August 19, 2010| The Amount Of Money You Can Qualify For Will Be Reduced October 1, 2010, Don’t Delay Any Longer.

The amount of money you can qualify for will be reduced October 1, 2010, therefore you shouldn’t delay any longer! If you are considering a Reverse Mortgage the ideal time to move is now before pending increases in annual mortgage insurance and a further anticipated reduction in Principle Limits take effect.  How will these changes affect you? Simply put, higher fees and less money to you. There are several reasons to act now:

1.  Low Rates – The lower the rate, the more money you receive. Today’s low rates are allowing borrowers to maximize the amount of money available to them in the program.

2.  Principal Limit Factors – Principal Limit Factors are guaranteed to go down October 1, 2010 when HUD introduces its new Principal Limit Factors tables. Principal Limit Factors could go down even further if Congress fails to pass a reconciled appropriations bill which includes HECMs. When Principal Limit Factors go down, the amount of money available to you goes down.

3.  Counseling – If you want to maximize the proceeds of the current HECM program, you need to act now. In the past, those borrowers who had FHA Case Numbers before the date of the change, received the proceeds of the program as they existed before the change. September 11, 2010 is the date for the change in counseling protocol and some are indicating counseling will slow. If counseling is not completed (with its more stringent rules) and an application has not been taken before September 30, 2010, there is little hope of getting an FHA Case Number before October 1, 2010. Get your counseling completed ASAP so an FHA Case Number can be secured before the deadline.  Jeff Lewis, Chairman of Generation Mortgage, goes into further detail here http://reversemortgagedaily.com/2010/08/13/hecm-proceeds-may-decrease-in-october-says-lender/ regarding the proposed changes.

There are fewer than 45 days before the anticipated program changes occur. One of our Lenders has just announced an additional benefit to clients who are ready to close now. In addition to covering the upfront Mortgage Insurance Premium (MIP) and no Service Fees, they will also cover closing costs up to 1% of the Principal Limits. If you are considering a Reverse Mortgage the time to move forward is now as the cost of waiting may be substantial. Please call us @ 1-800-963-8011 to speak to one of our Senior Home Advisors. 

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August 5 | Let The Buying Begin: FHA’s New Reverse Mortgage HECM for Senior Home Purchase Program

 

 

 

 

 

By Kate Love 

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Early this year, FHA began accepting applications for its newest Reverse Mortgage Program – HECM for Senior Home Purchase.  The program allows seniors to buy a home with proceeds from a reverse mortgage for the first time.  Previously, seniors had to qualify for a conventional loan, pay for the purchase transaction and then pay again to get a reverse mortgage.  Seniors who want a reverse mortgage and need to relocate to be closer to family, or perhaps downsize, can now do so in a single transaction.

The following are answers to some of the most frequently asked questions about the program and qualification:

How much money does a buyer have to put down? 

The down payment is called the “required monetary investment”.  It is a calculation based on the youngest buyer’s age, current interest rates and the home’s value. For example, if you are 67 years old and purchasing a home worth $300,000 must make an investment of $118,032 (approximately 40% of value).  Note that an older buyer of 75 need only invest $97,427 for the same property.  

 So which part is the reverse mortgage? 

The remaining balance of the purchase price is the beginning loan balance of the reverse mortgage.  In the example above, the 67 year old buyers “invested” $118,032 so their beginning loan balance is $181,968.  Because the required investment for the 75 year old buyer is smaller, she or he will have a higher beginning loan balance of $202,573.

 Are there any required payments?

There are NO required payments of any kind, this program is designed to let seniors use a portion of their home equity without required payments. If you want to make payments (and pay down the loan balance), you may do so – but there are no penalties or required payments of any kind.

 Is it difficult to qualify for this program? 

Qualification is simple: buyers must be 62 or older and be able to make the required initial investment – that’s it.  Unlike other mortgage programs, there are no credit or income requirements to qualify.

 Doesn’t the bank take the home in a reverse mortgage? 

