Americans are resilient. Even as Florida home loan rates continue to rise - and gas prices sky-rocket - consumer confidence improved throughout June.

The University of Michigan’s Survey of Consumers stated that the Index of Consumer Sentiment was 84.9 in the June 2006 survey, up from 79.1 in May. Most of the gain this month was in individuals’ evaluations of current economic conditions; investors in Florida real estate, for example, still see potential for profit.

“Rather than a free-fall in confidence that has sparked recessions in the past, consumers have demonstrated a resilience based on a newfound sense of long-term economic stability,” said Richard Curtin, director of the survey.

Taking out Florida home loans, analyzing spending: The year ahead

While consumers will curtail their spending in the year ahead to accommodate higher gas prices and smaller cash-outs from Florida home loan refinancing, the spending cutback will be moderate.

While high energy prices are no longer viewed as temporary, individuals have not abandoned their view that inflation will revert to lower levels over the longer term. For the near future, however, they are concerned.

“Just one-third of all consumers expect their financial situation to improve, with a rising number that expect inflation to offset any wage gains they receive during the year ahead,” said Curtin.

Only time will tell the results, of course. For now, potential buyers just need to organize their debts and look at their credit score if they wish to be approved for a Florida home loan.

The Florida housing market may be cooling overall, but you wouldn’t know it by visiting the Duval County Courthouse, where the foreclosure market is booming.

According to the Jacksonville Daily Record, rising interest rates and an ample supply of inventory might mean that “For Sale” signs are lingering longer in front yards. But foreclosed property auctions attract crowds of buyers. An auction Tuesday saw eight properties sell in under an hour.

The number of foreclosed properties has been on the rise this year in North Florida, with several buyers attributing the increase to the popularity of adjustable-rate Florida home loans.

As interest rates climb, those mortgages have adjusted and are now becoming unaffordable for many middle- and low-income homeowners, according to April Charney, a consumer attorney for Jacksonville Area Legal Aid. Charney, who specializes in foreclosure defense, keeps clients out of the auctions by working ahead of time to settle their debts.

“Particularly in poor neighborhoods, we’re drowning in foreclosures,” she said, adding that the auctions are becoming commonplace.

It’s not just on the supply side that the auctions are growing, as many new buyers now crowd the Courthouse to bid on the properties. Cheap houses are hard to find in this state, so Florida foreclosure property draws a diverse crowd, ranging from real estate attorneys in suits to contractors in jeans and boots. The crowds make it harder to walk away with a bargain.

“I used to come out here and there’d be two or three people out here,” said John Kern, an entrepreneur who bid on his first foreclosed property four years ago. “Now you’ve got all these people just bidding up and bidding up.”

Many are lured by tales of the quick flipping and big profits.

“A lot of people think they’re going to make a lot money. Some call them speculators, some people have worse names for them,” said Mark Kessler, an attorney bidding on properties for his clients.

But even at half the market value, the homes aren’t always sure things, says Herb Rinderer, a title examiner who also invests in properties and believes novice bidders sometimes receive unpleasant surprises along with their winning bids.

“If you don’t do title research, you don’t know what you might be getting,” he said. “You could be buying a second mortgage on that property. I did a search for one client and the property had a $77,000 IRS lien attached.”

Title researchers like Rinderer are part of the spin-off business created by the auctions. The auctions for properties with loans in delinquent status attract buyers, and right along with them a slew of title search firms, contractors and real estate attorneys.

Charney wishes she could get all that manpower involved before properties end up on foreclosure rolls in the first place. Ironically, she thinks a lot of properties could be had early at a discount, before the foreclosure price is ramped up by fees from lawyers and lenders. Or, owners might be able to dodge this bullet via refinancing.

“There’s a lot of smart people in this room. It’s too bad the living they make comes along with a heavy human toll and a toll on the community,” she said.

While foreclosure rates are on the rise across the state, the increases have been moderate, more so than some analysts predicted. Florida ranks eighth nationwide in foreclosures per capita. But, if and when the average Florida home loan (currently the average 30-year, fixed-rate mortgage is 6.78 percent) rises into the 7-7.5 percent range — or the 8 percent range — we could see a deluge of new properties entering this undesirable stage.

Despite a cooling Florida real estate market, the strong national economy is helping to maintain home prices at a reasonable level.; so says a report by PMI Mortgage Insurance Co., which released its U.S. Market Risk Index this week.

The index is based on risk scores, which work as follows: a score of 100 means the area has a 10% chance its home prices will decline over the next two years. Higher scores mean a greater risk of home price declines in the future.

