Thank you for visiting the finance section on MiamiBeach411. Our aim is to provide comprehensive, unbiased financial information, and assist consumers about their personal finance choices.

Our news feed will provide daily updates on real estate, banking, and personal finance issues taking palce in South Florida.

Personally, I will also share the decisions we make on our journey toward financial independence by 2008. 

David Bach said: 

Financial education needs to become a part of our national curriculum and scoring systems so that it’s not just the rich kids that learn about money.. it’s all of us.

We’re together at the Mortgage Depot ready to depart on our journey.  In the relm of home mortgage, I will be your driver/guide.  It is my mission to keep you informed.

I have seen how large lending institutions market their wares. 

Finding a home mortgage is not brain surgery, it’s service. Let’s do it fair, fast, and with respect.

I will take the mystery out of lending and finance.  How I will do that is by providing accurate information.

My father drove a Greyhound Bus.  Below his name plate in the front of the bus in plain site for all his passengers to see were 3 words:  SAFE, RELIABLE, COURTEOUS. 

All aboard the Mortgage Bus movin down the highway to financial success.

From an nbc6 article:

“Florida Power & Light will freeze rates for four years under an agreement reached Monday with Attorney General Charlie Crist, the AARP and other groups that planned to challenge a proposed increase.”

Interesting that when a conforming mortgage is submitted to a conforming lender, no steps are taken to approve the package until it is run through what is commonly known as a decision engine.  If the decision engine does not render the application as an “accept”, further action will not take place until this hurdle is crossed.

Federal Home Mortgage and conventional Fannie Mae and Freddie Mac product mix is the standard that decision engines utilize to either rate your mortgage application as an “accept” or as “referred”. These decision engines post what is know as “conditions” and if all the “conditions” are met, an underwriter has nothing more to do than to verify that your supporting documents satisfy those “conditions”.

The initial phase of the process is not so much to get the human to “ok” the application as it is to have the “decision engine” render an accept status so that the human (underwriter) may just sign off on conditions such as: the income documents, appraisal, title work and insurance and any other details the “decision engine” rendered as conditions of final approval.

Approvals are sometimes a result of using more than one decisioning engine.

Fannie Maes’ decision engine is called “Desktop Underwriter” (DU); while the name for Freddie Macs’ is “Loan Prospector” (LP)

Borrowers should know what decision modality is being utilized and to realize that one decision engine could render a “caution” while another may render an “accept”.

Brokers and Banks are held to a standard which is known as RESPA (Real Estate Settlement Procedures Act).  Within RESPA are guidelines such as Regulation Z.  These are government standards that must be adhered to by the loan officer.

A variety of good mortgage offerings are generally in the best interest of all concerned, the best offerings are created when the loan officer puts client needs in front of higher commission opportunities and let’s the client choose based on personal situations.

Complete information is what good loan officers give to decision engines which facilitates borrowers in receiving fast results.

Interesting that lenders provide programs for applicants who do not wish to verify their income. 

These programs are known around the mortgage industry as: Stated Income No Doc, Lite Doc and a dozen or so other lender specific terms.

When lenders offer a non-disclosed income loan, the borrower is only required to meet 1 or 2 stipulations:

1. prove he has been in the same line of work for at least 2 years
2. show cash flow in lieu of income

What these specialty programs provide is the opportunity to purchase or refinance property without having to substaniate steady income.

Borrowers do not have to prove income; however, if they choose not to “prove” income they must either prove a business license or substainiate “cash flow”.  (Personal or Business Bank sta).  In some cases a letter from a CPA will work in lieu of a business license.

For example lets say you’re an applicant and you mostly pay your creditors on time.  You have “fair” credit history;  however, you elect not to prove your income.

Banks and lenders want to do business with persons like you and the banks only want the you to “state” what you earn, and NOT PROVE what you earn.  The following are 3 lenders which allow for undocumented income: Countrywide:  accross the board Countrywide has more diverse product mix than any other lender. Another very good source for low rate non conforming mortgages is Wilmington Finance.

