Late payments for residential national and Florida mortgages shot up by 15.6 percent in the fourth quarter, U.S. regulators said yesterday in a report showing record earnings by commercial banks and thrifts in 2006.

The Federal Deposit Insurance Corporation, which insures deposits at more than 8,600 banks and savings institutions, said the increase in late mortgage payments followed a 5.2 percent increase in the third quarter.

Noncurrent mortgage loans - payments that are more than 90 days late - grew by $3.1 billion in the last three months of 2006 after rising by $974 million in the third quarter, the FDIC said.

Richard Brown, FDIC’s chief economist, said regulators are seeing emerging signs of distress among subprime loans, especially with hybrid home loans that subject borrowers to higher monthly payments after introductory interest rates.

“While the degree of credit distress in these portfolios is still well below the peaks that we saw during and after the 2001 recession, it seems likely that their performance will get worse before it gets better,” Brown said.

Bank regulators are considering new rules on popular loans for subprime borrowers with bad credit that carry low introductory rates but can rise over the life of the loans.

Consumer advocates have warned that loose underwriting standards will soon have homeowners buried under mortgage debt.

Brown said that total subprime mortgages outstanding amount to about $1.3 trillion, of which $700 billion are held by private asset-backed securities issuers.

That means banks, thrifts and other mortgage lenders are holding about $500 million in subprime mortgages, Brown said.

Financial institutions insured by the FDIC held about $2.2 trillion of national and Florida home loans for single to multifamily homes at the end of 2006.

“We know for certain that more than three quarters of the mortgages held by all FDIC-insured institutions are prime loans,” Brown said. “The actual percentage is certainly higher - perhaps as high as 85-90 percent.”

For the fourth-quarter FDIC-insured commercial banks and savings institutions posted net income of $35.7 billion, 9.3 percent higher than the fourth quarter of 2005, but lower than $38.1 billion earned in the third quarter.

For the year, banks earned $145.7 billion, topping the 2005 total of $133.9 billion and marking the sixth straight year of record earnings, the FDIC said.

The FDIC said the industry’s performance in the last three months of 2006 was stronger than the numbers indicate because restructurings at a few large institutions resulted in understated income and expense items.

“The banking industry continues to perform well,” FDIC Chairman Sheila Bair said in a statement, “even as an inverted yield curve and weakening mortgage market have made the operating environment more challenging.”

In the current, slow housing maret, it isn’t just big builders and developers that are stepping up with oncessions and incentives to buyers - now small-time individuals are doing it too.

One such incentive is the buy-down, in which sellers pay up-front payments to reduce buyers’ Florida mortgage rates.

Buy-downs are popular with developers because they enable the builders to offer savings without actually lowering their list prices, which they hate to do because the lowered price becomes the new benchmark.

One such buy-down is called a “3-2-1,” because it lowers buyers’ Florida mortgage rates by 3 percentage points during the first year; 2 points the next; and 1 point the third. In the fourth year and ever after, home buyers make the full payment themselves.

“People think that the price is what sells,” says Earl Niemoth, founder of Real Estate on the Internet, a Web-based broker in Florida. “But reducing the price won’t help very much. Terms are what sells.”

In Niemoth’s buy-down plan, sellers pay down the first two years of interest. Buyers save 28 percent of their payment the first year, and 14 percent the second. Initial home loan costs are greatly reduced as a result.

Example of a buy-down; How much saved on Florida mortgage?

He worked out the arithmetic for a client recently. The house cost $224,900. With a 20 percent down payment, the Florida mortgage loan principal would be $179,920 and the monthly mortgage payment would be $1,049 a month, assuming a 30-year loan fixed at 7 percent.

The buy-down would lower that to $749 the first year and $900 the second year.

The incentive cost the seller $5,397.60 at closing.

Another form of buy-downs provides less of a hit early on but lasts the life of the loan. According to Bob Moulton, a mortgage broker with Americana Mortgage on Long Island, sellers can pay 2 percent of the entire mortgage amount to lower the interest rate by half a percentage point.

