First Time Homebuyers

Home Buying Strategies for 2024

For now, economic signals suggest more positive news for buyers in 2024 though no experts are forecasting a return to 3% rates anytime soon. More likely, we will see the 30-year mortgage rate decline closer to 6% according to forecasts from the Mortgage Bankers Association and the National Association of Realtors.

Mortgage rates and housing prices are both high while the housing supply is running low. The current market has a 3.6-month supply of unsold home inventory. A balanced market has a supply of five to six months. Despite larger shortages, 92% of markets have seen modest inventory growth over the last three months, according to a November 2023 report from ICE Mortgage Technology.

Until supply catches up to demand, prices are unlikely to fall. Realtor.com estimates prices will fall less than 2% next year and that is a nationwide forecast. Prices in the South are not expected to fall with over 2000 people a month moving to Florida.

More than one in four homes are still selling for above list price, according to October 2023 data from the NAR: 28% of homes sold for above list price that month. Homes for sale spent a median of 23 days on the market and saw an average of 2.5 offers, a sign that competition remains tough.

Don’t let high rates keep you on the sidelines for too long. When rates go down, competition goes up — another reason there’s no time like the present to start house hunting.

How do you compete in this market?

1. Adjust your criteria and expectations. No one gets 100% of what they want in a home. Decide the features that are your top priority and compromise on the rest. Plan on adding or changing features you can control in the future and shop for those you cannot such as location, community amenities, school districts, and more.

2. Consider the option to refinance in the future if rates do fall significantly. Nothing in the economy is suggesting that this will happen anytime soon. Waiting around for rates to drop only means that there will be more competition for the homes you can afford while home prices continue to rise. Consider getting into a home that you can afford and leave open the option to refinance in the future to ease your monthly expenditures and invest in home improvements. Should rates not fall, then you are already building equity and are way ahead of where you would be if you waited.

3. Consider new construction, some developers are offering below market mortgage rates if you use their financing company and often include incentives towards closing costs. You start off with a brand-new roof, appliances, a home warranty, and more so the future expenditures you need for a resale can be applied to your down payment or décor.

Filed under: 2024 real estate, Blog, Boca Raton real estate, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, new home construction, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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Should You Buy A House Now Or Wait Until 2024?

Many prospective homebuyers have been left wondering when the time will be right for them to enter the housing market. The average 30-year fixed mortgage rate hit 8% this week, the highest level since 2000 but a very moderate rate to the 16.5% I paid for my first home in 1980.

Daryl Fairweather, Redfin’s chief economist, said waiting for rates to fall before entering the housing market could be a mistake. “The second that happens, buyers will rush back into the market, and we will see a return of bidding wars,” she said.

For homebuyers who are financially prepared to buy a home, locking in a high interest rate now — and refinancing at a lower rate down the road — could be a wise move, Lawrence Yun, stated chief economist at the National Association of Realtors.

Over the next 12 to 18 months, Yun expects mortgage rates to fall from the near-8% they’re at now to below 7%, perhaps even close to 6%, he said. Remember, the real estate adage of ‘Marry the house and date the rate.’ To put it another way, you can always refinance later. I always advise my buyers to plan on staying in the home for five or more years if you plan on owning a home. If your short term situation involves moving, then perhaps it is best to rent for the time being.

Many factors will change rates in the future and the housing market is directly influenced by mortgage rates. Many of these factors are unknown at this time. Inflation, world unrest and economic conditions, GDP, and more.

The volume of existing home sales was down more than 15 percent from August 2022 to August of this year, according to the National Association of Realtors. However in South Florida though the volume of sales where down homes prices have continued to increase month to month due to a lack of inventory with both resale and new construction.

Cash Buyers should get into the market sooner than later since there are no forecasts that predict that home prices will be lower in South Florida in 2024, just the opposite.

No matter which way the real estate market is leaning, though, buying now means you can start building equity immediately. It also means avoiding the potential for additional mortgage rate increases later.

The decision to buy a house in 2023 or wait till 2024 is multifaceted, depending on market conditions, economic forecasts, personal finances, and lifestyle factors. While it’s essential to consider all these elements, remember that a home is not just an investment—it’s a place to live, grow, and create memories. Whether you choose to buy now or wait, ensure it aligns with both your financial goals and personal needs.