Should this mirror your situation and you wish to move up or take large cash out of your existing property and don’t want to provide proof of income…Wilmington definately has programs which are easy to qualify for.  Lastly a great bank from the Midwest who’s cheaper than anyone for underwriting a conforming mortgage is Fifth Third Bank Fifth Third has a great product mix, caters to foreign nationals, and has the lowest costs.
The following are a list of occupations, trades, and careers which fit well with the Stated Income, No Doc programs:  any owner of a small business, entrepreneurs, consultants, counselors, ministers, barbers, chiropractors, psychologists, nurses, real estate agents, and any hourly, salaried or W-2’s persons are considered worth candidates of these useful products.

In 1938 the Federal Government realized they needed to expand the flow of money and create a secondary market. Fannie Mae was established and authorized to buy FHA insured mortgages there by replenish the supply of lendable money.

In 1968 Fannie Mae became a privately company providing capital on a self sustaining basis. It’s role was expanded to buy mortgages beyond traditional government loan limits which caused it to reach out to a broader cross section of Americans.

Today Fannie Mae operates under a congressional charter from the U.S. House of Representatives that directs it to channel its efforts to make more affordable housing available to low and moderate income households.

Fannie Mae receives no government funding or backing but is one of the nations largest tax payers.

Fannie Mae received numerous awards including:

• Hispanic Corporate magazine “Corporate 100”
• Forbes magazine “Americas Most Admires Award”
• Essence magazine “30 Best Companies for African Americans”.

Your comments and questions about Fannie Mae Information will be openly addressed and replied to with immediacy.

There are some rumors floating around Silicon Valley that Google is planning launch Google Finance sometime in September. Although this is unconfirmed, the word is Google wants to replicate the Yahoo Finance Portal, but do it even better. Goolge has been in talks with data vendor Revere Data, a San Francisco company—which provides the data and analytics on U.S. public companies for this type of service.

Paid Content says:

“Finance information is a very search and data centric operation, something that would fit well into the mix, and add to that alerting capabilities across the Google spectrum, and you can see the potential to push the limits here”.

There are three basic catagories of home mortgages: 

• Conforming
• Non Conforming
• Government

Government loans are administered either by the Federal Housing Authority (FHA) or the Vetrans Administration (VA). 

Most people select a government loan because of the low down payment requirement. 

FHA will lend up to 97% of the appraised value of a single family residence (including mobile homes) with a maximum loan amount of approximately $360,000. 

VA will lend up to 100% for the purchase of a property up to a loan amount of $359,650 and with appropriate down payment there are no limits on loan amount.  Other Government Loan details include:

• VA only offers programs while FHA has both fixed and adjustable rates
• In some cases FHA waives appraisal requirements
• FHA maximum debt ratio is 43%.  VA maximum debt ratio is 41%
• Both VA and FHA have offerings for 2-4 Unit properties. 
• Both VA and FHA have offerings for approved condominiums

VA and FHA offer mortgages for:  rate and term refinancing, cash out refinancing, and for purchases.

Questions or concerns regarding Government Home Loans will be responded to with alacrity.

Conforming lending is a standardized complex process.  Generally 80% of the property value is the standard loan amount.

Many conforming loans are written at more than 80% of the property value; however, (and this is a huge “however”) there must be some way the integrity of the transaction is to “conform”. 

Should a person require an additional 5, 10, 15, or 20% advanced there are choices that must be made.  For each 5% threshold beyond 80% the guidelines require private mortgage insurance (PMI).  Therefore a mortgage of $85,000 on a property valued at $100,000 is at an 85% loan to value ratio.  An 85% loan to value ratio exceeds conforming guidelines by 5%.

There are two ways which most lenders will advance the additional 5%.  Either the borrower purchases private mortgage insurance and pays a monthly premium, or the lender purchases the mortgage insurance policy and increases the borrowers interest rate to offset the cost.

Typical rate increases for lender paid mortgage insurance are as follows: 

• 80.01 to 85.00 loan to value add .375 to rate
• 85.01 to 90.00 loan to value add .500 to rate
• 90.01 to 95.00 loan to value add .875 to rate

My personal point of view is that the borrower saves by having the lender pay the premium.  There are tax benefits to having the lender pay the premium.

The lowest interest rates available are found in conforming mortgages.

One other way to avoid PMI is to obtain two mortgages:  take a conforming 1st mortgage for 80%; and, close simultaneously on a 2nd mortgage for whatever percentage is needed beyond 80%.  (Neither mortgage would require PMI).

