Real Estate has been a solid investment for years.  It has recently gotten a bad rap, but that was more about people who made foolish decision and banks that allowed it than it was the real estate market.  The reality of the situation today is that anyone wanting to make a solid investment in their future needs to seriously consider a Florida mortgage.

Investment properties are a great way to set up for the golden years because if they are done properly, they are self sufficient and even throw a few extra dollars into the bank account while they are being paid off.  Resort locations like Florida are pretty much a sure bet as the demand for locations such as this by renters is always high.  Not only that, but it allows the owner to save on vacations as well.

One of the more frustrating things that people go through on vacations is dealing with bad rooms and having to spend excessive money in restaurants because they do not have the ability to cook. While people want to take it easy on vacation, there is no need to eat out every night and add hundreds, if not thousands to the cost of the vacation.  Because of this, they are now looking at rentals as a viable option for a vacation.

The other market that makes getting a Florida mortgage a wise decision is long stay renters.  People are moving from job to job and are tentative to buy a home when they are first settling in. Who knows how long the job will hold and locking into a mortgage without that security is a risky deal. This is an even a better situation for an investment property owner as they now know that their monthly payment will be there and the mortgage along with a small profit can be made.

The beauty in getting a Florida mortgage right now is that the pricing is locked in.  When the economy bounces back and people are paying more money for vacations and rental fees, your low monthly payment is still the same. This is excess money that can go to paying the home off early or that can go right into the bank for a “rainy” day.

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Florida mortgage

Luckily, for Florida mortgage rate shoppers, the momentum was largely positive.

Mortgage rates in Florida fell for the second time in as many weeks, but on the whole – rates still remain higher versus their early-October lows.

The financial news impacting Florida mortgage rates last week was pretty extensive:

• The Federal Reserve held the Fed Funds Rate near 0.000 percent
• The Unemployment Rate crossed 10 percent
• The First-Time Home Buyer Tax Credit was extended to April 2010

Together, these 3 events helped push Wall Street analysts towards a more positive outlook regarding the U.S. economy’s chances for recovery, but not yet out of the woods.  This particular philosophy has been excellent for Florida mortgage rates, helping to hold conforming 30-year fixed mortgage rates near 5.250 percent since the start of the year.

It helped rates last week, too.  But low rates aren’t without threats.

For one, the decision by “Uncle” Ben Bernanke and company to hold the Fed Funds Rate near 0.000 percent will eventually spark inflation concerns.  When it does, Florida mortgage rates will rise. That won’t be this week, though.

Actually, nothing may happen this week — as there’s not much data to release.  Apart from a retail report, a confidence survey and some Fed speakers, the calendar is bare.  That, and Wednesday is a federal holiday.

However, without data, markets often trade on things like geopolitics, or energy concerns, or momentum.  In other words, don’t be lulled into thinking rates won’t change this week.

At least for now, the Florida mortgage rates look good. By the end of the week, that may not be the case.

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The expiration date for the new version of the First-time home buyer tax credit has been moved forward to the spring of 2010 – with home buyers in Florida and across the country required to be under contract by April 30, 2010, and to be closed by June 30, 2010.

For the most part, Florida mortgage borrowers can expect similar requirements as were part of the last tax credit:

• Buyers may not purchase their home from a spouse, parent, or child
• Buyers are not permitted to purchase the home from an entity in which they are listed as a majority owner
• Buyers may not receive the home through either a gift or inheritance
• All parties to the purchase must meet eligibility requirements

Important Updates to the New First-Time Home Buyer Tax Credit

Florida mortgage borrowers should note that there are a few new wrinkles in this latest iteration of the tax credit.  First, the definition of “first-time home buyer” has been expanded to include most homeowners with at least 5 years in their current home.  This is great for “Move-up” home buyers in Florida, as they can now stake a claim up to for a credit with the IRS of up to $6,500.

Other eligibility changes Florida mortgage borrowers need to be aware of include:

• The subject property sales price may not exceed $800,000
• The subject property must be a primary residence
• Income limitations have been raised to $125,000 for single-filers and $225,500 for joint-filer

And remember, folks -  this First-Time Home Buyer program provides Florida mortgage borrowers and other home purchasers with a true tax credit – not a deduction.  This means that you, as a tax filer will receive a cash payment of $2,000 from the U.S. Treasury if your “normal” tax liability totals $6,000 and you are eligible for all $8,000 available under the new law.

The complete list of qualifying criteria is posted on the IRS website.  Be sure to review it with a tax professional to determine your eligibility.  Then mark your calendar for April 30, 2009.

It’s 5 months away.

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As anticipated, Florida mortgage borrowers should get ready for a rate increase per the November 4 FOMC press release.

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

The general sentiment from the meeting was that the U.S. economy “has continued to pick up” since the September FOMC meeting and that housing market activity has increased.