It costs the seller, subsequently, $5,000 to bring a mortgage rate down from, says 6.5 percent to 6 percent on a $250,000 mortgage. That saves the buyer $81 a month on a 30-year fixed - but buyers realize that same savings every month for as long as they own the home or have a mortgage. Over 30 years that adds up to nearly $30,000.

According to Julie McWorter, an agent with the ERA Davis and Linn brokerage in the Jacksonville housing market, the biggest benefit for sellers who offer this kind of deal is the big boost to buyer interest for properties.

First years are the toughest

According to Nancy Alperin, a broker with Maxwell Realty in Philadelphia, many buyers prefer the savings in the early years of the mortgage rather than spreading it out over the lifetime of the Florida home mortgage.

She represents some properties that offer buyers a five-year, buy-down plan: They would have a rate of 3.5 percent the first year, 4.5 percent the second, 5.5 percent the third and 6.5 percent the fourth and fifth.

“Buyers want the savings now,” she says. “Everybody buys furniture and redecorates the first few years.”

Many buyers are also not planning to stay in the house very long. Their jobs may require them to relocate, they hope to trade up to a better house or they plan to downsize in a few years. Getting the savings early on makes much better financial sense for these buyers.

We’ve talked at length about the need for sellers to change strategies in order to make up for a lack of Florida home loan demand. With that in mind, here are three unique ways in which buyers can save money by taking advantage of seller and/or builder incentives:

1. Improve Your Florida Mortgage
Buyers are getting incentives for taking out mortgages, says Anthony Hsieh, president of LendingTree.com. For example, 20% of home builders are using “buy-down” programs, in which they buy down your Florida home mortgage by two percentage points in year one and one point in year two.

This could be a great deal, but remain wary. Some trendy mortgage offers are similar to certain credit cards, replete with teaser Florida home loan rates attached that soon get hiked up. These are cheaper in the early years than what you might qualify for, but they escalate quickly.

“Buyers have to be very careful not to be swept off their feet to take the wrong product,” says Hsieh. “You don’t want to get blinded into the wrong mortgage.”

The key to knowing whether the loan being offered to you is a good deal or a bummer is to run the numbers on a few scenarios, says Keith Gumbinger of HSH.com, a publisher of mortgage information. You want to know what your actual payment will be not just in years one and two, but for as many years as you’re planning to live in the house.

2. Look for Alternative Cuts
The buyer’s market has created a market for something that’s not usually on the list of negotiable factors in the sale of a home: title insurance. That is changing thanks to Titleinsurance.com.

Consumers go to the site, fill in information about their transaction and get a handful of quotes from title insurers in the county. The service is nonbinding and free to consumers. Revenue comes from title insurers who pay, essentially, for leads.

How much money you will save depends on the competition in your area, but with title insurance averaging less than 0.5% of your Florida home loan- but sometimes costing as much as 1.5% - the gap can be a couple thousand dollars or more.

3. Grill Your Broker
In order to help move inventory, more than a third of today’s home builders have increased their use of brokers over a year ago, often paying them higher-than-average commissions.

“Owners and builders are inviting us to cocktail parties, and they’re giving bonuses and increased commissions,” says Diane Saatchi of the Corcoran Group.

Most buyers don’t realize that their Florida mortgage broker is getting an incentive, and there’s no legal obligation to tell them. “But you can flat out ask a broker, ‘Are you getting an incentive?’ Then the broker has to tell,” says Saatchi.

Therefore, if a broker is getting an extra 2%, you may wanna take his/her words with a grain of financial salt. Be aware of what all parties have to gain from this transation.

You’ll also know that the seller is desperate, so ask for a lower price. These days you just might get it.

Have you been thinking about Florida home mortgage refinancing? Many people are doing so in the current market because interest rates are low. This could be a good time to lock in those low rates.

Moreover, numerous borrowers simply want lower paymens every month. It’s hard to blame them for this. With that in mind, let’s take a closer action at how you can refinance a Florida home loan to accomplish this goal.