Questions or comments regarding mortgage PMI will be answered promptly

Throughout the mortgage industry, banks, lenders and brokers all use the same mortgage application form (PDF). The common name for the form is a Fannie Mae 1003 or Freddie Mac 65.  The application is a four page document that is relatively simple to complete.  1003 forms are acceptable when written in long hand or filled out online. 

Questions or concerns regarding a Mortgage Application Form will be responded to promptly.

Related stories:
On Line Mortgage Application

Real Estate appraisals are important documents.  They are an estimate of how much a property is worth based on its age, size, and the ammenities it has in comparison to similar properties (in a close proximity) which have sold in the past year.

The value of the “subject property” is determined by making adjustments to each comparable as it relates to the comparable.  For instance if the subject property has a 2 stall garage and a comparable property has only a 1 stall garage then value is added to the subject property.  Conversely, if the subject property is 40 years old and a comparable is 3 years old, value may be subtracted from “subject” as it relates to that particular comparable.

The reason real estate appraisals are important documents is that the more valuable a property is the better the ratio’s becomes should the mortgage amount be less than the value.  An example would be:  a home valued at $400,000 with a mortgage of $350,000 is an 87.5% loan to value; however, if the same property appraised for $440,000 then the $350,000 mortgage would be 79% loan to value.  With a 79% loan to value ratio, much more attractive interest rates are available.  Also, a 79% loan to value is much easier for a decision engine to approve.

Comments or Questions regarding Real Estate Appraisals and mortgage products will be replied to promptly.

Dino called me.  Dino always wants something free and easy; and easy mortgage financing is what Dino always asks for.

Once again:  “Hey Jimmy, what’s up”.  “I need money”. (Same old Dino) (this is a true story).

Ok, Dino’s a mover and a shaker (but not a big money maker).  Sometimes he sells copiers, sometimes steel out buildings; right now, it’s granite and marble floors and countertops.

Dino’s changed jobs, and hasn’t been earned a paycheck in about six months;  but, he’s got “irons in the fire”.  He needs some operating capital.  He tells me $16,000 cash in hand will hold the line until the commissions get cut loose.

I am not sure if I can help Dino until my wholesale rep Kevin from a national well run lender drops by my office. 

Kevin tells me:  “If Dino can prove he’s been in the same line of employment for 2years he can simply state his income”  (That means Dino just tells us how much he usually earns and doesn’t have to back it up).

Of course, Dino wants the easy mortgage refinancing and with marginal credit and the tax savings of paying off his revolving credit and putting it under his mortgage he recognizes that this is good business.

Dino got his credit cards paid off and received $16000.00 cash.  He also got a lower interest rate than he was paying previously, and a lower monthly payment.

Question about easy mortgage financing will be responded to promptly

A Non Conforming Mortgage can be an excellent product choice.  The reason is they are limitless in the arena of possibilities for clients with unique needs.  Unique needs are sometimes related to the amount borrowed in relation to the appraised value (LTV).

Other times those “needs” are about the “employment” (or lack thereof) or the “income” (or lack thereof).  And, sometimes they are about a previous credit issue which in most cases will be not that big a consideration in the “non conforming world” whereas it may have been a deal breaker for a “conforming” product.

The misconception prospective borrowers have is that non conforming means high interest rates.  This is not necessarily true. 

Earlier, I explained how Dino found easy mortgage financing—and got his cash, bills paid, and a lower interest rate.  (Dino’s mortgage was a 90% LTV with no proof of income and a 5.875 ARM).

Highlights of non conforming mortgages

• Don’t need a job
• Don’t need an income
• Borrow up to 107% of property value at low interest rate
• Don’t need excellent credit
• Licensed self employed borrowers do not have to prove income
• Bank statements can be used in liew of W-2’s or Tax Returns
• No Interest rate increase for large amounts of cash out.
• Great programs for borrowers who have larger cash flow, than income.
• PMI not required on non conforming mortgages

Getting a Home Equity Line of Credit (HELOC) is an option worth discussing.

