From the Editor

During the production of this magazine, the news hit that the Fort Myers-Cape Coral area had the highest number of foreclosures in the country for the month of January. One out of every 86 homes was in some stage of foreclosure for the region—and the rest of Florida was not looking much better.

So I began to wonder: For those of us who are in the home-buying market (and there are some of us out here), have the guidelines for applying for loans gotten tougher? And how can we protect ourselves from this foreclosure fate? Buyers are certainly in the driver’s seat in this market, but how can we make the most of this opportunity?

I checked in with Shaundra Goff, vice president at Edison National Bank, to take the temperature of the local mortgage industry and its activity. According to Goff, there’s good news, and then there’s bad news.

"We have money to lend," she says. "We have great rates and great programs, and there are some great deals out there. Everyone’s just still sitting on the fence."

With the declining market, Goff says banks are tightening up in the loan-to-value area, meaning that the days of 100 percent financing are likely over. "Now you have to have a minimum of 5 percent down. I’ve noticed this in just the last two months." For investment properties, she says banks are requiring 30 to 40 percent down. "They’ll [give the loans], but they’re protecting that market value now," she says.

Banks are also getting tougher on stated income. They’re going to verify it now, so a couple that brings in less than $80,000 won’t be able to get a loan for a $400,000 home with no money down. We all know it’s happened in the past—and that’s why things have gotten out of hand.

Here are some tips Goff offers potential homebuyers who are entering the process:
• Get your credit under control. Try to get to the point where you’re not over-extended. When choosing a home, buy what you need, not necessarily what you want.
• "You should not have more than one or two credit cards for emergencies," Goff says. Request to close out store credit cards, and keep the two cards you’ve had the longest—they usually have the lowest interest rate. Everything else, work on paying it off. "This will increase your credit score dramatically."
• You can get a free credit report every year. Clear up any inaccuracies.
• Keep your debt-to-income ratio in check. Your debt shouldn’t be more than 45 percent of your income. You can get a loan if your debt is more than that, but probably at a higher interest rate.
• If you can put down 20 percent or more, you can avoid paying Private Mortgage Insurance. If you end up having to pay PMI, the good news is that it is now tax-deductible, Goff says.

In this issue of Gulfshore Life’s Homebuyer, we’ve collected the latest information on the new communities in Lee and Collier counties. Be sure to take this along while you’re on your search for your new home in Southwest Florida. Happy hunting.