Government loans

LONG FHA MORTGAGE LOAN BLOG

2008-08-18T19:04:00.000-07:00

What Would The Housing Bill Really Provide?

August 17th, 2008

I know that in recent weeks I’ve made some harsh comments about Congress being involved in trying to fix the housing market with the bill they currently have in place. The fact is, the FHA programs are outstanding and they provide help to those that can afford to stay in their homes. I stand by the fact that many homeowners who are in trouble could potentially get help from the FHA currently. In addition, should the FHA take on these new responsibilities to help those who are struggling through this bill, chances are good it is a good move for them.

Yet, what is not okay is that Congress lawmakers and politicians of the worst kind (you know, those who are really just looking to move closers to the ballot box with this vote) are getting involved. That does not bode well with me.

Back to the point…though.

If the housing bill does go through, will it rescue homeowners who are in trouble for losing their home? It could, but it is not a for sure method of getting out of the financial difficulties you are in. For example, if you cannot afford the house payment you are making now, what is to say that you can afford it in the coming months?

Essentially, distressed borrowers would be able to get refinancing from their lenders who agree to work with them with these loans. The lenders are more encouraged to do so because these loans will be federally backed with taxpayer money. They will refinance into better termed 30-year mortgages if they are in their primary home. Lenders will need to agree to cut the loan balance to about 85 percent in order for the loan to be backed.

Is this the right opportunity for homeowners, then, who are struggling?

If you are worried about your current loan, get into an FHA loan right now. If you have an upside down mortgage, try working with your lender to revalue the loan. Some are willing to avoid the cost of foreclosure. Even if the bill passes both the Senate and the House, chances are good it will not stand up to the White House Veto. In addition, perhaps it is not the right solution.

Regardless of this, if you are unable to make your current home loan payments, there is risk that you will not be able to make them later, too. This program can only help those that can afford the loans, even with FHA backing.

The Latest On The FHA Bills In Congress

August 14th, 2008

A few weeks ago, we talked about Congress, the Bush Administration and the FHA and a bill that was being debated. Perhaps it is time for an update on where the legislation stands.

Congress believes it has the right, and the obligation, to pass laws that would allow and even require that some $300 billion worth of troubled loans would be turned over to the FHA to manage. There is little doubt that there are risks for everyone involved in such a turnover. Nevertheless, as much as people are talking about the risks this would place on consumers, the government and plenty of other people, there has been movement within Congress regarding the process.

The bill passed throughout the House. It is now on the floor of the Senate and being debated. The bill has been expanded to now include some 1.5 million loans; most of these loans are subprime, high-risk home loans.

While the FHA is an outstanding organization and provides a lifeline to those that need it, the debate centers around one fact: should Congress step in and force the FHA to take these substantially risky loans at the taxpayer’s expense. More so, just a few weeks back, FHA announced that last year, the 2007 fiscal year, say a loss of some $4.6 billion dollars. That is the largest and most severe drop the government agency has ever seen. Yet, more risk is in order here through even more loans that are high risk?

As with everything in Congress, the Senate did make some changes to the bill. They added what is being called a modernization. This will provide the FHA with the ability to lower the amount of a required down payment by the potential homeowner while still allowing the agency to nearly double the loan limits in place. The problem I see here is that this may put even more risk on the heads of taxpayers. Tens of billions of dollars worth of risky loans could be on the taxpayer’s head. Is that the right route to take?

There is a lot of speculation as to why the FHA struggled last year. Yet, looking forward, the goal of this agency is to provide a financially sound start for those who need it. In addition to this, you have to wonder if this will help to pull the country out of its housing situation. Can one agency be called on to do so much?

Another worrisome area of the Senate’s proposal is the fact that the FHA will be able to take loans from private banks that are funding them. The problem is that these are the highest risk subprime loans, which puts additional risk on the agency.

According to Brian Montgomery who is the current FHA commissioner, the bill would strap the agency considerably. After talking about the losses from last year, he noted that the FHA would be further in the red should the bill pass Congress and be signed into law. In fact, it is not just speculation. Many of the lenders who have funded these high-risk loans are now saying that they will take the “bailout” and hand over the loans to the FHA to manage.

Reports show that people are looking for answers to their home loan needs. For many people, FHA loans are the best type of loan to fund your home, and I highly recommend that anyone that may be struggling or otherwise looking for a good deal to contact FHA lenders to find out what solutions are available to them. There is no doubt this agency has every ability to help many.

Sales Rates Move Higher

August 12th, 2008

The housing industry is under an enormous strain, without a doubt. However, news is that existing home sales are up. Some real estate agents are contributing the growth in home sales to be because many home buyers are finally getting off the fence about making their investment. Since many homes are now at the lowest rates they have been in four years, the investment opportunities are simply too good to pass up, and buyers realize this.

Resale of homes and condos in the United States market have risen by 2 percent. This is a seasonally adjusted rate that takes into consideration the movement from April to May. In May, some 4.99 million homes were bought while in April, 4.89 million homes were purchased. The good news is that this is the highest rate increase since February and may signal a lessening of the worries many home buyers have faced over the last months.

Look farther back and you can see where the real numbers are. In the last year, figures are still markedly lower with a drop of 15.9 percent. Look even farther back, to the peak home sales of 2005, and the drop is much more considerable at 31 percent.

Of the homes selling, about a third of the total sales are distressed sales. These include homes that are in foreclosure (or have been foreclosed on) as well as short sales done to keep foreclosures from happening.

Inventory numbers are still high, but did fall 1.4 percent in this period. There is still a near 11-month supply on the market. Home sales have dropped in value, though. They are down 6.3 percent over 2007 to $208,600, which is a median price. The largest growth was seen in the Midwest while the Northeast rose nearly the same about. The South saw the smallest increase of all areas.

New home sales have not fared well, which has put a large strain on the economy as home builders struggle to find individuals willing to buy. The Commerce Department announced on June 26th that new home sales fell by 2.5 percent. The annual rate (seasonally adjusted) has fallen to 512,000.