There are a variety of HELOC mortgage products.  Most are 2nd mortgages that give the borrower a line of credit that they can utilize for a specific period of time (usually 10 to 15 years).  After the 10 or 15 year period, no more draws are available on the “line”, and the balance must be paid down (usually over an additional 15 years).

Here’s a different spin.  Most major lenders offer a first lien position HELOC (Home Equity Line of Credit) which may be utilized for as many years as the borrower wishes to have the line in place. 

Here’s a typical scenario: Mr. and Mrs. Borrower have a beautiful home worth 1.5 Million dollars.  Mr. and Mrs. Borrower owe $650,000 on a first mortgage on their beautiful home.  Mr. Borrower owns a business and sometimes the accounts payable are slow and Mr. Jones has to go to his own pocket to meet expenses.

Mr. and Mrs. Borrower decide to have a first lien position HELOC replace their old mortgage.  Mr. and Mrs. Borrower new HELOC is for $1,350,000. 

Now they have $700,000 cash available 24/7.  (Some lenders even re-evaluate the value of the property annualy and increase the line of credit porportinate to the value of the home). 

Information on Home Equity Lines of Credit will be responded to promptly.

Certain banks specialize in high loan to value low interest rate mortgages.  These programs are designed for borrowers who have an excellent credit history and have a need for a mortgage that will advance up to 107% of the appraised value of their property.  These low interest rate high loan to value products are offered without the borrower having to pay for private mortgage insurance (it’s not required). 

These are available for cash out refinance, rate and term refinance, and, for the purchase of a home.

Remember, excellent credit is a must for these programs (generally a middle score of 680 of 3 separate repositories).

Adjustable rate mortgages are normally written at lower interest rates than fixed rate mortgages.  Typical adjustable rate mortgages have a period of time that the rate is fixed and thereafter will adjust.  The normal ajustment periods that are offered are: 1 year, 3 year, 5 year, 7 year, and 10 year. 

Recently there has been a trend to shorter adjustables such as 1-month adjustables. 

The shorter the adjustment period the sooner the mortgage can begin to adjust to market swings. 

A 1 month adjustable can begin to adjust to market conditions almost immediately while a 10 year adjustable gives a stable interest rate for 10 years. 

It makes sense to accept an adjustable rate mortgage if a property will be sold in a short period of time.  If a person knows that within a certain period of time they are likely to move then adjustable rate mortgages are worth consideration.

Questions and comments regarding Adjustable rate mortgage information will be responded to promptly.

The Mortgage Bankers Association (MBA) has released a study on the current real estate and mortgage markets. The study discusses the current state of the housing markets, the growth of innovative mortgage products, and the impact of developments in the housing and mortgage markets on households, financial institutions, the financial markets, and the economy more broadly.

One interesting point is the MBA’s speculation regarding a potential housing bubble, and the use of non-traditional, low interest mortgages. Good timing. We just learned about the pros and cons of low interest rate mortages.

You can read the entire study from their site here.here.

Finding disaster mortgage information can aid those who wish to take the appropriate steps to rebuild.

Through Section 203 (H),  the Federal Government helps victims in Presidentially designated disaster areas recover by making it easier for them to with mortgage insurance for disaster victims, and re-establish themselves as homeowners.

Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary.

If you need help, contact the HUD Homeownership Center that serves your state. Homebuyers can also find a list of HUD-approved lender, or call the FHA Mortgage Hotline, 1-800-483-7342.

Further assistance regarding disaster mortgage information will be responded to immediately.

Have you ever been taken in? 

Con artists have a way of making a person invest in a false reality.

One of the most frequently used con games that exists in mortgage lending is:  The Effective Interest Rate Presentation

Beware of effective interest rate proposals.

The typical scenario is that when the mortgage product is presented, it is supported by an amortization chart.  The bogus presentation is accompanied by a scenario whereby the borrower only adds a small additional amount to his/her monthly payment each time it is sent in, therby reducing the principal amount and unpaid balance.

If Mr and Mrs Borrower add a mere $100.00 each month to their mortgage, they will pay the mortgage off much sooner.

There is nothing wrong with this.  But the hook is:  If they person who is presenting the mortgage product conitinually refers to the “effective rate” rather than the APR (annual percentage rate) there is a good chance that the client is paying a higher rate than is available and in some cases is not “saving” but is really paying more.

