agent. The parties must agree on the option of who pays.

Paragraph 5(c):

The provision is the same, except there is a third option whereby buyer selects the title agent, but seller pays the premium.

Title Matters to which Buyer Takes Subject

Paragraph VII:

In addition to other matters, the buyer is required to take title to the property subject to “unplatted public utility easements of record (located contiguous to real property lines and not more than 10 feet in width as to the rear and front lines and 71⁄2 feet in width as to the side lines).”

Paragraph 10(a):

No such requirement, but the other matters to which the buyer takes subject are the same.

1031 Exchange Required Provision

Standard Y:

The Contract contains a provision dealing with this requirement.

No reference:

A separate 1031 Exchange Addendum must be added regarding this Internal Revenue Code requirement.

TABLE 2

CROSS-REFERENCES* FOR CORRESPONDING PROVISIONS OF:

THE FAR/BAR CONTRACT

THE FAR CONTRACT

PROVISION OR TOPIC

CONTRACT LOCATION

Acceptance Deadline (Initial Offer)

Paragraph III(a)

Lines 403 – 407

Acceptance Deadline (Counteroffers)

Paragraph III(a)

Lines 408 – 411

Alternative Dispute Resolution

None

Paragraph 16

Assignability of Contract

Paragraph X

Paragraph 14

Attorneys’ Fees

Standard R

None

Building Permit Representation

Standard W(4)

None

Closing Costs Payment (Except Title Insurance)

Standard K covers both sellers’ and buyers’ costs.

Paragraph 5(a) for sellers’ costs. Paragraph 5(b) for buyers’ costs.

Closing Date

Paragraph VI

Paragraph 4

Closing Place

Standard H

Paragraph 5

Coastal Construction Control Line (CCCL) Requirements

None

Paragraph 7(g)

Deed Documentary Stamp Tax Paid by Seller

Standard K, Line 207

Paragraph 5(a), Line 65

Deed Type

Standard U

Paragraph 10

Default by Either Party

Standard S

Paragraph 15

Delay of Closing (Acts of God)

Paragraph VI

Paragraphs 4 & 11(c)

Disclosures: a. Radon Gas b. Mold c. Lead-Based Paint

d. Energy-Efficiency e. Property Tax f. HOA

Paragraph XI(b) Paragraph XI(c) Paragraph XI(e) (add lead-based

paint rider for pre-1978 homes) Paragraph XI(d) Paragraph XI(h) Paragraph XI(g)

Paragraph 7(b) Paragraph 7(f) Add separate FAR Lead-Based

Paint Addendum Paragraph 7(a)

Paragraph 7(e) Paragraph 7(d)

g. Non-Observable Facts

Standard W(1)

Paragraph 7

Dispute Mediation, Arbitration & Forums

Standard S

Paragraph 16

Effective Date Definition

Paragraph III(b)

Paragraph 11(a) & Line 424

Escrow

Standard Q

Paragraph 17

Financing Contingency

Paragraph IV

Paragraph 3

Flood Zone Advisory

None

Paragraph 7(c)

Force Majeure

Paragraph VI

Paragraph 11(c)

Foreign Investment in Real Property Tax Act (FIRPTA)

Paragraph XI(f)

Paragraph 5(f)

Home Warranty & Payment

Paragraph XIII

Paragraph 5(g)

Inspection Period

Paragraph XIV

AS IS Addendum

Maintenance of Property

Standard X

AS IS Addendum

Miscellaneous & General Provisions

Standards T & V

Paragraph 13

Notices

Standard T

Paragraph 12

Occupancy Delivered at Closing

Paragraph VIII

Paragraph 4, Line 55

Prorations

Standard L

Paragraph 5(d)

Realtor® Names & Commission %

Lines 148 – 151

Paragraph 19, Lines 362 & 363

Realtor® Protections

Standard Z

Paragraphs 15, 16(b), 18, & 19

Rented Property Provision

Paragraph VIII & Standard F

None

Risk of Loss

Standard O

Paragraph 9

Seller Financing Provision

Standard B

None

Seller Protections

Standards W(2) & Z

AS IS Addendum

Special Tax Assessments

Paragraph XI(a)

Paragraph 5(e)

Survey Procedure & Payment

Standard C

Paragraph 10(c)

Time Calculations

Standard I

Paragraph 11(b)

Time of Essence

Standard I

Paragraph 11(a)

Title Insurance Procedures

Paragraph V & Standard A

Paragraph 10(a) & (b)

Title Insurance – Who Pays?

Paragraph V

Paragraph 5(c)

Title Matters to which Buyer Takes Subject

Paragraph VII

Paragraph 10(a)

Walk-through

Standard X

AS IS Addendum

1031 Exchange Provision

Standard Y

None

* Corresponding provisions whose locations are similar or obvious, or that address legal “boiler- plate” issues, are not included in this table.

If you have any questions, please do not hesitate to contact us at 741-8224. Sincerely,

Garret T. Barnes Adron H. Walker

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