Filed under: 2024 real estate, Blog, Boca Raton real estate, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, Mortgage Information, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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Government Shutdown’s Effect on Real Estate Market

While a government shutdown won’t stop people from buying and selling homes, the ripple effects across the economy could be disruptive, especially if it drags on.

Some expect to see delays around mortgage loans, particularly if the shutdown isn’t resolved quickly. Zillow estimates around 2,500 originated loans would be delayed per working day. Homebuyers applying for a government-backed mortgage from the Federal Housing Administration would face processing delays.

A government shutdown could also delay mortgage loan approval for other reasons. In areas where flood insurance is required, for example, buyers could be stalled if the National Flood Insurance Program were to pause operations.

Delayed Loan Processing- Some federal agencies, such as the Federal Housing Administration (FHA), may operate with reduced staffing or close entirely. This can lead to delays in loan approvals and processing, affecting both homebuyers and sellers. It’s essential to inform your clients about the possibility of extended timelines.
Verification and Documentation- Many mortgage applications require verification of income, tax returns, and other documentation from government agencies. If these agencies are affected by a shutdown, obtaining necessary documents may become more challenging, further slowing down the mortgage approval process.
National Flood Insurance Program (NFIP)– The NFIP is vital for many homeowners in flood-prone areas, as lenders often require flood insurance for mortgage approval. A government shutdown could impact the availability of NFIP policies and affect property transactions in flood-prone regions.
IRS and Tax Transcripts–The Internal Revenue Service (IRS) provides tax transcripts required for mortgage applications. The IRS would remain funded through the Inflation Reduction Act, but obtaining these transcripts may become difficult, potentially leading to delays in loan processing and closing.
Appraisals and Inspections- Government shutdowns may disrupt the scheduling of appraisals and inspections, as federal agencies oversee certain aspects of these processes. Delays in these areas can lead to extended closing times and may affect contract deadlines.
Market Uncertainty- A prolonged government shutdown can create uncertainty in the real estate market, causing some buyers and sellers to delay their transactions until stability is restored. This could result in slower market activity and potential fluctuations in home prices.
Economic Confidence- Government shutdowns can erode consumer and investor confidence in the economy. If potential buyers and investors become hesitant due to political uncertainty, it may impact the overall demand and stability of the real estate market.

Filed under: appraisal, Blog, contracts, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Flood Insurance, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, home Inspections, Homebuyer Advice, House Closings, Mortgage Information, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, South Florida Real Estate by Kim Bregman
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Tips to Reduce Home Insurance Costs in South Florida?

Are you a home buyer in Florida looking to save money on your insurance costs? Here are some expert tips to help you reduce your home and wind insurance expenses.

Shop Around: Don’t settle for the first insurance quote you receive. Take the time to compare prices from multiple insurers. By doing so, you can find the best coverage at the most competitive rates.

Increase Deductibles: Consider raising your deductibles to lower your premium. While this means you’ll pay more out of pocket in the event of a claim, it can significantly reduce your monthly insurance costs. Make sure you take on a deductible that won’t leave you financially overwhelmed when you need to make a major claim.

Improve Home Security: Installing security measures such as alarms, deadbolts, and smoke detectors can make your home safer and lower your insurance premiums. Insurers often offer discounts for homes with enhanced security features.

Bundle Policies: If you have multiple insurance needs, consider bundling your auto, umbrella, home and wind insurance with the same provider. This can lead to substantial savings on your premiums.

Maintain a Good Credit Score: Believe it or not, your credit score can affect your insurance rates. Pay your bills on time, keep your credit utilization low, and regularly check your credit report for errors to maintain a good credit score and potentially lower your insurance costs.

Consider Wind Mitigation Measures: Living in Florida means being prepared for hurricanes. By fortifying your home against wind damage with measures like impact-resistant windows and reinforced roof trusses, you can qualify for wind mitigation discounts.

Avoid Making Small Claims: While insurance is designed to protect you from significant financial losses, making multiple small claims can lead to higher premiums. Consider handling minor repairs out of pocket to avoid impacting your insurance rates.