Beware of the “effective interest rate” pitch, close scrutiny is helpful.

Questions and comments regarding effective interest rates will be answered promptly

Interesting how major lenders are assisting with credit repair issues; aka, credit mortgage repair.

John Fitzgerald, my wholesale account rep, stopped by my office this week. While we were discussing service and program choices he directed me to a site that Countrywide makes available to brokers like me.

Interestingly, I navigate to a place called “Credit Reconciliation”. I am intrigued thinking:  “why would a lender be in the credit repair business”.  I decide to watch the video tutorial, and to my amazement find that this company has software which allows them to decision a person’s mortgage based on an elevated credit score even though the score won’t officially be posted onto the credit until said person provides proof of credit issue.

What’s all that mean to Mr. & Mrs. Borrower?  It means that if there are errors on his credit he doesn’t have to labor thru the arduous process of repair.  His credit will repair automatically, as long as “down the road” he provide to the Mortgage Broker (yours truly) the paperwork proving that which is being mis-reported is satisfied.

This is a one step process and it allows a person to get the best product and repair his credit discrepancies all in one move.

The Federal Trade Commission is also an excellent resource for Credit Repair Facts for Consumers.

Questions or comments regarding credit mortgage repair will be answered promptly.

Interesting how major airlines are offering bushels of frequent flyer miles if you sell or purchase a home using their sources: American Airlines recently sent me this post and I would have a difficult time not checking it as it could be a free excursion and I love a freebie.  FYI a property which sells for 350,000 qualifies for 70,000 air miles.

American Home Miles provides a handy calculator which will determine how many miles are awarded based on the sales price of the property. 

Also see the American Airlines Advantage Program which specifies choices of awards.

Questions or comments regarding frequent flyer air miles in conjunction with the purchase or sale of a property will be responded to promptly

Just when you think you’ve heard everything here comes some new mortgage scams—Welcome to the world of “asset rentals” now being investigated by bank and mortgage industry fraud experts.

On some mortgage transactions borrowers are qualified based on cash reserves and on proof of employment. Now there are companies who advertise they will “rent” you the reserves and “create” your employment.

It works like this: Say your loan officer discovers that you lack the financial wherewithal needed to qualify for the mortgage you want. Rather than lose your business, the loan officer turns to a service that offers’’ asset rentals.’’ For a flat fee of 5 percent of the amount you need, the service will verify to anyone who asks that the $100,000, $500,000 or $1 million in bank deposits you’ve claimed on your loan application documents are yours.

I don’t know about you, but for me I don’t think I would sleep well in the bedroom of a home that I purchased under fradulent circumstances.

Mortgage scams hurt lenders and their consequences reach out to hurt the public in general.

Questions or information regarding mortgage scams will be responded to promptly.

Source: Miami Herald (registration required)

Whether you’re buying your first home, or trading up to a larger one, there are many costs - on top of the purchase price - that you must figure into your budget. These extra costs, could surprise you with an unwanted financial nightmare on closing day if you’re not prepared.

Read through the following checklist to make sure you’re budgeting properly for your next move.

1. Appraisal Fee - Your lending institution may request an appraisal of the property, which would be your responsibility to pay for. Appraisals can vary in price from approximately $175 -$ 300.

2. Property Taxes - Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid.

3. Survey Fee - When the home you purchase is a resale (vs. a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary between $190 - $1,000.

4. Property Insurance - Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan. Beware! Some homes may not be insurable. Make sure you have an insurability clause in your purchase contract.

5. Service Charges - Any new utility that services your hook up, such as telephone or cable, may require an installation fee.

6. Escrow and Document Preparation Fees - Escrow fees are split between the buyer and the seller in Colorado. However, additional fees will be charged for the buyer’s mortgage closing. This can include first and second mortgages. In addition to the “Doc Prep” fees charged by the lender, some lenders will e mail the loan documents and therefore the escrow or title company may charge a electric to paper fee.

7. Mortgage Loan Insurance Fee - Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% -3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment.

8. Mortgage Brokers Fee - A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost.

9. Moving Costs - The cost for a professional mover can cost you in the range of: $75-$200/hour for a van and 3 movers.

10. Maintenance or HOA Fees - Condos charge monthly Home Owners Association Fees for common area maintenance such as grounds keeping and carpet cleaning in hallways. Costs will vary depending on the building.

