Saving Yourself From a Bad Credit Florida Home Loan

A single mom with a steady job and two extra small incomes a month has been at my full-time job for eight years and her previous job for 11.

• She just brought a home with the money from the sale on my old home, and her monthly Florida mortgage payment is $2,153.46.
• That’s without insurance and taxes.
• She has to wait until next February to qualify for a Florida mortgage refinance because she has only been in the home since February 2007.

Because of the short time in the new residence, no one will qualify her for a Florida refinance.

All she needs is someone who can help her combine the mortgage, insurance and taxes into one payment and keeping it all under $2,000.

What does MarketWatch suggest?

Judging from the sounds of it, this is a bad credit Florida mortgage.

One clue is that there is a prepayment penalty, which calls for a huge fine if one pays off (or refinances) the loan before it is, in this case, a year old.

Bad credit home loans aren’t the only products with that feature, but the fact that the monthly payment does not include anything for property taxes and insurance is almost a dead giveaway in this case.

That is one of the ruses a Florida mortgage broker and lender will use to make these higher cost loans more affordable, at least on a monthly basis.

That borrowers will have to come up with large amounts of money at one time to pay their taxes and property insurance doesn’t bother the people who helped you finance your house because they will be long gone and could not care less when that dawns on the borrower.

The situation is so intolerable that lawmakers in Washington, at the behest of consumer and community activists, are considering legislation to require that all borrowers be required to escrow money each month with lenders so the money will be on hand when their annual tax and insurance bills come.

Unfortunately, unless you were lied to, a deal is a deal and there may not be an easy way out. If you believe you were hoodwinked, you can appeal to the Florida mortgage lender for relief.

Maybe you can persuade the powers that be to drop the prepayment penalty by threatening to go to the authorities or the media with your tail of woe.

In a similar situation, one could also seek credit counseling in your area with a genuine person can help guide you. There are some wonderful church and community-based agencies, but there also are some scam artists around masquerading as mentors, so be careful to whom you turn.

As for keeping your PITI under $2,000, consider a longer term note, say 40 years instead of the normal 30-year Florida mortgage, that’s a different story.

Unless you have A-1 credit, it is doubtful you will be able to lower your Florida mortgage rates right now. A lower rate is the best way to achieve a lower payment. But rates are trending up these days, not down.

Not by much, but they are rising just the same.

SOURCE: MarketWatch