Are there any risks with this course of action?
Yes. While you can save in the short-term by reducing your monthly payments, you may pay more in interest payments over the long-term if you extend your loan term and pay your mortgage off more slowly. There may also be financial penalties associated with a mortgage refinancing. Find out if there are - and whether the gain on the refinancing is greater than the cost.

Extending the term
One way to cut down on your current bills is to extend the term of your Florida mortgage. For example, if you extend the term of a $100,000 mortgage at 6.25 percent interest from 15 years to 20 years, you could reduce your monthly payments by $126.49. But you will also end up paying an extra $21,086 in interest charges. Only you can decide if that’s an appropriate trade-off.

Lowering the interest rate
In the case of a $100,000 mortgage amortized over 30 years, you could reduce your monthly payments by $47.91 by refinancing from a 6.25 percent interest rate to a 5.5 percent interest rate. Plus, you’ll save $17,253 in interest charges over the life of the Florida home loan.

Combining options
It may be possible to change both the term and the interest rate of your mortgage in order to lower the rate. Start by finding or negotiating the lowest possible Florida mortgage rate, then calculate the term that brings your payment to a level that is acceptable to you.

Arranging a payment holiday
Some mortgages allow you to take a payment holiday. If your financial bind is likely to be only short-term, ask your lender if you can arrange a temporary suspension of payments.

Refinancing with an interest-only mortgage
You can reduce your monthly payments to the least possible amount by refinancing with an interest-only mortgage. The downside is that when the typical five- or 10-year interest-only period expires, your payments will increase considerably. This option is, therefore, only worth considering if you are experiencing a temporary financial squeeze but expect your finances to pick up.

A major reason why the home ownership process can be so complicated? The fact that there are so many types of Florida mortgages from which you can choose. This article is dedicated to the resource known as “simple-interest” and how you can develop an amortization schedule based on it.

What is a simple-interest Florida home loan?

A simple-interest mortgage is one on which interest is calculated daily instead of monthly. On a 6 percent Florida mortgage loan, for example, .06 is divided by 365 to obtain a daily rate of .016438 percent. This is multiplied by the balance every day to calculate the daily interest. On monthly accrual loans, in contrast, .06 is divided by 12 to obtain a monthly rate of .005, which is multiplied by the balance every month to obtain the monthly interest.

While amortization schedules are often printed out for monthly accrual loans, this is far more challenging for a simple-interest loan. The logistics are just too formidable. Where an amortization schedule for a 30-year monthly accrual mortgage has 30×12 = 360 lines of numbers, the simple-interest loan has 30×365 = 10,950 lines. Assuming 50 lines a page, you would need 219 hard-copy pages.

And that’s just for starters. Your first schedule would assume that all payments are posted on the due date, say the 17th of the month. If your first payment is actually credited on the 16th or the 18th, assuming you want the schedule past that point to be accurate, you would have to redo the entire schedule. The same holds if you make an extra payment at any time.

Note that on a simple-interest loan, what matters is not when you make the payment but when the lender credits your account. On a monthly accrual Florida mortgage, if you pay on the eighth and your account is not credited until the 10th, it doesn’t matter because your payment is within the grace period.

But on a simple-interest mortgage, the two days between payment and posting will cost you two days of interest. Make sure you understand how all this works; complete our FREE ONLINE FORM and learn more today.

You’ve gotta do what you’ve gotta do to make the Florida mortgage payments, even if that means thinking outside the box.

In the case of Karol Gajda, who lives right outside Orlando, he’s taking that mentality to new heights. Rather than trying to keep his home up for sale in this sliding Florida housing market, he is offering one person or company an advertisment on his garage door for a year.

In the coming months, Gajda will be moving from Central Florida back to his home state of Michigan. But with over 40 homes in his community for sale, and virtually none of them selling, he decided on a different way to pay his Florida home mortgage while he makes the move.