How risk scores reflect Florida home appreciation

The average risk score for the country’s largest metropolitan statistical areas was 288 in the first quarter, one point up from the last quarter and 70 points up from a year ago. This slight jump goes along with the transition to a buyer’s market in The Sunshine State, as Florida home loans are becoming more affordable.

“This quarter’s data signals that in many areas the expansion of the housing balloon has slowed substantially,” said Mark Milner, chief risk officer of PMI Mortgage Insurance Co. “The Risk Index also shows that slowing price appreciation is balanced by underlying economic strength. In the absence of an unexpected economic shock, this makes a gradual cooling of the market the most likely outcome.”

Thirteen metropolitan areas had risk scores higher than 500 - indicating a 50% or greater risk of home price declines in the next two years. Miami, for example, had a 32-point increase in risk over the quarter. This would explain why sellers in the area have been offering incentives to those seeking a Florida home mortgage loan.

Certain Florida cities enjoy increased home values:

Of the six nationwide markets that saw appreciation of more than 20% over the year, THREE were located in Florida:

1. Orlando saw appreciation of 27.7%
2. Fort Lauderdale saw appreciation of 25.7%
3. Miami saw appreciation of 24.7%

Buyers and sellers alike benefit from learning these figures. It gives everyone a clear idea of how to price a house for sale or what to arrive at when coming up with a Florida mortgage loan offer.

After a two-day conference this week, the Federal Reserve bumped up the nation’s interest rates for the 17th consecutive time. As a result, the average costs of Florida home loans rose for the third consecutive week.

The Federal Open Market Committee said it believes U.S. economic growth is slowing from earlier this year, reflecting a cooling of the housing market and the effects of higher interest rates and energy prices. However, high gas prices and other important commodities have the potential to sustain inflation pressures.

The rising rates have pushed up mortgage payments, especially for those who financed their homes with adjustable-rate mortgages. Increasing payments and higher borrowing costs are putting downward pressure on the Florida housing market, which has boomed for the past five years.

There is no doubt the Fed’s continued battle against inflation will impact the housing market, predicts Jonathan Hamilton, the Economics Department Chair at the University of Florida.

“It’s just going to be a little more of a push-up in mortgage rates,” Hamilton said. “Everybody has been predicting the housing boom to end, and this is just another nail in the coffin, I think. Housing already seems to be slowing down in some places.”

It all depends where you look. The Naples real estate market, one of the state’s priciest, and considered up to 102 percent overvalued according to some estimates, is demonstrating signs of significant cooling. But farther north, areas such as Brevard County and greater Gainesville have held steady or grown in recent months.

How the market will play out if mortgage rates top 7 percent — or 8 percent — in the next year or so remains to be seen. For now, analysts are calling the recent market trends a return to normalcy. Here is a look at the average Florida home loan costs, by month, over the past three years, during which time the housing market boomed… and is only recently cooling off.

As rents rise, home sales dwindle and the housing market cools, companies around the state and country are also feeling the ramifications. In what way?

Many businesses offer employee-relocation programs; they now should take steps to guard themselves from any potential negative fallout - and doing so is not as difficult as many might think, according to GMAC Global Relocation Services.

As the Florida real estate industry, for example shifts away from sellers - and toward Florida home loan buyers - companies will need to deal with the consequences of employee houses taking longer to sell. How can they help in such a situation?

“Instead of cause for pushing the panic button, we see this as an excellent opportunity for companies to carefully reexamine,” said Dawn Graffis, director of Strategic Services for GMAC Global Relocation Services.”And, if needed, fine tune their relocation home sale programs to ensure they’re benefiting and protecting employees as well as the companies themselves.”

In response to companies needed to deal with more unsold homes in their employee inventory, Graffis outlines a series of steps companies can take toward that goal, beginning with a thorough review of their program’s policies to determine if they are placing the company at risk. Companies should ask and answer a series of questions, including:

- What policy drivers do we use to limit the risk of taking homes into inventory?

- What is our philosophy regarding assisting transferring employees with home sales?
Moreover, here are several strategies for strengthening home sale programs and assuring that employees can find Florida home loans when desired:

- Marketing Assistance. Mandate a Marketing Assistance program which, among other things, provides transferring employees with access to approved Florida real estate professionals and comprehensive guidance in preparing their homes for sale.

- Broker Market Analyses. Require employees to obtain at least two broker market analyses from preferred Florida home loan brokers.