Look for Discounts: t’s easy to miss a discount you’re eligible for. Homeowners often have the stress of the home-buying process in the background when they get coverage, meaning insurance could be one thing hurriedly checked off the list. You can qualify for discounts if you:

Have a residence with no smokers
Pay your premium upfront
Pick paperless billing
Sign up for automatic payments

Remember, every insurance policy is unique, so it’s essential to speak with a qualified insurance agent to find the best ways to lower your home and wind insurance costs in Florida. Don’t let high premiums take away from the joy of homeownership – take action today and start saving!

Filed under: 4 Point Inspection, Blog, Boca Raton real estate, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Flood Insurance, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Maintenance, home safety, Homebuyer Advice, Homeowners Insurance, Hurricane Preparedness, Insurance Claims, Real Estate, real estate news, South Florida Real Estate by Kim Bregman
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2023 Florida Jumbo Loan Limits

A jumbo loan is a type of mortgage loan that’s used to finance loans that exceed the conforming loan limit. In the United States, the Federal Housing Finance Agency (FHFA) sets loan limits for conforming loans each year.

If the home you’re purchasing will require you to borrow more than the conforming loan limit (CLL), you’ll need to apply for a jumbo loan. But because of the larger loan amounts and increased risk for lenders, Florida jumbo loans often come with higher interest rates and stricter requirements than conventional loans.

In 2023, the conforming loan limit for most U.S. real estate markets is $726,200. However, the jumbo loan limit in Florida depends on what county you’re planning to buy a home in.

· $726,200 is the conforming loan limit in most Florida counties.

· $874,000 is the maximum limit in Monroe County

The amount being borrowed is what determines whether you will need a jumbo loan, not the price of the home.

The requirements for a jumbo loan are much more stringent than a conforming loan. Each lender may have different requirements or processes, but below are the typical requirements for borrowers seeking a jumbo loan.

Higher credit score: When it comes to obtaining a jumbo loan, credit score requirements are typically stricter than for conventional mortgages. While some lenders may be willing to accept a lower score, a credit score of at least 720 is generally required to qualify for a jumbo loan.

Larger down payment: When applying for a jumbo loan, keep in mind that down payment requirements are generally more substantial than for traditional mortgages. While the specific amount will depend on the lender and the borrower’s financial situation, many jumbo loan lenders require a down payment of at least 10%, and some require as much as 20% or more.

More assets: During the asset review process, lenders typically request that jumbo loan borrowers provide evidence of sufficient liquid assets or savings to cover the equivalent of one year’s worth of loan payments.

Lower debt-to-income ratio (DTI): Whether you’re applying for a traditional mortgage or a jumbo loan in Florida, lenders evaluate your spending habits and creditworthiness by analyzing your debt-to income ratio ( DTI) The DTI is determined by dividing the total of your monthly debt payments by your gross monthly income. While some lenders may accept a DTI as high as 50% for a conforming loan, those applying for a jumbo loan should aim for a DTI under 43% and ideally closer to 36%.

Additional home appraisals: For a jumbo loan, lenders may require an additional home appraisal to ensure that the property’s value is accurate. This is particularly true in places where there are few comparable home sales. The additional appraisal acts as a second opinion and helps the lender to mitigate their risk. It’s important to note that the cost of a second appraisal may be higher than a typical home appraisal, particularly in areas with fewer sales.

Filed under: Blog, Boca Raton real estate, closing costs, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Jumbo loans, Mortgage Information, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, Refinancing, South Florida Real Estate by Kim Bregman
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Hurricane Preparedness Before Your Vacation

As a Floridian, you already know the drill: hurricane season runs June 1 through November 30 each year, and certain hurricane preparations are needed to protect your home when storms appear to be heading your way. But what happens if you are some distance away, or even out of state, when this occurs? You can still prepare ahead of time – and a few extra steps is all it takes to secure your home while you’re away.

Performing the following hurricane preparation before vacation will allow you to relax and enjoy family time, or the scenery wherever you’re vacationing.