We have a post in our News section that addresses the growing Hispanic Media influence.

The post comments on how Hispanics are becoming the largest minority group in the United States, representing an estimated $700 billion a year in buying power, and how advertisers and media companies from TV and the Web are scrambling to appeal to them.

Since as a culture we’re dedicated to improvement, why not discuss: credit score improvement.

It’s important to note that raising your credit score is a bit like losing weight:  It takes time and there is no quick fix.  In fact, quick-fix efforts can backfire. 

Here is some credit score improvement information:

Payment History Tips
Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score. If you have missed payments, get current and stay current

The longer you pay your bills on time the better your score.

Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t improve your score immediately; but, if you begin to manage your credit and pay on time, your score will improve over time.

Amount Owed Tips
Keep balances low on credit cards and other “relvolving credit”. High outstanding balances can affect a credit score.

Pay off debt rather than moving it around. The most effective way to improve a score in this area is by paying down revolving credit. In fact, owing the
same amount but having fewer open accounts may reduce a credit score.

Do not close unused credit cards as a short-term strategy of rasing a credit score.

Do not open new credit cards that you don’t need (to increase your available credit). This approach can backfire and actually lower a credit score.

Length of History Tips
If you have managed credit for a short time, do not open numberous new accounts too rapidly. New accounts will lower an average account age which could have a negative effect on a score if there is not adequate amounts of other credit information.  Rapid account build up can be viewed as increased risk.

Note that closing an account does not make it disappear. A closed account will show up on a credit report.  It may be considered for scoring purposes.

It’s OK to request and check your own credit report. This will not affect a credit score as long as the report is ordered directly from the credit reporting agency.

Information and Questions regarding credit score improvement will be answered promptly.

Also see:
FTC - What is Credit Scoring

Since the chief here added a very handy home appraisal tool to the site; and since he asked me my opinion of it,  here is my review of the Miami home appraisal tool.

Perhaps in the future we can “review” other products or items of interest which could lead to contraversy/insight.

Anyway, back to the subject at hand. 

Here is what I like about this appraisal tool:  Lets say Mr. and Mrs. Buyer are out shopping for a home; and, as most home shoppers do, they’re driving by some properties which may be of interest to them.  As they drive by a beautiful property, they jot down the address. 

When they return to a computer, they enter the address of the beautiful property..and ..walla they now have: a legal description, square footage, year built, the date the property last sold, and very importantly the amount it last sold for.

Now, the Buyers can determine with some expertise whether or not they wish to contact the owner, or their real estate agent for a viewing.

The only down side to the appraisal tool is the fact that it cannot produce an appraised value.  Appraised values can only be done by comparison of the property to 3 sold properties and that’s a process unto itself. 

One other drawback is that this tool can only be used for properties in Miami-Dade County.

Any questions or comments concerning the home appraisal tool will be responded to promptly.

They say the best things in life are free; here’s hoping our free credit reports fit in that catagory.

Starting September 1, consumers in 14 East Coast states join the rest of the country in qualifying for a free annual credit report from each of the three nationwide consumer reporting companies – Equifax, Experian, and TransUnion.

The free reports were mandated by Congress in The Fair and Accurate Credit Transactions Act of 2003 (FACTA), which requires the nationwide credit bureaus to provide consumers with a free copy of their credit report, at their request, once every 12 months.

Consumers who want to access their free credit file disclosure, commonly called a credit report,  can go to AnnualCreditReport.com.

“The right to receive a free credit report is an important new tool for consumers,” said Deborah Platt Majoras, Chairman of the Federal Trade Commission. “Not only does checking the credit report give consumers a valuable snapshot of their credit histories, it permits them to detect and correct errors, and spot and stop identity theft.”

I like what Chairperson Majoras says about decting errors and stopping identity theft.

When a bank runs your credit, you get the banks interpretation of the report, but if you run a credit report yourself, you can see the findings, and address any errors.

Questions and or comments regarding free credit reports will be answered promptly.

Recently here at miamibeach411.com an on line mortgage application was added.

The purpose of an on line mortgage application is to condense specific personal data and match the data with a variety of mortgage products.