- List Price Control. Ensure that homes are priced accurately, and possibly place a cap on the listing price of homes based on the broker market analyses.

- Mandatory Marketing Period. Require a minimum marketing time of 30 days before employees may start the appraisal process; this, according to Graffis, can help companies avoid the significant costs associated with accepting homes into company inventory.

Overall, companies need to be aware of housing market conditions. If employees are searching for Florida home loans or looking to sell, they should be assisted in every conceivable way.

With investors continued to express concerns over inflation, Florida home loan borrowing costs increased for the third consecutive week, with the benchmark 30-year, fixed-rate mortgage coming in at an average of 6.78 percent, up from 6.71 percent last week.

It was the highest level for the 30-year mortgages since they averaged 6.81 percent the week of May 24, 2002, Freddie Mac said.

While the housing market has enjoyed five boom years powered by the lowest rates in four decades, housing sales are expected to decline by 7 percent or more this year as increasing home loan rates make ownership more costly.

“Financial markets continue to expect more rate hikes by the Fed over the next six months, which has added upward pressure on mortgage rates,” said Freddie Mac chief economist Frank Nothaft. “With higher interest rates, the housing market has begun a gradual and orderly reversion towards historical norms. New construction, home sales and house price appreciation have all been slowing over the past few months.”

Rates have been on the rise since Federal Reserve Chairman Ben Bernanke expressed his concerns earlier in June that inflation was rising at “unwelcome” levels, raising worries about how many more interest rate hikes there will be before the Fed determines that it has done enough to combat inflation.

A variety of popular mortgage options experienced rate increases this week, in addition to the fixed-rate, 30-year home loan.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a Florida home loan, increased to an average of 6.43 percent, up from 6.36 percent a week ago. Meanwhile, one-year adjustable-rate mortgages (ARMs) rose to 5.82 percent, up from 5.75 percent last week and the highest average seen by the market in more than five years.

Five-year adjustable-rate mortgage rates climbed to 6.39 percent, up from 6.32 percent last week. The rates reported in the Freddie Mac survey do not include origination fees or points. The one-year ARM carried an average fee of 0.8 point, while the other three mortgage categories each averaged 0.5 points.

A year ago, at the peak of the housing boom, 30-year mortgages averaged 5.62 percent, 15-year mortgages 5.20 percent, one-year adjustable-rate loans 4.33 percent and five-year ARMs averaged 5.19 percent. Analysts expect the continued steady rise of rates until inflation concerns subside, but do not think Florida home loans will eclipse 7 percent by year’s end.

Some look into Florida home loan for residential purposes, while others are focused on inventment opportunities. The following list speaks to the latter. Here are three types of real properties that should be avoided … assuming actualy profits are your main goal:

AVOID BUYING HOUSES IN EXCELLENT CONDITION: To avoid this risk of buying at the top of a housing bubble and then watching as homes depreciate, you’d be best served avoiding purchasing homes in excellent condition. Instead, look into so-called “fixer-upper houses” where the market value can be increased by making profitable improvements that add more market value than they cost.

This technique is called “forced inflation.” It’s used by smart home buyers and real estate investors to raise the market value of a property by more than the fix-up work costs.

AVOID BUYING “TEAR-DOWNS” OR “SCRAPERS:” You don’t wanna take out a Florida home mortgage loan on a complete mess. Some houses are in such bad condition they need major structural work, such as a new foundation, new wiring and new plumbing - or they are hopelessly outdated with a bad floorplan design or other incurable defect.

In the real estate business, these are known as “tear downs” or “scrapers.” Avoid such a purchase unless you can buy the property for its land value alone. Otherwise, you’ll never make up the cost of construction or any Florida home improvement loans.

AVOID TOWNHOUSES AND CONDOMINIUMS: Most townhouses and condominiums offer little profit opportunity (except possibly as long-term investments). Why? These units, which are very similar to the adjoining townhouses and condominiums, are constrained by the sales prices of those nearby properties.

Even if you can buy a run-down townhouse or condominium at a bargain price and fix it up, your profit potential is limited (no matter how nice your unit is after fix-up) by the comparable sales prices of nearby units. You can’t sell this property for any amount greater than those directly around it.

Legislation to establish a comprehensive, national insurance fund to help pay claims from another major hurricane, earthquake or other catastrophe has drawn ample praise from Realtors, consumer advocates and state officials. Nevertheless, the Washington Post reports some insurers remain highly skeptical.