Insurance Coverage. Every year, you should review your homeowners, flood, and wind insurance policies to make sure you will have the coverage you need should your home be in the path of the next major hurricane or storm surge. Ideally, this is done before hurricane season begins, but should absolutely be done before you leave on vacation.

Home Safety Measures. Whatever hurricane preparedness you might normally do if you were home when a storm was approaching, do before you leave on vacation. This includes closing/installing your hurricane shutters, trimming trees, and bringing in any outdoor furniture or other items subject to becoming projectiles during a hurricane. Doing all of this before a storm is even on the horizon might seem like overkill – but the peace of mind it provides should bad weather threaten while you’re away will be priceless. Especially since you won’t be able to do much from a distance.

Electronics, Water & Gas. Consider unplugging valuable electronics and appliances to avoid potential power surges as the result of a hurricane or tropical storm. Alternatively, you could opt to turn the power off at the breaker. To avoid potential leaks, you may also want to consider turning off the main water and gas valves to your home.

Inform a Trusted Neighbor or Friend. Let someone you trust know about your vacation plans, including when you’ll be away, how you might be contacted, and any relevant details about your home security or other systems. They may be able to keep an eye on your home in your absence should a hurricane develop.

Ready the Emergency Kit. Stock up on supplies you would rely on if you were home during a hurricane, such as flashlights, batteries, first-aid kits, nonperishable food, and an ample supply of bottled water. This hurricane preparedness will be helpful if you return home without power or access to supplies are limited. Store a small version of this kit in your car, and top off the tank.

Have a Backup Plan. Should you be unable to get to your home upon your return from vacation, or if your home is damaged by a hurricane or tropical storm, have a contingency plan of possible friends or nearby locations you may be able to shelter in until your home is safe to return to.

‍Stay Informed. Even with all the right hurricane preparedness before you leave on vacation, you’ll want to monitor weather conditions from afar, especially once a hurricane or tropical storm has been identified. You’ll be able to make the best decisions when they are informed by as much information – and preparation – as possible.

Filed under: Blog, Exclusive Buyer Agency, First Time Homebuyers, Flood Insurance, Home Buyer Advice, Home Maintenance, home safety, Homebuyer Advice, Homeowners Insurance, Hurricane Preparedness, Insurance Claims, Uncategorized by Kim Bregman
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Beware of Polybutylene Pines in Older Homes

Think twice about purchasing a home with Polybutylene (PB) pipes. Polybutylene (PB) pipes were widely used in Florida residential construction from 1978 to 1995. Billed as a less expensive alternative to traditional copper pipes, up to 10 million homes across the United States were outfitted with PB piping during this period. Polybutylene pipes tend to degrade over time, creating small fractures and pinhole leaks. Any single fracture could eventually result in sudden failure, which generally ends up causing extensive damage to the home. A class-action lawsuit in 1995 resulted in nearly $1 billion being awarded to affected homeowners but the class action is no longer an option for compensation by current homeowners.

Many experts will tell you that PB pipe failure is not a matter of if, but when, and if you currently have polybutylene pipes in your home they have been there for many years. Polybutylene pipes take about 10-15 years to deteriorate, and sometimes you may not know you have a leak, especially if the pipes are behind sheetrock.

These leaks are a serious risk because they can create:

Mold
Water damage
Or even flooding

Ways to tell if you have PB pipes:

PB pipes used for interior applications are generally gray in color but may also be black. PB pipes used outside may be gray, blue or black.
PB pipe is flexible, not rigid.
PBpipes may be stamped with the code: PB2110.

The easiest places to see polybutylene pipes in your home are…

Near the water heater
Connecting to sinks and toilets
At the main shut-off valve or water meter

A home inspection and/or 4-point inspection will determine if there existsPB piping, but only if it is visible. No home inspection, for the purpose of purchasing a home, will open walls to determine the existence of polybutylene piping. I advise my clients to assume that it exists if the home was built between 1978-1995.

If PB pipes exist in a home, you basically have 2 options:

1. Replace the pipes with PEX (a more reliable type of plastic pipe)

2. Wait until they rupture and pay for expensive water repair AND then re-pipe the home.

To replace polybutylene pipes or copper pipes, you’ll have to remove them and re-pipe your home’s entire plumbing system. This will likely involve opening walls and even floors. Re-piping generally requires takes 1 – 2 days, dependent on the size of the home, followed by 2 – 4 days of drywall repair and floor repair and painting to return the home to its original appearance.