As this shows, home buyers should be ready to get into the market. With home prices at historically lower numbers and interest rates quite loan, there has not been a better time in recent history to get into the market. Since many economists feel that by the end of the year the housing market will turn upward significantly, those considering purchases should make their move sooner rather than later.

To get the lowest rates and to have the most secure loans, homeowners should seek out the opportunities to buy into these markets offered by FHA loans.

Look At The Headlines And You Should Be Scared

August 9th, 2008

You are an individual who would like to get into their first home. You are worried, even scared to get started due to the number of risky loans out there. The headlines tell the story themselves.

“Subprime Smack Down”
“Foreclosures Increase Homelessness”
“Countrywide Accused of Predatory Loans and Misleading Ads”

And, these are the nicest you have seen. The media has made the housing market even worse than it is. The fact is, for someone with decent credit, there are some of the best opportunities available, especially those who qualify for FHA loans.

Look at the facts.

#1. Home inventory numbers are at the highest they have been in recent memory, which means there are plenty of homes to select from if you are ready to get into them. If you have been on the fence, now is the time to jump off.

#2. Interest rates are at record lows. The Fed recently announced that they would keep interest rates at this historically low point for this quarter (2 percent prime lending is not very bad at all.) In other words, these home loans are inexpensive.

#3. It is a buyer’s market. There is no doubt about it, cheap homes are out there in record numbers. Housing prices have slowly fallen to levels as low as 31 percent of their record high numbers in 2005. They are not likely to continue to fall much farther, many economists say.

For those considering buying a home, there are aspects to worry about. For example, many home buyers are rightly concerned about the risks of getting into a loan that is not stable, too costly or even worse, working with a lender that may go under. Those are important worries, but an FHA loan may help to put your worries aside.

In record numbers, FHA has been helping home buyers to get into more affordable loans. There is no reason to worry about lending when you have this government-backed loan for your home. Moreover, FHA loans are even more affordable than those that are conventional. They are more readily available too, since you do not have to have a large down payment or a perfect credit score to get into them.

The headlines you see are worrisome for many reasons. In addition, while there are risks with some lenders and with those in subprime loans, there are still opportunities available to homeowners who are looking for new opportunities. If you are considering the purchase of a home, get into it through FHA.

Getting Mortgage Help Through FHA And Congress

August 7th, 2008

There are many ways to look at the current bill in Congress that would allow FHA to take on some of the most risky loans. While I have not been very positive about this situation, if it does happen, what should the average homeowner expect and what should you do to get help?

First, if you are in a situation and need help, do not wait for this bill to pass. Instead, call on FHA as soon as possible. Find out what solutions they may already have in place to help you out of your worrisome mortgage and into a safer one. Many homeowners who are struggling to make ends meet are seeing that they do not have to lose their homes to foreclosure. Instead, they can take advantage of the programs already in place through FHA to get into a more affordable loan.

Granted, not everyone qualifies right now for this opportunity. Let us say you do not qualify for an FHA loan right now. What do you do should Congress pass this bill?

The first step to take is to talk to your mortgage lender about the options they are giving you. Yes, you hate when they call and the pressure they put you under. One thing is for sure: if this bill goes through, you will need to put some pressure on your mortgage lender to put your loan into consideration for help from FHA.

If you do not get the help you need from your mortgage lender, the next best move for you to make is to contact FHA directly or through another lender offering FHA loans. Many lenders will be more at ease to pass off these loans onto the FHA especially if they are high risk. Therefore, it may be your opportunity to make your move.

There are a few things to avoid.

#1: Do your best to stay in the loan right now, making payments as much as possible. Do not assume that you can just forget about your monthly payment. You should be actively trying to make it.

#2: Do not ignore your current lender. Should the bill pass and your home be in foreclosure to far, you may be out of luck anyway. Therefore, work with your lender. They have more solutions now then they had in the past.

Mortgage help is available to many people currently. If you have not done so yet, find out if an FHA loan can help you. You may be shocked to find out it is just the right opportunity.

Fixing Your Mortgage: There Is Light At The End Of The Tunnel

August 5th, 2008

Every day I see more homeowners who are worried, terrified really, that their loan is going to cause them to lose their home. OF course, with the latest economic data out, there is no doubt that the risks and worries are there. Jobless numbers are rising. The economy is trying to recovery (retail sales are up, which is always a good sign.) Oil prices are causing everyone to cringe every time you step up to the pump. Yet, still, the largest concern I see is a bad mortgage. If you want to fix your mortgage, what would you do? More importantly, what could you do?

Foreclosure prevention is the term of the day. This method has been designed to help those who are struggling with making their mortgage payments before the home gets to foreclosure. These are troubled loans needing help. The problem is, many loans can be worked out, but many others cannot. Why do some lenders offer solutions while others do not? Let us try to explain here.

First, who are the game players in foreclosure prevention? The mortgage servicer is on one side of the coin. On the other are the borrowers. Then, there are foreclosure prevention counselors in between, serving as the go between. In other words, you do not work directly with your lender to fix your mortgage. Instead, you work with a third party. Unbelievably, your lender does want to fix your loan because it is much more profitable (as well as much less expensive) to have you in that loan even at a lower profit amount, than it is to foreclose on you. That is not to say they will take anything, because they simply will not.

So, why do some get help and others do not? It really comes down to the numbers.

The lender is looking at their numbers and their costs. For example, if you are going to cost the mortgage lender more to stay in your home (by fixing the loan) than foreclosure will cost the lender, then the homeowner is unlikely to get their loan fixed. When foreclosure is less expensive to the mortgage provider, they are likely to go that route. In addition, they do have the right to do so.

On the other hand, the foreclosure process is anything but inexpensive. According to Center for Responsible Lending, the foreclosure process will cost the lender about $50,000.

What Happens In Foreclosure Prevention?

So, how do you know if you will qualify? First things first, the bank wants to know, directly, what the problem is. They will likely request a detailed explanation of your income and expenses, down to the food you buy and the credit cards you have. You will likely need to provide paycheck stubs as proof of income and bank records, too. Often, it is in these expenses that negotiations happen.

For example, let us say you have a nice Lexus in the garage and are paying a hefty $500 a month on it. The lender may require that you get out of the loan before they will work with you on foreclosure prevention.