At a House Financial Services subcommittee hearing, Florida Insurance Commissioner Kevin McCarty lobbied for the federal fund, saying it would bolster state catastrophic insurance funds and provide needed capital to keep insurers afloat and stabilize the Florida housing market. The Sunshine State is reeling from recent hurricanes and concerned that another Katrina-like storm could cripple the industry financially.

“The prospect of mega catastrophes — i.e. the big one (earthquake) hitting California, a category 3 or 4 hurricane hitting New York, the New Madrid Fault leveling the Midwest — create risks that could simply destroy an insurance company or potentially the entire industry,” McCarty said.

McCarty added that a federal backstop, funded from policyholder premiums based on local risks and with incentives to better building standards and emergency preparedness, could help avoid devastation to the Florida and U.S. economies. State officials have been doing everything in their power to prevent this year’s hurricane season from wreaking financial havoc.

A bill proposed by Reps. Virginia Brown-Waite and Clay Shaw, both Florida Republicans, would create the Consumer Hurricane and Earthquake Protection Fund, providing lower-cost reinsurance to state catastrophic insurance funds, thus reducing the cost of homeowners insurance across the U.S.

Brown-Waite, a member of the panel’s housing subcommittee, said that high Florida property insurance costs were becoming a significant problem for the state’s homeowners, many of whom are now paying higher insurance premiums than their yearly property taxes. Combined with the rising borrowing costs of Florida home loans, the state is on the verge of a widespread affordable housing crisis.

A repeat of the 1938 “Long Island Express” hurricane would possibly result in damages of $100 billion in the area east of New York City, while another San Francisco earthquake on the scale of 1906 could result in more than $400 billion in reconstruction costs, according to James Loy, a retired admiral and co-chairman of ProtectingAmerica.org, an emergency preparedness advocacy group.

But insurance officials say the industry has coped well with the massive costs of Hurricanes Katrina and Rita and other devastating storms. They cautioned against creating another federal program along the lines of the National Flood Insurance Program, saying non-flood disaster insurance is better handled by the private sector as long as it is priced according to real risks of coastal exposure.

On Tuesday, the House of Representatives passed legislation to bolster the heavily indebted flood program, raising borrowing capacity to $25 billion from $20.8 billion and requiring the nation’s flood maps, which determine where homeowners must purchase such insurance, be redrawn.

But many insurers are not swayed. The President of the American Insurance Association, Marc Racicot, takes issue with the premise that insuring a large-scale natural catastrophe is beyond the capability of the private sector.

“It is important to recognize that new government programs are no panacea for natural catastrophe risk and that such programs can encourage and lead to inefficient allocation of capital, unfair subsidization and increased and unwise building in catastrophe prone regions,” Racicot said, noting that even since Katrina hit the Gulf Coast in August 2005, about $28 billion in new capital has entered the insurance market.

Yes, you’re reading this correctly: a little bit of debt can be a very good thing. Why is this the case? Why would you ever choose to owe money? Because it will prove to lenders that you’re a solid candidate for a Florida home loan. Allow us to explain …

Lenders rely on a credit report to decide whether to give you money, to determine the interest rate they will charge you and to establish your automobile or home insurance premium. If you have no track record demonstrating that you repay your debts, you may not qualify for a Florit home mortgage loan.

Simply put: you need to prove you are a responsible consumers in order to be approved for any Florida home loans. How else can this be accomplished unless you have a history of paying off debts?

Florida home loan approval: The importance of your debt ratio

The less money you owe, the better. Your debt ratio should be no more than 40 percent of your take-home income. If you and your partner take home $5,000 per month, for example, potential creditors prefer that your debt repayments, including your Florida mortgage payments, be no higher than $2,000 per month.

With this in mind, let’s actually go over loans that would appeal to creditors, those that make you more likely to receive lowered Florida home loan rates:

- A mortgage: Can look good to potential creditors, as long as you’ve kept up your payments. As an added bonus, the interest on mortgage payments may be tax-deductible. Moreover, hopefully, real estate is an asset that will appreciate in value.

- Car loans: Will not harm your credit rating provided you shop around for a reasonable interest rate. But it pays to keep in mind that a car is an asset that tends to depreciate in value the minute you drive it off the lot. Hence, the reason why a Florida home equity loan is often recommended instead.

- Bank loans: Won’t hurt your credit rating as long as you repay them regularly and on time. If you borrow to pay for your education, it’s assumed you’ll get the money back in the form of a better salary.

- Credit cards: Can be a good thing in the eyes of creditors, as long as you make regular payments. Creditors don’t like to see you carrying a credit card balance of more than 80 percent of your available limit.

