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I have found the best way to give advice to your children is to find out what
they want and then advise them to do it.
Harry S. Truman
| Mortgage Lenders | Fixed and Adjustable Rate Mortgages Mortgage Programs | |
| Mortgage Calculators |
The information on this page was supplied by:
Scott Wilson, Loan Advisor Pinnacle Lending Group
Boca Raton, FL
The information was prepared on 11/5/2004 and is date-sensitive. Please
consult with a mortgage professional
because programs and guidelines
are updated daily.
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Florida is Lein theory State. This means that the State of
Florida regards a mortgage as a just claim on specific property
pledged as security for a mortgage debt. The mortgage debt may
be held by any institution or person foreign or local. Florida
will recognized a institutions claim to the property if the
borrower does not pay the mortgage. You should shop around for the best mortgage you can obtain. Different sources will have different requirements. Most mortgage sources will require a minimum of 20% of the purchase price as a down payment (see below). |
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| Mortgage Lenders have become more aggressive with financing Foreign Nationals as more and more foreign residents seek to purchase property in South Florida. The following is a brief overview of how Lenders make loans for Foreign Nationals that purchase single family residence and condos in South Florida. Please remember that because Lenders modify their loan programs, guidelines, and conditions often it is strongly advised that Buyers consult with a mortgage professional experienced in financing foreign nationals before the property search commences. |
| 10% Down/90% Financing |
| In order for a Foreign National to obtain 90% mortgage financing he/she will need to document a three-year employment contract. This documentation and all other information that is submitted to the Lender will be independently verified by the Lender. The Borrower will need to verify his/her assets for at least two months and the Lender will require at least six months of reserves in the bank after the closing. As is the case with all Foreign National loan programs U.S. credit is not needed but the Borrower’s VISA status will be documented. Most of the loan programs that are available to U.S. Borrower’s will be available to Foreign Nationals who qualify for this program. These loan programs include the 30- and 15-year fixed loan, ARMs (Adjustable Rate Mortgages) and interest-only ARMs. |
| 20% Down/80% Financing |
| The 80% loan has few restrictions than the 90% loan for Foreign
Nationals. With an 80% loan the Lender is less concerned with
employment verification and more concerned with asset verification.
The Lender requires that the Borrower’s sources of funds be verified
for the three months prior to application. “Gift Funds” are not
allowed. The Lender will require at least 6 months of reserves after
closing. Two reference letters (preferable financial) from the
Borrower’s country of origin are required. The 80% loan options
include the 15-year fixed and a 3-, 5-, and 7-year ARM. |
| 25% Down/75% Financing |
| Loans that are 75% or less in loan-to-value have the fewest Lender restrictions. If the Borrower puts at least 25% down the source of funds do not have to be verified. Thus, “Gift Funds” are permitted. The Lender requires one reference letter from the Borrower’s country of origin and six months of reserves. The same loan options that are available to the Borrower who puts down 20% are available to the Borrower who puts down 25%. |
| Fixed Rate - With a fixed rate mortgage your monthly payment
will always be the same for the life of the loan. The benefit is
that you always know what your principal and interest costs are. Adjustable Rate Mortgage- In comparison, an adjustable rate mortgage (ARM) is a loan that will fluctuate your payment and interest rate during the life of the loan. Most ARMs start off with a set interest rate and principal payment for the first year and then adjust annually. The interest rate on your loan is set to reflect changes in the index interest rate. As the index interest rate changes, your payment will be adjusted annually to reflect those changes. Both types of loans have their pros and cons. For example, a fixed rate mortgage is appealing because you always know what your payment will be. On the other hand, when interest rates are high, choosing the adjustable rate mortgage is favored because it is probable that the interest rate will drop in the future, resulting in smaller monthly payments. However, with an adjustable rate mortgage you run the risk of ending up with a higher payment should the interest rate soar during the life of the loan. Adjustable rate mortgages can be advantageous because they generally offer a lower initial interest rate than a fixed rate loan, but an increase in the interest rate will result in a higher monthly payment, unlike the fixed rate loan. |
| What are Some of the Different Types of Mortgage Programs? There are several types of adjustable rate and fixed rate mortgage loans. Here are some of the more common loans: 30-Year Fixed Rate Mortgage This is a conventional mortgage which provides for a fixed interest rate and level payments for the 30-year life of the loan. 15-Year Fixed Rate Mortgage The 15-year loan is a conventional mortgage in which the borrower will pay fixed monthly payments for the life of the loan. With a 15-year loan, payments are higher than a 30-year loan, but the loan is paid off much faster. 1, 3, 5, 7, 10 Adjustable Rate Mortgages These types of mortgage programs allow you to carry a fixed interest rate for a specified amount of time. Once that time is up, you will assume an adjustable rate for remaining life of the loan. For example, if you choose a 3 year adjustable rate mortgage, you would have a fixed interest rate for the first three years of the loan and an adjustable rate for the remaining years. 10/1, 7/1, 5/1, 3/1 Treasury ARMs These loans provide for a fixed interest rate for a specified amount of time. After that you pay a variable interest rate with annual adjustments. For example, if you selected a 10/1 Treasury ARM loan, you would have a fixed interest rate and fixed monthly payments for the first 10 years of the loan. The remaining life of the loan would assume a variable rate annually. 3-Year, 1-Year, 6-Month Treasury ARMs This type of loan applies adjustments to the interest rate payments in various ways. For example, if you selected the 6-month option, your interest rate would adjust every six months. In comparison, if you selected the 3-year option, your interest rate would adjust every 36 months. Jumbo Loan Programs These mortgages allow you to borrow more than an amount set by the Federal National Mortgage Association. As of January 1, 1999 any loan over $240,000 is considered a Jumbo Loan. Conventional Loan Programs Any loan that allows you to borrow within the amount set by the Federal National Mortgage Association. Currently, loans under $240,000. Which Mortgage is Best? There are several types of mortgage plans available that are appropriate for different needs. If you are more comfortable with a steady payment, then you will want to choose a fixed rate loan. You may select the common 30 year fixed rate mortgage. This type of loan is beneficial if you plan on living in your home for several years. On the other hand, if you expect to keep the house for only a short period of time or prefer an adjustable rate mortgage, you will want to investigate other loan options. There are many mortgage programs available to fit your needs. Consult your real estate professional for more information. |