Then, the mortgage lender will begin to figure out just what you can afford in payments. Let’s say that you bring home $4000 a month and have $2200 in expenses and you put aside $200 a month in savings. The lender will then work with you to get your housing payment at $1600 or around that much.

Now, remember, as a homeowner your lender is not going to work with you directly on this. You will need to contact third party mortgage prevention specialists.

It is also likely that you can find some help available to you through FHA loan specialists who can help you get into a new loan altogether. Whatever you do, do not sit on a bad loan.

First Time Home Buyers Find FHA Loans Valuable

July 31st, 2008

In a recent story reported by the Tri City Herald out of Washington, FHA loans are set to move forward at a much faster rate. In their report issued on June 25th, there is evidence that the number of home buyers looking for secure loans through FHA is increasing. This is the same sentiment happening in many cities around the country.

Lenders offering conventional loans are making it more difficult every day for the first time home buyer to get into a home. Those without high credit scores or a significant down payment are finding it difficult, if not impossible to get into the American Dream scenario of homeownership. This has crippled many opportunities for potential home buyers across the country. If you cannot prove yourself through a first time home loan, how will you ever get into a home at all?

FHA has the goal of helping those without significant histories of credit worthiness. They provide insurance to help mortgage lenders accept the less than ideal credit score or the low down payment. First time home buyers are turning in record number to the FHA loans because they are the only opportunities available to them.

Yet, is using an FHA loan a bad thing? Even those who would otherwise be able to get into a conventional loan should be thinking about the benefits of FHA. This includes a lower interest rate, more security, lower down payments as well as the simple fact that lenders are willing to loan with FHA insurance backing the loan.

In the report issued by the Tri City Herald, it shows this through the numbers. From October of 2007 through May of 2008, some 722 FHA backed loans were put in place. That is more than a twelve month space from October of 2006 through September of 2007 (that time period say just 683 loans in a significantly longer period of time.)

The same scenario is playing out in many areas of the country. The fact is, first time home buyers often need this type of loan to get started on the home ownership path. Yet, many other home buyers that would qualify for conventional loans are still seeking out FHA loans because there is less risk and worry.

Are you ready to move forward with a home purchase? If so, find out if you qualify for FHA loans. It could mean the difference between getting into a home or not, but more than likely it means more security.

FHA Sees Boost In Applicants: The Benefits Are Too Good

July 28th, 2008

The number of FHA loan applications see through FHA loan specialists is growing…surprisingly. In fact, for some bankers, that is all they are seeing happen. Why are so many people looking into these loans? There are several reasons and it all comes down to the overwhelming benefits of FHA loans. The number of FHA loans secured in the first quarter of 20008 when up 126 percent compared to the same quarter last year. Make no mistake, these loans are only a fraction of the market share, but they are growing faster than any other type of loans out there.

Reduced Restrictions Push Numbers Up

One of the key benefits of FHA loans is the reduced down payment. This, along with the lessened credit score requirements seem to be helping. That is what people want to know. They can pay less for a loan with lower interest rates because FHA loans offer lower interest rates to borrowers with a bit more risk. They also do not have to have a large down payment, which has harmed many people in the past.

In addition to this, the government approved an increase in the amount of money that can be borrowed through FHA loans, which has drastically helped many of the country’s more lucrative investors in locations such as California where a home is double what it is elsewhere in the country. The increase moved the maximum allowed to be financed through FHA up to $729,750, nearly doubling it.

If you are currently struggling with your loan, FHA refinancing is also quite lucrative since many of the same benefits are in place. For those homeowners who took advantage of the lower adjustable rate loans a few years back and are now facing adjustments in those rates, refinancing into an FHA loan can help them stay in their home.

It is helping many people. Consider this. As reported by Chron.com, Wells Fargo spent some time working to train real estate agents on the benefits of FHA loans. To do this, they welcomed agents to movie theaters around the country, where they broadcast live training sessions. Their goal: teach agents about FHA loans in the hopes that these agents would in turn promote the idea to their interested clients. In doing so, the company saw an increase of 342 percent over 2007 in volume of loans serviced.

It’s Effects On You

FHA is an option for many borrowers. If you find yourself facing lenders who turn you away because your debts are higher than others are or because your credit score isn’t as high as it could be, these loans can work for you.

I highly advise anyone that is considering applying for a new home loan or are considering refinancing a current loan to look into FHA loans. They are not for everyone, of course, but they do offer benefits where other loans are often holding you back.

Consider the current real estate market. You have the goal of owning property. You have the goal of buying a home. You do not have a credit score that is stellar, but you have a job and are making decent money. You do not have a down payment. Although you could do very well in a home loan, some lenders will tell you no shutting the door on your dream home while just a year ago they would have been welcoming you in. That is harsh, but it is today’s reality. If this happens to you, FHA loans are more flexible and ideal for some borrowers. Do not sign on the dotted line until you have considered all options.

As for the FHA numbers being up, that is a sign that people need this organization to keep them buying homes.

FHA Moves To Second Phase Of Helpline For Homeowners

July 16th, 2008

The FHA is out there to help. This week, the second phase of the direct mail campaign the agency has in place will roll out. That means that some 675,000 people who are considered at risk for losing their home will get help from the agency, or at least the offer of help.

The agency will mail out thousands of letters this week to those who are going through foreclosure as well as those who are at risk for doing so, to offer help. The agency has used this method to get people back on track for their loans, and help them to avoid foreclosure. The FHA is offering a method that allows these homeowners to get into better mortgages that are safer to the homeowner (and the lender) as well as helps them to get out of the higher costing mortgages they are currently facing.

A few months ago, the organization provided the same type of help to some 280,000 people. In that batch, from February, was just the first round. They plan to help at least 850,000 homeowners by September of 2008. The letters are part of the organization’s public awareness campaign, which stresses that homeowners have options beyond foreclosure.

There has been quite a bit of talk about foreclosure being the only solution for many struggling homeowners. While many people have selected to cut their losses and run, this is highly risky. Not only do they lose any investment into their homes they have made over the last few years, but they also put themselves in a situation where they may not be able to purchase a home for some time through damaged credit and financial struggle. This FHA program is alerting those homeowners best positioned to stay in their home through new loans.