I advise my clients to think twice about purchasing a home with polybutylene piping unless you plan on doing extensive renovations. The home may be uninsurable in today’s insurance environment until this work is completed and as a result excludes buyers needing financing to purchase the home.

Filed under: 4 Point Inspection, Blog, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, home Inspections, Homebuyer Advice, Homeowners Insurance, Insurance Claims, PB Pipes, PEX piping, Polybutylene pipes, Real Estate, Real Estate Investment, real estate news, South Florida Real Estate, What Buyers Should Check When Buying an Older Home by Kim Bregman
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Benefits of Home Automation

Home automation is increasingly popular as technology improves and devices become more affordable. Smart home automation works by connecting various devices in your home to a central hub or directly to a network. These devices can then be controlled remotely through a smartphone app, voice assistant or web interface.

Smart home components like security or climate control can be integrated with other smart devices, like your home entertainment system. This allows you to create a comprehensive and integrated smart home system that can automate many different tasks.

There are tons of reasons you may want to invest in home automation, but they generally fall into four categories.

Convenience. This is one of the primary reasons people start down the smart-home path. It just makes life a little easier when your home automates all the mundane tasks you used to have to do on a day-to-day basis.
Safety. A lot of smart-home technology is centered around your home’s security system, and there’s a good reason for that. No one piece of security equipment will protect your home comprehensively, but a network of pieces of equipment all working and thinking together can.
Sustainability. A lot of energy is wasted when you leave the lights on or keep your AC running when you’re gone for the weekend. A truly smart home will adjust itself to your habits and make sure your environmental impact is a little lighter.
Savings. You waste a lot of money when you leave things running unnecessarily. Your smart home will improve your economic efficiency by helping you remember to turn things off or down when they’re not needed

Here’s some of what the marketplace currently has to offer:

Detectors – Smart detectors provide peace of mind, so you aren’t left worrying that you forgot something. Smoke and carbon monoxide detectors are vital additions to any home. Gas and water leak detectors are good additions as well.
Heating and Cooling – With the initial success of 2011’s Nest Learning Thermostat, this product category is most associated with home automation.
Lighting – With the ability to control lights through your tablet or phone, intelligent lighting has become the initial step many take in setting up smart home technology.
Security Systems – This area has taken home automation to the next level. A lot of the newer, more advanced smart home tech is in this category, with keyless entry, camera equipment, and more. D
Hubs – Hubs, for the most part, are what tie your systems together. .
Appliances – Get a text message from your washer when a load finishes. Have your fridge create your grocery list for you. Shut the coffee pot off from work. Smoke a brisket for a few hours while remotely controlling its temperature. All possibilities with smart appliances.
Energy Management – Track your energy use and make changes in real time, from any location.
Lawn and Landscape Care – Control your pool cleaner, mow your lawn or set the irrigation system, all via smartphone app.
Window Coverings – Automatic shades and blinds timed to open or close with your bedtime or wake up call.

Technology experts say that tomorrow’s smart homes will have more seamless smart home device integration, more intelligent home appliances and gadgets, movement into the virtual world, and increased customization, efficiency, and control.

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, home automation, Home Buyer Advice, Home Buyers, Home Maintenance, home safety, Homebuyer Advice, Real Estate, Real estate trends, smart home, South Florida Real Estate, Uncategorized by Kim Bregman
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Confused About Flood Insurance?

The National Flood Insurance Program is a pre-disaster flood mitigation and insurance protection program designed to reduce the escalating cost of disasters. The National Flood Insurance Program makes federally backed flood insurance available to residents and business owners. Standard flood insurance by the National Flood Insurance Program generally covers physical damages directly caused by flooding within the limits of the coverage purchased. Private providers may have higher limits or broader coverage compared to National Flood Insurance Program policies.

A flood insurance policy is intended to cover physical damage to your building or personal property “directly” caused by a flood. Flood insurance covers damage caused by hurricanes, rivers, and tidal waters. Flood insurance covers water that rises, wind insurance covers water damage cause by blowing water, rain, etc. that enter or damage the property due to wind damage to the property.