No, you (as buyer) always stay on title and the home remains your property.  When the home is sold or all buyers have passed away, the property will revert to the estate.  Heirs have up to 1 year to refinance the current loan balance and take title, or sell the property, pay off the loan balance and retain all remaining equity, just like a “regular” mortgage.

What happens if the loan balance becomes higher than the value of the home?

 FHA reverse mortgages are unique: if the loan balance is higher than the property value when the home is sold, the FHA insurance will pay the difference to the lender.  FHA reverse mortgages are insured by FHA and neither you nor your heirs will ever be left with any outstanding debt over and above the value of the home.

 What about the costs of a purchase reverse mortgage?

Typical costs for our example 67 year old buyer are approximately $12,400 – $6,000 of which is the upfront premium for the FHA mortgage insurance.  These costs are typically financed into the beginning loan balance.

 How can buyers find out how much home they qualify to buy? 

CALL STAY IN-HOME MORTGAGE and speak to one of our senior home loan advisors!  We are the largest independent reverse mortgage broker in the Northwest, our senior advisors are uniquely qualified to help buyers obtain rapid hassle-free purchase financing! 

Stay In Home Mortgage is currently the largest independent reverse mortgage broker in Washington , Oregon , Idaho , and is also recognized as a Top 25 Reverse Mortgage Provider in other states such as California, Arizona, Nevada, Hawaii, New Mexico, Utah, Florida, North Dakota, Minnesota, Michigan, Alaska and Colorado.

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July 2, 2009 | FHA HECM Fixed Rate Reverse Mortgage or FHA HECM Adjustable Rate Reverse Mortgage? That is The Question.

 

 

 

 

 

Fixed or Adjustable? That is The Question.

Are FHA HECM (Home Equity Conversion Mortgage) Fixed Rate Reverse Mortgages a better deal throughout the years for borrowers based on historical information, as compared to HECM Adjustable Rate Reverse Mortgages at today’s interest rates? Let’s take a closer look.

If you look at historical information for the last 10 years (the average term for a HECM Reverse Mortgage loan is 7 years), the borrower with a HECM LIBOR adjustable rate reverse mortgage would have an average interest rate of 6.29%. This is based off of a LIBOR margin of 3.0 combined with the last 10 year average (3.29%) of the LIBOR Monthly Index, the HECM 1 -month LIBOR. Today the HECM LIBOR 300 (adjustable HECM) has an Initial Interest Rate of 3.31%, however adjustable monthly HECM’s have a lifetime cap of 10% above the initial rate, so the Interest Rate Cap is 13.31%. The lowest HECM Fixed Rate Reverse Mortgage available today is at 5.56%.  Now let’s look at the difference in proceeds between the HECM Fixed and HECM Adjustable programs by using a Reverse Mortgage Calculator:

 Sample Loan Comparison for a 70 year old borrower with a $200,000 home:

                            HECM Fixed         HECM 275          HECM 300     HECM 325

Available            $122, 466.38       $100,000.00    $96,172.03     $91,894.02
After Fees       

As you can see, the HECM Fixed Reverse Mortgage offers borrowers the most money.  If you’re looking to maximize the amount of money that you get out of a HECM Reverse Mortgage, the HECM Fixed Rate is your best bet.  There are some disadvantages of a HECM Fixed Rate Reverse Mortgage. The main shortcoming of the HECM fixed is that it requires borrowers to make a full draw at closing. This means that you begin accruing interest on the full amount of the loan from the very first day. Because of the other options the adjustable rate mortgages allow, which include the line of credit, monthly payments and any combination, interest is not accrued until you actually receive the money. This way, you are only taking money as you need it, preserving more of your equity over time.

 Closed End vs. Open End Credit

Closed End Credit – A loan or extension of credit in which the proceeds are dispersed in full when the loan closes. Borrowers with a closed-end loan will not be able to draw any additional funds unless they refinance. Borrowers may pay back any money they do not want at closing, but they will no longer have access to the money.