In a statement about the letters going out, the HUD Secretary Steve Preston had this to say, “This letter might be the most important piece of mail many of these families will receive this year. This information could not only help save their current home, it could help provide them with long-term financial security. This outreach campaign will ensure families are aware of the safe mortgage alternative offered by FHA.”

Who Gets The Help?

The letters being sent by the FHA are a small fraction of the help available, but those receiving the letters should take advantage of them quickly. They are headed out to those who have already faced or are currently facing their first reset of the adjustable rate mortgage they have.

If you are one of the many that will receive this letter, act on it. FHA loans are highly desirable because they are backed by the federal government, are more affordable and they are safe, unlike many of the high risk loans out there that many homeowners are struggling with currently.

At the same time, if you are unable to get the help you need, or are facing a reset of your mortgage interest rate soon, you can still get help, even if you do not receive one of these loans. The FHA is available to anyone in the United States, though there are loan requirements.

If you are interested in finding out if you qualify for FHA loans, take the first step. While the organization cannot help all borrowers, it can help those that are struggling, those getting into loans, and even some of the higher loan amounts (the FHA has been approved to lend to those homes with values up to $729,750 through the end of the year at least.)

For those that get a letter from the FHA, do not make the mistake of tossing it out. It will be the most important letter you receive.

Does The Government Have A Duty To Take On More Bad Loans?

July 15th, 2008

Throughout this year, the evidence that the housing industry was suffering has been everywhere. Every time you turn around there seems to be another position on the table. A new solution, a new opportunity, a new way to fix the problem…these have all surfaced. Yet, with each one of these new situations there comes the “what if” situations.

On June 9th, the Federal Housing Administration Commissioner Brian Montgomery made a very interesting statement to the National Press Club. He said that there was his agencies just could not handle any more bad loans, which is one offer or opportunity on the table being discussed. He said, “This is a worrisome idea,” CNN reported, “FHA is designed to help stabilize the economy, operating within management, low risk loans. It’s not designed to become the federal lender of last resort, a mega agency to subsidized bad loans.”

These remarks are meant to table the discussion happening in Congress currently. There is legislation on the table that would have FHA backing up an estimated $300 billion worth of worrisome mortgages. This translates into about 2 million loans.

What is your stance? Should the government really back up these troubled loans? Are you one of the people who are struggling and would like that helping hand from the government?

The concerns go much further….

Montgomery went on to list various reasons why this type of scenario would be troublesome, saying that it would weaken the FHA situation badly. In his own words, Montgomery said his agency has been, “hobbled by low loan limits and higher down payment requirements.” He continued adding that his agency, “was priced out of some housing markets.”

Credit and FHA Standards

One aspect of this entire situation that is new is the way FHA is currently looking at their potential borrowers. For the first time in the agency’s 74 years, it is now pricing loans according to the risk level the borrower possesses, which could be risky for some of today’s FHA borrowers.

Doing this is often believed to be worrisome. It implies that those that have high FICO scores would get the lower rate, while those who are more at risk with a lower FICO score would be a higher rate. What is unique about this is that many people jump in here and claim that this would actually hurt the industry, after all, are not the people who need the most help being charged the most?

According to Montgomery, that is not the case. In fact, he said, “Contrary to conventional wisdom, FHA families with lower incomes have higher FICO scores.” He says, “These are hard working American families who live within their means and pay their bills.”

This would imply, then, that FHA is helping those with lower incomes to get into the homes they want because they are better credit risks than those with a bit more income and lower FICO scores.

What About You?

What situation are you in with your fha loan? Are you hoping that the government offers more programs to help you get out of the loan or into one that is better protected? As a homeowner, you can wait around until the government makes decisions, or you can put the future of your home in your own hands. Various FHA loan programs could be beneficial to you are already available. Many people will qualify for help under the current program offered, which means that you could save your home loan even if you are currently facing trouble now.

I highly recommend that you invest the time into finding an FHA solution for yourself, instead of letting the government battle it out.

Reverse mortgages allow seniors to draw on their home equity

2008-08-18T18:56:00.000-07:00

Q: My wife and I have just retired. Our home is paid off but we are concerned about having enough money to enjoy our retirement. Is there anything we can do to get the equity out of our home to live on now?

A: For adults over the age of 62 who own their home and plan to continue living in it there is a form of mortgage - called a reverse mortgage - that could be the solution to your need to have money today.

A traditional mortgage is one in which you borrow the money to purchase a home and pay it back, with interest, on a monthly basis. This is the type of loan most homebuyers use to make their purchase. Equity builds up over time and eventually you pay off the loan either when you sell the property or at the end of the term of the loan.

With a reverse mortgage you can turn the value of your home into cash without having to move and with no monthly payments to make. You do not have to pay back a reverse mortgage so long as you continue to live there. Instead of turning your income into equity, you reverse the process and turn your equity into income.

There are a variety of options on how to take the income from the mortgage. You could arrange for monthly cash advances, a single lump payment, a credit line account that you draw on as needed or any combination of these.

Even better, there are no restrictions on how you can spend the money. Travel, medical expenses, remodeling or just adding a cushion to your financial situation are all legitimate reasons people have elected to take a reverse mortgage. So long as all owners of the property are at least 62 years old and it is a single-family home (detached, town home or condominium) or a two- to four-unit building you are likely to be eligible for a reverse mortgage.

Unlike a traditional loan where you build equity, with a reverse mortgage you build debt as you withdraw the home’s equity - but you postpone having to repay that debt typically until you leave the home by moving or through death. An exception to this would occur if the value of your home rose considerably over the time you had the reverse mortgage. In that case, you could actually have some equity available even after you have taken what you could on a reverse mortgage. You keep any difference between what you owe the lender and the value of the home at the time the reverse mortgage is paid off.

As with any important financial decision it is best to consult with a professional - a bank, mortgage broker or a REALTOR® - who could help you decide if a reverse mortgage is appropriate.

WWW.SECURESENIORLIVING.ORG

Can I be forced out of my house if I have a reverse mortgage?