It’s the third shot of optimism we’ve received from these post FOMC meetings – a signal that the recession may in fact be over.  However, the economy is not entirely out of the woods, and the Fed identified several points to watch out for including:

1. Continued job losses for American workers
2. Reduced fixed investment by businesses
3. Ongoing challenges for the financial markets

In spite of these concerns, the overall tone remained positive, as inflation appears to be held in check.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to honor its $1.25 trillion commitment to the mortgage bond market.

The Fed plans to wind down its mortgage market support over the next 5 months, reaffirming its March 2010 exit date.  For now, Fed support helps hold mortgage rates down.

The Florida mortgage market reaction to the Fed’s press release is negative overall.  As such, mortgage rates in Florida are rising.

The FOMC’s next scheduled meeting is December 15-16, 2009.

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As we know, the meeting minutes from each Federal Open Market Committee (FOMC) meeting tend to shake things up.  We saw this with last September’s notes – based on the following points:

1. Financial markets have improved
2. Housing activity has increased
3. Economic activity has “picked up”

Per analysts, the economic picture looks to continue its improved track.  If today’s notes from the FOMC lead Wall Street to believe this pattern will continue, expect Florida mortgage rates to rise.  Of course, reference to slower growth should help keep mortgage rates in Florida holding firm.

Most analysts feel that the Fed Funds Rate will remain within its target range of 0.000-0.250 percent — the lowest it’s been in history.  However, it’s what the Fed says today that will matter more than what it does.

If you’re floating a Florida mortgage rate or wondering if the time is right to lock, the safe approach is to lock prior to 2:15 PM ET Wednesday.

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Released by the National Association of Realtors®, the Pending Home Sales Index posted its 8th consecutive monthly gain in September.  The results from this report mark the longest overall upswing in the history of the index – with Pending Home Sales now at their highest levels since December 2006.

As its name suggests, a Pending Home Sale represents a potential sale that is currently under contract, but has not yet closed.  It’s the precursor to an Existing Home Sale.

On average, roughly 80 percent of “pending” homes close within 2 months.  The majority of those remaining close three to four months out.

What we can learn from the Pending Home Sales Index

When the Pending Home Sales Index rises, it’s an indication that market activity has increased.  September’s data confirms what we’ve been noticing since February — the “Buyer’s Market” home sales period is coming to an end.

With more Florida homes under contract, homebuyers will begin to see more of the following:

1. Competitive, multiple-offer situations
2. Reduced purchase price leverage over sellers
3. Fewer seller concessions

Therefore, if you’re buying a Florida home in the next several months, you should understand that the 8-month run in Pending Sales will lead to a run in closed sales.  It should result in higher home prices, too.   Indeed, we’re already seeing it.

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The volatility we saw last week is nothing new, as it’s been an ongoing trend through most of 2009.  When asked why such volatility takes place, I explain to my Florida mortgage clients that we see markets shift up and down to dramatic effect any time analysts fail to agree on what’s next for the economy and. I just so happens that there’s been a lot of this type of disagreement this year.  Why do analysts not agree on where the market is going at any one point?  It’s all in the data.

Consider the events impacting Florida mortgage rates last week:

At 9:00 AM Tuesday morning, the Case-Shiller Index report showed home prices rising nationwide.  Because many analysts believe housing fueled the recession, strength in the sector is widely believe to be a positive for the economy.

Good news for the economy – as we’ve said – means bad news for Florida mortgage rates.  As such, rates rose on the news.   But the ride had only just begun…

Not an hour after the Case-Shiller numbers came out, the national consumer confidence report showed a substantial deterioration in consumer sentiment as compared to the previous month.  The data forced Wall Street to do an about-face.   Consumers drive the markets.  Don’t let anyone ever tell you any different.  When folks lose confidence in where the economy is going, markets drop.  Again, when the economy starts to take a dive in the eyes of analysts, we see Florida mortgage rates move down as well.

Think of it this way:  The Holiday Shopping Season fast approaching, and the last thing businesses want to see is a suddenly reserved American shopper.

This week, the volatility should continue.

In addition to the release of key employment and housing data, the Federal Open Market Committee (FOMC) has a scheduled 2-day meeting.  The group’s Wednesday afternoon adjournment will influence mortgage rates.

The Fed is widely expected to keep the Fed Funds Rate in its target range near 0.000 percent, but it won’t be what the Fed does that will matter as much as what the Fed says.  Statements made by Bernanke and company will be dissected and distilled by Wall Street analysts in hopes that they’ll get a better handle on where the economy is going next.

If the FOMC’s press release shows optimism for the economy, mortgage rates will rise in response.  Alternatively, if the Fed appears more dour, rates will fall.

Either way, consider locking your rate before the Wednesday afternoon announcement.

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Florida home sales through September 2009, according to the Florida Association of Realtors®, and the national housing supply fell to a 2-year low last month, according to the National Association of Realtors®.