Overall, you don’t wish to accumulate very high balances. We suggest using home equity to alleviate many debt concerns. But before you enter into the Florida mortgage loan process, you will need to show that you possess a reliable payment history in some way.

It’s no longer a renter’s market.

For years, as a result of the booming housing market, rents have been flat or even declining in cities across the U.S. But as the market starts to cool off, rentals are once again in demand, empowering landlords in many markets to raise rents at a pace faster than tenants have experienced in years. They’re also cutting back on incentives to help lure tenants.

Renters have enjoyed an easy ride for years, but the current slew of rent increases could prove to be a jolt for many Americans, from seniors trying to downsize to recent graduates looking for their own place. Average rents —- what tenants pay after taking concessions into account -— are expected to rise 3 percent this year, according to the Wall Street Journal.

Lee County, Florida, is no exception. The average rent for a nice two-bedroom apartment in Lee County rose 13.9 percent, to $1,017 in 2005. A one-bedroom rose 11 percent to $845 a month. The local rental market has been pushed up by the condo conversion trend, with a total of 5,500 units sold to converters in the past two years.

The pace of change varies greatly from market to market. In a survey of 69 metro areas, 60 markets demonstrated rising rents, with the South Florida housing market — Fort Lauderdale, Palm Beach, Miami and Tampa are all on the list — leading the way. Only nine major markets showed rents flat or falling; Buffalo, N.Y., Charlotte, N.C., Denver, Colo., and others.

Rents in East and West Coast cities are expected to rise the fastest. It’s partly a supply and demand issue, as years of soaring prices (and recent increases in Florida mortgage loan rates) have priced many people out of the market. The portion of U.S. households owning their own home slipped to 68.5 percent in the first quarter from 69.1 percent a year earlier, according to the U.S. Census Bureau.

Still, tenants might be able to find some good deals. New buildings still needing the first round of renters may be more willing to negotiate. It is also worth seeking out individual owners who are unable to sell a house or condominium that has been on the market too long for their liking, and may be looking to rent at a reasonable price instead.

Higher rental costs come as strong job growth in recent years has boosted demand for apartments. At the same time, many apartments have been changed over to condos, reducing the availability of rentals. Tenants forced out of units being converted to condos often have trouble finding another places with similar rents, agents say.

Average vacancy rates dropped to 6 percent in the first quarter from as much as 7.4 percent at the end of 2003, according to Property & Portfolio Research Inc., giving landlords more power to boost rents than they’ve had since the beginning of the decade. Camden Property Trust, a big apartment owner, says it is raising rents in all of its 22 markets.

In Miami, Camden now charges an average of $1,319 a month for apartments, up 7.4 percent from $1,228 in the first quarter of 2005.

Freebies are vanishing, too. United Dominion Realty Trust Inc., which operates in 17 states, says the amount it spent on free rent and other concessions fell 26 percent in the first quarter from the year-earlier period, to roughly $12 million, or about $265 for each new tenant. Over the next 12 months, the organization predicts that percentage will diminish — to practically nothing.

Despite the price increases, renting remains a bargain in much of the U.S. In Las Vegas, Los Angeles and Seattle, the cost of monthly rents are roughly half what it would cost to own the median-priced home. The cost of owning is based on a 15 percent down payment and a 30-year fixed-rate mortgage; property taxes, insurance and/or tax deductions are not included.

Even in some cities where rental costs are rising, individual investors having trouble selling condos and single-family homes are rushing to rent them instead. In some markets, such as South Florida, vacancy rates for large apartment buildings are down and rents are up. However, the supply of condos and homes available to rent in the region is growing as investors clamor to rent out properties they are having trouble selling.

“We’re having a flood of rental properties coming back into the market simply because the investors who bought with the intention of flipping them have not been able to,” said Brenda F. Gerdes, broker-owner of Management Specialists Inc., a property-management firm in Port St. Lucie, Fla.

Agents say individual investors need to be realistic about their asking rents, even if the rent isn’t enough to cover their monthly costs. Robert Fowler, owner of HomeRentalAds.com, a rental Web site, tells clients to base their asking rents on what similar properties are fetching.

With many of Florida’s markets so overvalued, the housing situation is highly volatile and subject to rapid changes. If large segments of the population continue to be priced out of the market, however, rents could go haywire. But, if sellers temper their expectations and interest rates (which influence the Florida home loan market) hold relatively steady throughout the rest of 2006, we could see a return to normalcy, as many analysts predict.