2008-08-18T18:48:00.000-07:00

If I am retired and do a reverse mortgage, what happens if I live for such a long time that all the equity in my house has been paid out to me? Will I be forced to sell the house and give the proceeds to the reverse mortgage holder? Or would I be able to live in the house until I die or need to go into a nursing home?

First, a bit of background information on reverse mortgages. In order to qualify for a reverse mortgage, all borrowers must be at least 62 and the home must be your primary residence. Generally, there can be no other mortgage on the property. If there is another mortgage on the property, you will need to use some of the proceeds from the reverse mortgage to pay off the debt. A reverse mortgage, as it’s name implys, is a loan against the equity in your home. The most common type of reverse mortgage is a Home Equity Conversion Mortgage or HECM.

The amount you can get depends primarily on your age, the value of your home, and the type of program you select. For example, an 85 year old living in a $500,000 home would qualify for a larger amount than a 64 year old living in a similar $500,000 home. To find out how much you could qualify for with a reverse mortgage, check out this calculator.

Once you are approved, the loan amount can be disbursed in one lump sum, paid to you in monthly payments, or established as an available credit line that can be tapped whenever you need it.

With reverse mortgages, you are never making any payments so your debt level is constantly increasing (because your equity is constantly decreasing). The good news is that you will never owe more on the loan than the house is worth. If property values drop after the loan is in place and you end up living a very long time, you might not have any equity left in the house but that would be the lender’s problem, not yours, and the lender wouldn’t be able to “evict” you because that situation occurred.

As long as you are living in the house and maintaining it properly, you do not have to pay back the loan. Reverse mortgages come “due” when:

the borrower has died,
the borrower sells the home, or
the borrower has not lived in the home for one continuous year.

So, the reverse mortgage wouldn’t even be due if you needed to go into a nursing home for a year or less. You would have to be in the nursing home for a year or more.

Technically, the lender can also demand payment if you:

don’t maintain your home,
don’t pay your taxes,
don’t carry the necessary insurance, or
declare bankruptcy.

I am really not a huge fan of reverse mortgages, as they tend to be very expensive. When you take out a reverse mortgage, you will incur origination fees, servicing fees, and closing costs. Total costs on a $250,000 loan amount could run close to $20,000. However, in certain situations, reverse mortgages are the only option on the table.

I do think that in just a few years, the costs associated with these products will come down and the terms in general will become more favorable. Baby boomers retiring in the next decade or so may find themselves short on retirement income but long on home equity so the demand for these products is likely to increase.

www.secureseniorliving.org

Call Centers: The Race To The Reverse Mortgage Finish Line

2008-08-18T18:40:00.000-07:00

The amount of lenders offering the reverse mortgage product has more than doubled in the past year. Sadly, the race to convert seniors into clients has begun. Too many lenders are focusing upon the reverse mortgage client dash. Because of hard times in the mortgage industry, these lenders are looking for a quick bundle of cash. (Rhyme intended)

The industry ethos has until recently been providing succor to our seniors in need. This has been replaced by focusing upon what I call the path of least resistance. This path is exemplified by call centers. A call center can have literally 100s of agents in a room cajoling seniors to sign reverse mortgage documents that the agent will gladly send in the mail.

To the contrary, the program works best when the lenders are offering much needed expert assistance. This requires the lender to act as a consultant instead of a salesman
Under the call center paradigm, the senior borrower will never come into contact with a concerned loan officer or someone who has taken the time to understand their peculiar circumstance. Understanding needs is no longer important. What is important is getting the senior to sign documents- at any cost.

I am at a lost to figure out how reverse mortgage concepts can be fully explained by those whose only focus upon winning the race. I am at a lost how difficult -to understand -reverse mortgage vocabulary can be properly explained by those who are focused upon their position in the race. Call center employees are usually divided into teams. These teams compete against each other. The focus becomes “What do I have to say to chalk up another one for my team?”

This is another reason why family members and their professionals must be the sentinels for their parents/ clients.And I dare say that this may be another reason why the reverse mortgage industry has not grown as rapidly as it should.

Reverse Mortgages: A new weapon in the foreclosure battle

2008-08-18T16:45:00.000-07:00

The spate of foreclosures, instead of being a short lived phenomena, will remain with us for the foreseeable future. The Sunday Business section of the New York Times featured the case of Mamie Ruth Palmer. This article is interesting for two points it makes. To wit: The bank agreed to reduce her balance and accept the proceeds from a reverse mortgage as payment in full. The plaintiff (bank) in these actions may not have standing (the right to sue) because as these loans get sold in the secondary market, assignments may be wanting.

Ms. Palmer suffered through 6 years of “foreclosure hell”. Her suffering through this foreclosure action just may have some redeeming value. She was fortunate because she was able find a lawyer that took her on as a client. The purpose of this particular post is not to look into the reason (s) the foreclosure happened. Our purview is not to look into why Ms. Palmer got stuck in her financial quagmire. By now all of us should know that there is plenty of blame to spread around for the mortgage debacle. Rather her case points up why reverse mortgages could be relied upon as an important financial tool.

It appears that courts around the country are looking at these foreclosure cases with a new set of eyes. No longer are they accepting the lender’s position. They are starting to look behind the facts to determine whether that lender has the right to bring the action at all.

When a loan gets sold in the secondary market, the loan must be assigned to the new lender/ investor. These assignments are often not drafted, or recorded. In New York, for example it was difficult to do consolidation extension and modification agreements because of issues with the assignments. Because lenders deal with pools of mortgages it is easy to see why assignments can be missed.

Accordingly, the reverse mortgage can perhaps be used as a bargaining tool whereby the existing mortgage balance gets reduced to an amount that can be satisfied with the use of a reverse mortgage.

vist: www.secureseniorliving.org , www.unitedlossmitigation.org

REVERSE MORTGAGES OFFER GREATER PROFITS FOR WALL STREET

2008-08-18T16:40:00.000-07:00

The reverse mortgage industry is beginning to take on a Kafkaesque quality. On the one hand, you would think with the debacle in the sub-prime mortgage markets investors (Wall Street) would be savoring the succor of a safe, inoffensive mortgage product, like the reverse mortgage. By its terms, it does not contain the detritus that these alternative mortgage products had. Instead, the clerisy of Wall Street pundits, fearful of making another fatuous decision, have chosen to ignore the one sector of the mortgage market that they should be embracing.