The borrower should determine if he/she has the capacity to repay the mortgage.  If the borrower in fact has the necessary “capacity”, the next step is to determine based on credit worthiness what products are available to them.

In most cases, an on line mortgage application should be completed (name, address, date of birth, and employment status).  Upon completion of the mortgage application; telephone contact should be made. 

When making contact with a mortgage professional, be prepared to release your social security number for free credit evaluation to be done.

Any questions or comments our on line mortgage application will be responded to promptly.

Related stories:
Florida Mortgage Application

With the addition of our new appraisal tool, it has brought up some good questions about property taxes and home appraisals in Miami-Dade County. We will do our best to answer any related questions here.

Who determines the amount of taxes I pay?
The Property Appraiser is the county officer charged with determining the value of all property within the county for tax purposes.

While the Property Appraiser determines the value of the property taxes, the local taxing authorities decide how much money is required to provide services.

The Property Appraiser’s office does not determine the amount of taxes you pay. The taxes can increase or decrease depending on the millage rate set by the school board, commissioners and other taxing authorities.

The Miami Board of County Commissioners, municipal governments and various governing bodies set the millage rates for properties within their boundaries.

How does the Appraiser arrive at the value for my property?
To find the value of a property, the Appraiser must first know what properties similar to it are selling for, what it would cost today to replace it, how much it takes to maintain, what income it may produce, and other factors affecting its value. Utilizing these factors, the Property Appraiser assesses the property’s value. The three approaches to value are:

#1. Comparable Sales Approach - One way to assess the property’s value is to find properties like yours - located in your vicinity - which have been sold recently. Their selling prices, however, must be analyzed very carefully to get at the true picture.

#2. Cost Approach - A second way is based on how much money it would take, at current material and labor costs, to replace your property with one just like it. If your property is not new, the appraiser must also determine how much it has depreciated.

#3. Income Approach - A third way is used if you happen to own property that provides you with a rental income, like an apartment house, a store, or a warehouse. Here the Property Appraiser must consider such dollar facts as your operating expenses, taxes, insurance, maintenance, and the return most people would expect to get on this kind of property.

What causes my home’s assessed values to change?
Property tax is based upon the value of your property. When the market value of your property changes, so does your appraised value.

A property’s value can change for many reasons.  The most frequent cause of a change in value is a change in the market.

As older neighborhoods with good housing stock are discovered by homebuyers, prices gradually rise as the neighborhood becomes fashionable. In a recession, larger homes may stay on the market for a long time, but more affordable homes are in demand, so their prices rise. In a stable neighborhood, with no extraordinary pressure from the market, inflation may increase property values.

If you were to increase the total market value of your property by adding a swimming pool or second bedroom, the appraised value would increase proportionately. Similarly, should your property’s value be decreased by flood or fire, the appraised value would decrease to show the downward effect of this damage on the market value of your property.

State law requires the Miami-Dade County to appraise property at 100% market value. The Florida Department of Revenue conducts an in-depth audit of the tax roll every other year to ensure compliance. If the levels of assessment do not comply to the law, the tax roll will not be approved.

What steps do I take if I don’t think my appraisal is unfair?
A Notice of Proposed Taxes is mailed to all property owners no later than August 24th. The notice states what the assessed value of your property is and how much your taxes should be.

For a period of 25 calendar days after the mailing of the notice, the Appraiser’s office will provide property owners with an explanation of their assessed value.

If your opinion of the value of your property differs from the Property Appraisal, they suggest visiting their office and discussing the matter with them. If you have information to show that the appraised value is above the market value of your property, they will conduct a review. The purpose of the review - which is not yet an appeal - will cover the following:

• To verify your property record information
• To show how your value was estimated
• To determine if you qualify for any exemptions
• To be sure you understand how to file a formal appeal
• To discover if the value is fair compared with the values of similar properties in your neighborhood

Typically, property owners who follow this process are satisfied with the end result because they are exposed to sales activity and current costs in their area that must be considered in the appraisal process.

After talking with them, if you still find a significant difference between the appraisal and what you feel your property’s market value is, you may file a petition to be heard before the Value Adjustment Board.