Flood insurance rates are determined by several factors, including:

The amount and type of coverage
Location and flood zone
Design and age of your home
Elevation (for homes in high-risk areas built after the first Flood Insurance Rate Maps were drawn)

Losses due to flooding are not covered under most homeowners’ insurance policies. It is recommended that homeowners add a Florida Flood Insurance policy to ensure complete protection of your home in case of a hurricane strike.

In some flood zones, flood insurance is affordable at about $1.40 per day (average is $503 per year), and the U.S. government provides a 100% guarantee.

Flood insurance typically requires a 30-day waiting period on new policies. Here are the exceptions:

If flood insurance is being purchased in connection with the creation, increasing, extending, or renewing of your mortgage loan.
If your home has been recently designated in the SFHA and flood insurance is being purchased within the 13-month period following a map revision.
If flood insurance is required because of a lender determining that your mortgage loan that does not have flood insurance coverage should be protected by flood insurance.
If an additional amount of insurance is selected as an option on the renewal bill.
If your home is affected by flooding on burned Federal land that is a result of, or is exacerbated by, post-wildfire conditions when the policy is purchased within 60 days of the fire containment date.

Flood risk zones are identified by the National Flood Insurance Program (NFIP) and are divided into the following three categories:

High-Risk Zone

There is at least a 25% chance of flooding during a 30-year mortgage. All homeowners in high-risk zones with mortgages from federally regulated or insured lenders are required to purchase flood insurance.

Zones: A, V

Moderate to Low-Risk Zone

The risk of flooding is reduced but not completely removed. Even if you live in a moderate-to-low-risk zone, it’s recommended that you purchase flood insurance. About 25 percent of all flood insurance claims come from areas with low-to-moderate flood risk. On average, only two inches of water in your home can cause $7,800 or more in damage. Poor drainage systems, rapid rainfall accumulation, and broken water mains can all result in flooding.

Zones: B, C, or X

Undetermined Risk Zone

No flood-hazard analysis has been conducted, but a flood risk still exists. Flood insurance rates reflect the uncertainty of the flood risk.

Zone: D

Only a licensed property and casualty insurance agent can sell NFIP flood insurance. Customers can find a local one using FEMA’s Agent Locator Tool.

Filed under: Blog, Exclusive Buyer Agency, First Time Homebuyers, Flood Insurance, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, Homeowners Insurance, Hurricane Preparedness, Uncategorized by Kim Bregman
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Beware of “Too Good To Be True” Lenders

Homeowners beware.

With the potential of a recession and rising mortgage rates; lenders are seeing fewer loan applications and many buyers are not able to qualify for legitimate loans. Homeowners are often coerced into using the equity in their homes to pay off debt, finance unexpected expenses and to cover job losses, etc.

Lenders that over promise are likely to be ones to stay away from. If you cannot qualify for a mortgage with a reputable financial institution if is best to wait to purchase a home until you can.

What Is Mortgage Fraud?

Any misrepresentation of information on a home loan application can be considered mortgage fraud, classified under Financial Institution Fraud (FIF). Mortgage fraud is typically carried out for profit or for housing.

Mortgage scams for profit: Those who attempt mortgage fraud for financial gain are typically lenders, brokers and other entities that make false claims to obtain monetary compensation or equity from lenders and homeowners.

How To Spot Mortgage Scams

In cases of mortgage fraud for profit, scammers most commonly promise victims to save their homes from foreclosure with term modifications and debt management, or to entice buyers with free services and reduced interest rates. Scammers prey on vulnerable homeowners and prospective homeowners who lack education or financial security.

Predatory mortgage lenders will often use tactics to make their offer seem like a good deal. You may be getting scammed. The following signs may indicate mortgage fraud.

‘Too Good To Be True’ Interest Rates

Mortgage rates that are noticeably lower than market interest rates are typically a sign of various hidden fees or even a bait-and-switch tactic. Predatory lenders may try to tell you that you no longer qualify for the advertised rate, or tack on additional fees after locking in the original rate if they think they can get away with it.