Yet these pundits in essence say that "ALL MORTGAGE PRODUCTS ARE BAD". I urge those that have great vision, those who pride themselves on seeing what others can not see, to take another look at both sides of the reverse mortgage program- The HECM-government insured loan and the proprietary loan/"jumbo loan". These programs are safe and secure because no monthly mortgage payments are made, there is no income , assets and credit requirements, 50% or less LTV(depends on the program) is the norm and these loans have an average life of 7-10 years.

This country has 78 million baby boomers. The oldest become 62 this year. This means that each day for the next 20 years over 10,000 boomers a day will become 62. Today there is in excess of 4 trillion dollars of home equity that can be accessed. This will more than double in 10 years.

The National Reverse Mortgage Lenders Association, HUD and AARP and the passel of incredible caring folks that make up this great industry have worked hard to make this nascent industry the shinning light of the mortgage industry.

Accordingly, there are yet many reverse mortgage products to create, companies to develop and mergers to attract. The best part of it all, is that the more we as an industry can do, the better our clientele - our elders will fare.

Yes ,the reverse mortgage industry has much work to do. Let's stop painting w/ that broad brush and get to work. ALL MORTGAGES ARE NOT THE SAME.

for more information on a reverse mortgage, go to www.secureseniorliving.org

Why It Is A Good Time To Get A Reverse Mortgage

2008-08-18T16:31:00.000-07:00

Contrary to what many people believe, it is a great time to consider getting happily involved with a reverse mortgage.

Often you hear property values are going down. "I will not get as much as I hoped, if I get a reverse mortgage today".

Often one hears that an adjustable rate reverse mortgage is no different than a subprime or alt-a loan. An adjustable rate reverse mortgage loan is light years better than the aforementioned mortgages. Those that seek to conflate the Alt-a and subprime mess with reverse mortgages clearly lack an understanding of the issues.

So let's dissect the component parts of a reverse mortgage and compare it to those mortgages that caused the melt down in the mortgage industry. I will debunk "the home values are going down so it is not a good time to get a reverse mortgage" issue later in this article.

There is no income, asset or credit requirements with a reverse mortgage. The ability to make monthly mortgage payments to the lender is a non issue because this is NOT REQUIRED with a reverse mortgage.

Some of the Alt-a and subprime mortgages had such loose underwriting guidelines that it appeared that there was no income, asset or credit requirements either. However, the borrower had to make monthly mortgage payments to the lender. AND because interest rates adjusted at a point in time, this affected the amount of the monthly mortgage payments that the borrower had to make. Because the borrower was qualified on the lower teaser rate, (that was the only way they could meet the loose underwriting guidelines) they did not have the money to continue to make mortgage payments at the higher rate.

Let me repeat: MONTHLY MORTGAGE PAYMENTS ARE NOT REQUIRED TO BE MADE TO THE REVERSE MORTGAGE LENDER. IN FACT, IT IS THE LENDER THAT MAKES PAYMENTS TO THE BORROWER PURSUANT TO THE BORROWERS' WISHES.

The "value" argument as above noted, is a false argument as well for those homes that are valued above the FHA limit for their community. Those homes that have a value above the FHA limit (in their county) will receive the maximum dollar benefits even though the home has lost some of its value. The reason is that the decreased home value remains above FHA's magic number.

Also it is important to know that reverse mortgage note rates are currently in 3% plus range. The recent Federal Reserve action is partly responsible for these low rates.

Because of the money flocking into the bond market, the yields on the bonds are also at a low level. These yields help determine the benefit amounts. These yields are currently below the FHA floor. This means that benefit amounts are being maximized.

So it is a wonderful time to be CONSIDERING a reverse mortgage. Low interest rates, value's often still remain above, at or just below FHA's limits, and these loans are safe and secure because you do not have to make monthly mortgage payments.

for more information on a reverse mortgage, visit: www.secureseniorliving.org or for fha loans: www.fhastreamlineonline.com

THE REVERSE MORTGAGE "MISCONCEPTION PROBLEM

2008-08-18T16:26:00.000-07:00

Many reverse mortgage “experts” will tell you that the amount of people obtaining reverse mortgages will continue to grow at an extraordinary pace. Conflating the industry’s claim of 100 per cent growth in prior years, with the fact that the oldest baby boomers will reach their 62nd birthday at a rate of 10,000 per day, provides all the proof needed to suggest that this industry will continue to enjoy exponential future growth. Those of us that love this industry must continue to fight this complacency to think this way.

It is time to wake up somnambulant reverse mortgage companies that believe incredible growth will continue as a matter of right. The sophomoric reasons proffered ignore the "misconception" barrier that needs to be overcome. Those of us that love this industry must continue to support and get involved with the colossal efforts of the NRMLA (National Reverse Mortgage Lenders Association - the industry trade group).

It has been 19 years since the first FHA/HECM reverse mortgage closed. Yet there still remains an aggregation of misconceptions that continue to be repeated as if they were concrete facts. I have heard these statements from clients, prospective clients, family members and professionals. The power of the internet provides the Petri dish for spreading & cultivating these falsehoods.

As a student of this loan program, I confess that I am dismayed by this constant stream of misconceptions that, like the proverbial stop sign, halts seniors dead in their tracks. Sadly it is often this program that provides the solution (too often ignored) that solves the seniors’ problems.

All of us in this industry must work together to give our elders the best information available. This means telling the client who has better options, to pursue those options. It means telling the client that you do not know the answer, instead of making one up. It means abiding by the industry’s code of conduct. It means caring a lot about honesty and integrity. And it means challenging yourself each and every day to be a little bit smarter and better than you were the day before. This partly means being an ambassador for the industry. If you haven’t published an article-start writing. If you do not have public speaking experience, do it. A Chinese proverb says, “The best time to plant a tree was 20 years ago. The second best time is TODAY”.