Lessening demand has yet to quell home price growth enough to bring priced-out buyers back into the market. As a result, the number of homes for sale is rising across the Sunshine State, and with that much inventory, properties languish for months on end.

Unwilling to try his luck against those odds, Karol is auctioning off an advertisement on his two-car garage door for a full year. The auction is running online through October 5, 2006. When asked how he thought of this idea, the creative homeowner said:

“I’d been writing down all the ideas I could think of with regards to selling my home. Nothing was jumping out at me as the way to go about it. Then, while eating dinner one night, I was thinking about outside advertising and wondering how I could integrate it into the sale of my house. The garage door ad just came to me. I [went online] and listed it right away.”

While it could end up being rather unsightly, you have to give Gajda credit for ingenuity. Plus, it’s not like he’s going to be living there!

The board of Citizens Property Insurance Corp. has approved a 2.07 percent assessment for Florida homeowners to cover losses from the 2005 hurricane season. The charge amounts to $20.70 on every $1,000 in property insurance premiums.

The assessment would have been larger, but state lawmakers in May agreed to pay $715 million to help cover the state-run insurer of last resort’s $1.7 billion in losses.

With 1.2 million policies, Citizens is the state’s largest provider of the necessary evil we call homeowners insurance. Teresa Badillo was shocked to learn that the insurance premium on her home west of Boca Raton had more than doubled to $5,050 per year.

And she was none too pleased about the terms of the payment plan offered by Citizens: Pay half now and the other half in 60 days.

“That’s a great payment plan, isn’t it?” Badillo said sarcastically.

Add that on to already-soaring Florida mortgage payments and you have a lot of people scrambling to pay the bills. Rocky Scott, a Citizens spokesman, acknowledged that the plan scarcely, if at all, provides viable assistance to homeowners hit with high premiums as a result of the destructive storm seasons of 2004 and 2005.

“That’s something we’re in the process of changing. What we’re trying to do is make insurance premiums more manageable for folks,” Scott said.

With Citizens’ prices, property taxes, mercurial energy prices, and the monthly costs of Florida home loans (for those with adjustable-rate mortgages) expected to keep rising, budgeting will become crucial for strapped homeowners.

“It’s easier to budget if you can pay it monthly, instead of all at once,” said Robert Hunter, the insurance director at the Consumer Federation of America, in an interview with the Palm Beach Post.

With the Florida housing market in a state of flux, the much-maligned Citizens has yet to decide the details of payment plans, such as whether payments would be made quarterly, monthly or twice a year. That task is just one more for the company, which officials say is understaffed as its policy count has soared.

Unlike Citizens, private insurers — who actually have to be competitive — tend to offer more generous payment plans. State Farm and Allstate let customers pay monthly for a fee of $1 a month.

At Allstate, only a third of policyholders use the payment plans. That’s because most Florida home mortgage lenders require escrow accounts that force homeowners to set aside money every month for property taxes and insurance. The homeowners who use payment plans typically don’t have mortgages or don’t have escrow accounts through their lenders.

Badillo and her husband decided this year to pay their premium all at once because their policy briefly lapsed. They were dropped by their former insurer, Tower Hill, and the policy ended just as Tropical Storm Ernesto hit and insurers suspended writing new policies.

So, you’re on a budget and can’t spend more than $200,000 on a home. Good luck, right? Well, you might have more options than you think, even in the high-priced South Florida housing market. You just have to look a little deeper.

Hey, a year ago you’d probably have to settle for Orlando. Nowadays, not only can you find a condo in South Florida, but you might even be able to find something on the beach, surrounded by a golf course and in a decent school district to boot. You might, however, have to forego some space. But what are you gonna do.

For reference, the monthly Florida home loan payments on $180,000 come to $934 for a 30-year, fixed-rate mortgage at 6.75 percent with a 20 percent down payment ($36,000). Estimated annual taxes are based on sale prices and include a $25,000 homestead exemption. Broward County taxes are calculated using the county’s average mill rate.