Your Loan Estimate Isn’t Honored

Your Loan Estimate gives basic loan information in a standardized format from the U.S. Department of Housing and Urban Development. It includes itemized costs of a loan, including fees, and is sent within 3 business days of a mortgage application. Lenders aren’t allowed to charge fees outside of the credit report fee prior to accepting the terms.

Mortgage Payment Scams

A mortgage payment should remain under 28% of your monthly income. The higher your debt-to-income ratio (DTI), the riskier you are for a mortgage lender. If your lender is recommending a type of home that requires a loan larger than 28% of your disposable income, be wary.

Homes Overvalued

Overvalued property creates risk for legitimate mortgage lenders by generating an inaccurate resale valuation or an inflated borrower income that will be difficult to pay off with existing income.

Penalties For Prepayment

A prepayment penalty is charged for paying off your mortgage too quickly or for refinancing. While prepayment penalties can offer lower overall interest rates, oftentimes, they’re hidden in the fine print of agreements. As a result, many borrowers don’t realize the stipulations of the penalties and are hit down the line with fees. Generally, these penalties are included as a way for lenders to make money on interest payments at the expense of the borrower.

Your Credit Score Doesn’t Matter

Your credit score will always affect your mortgage rate, without exception. If you’re being offered a home loan that states this score won’t affect the mortgage, be wary. These tactics are typically scams that prey on low-income borrowers and generally come with undesirable terms.

Deceptive Marketing

Victims of predatory lending frequently describe being subjected to a flood of phone calls and letters from brokers and lenders, encouraging them to take out a home equity loan.

Red flag: Lenders who engage in high-pressure tactics, telemarketing, cold calling, and deceptive advertising campaigns.

Excessive Fees

Predatory lenders routinely charge borrowers fees totaling as much as 15% to 20% of the loan amount. Fees alone can have a ruinous impact on a homeowner’s equity. But add them to prepayment penalties and you’re locked into a high-rate, financially disastrous loan.

Red flag: You inquire about fees and charges, but you can’t get the facts. They insist there are no “upfront” fees.

Equity stripping

You need money. You don’t have enough coming in each month to cover your expenses. You have equity in your home. A lender tells you that you could get a loan. This is a big shock because you know you will have difficulty keeping up with the payments. The lender encourages you to “pad” your income on your loan application to help get the loan approved.

Equity stripping is particularly dangerous for people who find themselves in financial trouble. Scammers target people who are facing foreclosure or other financial hardships and make false promises of relief. Beware of anyone who pops up at what seems like the perfect time promising to let you cash in the equity you’ve built up without any consequences. Falling for this scam could end up with you losing your home and all the equity you’ve accumulated.

Red flag: Any suggestion that you can qualify for a loan when you know the truth is you cannot reasonably make the payments.

Balloon payment

You’ve fallen behind in your mortgage payments. Another lender offers to save the day by refinancing your mortgage and lowering your monthly payments. But beware. The payments may be lower because the lender is offering a loan on which you repay only the interest each month.

Red flag: Unrealistically low payments.

Loan churning

Senior homeowners who are asset-rich, but cash-poor are prime targets for this scam. A mortgage company contacts you offering to refinance your loan and throw in some extra cash along with it. The problem is, each time you refinance, the fees and interest rates are going up. Red flag: Lenders that contact you and any suggestion that a loan is the way to get your equity to start “working” for you.

Not all lenders are predatory. The best way to protect yourself against those who are is to be keenly aware of their tactics and always on the lookout for the red flags. If you need an explanation, talk to someone you can trust who has nothing to gain or to lose by the decision you make. Be careful how often you refinance your mortgage. Talk to a HUD-approved housing counselor (hud.gov/counseling) if you have questions or concerns about any mortgage loan transaction. Then consider all the costs of financing and repayment before you agree to a loan.

Filed under: Blog, Boca Raton real estate, cash out refinance, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, HELOC, Home Buyer Advice, Home Buyers, home equity, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, peer to peer lending, private money lender, Real Estate, real estate news, Refinancing, Reverse Mortgage, Seller Financing, South Florida Real Estate by Kim Bregman
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