For all your reverse mortgage information, go to www.secureseniorliving.org

A message from a Las Vegas, Nevada Home Loan Consultant

2008-08-18T15:55:00.000-07:00

As a Mortgage Home Loan Consultant in Las Vegas, Nevada, I understand that our market has plenty of bumps and bruises. I firmly believe that the Las Vegas Market will soon rebound and continue to be a city that the rest of the country uses as a benchmark. When that time comes I will still be originating home loans ethically and with integrity! Las Vegas, NV has many advantages that a majority of the country could only hope for. As a long time resident of Henderson, NV since 1996 I have seen Las Vegas grow leaps and bounds over the last 11 years and will continue to serve the Las Vegas valley.

The current trend in Las Vegas and the entire country seems to be moving back to government loans. Specifically, FHA Loans and VA Loans . It is important that any lender that you are dealing with is approved to these type of loans. I have several years experience in the FHA and VA arena and can help guide you through successfully.

A majority of the Mortgage Loans I close come from past client referrals. I treat each client with respect, honesty and integrity. When they walk away from a Mortgage Loan transaction, they walk away confident and informed about their Las Vegas or Henderson home loan! I will work hard for you from mortgage loan quote, to pre-approval , to Online Mortgage Application or In-Person Application, to Underwriting Approval to attending your first BBQ!

My Home Loan commitment to you and the entire Las Vegas Valley:

It is important to me that every person I work with know they can expect the following:

Excellent Customer Service - Purchasing a Las Vegas or Henderson home is the single largest investment most people will ever make. It is important that everyone involved knows where we are at in the process at all times.
Accessibility - I want you to know what's going on with your home loan! My direct line is accesible to people so that they can get their questions answered!
Flexibility/Perseverance - I WILL find the best loan program for you and I rarely accept no for an answer when dealing with Las Vegas mortgage lenders.
Honesty/Integrity - I will NEVER promise a mortgage loan program that cannot be delivered! In every home loan scenario you will have knowledge of each and every item that may affect you.
No Surprises! - For you as a homeowner, potential homeowner or your new home buyer. You will not be surprised one week from the mortgage or transaction closing! If I have knowledge of something, so do you!

As a Henderson, Summerlin, and Las Vegas, Home Loan Consultant, I handle all types of loans: Conventional, Jumbo, Non-Prime, FHA, and VA, as well as every type of loan program.

Please visit the site to learn more about buying a home, refinancing your current mortgage, and the loan process. Call me today for your fast Las Vegas, Nevada Mortgage Quote.

The bottom line is:

I get the job done!

Las Vegas FHA Loans and VA Loans:

Las Vegas FHA Loans

There are many good reasons to choose an FHA loan, especially if one or more of the following apply to you:

You're a first-time homebuyer (You don't have to be)
You don't have a lot of money to put down on a house
You want to keep your monthly payments as low as possible
You're worried about your monthly payments going up
You're worried about qualifying for a loan
You don't have perfect credit
You're worried about what will happen if you fall behind on your payments
You need to refinance but you owe MORE than you home is worth

Want to know more about Las Vegas FHA Loans? Visit my FHA Loan Home Page

at www.fhastreamlineonline.com

www.fhastreamlineonline.com

or for

Las Vegas VA Loans

go to www.vastreamlineonline.com

The VA Zero Down Home Loan is one of the best kept secrets in lending. In the past, many 100% Financing options have over shadowed this home loan but recently we have seen a tremendous resurgence especially in the Henderson and Las Vegas, NV area. This loan is quite simple to understand and qualify for.

No Down Payment
No Income limit
The Loan is Guaranteed by the Government (This is the banks reassurance that in case of default they may still be able to recoup their money)
No upfront or monthly Mortgage Insurance
This loan may be assumed by a qualifying person

Want to know more about Las Vegas VA Loans? Visit my VA Home Page at

www.vastreamlineonline.com

Refinance VA Loans in Las Vegas

2008-08-18T15:47:00.000-07:00

I have always been a big fan of VA Loans. In the Las Vegas area, VA Loans have become extremely popular for many reasons. First, the VA has not instituted a 5% Soft Market Policy in Distressed markets. What that means is that it is becoming increasingly more difficult to buy a home with no money down. Unfortunately, Fannie Mae AND Freddie Mac have put Las Vegas into this category.

However, with your VA Loan benefit you can still use a purchase a property with NO Down Payment. This is exciting for the Men and Women that have served our country.

So many people know about buying a home with your VA Benefit BUT most people don't know that they can refinance their home into a VA Loan weather or not their current loan is through the VA. Some outstanding key options for a VA Refinance are:

100% Rate and Term Refinance available if you currently have a Non VA Loan
90% Cash Out Refinance Available
Interest Rate Reduction Refinance Loan (IRRRL) available that will lower the rate of your current VA Loan with very little qualifying

I have been a huge advocate of government loans for Las Vegas properties in recent months. If you have any questions please feel free to contact us as www.vastreamlineonline.com.

www.vastreamlineonline.com
www.vastreamlineonline.com
www.vastreamlineonline.com
www.vastreamlineonline.com
www.vastreamlineonline.com

Removing MIP from FHA loans

2008-06-20T16:02:00.000-07:00

Removing MIP from FHA Loans is one of the happiest moments for most borrowers in FHA Loans. However, I am continually asked by loan officers how and when these payments end. The misunderstanding of this is almost pandemic.

Mortgage Insurance Premiums on FHA Loans are not the same as Private Mortgage Insurance on conventional loans. Additionally, they differ in how and when they are removed from the loan. For those of you that have questions about how and when MIP does come off FHA Loans, please CLICK HERE to get more information.

US AIR FORCE BASES - MILITARY PERSONNEL

2008-05-13T07:22:00.000-07:00

For all our military personnel, the following is a list of Air Force Bases in the United States.
If your looking to purchase a home within the location of any of these bases, go to www.Vastreamlineonline.com to get all you Va Loan information. If your an existing home owner who lives near any of these bases throughout the US, maybe you want to consider a VA streamline Refinance or VA Cash-out Refinance. Va Streamline loans are quick, painless and simple. Just go to the above mentioned website for all you information on va streamline loans.