Featured in the Miami Herald are a number of available properties in nice condo complexes, one in Pembroke Pines (right) for $188,700, and another similar unit in Miami Beach for $184,900.

Both offer around 700 square feet, one bedroom, one bathroom, parking and their own washer / dryer. The former is 19 miles to Fort Lauderdale and 23 miles to Miami, the latter 23 and 12.

Sure you don’t get what you might at $375,000 or $650,000. But you have to start somewhere if you’re on a budget, and remember — these moderately priced options are going to be in high demand, and less likely to fall in price over the next few years. These are still pretty sweet deals for the Florida home mortgage hunter, so don’t delay.

Potential buyers have many issues to consider as they think about applying for a Florida home loan. As you weigh points, closing costs, down payments and interest rates, however, an unexpected financial wrench may be thrown into the process, as well.

Recently, the U.S. and Canadian governments reached an agreement on softwood lumber that, some critics contest, will make national and Florida mortgage costs more expensive for hundreds of thousands of prospective owners.

A trade group representing U.S. lumber companies, home builders, building supply retailing, and consumers is far from happy with the situation.

Using statistics from the U.S. Census Bureau, the American Consumers for Affordable Homes (ACAH) calculates that up to 300,000 households could be priced out of the housing market because of the duties that would be collected by the U.S. on lumber from Canada.

Simply put, ACAH states, those duties shouldn’t be collected. Washington hasn’t been able to make a compelling case for collecting the $1 billion worth of the duties before the World Trade Organization or through the NAFTA dispute process, according to ACAH spokesperson Susan Petniunas. It will negatively affect affordable housing.

“No rational Canadian company will ever use the NAFTA dispute process again if Canada agrees in this deal that it has given up its right to get all illegally collected duties back,” Petniunas said in a press release.

We know this sounds complicated, but it’s an issue - as stated above - that could directly affect numerous first-time home buyers. It’s just another reason to consult with a Florida home mortgage broker and make sure you’re aware of every detail on your home loan.

We can help.

As housing affordability remains an issue throughout the Florida home loan world, one important question arises:

What is the main factor that causes a potential buyer to determine a house is beyond his means?

Based on fourth annual National Housing Opportunity Pulse - conducted by the National Association of Realtors - Americans overwhelmingly believe that it is NOT the purchase price of homes that provide an obstacle to home ownership, rather it is the monthly bills from their Florida home loans.

The costs of home ownership

Furthermore, this concern is not necessarily based on the Florida mortgage loan payment itself, but on the ancillary costs associated with home ownership. By a two-to-one margin Americans think that high monthly payments, rather than down payments, are the greatest obstacle to buying a home.

Surprisingly, rising property taxes were cited by 34 percent of survey respondents as the leading cost concern associated with owning a home. The second most frequently cited concern - mentioned by 28 percent of those surveyed - was the growing cost of energy. Only 14 percent said that increasing Florida home loan rates would deter them from becoming homeowners.

The study said that in 2003 the average monthly mortgage payment, including principal and interest, was $840. By April 2005, however, that figure had risen to $1,015, an increase of 23.8 percent. One year later that figure had risen another 11.5 to $1,132. These are painful increases but they are just the beginning, as many experts fear Florida home loans may continue to grow out of the reach of lower-income families.

NAR found that more than 42 percent of Americans ranked the lack of affordable Florida housing in their communities as one of their top three concerns. Nearly one-third are concerned they will never be able to buy a home and 58 percent feel that the cost of housing is becoming a drag on their local economy.

The concern about affordable housing is spilling over into rental property. As homes sales cool, rents rates sky-rocket; sixty eight percent of survey respondents feel that even renting a home is becoming too difficult for local families. As a response to this, a remarkable 80 percent of Americans are now willing to support more affordable homes in their local communities and 68 percent would be more likely to vote for candidates who pledged to make housing more affordable.

This is becoming a hot button issue, especially as election season nears. Even though certain residents are confident about the future of their Florida home loan market, politicians in the area would be well-served to keep this topic atop their priority list.