Open End Credit (Revolving) – Line of Credit where no restrictions (other than the maximum credit limit) are placed on withdrawals and repayments. Any amount repaid is available for re-borrowing. Borrowers with an open-end loan may make payments, decreasing the outstanding balance and therefore increasing the principal balance available to the borrower for future use.

 Why is the Line Of Credit Option Not Available For The Fixed Rate Program? 

From a secondary marketing perspective, investors are more at risk if a Line Of Credit structure is used, because at the time borrowers draw funds the market rate can be drastically different. This means investors are lending money at “non market” rates. 

·        So, for that issue, the structure of a HECM Fixed Reverse Mortgage must be such that it is a one-time draw. 

·        HUD does not allow for Fixed HECM products from which only a portion is drawn.  In other words, you can’t say “I just want x amount of money.”  What’s left of x has to go on a Line Of Credit, or be disbursed as payments, which is undesirable for investors with a HECM fixed rate. A HECM Fixed Rate Loan with a Line Of Credit is worthless in the secondary market and as such, the pricing makes it worthless to a consumer.

In closing, I encourage you to look at the HECM Fixed when exploring your Reverse Mortgage opportunities. The HECM Fixed Rate provides you the maximum benefit combined with the security of a fixed rate that is not subject to the monthly interest rate adjustments that come with ARM products.

Stay In Home Mortgage is currently the largest independent reverse mortgage broker in Washington , Oregon , Idaho , and is also recognized as a Top 25 Reverse Mortgage Provider in other states such as California, Arizona, Nevada, Hawaii, New Mexico, Utah, Florida, North Dakota, Minnesota, Michigan, Alaska and Colorado.

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June 22, 2009 | FHA HECM Reverse Mortgage Rate Lock Helps Seniors

 

 

 

 

 

 

 

FHA HECM Reverse Mortgage Rate Lock Helps Seniors

Why is the FHA HECM Reverse Mortgage Rate Lock Feature Important to Me?

The Reverse Mortgage rate lock dictates the amount of money you are able to obtain from the equity in your home.  Lenders can set the expected interest rate on the Federally Insured FHA HECM (Home Equity Conversion Mortgage) Reverse Mortgage (variable rate programs only) at the time of the Loan Application, or at closing, whichever brings the lower expected interest rate.  The expected interest rate is not to be confused with the loan interest rate; the expected rate is used solely to determine the loan principal limit (amount available to you).  

In the past, borrowers ran the risk of expected rates rising during that time, potentially reducing the amount of money to them. This rate lock mechanism protects you in a rising rate environment, yet lets you benefit if expected rates are lower at the time of closing. If expected rates decline between the date of application and closing, you can utilize the lower of the two expected rates and receive more money than what was originally quoted. 

What Can I do to Ensure I’m Maximizing the Full Value of My FHA HECM Reverse Mortgage?
If you’re looking into a Reverse Mortgage, you can maximize your benefits by filling out the Loan Application as soon as possible. The expected rate, which determines how much money is available to you, changes every Tuesday. Every Tuesday the amount available to you may change until you fill out the Loan Application. When you sign the Loan Application you lock in the amount of money available to you.  The example below illustrates how the rate can affect the money available to you. 

Jan                  5.75%           $49,851.36

Feb                  5.86%           $47,948.85

March            5.97%           $46,042.84

April              6.08%           $44,233.47

May                6.25%           $40,420.90

As you can see, delaying the process can reduce the amount of money available to you.  In this example, just a .50% increase in the interest rate resulted in a loss of $9,430.46! If you’re currently looking into a Reverse Mortgage I encourage you to contact an Advisor immediately to ensure you’re maximizing the full value.

Please visit us on the web @ www.stayinhome.com

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Locations: 1000 124th Ave. NE, Ste. 200, Bellevue, WA 98005/4955 S. Durango Drive, Ste. 119, Las Vegas, NV 89113