Existing home sales rose 34 percent last month with a total of 14,419 homes sold statewide compared to 10,778 homes sold in September 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.1 percent over statewide sales activity in August. – Florida Association of Realtors®

Overall, we’re starting to see a regular reduction in housing inventory, which helps to explain why multiple-offer situations for Orlando mortgage borrowers have been so common lately.

If you’re looking for evidence that the long-standing Buyers Market is ending, this month’s Existing Home Sales report might be it.

Even median sales prices — normally pushed lower by distressed and foreclosed properties — declined at its slowest pace in a year.  Folks – for those of us living in the Orlando area, the market may have turned a corner.

Orlando home prices are rooted in the basic economics of supply and demand.

• When supply outweighs demand, home prices fall
• When supply lags demand, home price rise

Since March 2009, the market has been moving in the right direction.  Low Orlando mortgage rates, ample housing supply, and the first-time home buyer tax credit fueled buyer-side demand for Orlando homes. As such, home prices are now rising.

If home supplies stay on this path into 2010, expect home prices in Orlando to rise even more.

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Many US companies are beating analysts’ expectations.  However, it’s important to realize that the bulk of companies achieving better earnings are doing so by cutting costs and laying off employees – not by increasing sales.

As usual, there seems to be a disconnect between Wall Street and “Main Street” – in that stocks are soaring higher based on these “positive” reports, but the cost cutting and job cutting measures can only go so far.  The writing is on the wall – it’s impossible for companies to continue to trim down their employee base to record levels and then grow their business, hoping that they can provide high levels of service after thinning out their ranks.   For evidence of this, we need only to look at the underwriting nightmare that lenders had, and to some extent are still having, after carving out huge chunks of their staff this past year.

Last week’s Jobless Claims numbers came in higher than expected.  In a seeming ironic shift – the number of individuals continuing to receive unemployment benefits actually fell to the lowest level since March.  However, this is likely the result of people’s unemployment benefits running out, without them having been able to find jobs.

USA May Lose the AAA Credit Rating It’s Maintained Since 1917

Yep.  Ratings agency Moody’s lead analyst, Steven Hess, reported recently that the US needs to cut its deficit or risk losing its “AAA” rating in the next 3 to 4 years.  This is huge, folks.  I mean, really?  We have maintained AAA status as a national economy since 1917… and have done so through some pretty tough times!

Think of all we’ve been through – two World Wars, the Depression, three Wall Street collapses and major terrorist attacks…yet our credit quality has maintained that AAA rating, allowing us to issue debt at the most favorable rates.

Just like with Florida mortgages – when the credit rating gets reduced, interest rates move higher. This will definitely be something we’ll keep an eye on as we move forward here over the next few months.

What to Look for with Florida Mortgage Rates for the Week Ahead

Florida mortgage rates for this week will hinge on several key economic events and news reports.  We’ll see a record sized round of Treasury auctions this week – and the massive amounts of supply that continue to flood the market can cause home loan rates to move higher, if there is ultimately not enough demand to sop up all the supply.

Tuesday – Tuesday brings both the Consumer Confidence and Durable Goods Reports, with the latter giving us an update on consumer and business consumption and buying behavior via data on items that are non-disposable, like cars, furniture, appliances, games, cameras, business equipment, etc.  These reports are always most impactful when it comes to mortgage rates – as they give analysts a true sense of where folks are in regards to their personal feelings about the economy.

Wednesday and Thursday - Wednesday, there will be more news on the housing front with the New Home Sales Report, while Thursday brings another Initial Jobless Claims Report. Thursday also brings a read on the economy with the Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity.

Friday - On Friday, the week could end with a bang, as we’ll receive the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) Index, found within the Personal Income Report.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

If you see a Florida mortgage rate you like, lock it in now.

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I started the Florida Mortgage Blogger site as a means to provide useful and easy to understand information about Florida home loans, refinancing options, various government mortgage programs (VA, FHA, USDA, etc.), and the like.  It’s also a great place to share some local color information on different parts of the state.   It’s my home that the Facebook Fan page does much of the same.  Actually, this local showcasing is actually an area I want to add more of to the Facebook page.

I want to relay a special thanks to Jim Cronin, over at the Real Estate Tomato.  He’s using Google Chrome, and I had some CSS coding on one of my main pages that wasn’t playing nice with Chrome.   All fixed now, thanks to you, Jim!  As a side note – please check out the Virtual REBarCamp Facebook page.   This awesome one-day event will be held on November 17, 2009, and promises to be a very special version of the BarCamp Experience.   Visit the Virtual reBarCamp site for more information.

If you’re browsing on Facebook anytime in the near future, please do consider becoming a fan of my Florida Mortgage Broker page.  I think you’ll gain some useful insights, and I hope you’ll stop by often to share your thoughts and experiences about living in or visiting Florida, too!

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