US Air Force Bases

Why VA Loans are Easier to Qualify for than Traditional Loans

2008-05-12T15:48:00.000-07:00

Veterans know that if they plan to use the VA Home Loan Guarantee Program to purchase a home that they are taking advantage of a valuable benefit that they earned from their service. This benefit allows veterans who are eligible to purchase a home with easier qualifying guidelines that traditional lenders.

Some of the reasons it is easier for a veteran to purchase a home through the VA Home Loan Guarantee Program include:

• The VA guarantees the loan. When a lender sees that a portion of the loan is guaranteed by the VA, they know they have a low risk investment. Even if the veteran does not pay the loan, the lender will still get some of their loan money back and the property to sell. This makes the loan more secure that traditional borrower’s loans and is one of the reasons why it makes it easier to qualify for applicants.

• Their eligibility can be determined within minutes. All a veteran needs to do is go into a VA approved lender and they can determine through the ACE system on the computer if the veteran is eligible to use the VA home loan guarantee program.

• The VA helps veterans who are in jeopardy of losing their homes. Lenders feel more secure knowing that the VA is behind these borrowers because the VA will help find solutions to problems in the case a veteran has financial difficulties. As a result of this, the borrower is less likely to default on their loan and the lender is more confident that they will be repaid by the terms of the mortgage contract.

• If you are still active in the service, then your employment is easily verifiable. One road block many people face is proof of income and employment. If you are an active service member then your income and employment are verified by the Federal Government.

• You are purchasing a home with no down payment, but it is treated as if you have a down payment. Even if you have $0 down, the lender considers the VA guarantee to be similar to a down payment. All a down payment does is ensures the lender that you are invested in the home purchase and will not walk away without paying back the loan. It also allows them to have some equity in your home in the case they need to sell it so that they can make their money back. With the VA guarantee the lender is already certain they will get their money back, so a down payment is not necessary.

If you are a veteran considering a near future home purchase, you should take advantage of the VA Home Loan Guarantee Program in order to have an easier time qualifying for a loan. For more information on the VA Home Loan Guarantee Program go to www.VaStreamlineOnline.com

Still Under a Mortgage? Try an FHA Refinance Plan

2008-05-12T15:20:00.000-07:00

The Federal Housing Administration offers home loans to first time homeowners as well as people looking to purchase a second or third or fourth home. However, in addition to these services helping people to get into a home in the first place, the Administration also offers the opportunity to enter into an FHA refinance plan which allows homeowners to save money in the long run. If your mortgage still has a considerable number of years before it will be paid off and your interest rate is higher than you would like it to be, you might consider rethinking your repayment plan for your home.

Sometimes people get rates on mortgages that are not ideal at all. If you bought your house a number of years ago, especially if you were young with a less than perfect credit history, your interest rate is probably at a rate much higher than it could be. If your mortgage will be paid off in two years, it might not be worth it for you to spend the time reworking your paperwork in order to get a lower interest rate, but if you still have 10-20 years left on your mortgage, a new plan might be worth the time.

When it comes to an FHA refinance plan, you will be able to get a lower interest rate than the one you were initially given if you borrowed from a bank or other lender. Since the Federal Housing Administration is backed by the government, you can be sure that this refinancing is a legitimate thing. In the 21st century, there are too many lenders out there with so much fine print that nobody understands all of it even if they take the time to read all of it. When it comes to working with the Federal Housing Administration, you can be sure that the services you are getting are the top of the line.

Perhaps it is time to start thinking about putting money into an account for your children to go to college, or perhaps you are getting ready to make some other large financial commitment. These are very good reasons to think about finding out if an FHA refinance plan could help you to put some of the money that you are currently putting into your mortgage into some other account, such as a college fund. The interest rates offered by the Federal Housing Administration are generally around 6%, which might be lower or higher than your current interest rate.

In order to find out if reworking your current mortgage would mean saving you some money, you will have to take a look at your current mortgage and interest rate. It is not true in all cases that going ahead with an FHA refinance plan will mean getting a lower interest rate.

In order to find out how you can rework your particular situation, visit www.FhaStreamlineOnline.com and get a free loan quote and all your fha loan information. Visit today to learn more.

FHA Home Loan for First Time Homeowners

2008-05-12T15:10:00.000-07:00

The Federal Housing Administration was started in 1934 to improve housing conditions in America, and more than 70 years later, that is still exactly what they are doing. They provide loans for purchasing houses as well as programs to refinance a house that you are already living in but need to refinance. One of their most popular types of financing is the FHA home loan going to first time homeowners.

In any given year, somewhere around 75% of the financing approved by the Administration goes to first time homeowners. Younger people who are looking to own their first homes are frequently daunted by house prices and the available financing options. When you look at a mortgage plan and it says 30 years, some people start to feel a little faint in the head. For a lot of first time homeowners, the prospect of paying for their house over 30 years means that they will be paying their house off for longer than they have been alive. This prospect is, understandably, sometimes a baffling one.

The folks at the Federal Housing Administration work with a variety of clients looking to buy a house or to refinance their current house. Their rules are quite simple when it comes to who can finance a house and who can not, but one rule to keep in mind is that borrowers can only hold one FHA home loan at a time. So if you are looking to finance a second residence, but are still paying for your first house, the Federal Housing Administration will not be able to help you out. Of course, this stipulation does not affect first time homeowners.

The financing plans given to first time homeowners are identical to those given to others, with the exception of those who have lost their residence in a disaster. Only disaster victims can obtain a financing plan without putting down any percentage of the purchase price. For all other borrowers, including first time homeowners, the amount that has to be put down up front is 3% of the total purchase price.

Beyond that universal 3% down payment for an FHA home loan, your interest percentage will depend on many factors. Starting interest rates are between 6-6.5%, but there are a lot of additional factors that are taken into consideration when calculating what the exact interest rate will be for each customer. Your credit score is considered, as well as the amount you are financing, whether or not you have a co-borrower (non-resident) and whether or not the house you are financing is a manufactured one.

If you are in the market for becoming a first time homeowner, and are not quite sure where to start, go to www.FhaStreamlineOnline.com for all your fha loan information and a free quote.