When you receive your assessment notice in mid-August, read it for instructions about deadlines and filing procedures. If you need clarification, call the Property Appraiser’s office. Be sure you understand and follow instructions. A missed deadline or incorrect filing can cause an appeal to be dismissed.

An assessment appeal is an attempt to prove that the estimated market value of your property is either inaccurate or unfair. You are required to present evidence supporting your estimate of market value to the Value Adjustment Board.

The Value Adjustment Board has no jurisdiction or control over taxes or tax rates. Their only function is to hear evidence as to whether or not properties called to their attention are appraised at more or less than their market value. If such is the case, the Board has the authority to change the appraised value. They cannot change your appraised value for any other reason. The Board can also hear appeals on denial of exemptions.

How can I block property information?
Certain sworn personnel can block public access of their property information. For help on who qualifies and how to apply, please visit the Property Appraiser’s block public access page.

When should I receive my tax bill?
If you live in Miami-Dade, combined Tax Notices are mailed each year in November for the calendar year January through December. Taxes become delinquent on April 1 each year, at which time additional interest and fees are added to the bill.

According to Florida Statute 197.122, the taxpayer is “held to know” when taxes are due and payable. If a taxpayer does not receive a tax notice in November, it is the taxpayer’s responsibility to contact the Tax Collector’s Office to request a duplicate tax notice.

How do they calculate how much property tax I owe?
The assessed value provides the base for the equation. The formula is a bit confusing, but I will try to explain:

One mill equals $1 per $1,000 of property value.

You can estimate your property tax by using the assessed value, minus any exemptions, multiply by the millage rate, and divide by 1,000.

For instance, $100,000 in taxable value with a millage rate of 5.0000 divided by 1,000 would generate $500 in taxes.

The Property Appraiser’s office archives Millage Rate tables back to 2000.  You can download a PDF file here.

Where is the Miami Appraiser’s Main Office Located?
Miami-Dade County Government Center

111 NW 1 Street
Miami, Florida 33128
Suite 710 Public Information Counter

Phone: (305) 375-1205
Fax: (305) 375-3024
Hearing Impaired: TDD (305) 375-3607
Web: MiamiDade.gov

Office Hours are 8am to 5pm.

Question and comments about Property Taxes in Miami-Dade will be answered promptly.

The U.S. Department of Housing shows us how not to fall victim to loan fraud, as well as 11 Tips On Being A Smart Consumer. I wanted to summarize the tips for you, but after giving it some thought, I feel they all should be addressed: 

#1. Before you buy a home, attend a homeownership education course offered by the U.S. Department of Housing and Urban Development (HUD)-approved counseling agencies.

#2. Interview several real estate professionals, and check references before you select one to help you buy or sell a home.

#3. Get information about the prices of other homes in the neighborhood. Don’t be fooled into paying too much.

#4. Hire a properly qualified and licensed home inspector to carefully inspect the property before you buy it. Determine whether you or the seller is going to be responsible for paying for the repairs. If you have to pay for the repairs, determine whether or not you can afford to make them.

#5. Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.

#6. Do NOT let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of yourdownpayment , failing to disclose the nature and amount of your debts, or even how long you have been employed. When you apply for a mortgage loan, every piece of information that you submit must be accurate and complete. Lying on a mortgage application is fraud and can result in criminal penalties.

#7. Do NOT let anyone convince you to borrow more money than you know you can afford to repay. If you get behind on your payments, you risk losing your house and all of the money you put into your property.

#8. Never sign a blank document or a document containing blanks. If information is inserted by someone else after you have signed, you may still be bound to the terms of the contract. Insert “N/A” (i.e., not applicable) or cross through any blanks.

#9. Read everything carefully and ask questions. Do not sign anything that you don’t understand. Before signing, have your contract and loan agreement reviewed by an attorney skilled in real estate law, consult with a trusted real estate professional or ask for help from a housing counselor with a HUD-approved agency. If you cannot afford an attorney, take your documents to the HUD-approved housing counseling agency near you to find out if they will review the documents or can refer you to an attorney who will help you for free or at low cost.

#10. Be suspicious when the cost of a home improvement goes up if you don’t accept the contractor’s financing.

#11. Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

Questions or concerns regarding loan fraud will be responded to with immediacy

Source: U.S. Department of Housing