Friday, August 1, 2014

2 new reverse mortgage rules for couples

 New reverse-mortgage rules kicking in Aug. 4 should provide peace of mind to married couples considering taking out these loans.

Reverse mortgages (home loans for people 62 and older that let them convert home equity into cash) can be a useful way for homeowners to receive extra income in retirement; the loan must be repaid when the borrower dies, moves or sells the home.

 But there has been a big problem: In some cases, husbands have taken out reverse mortgages and their wives, who then faced foreclosure when they couldn’t pay off the loans after their spouses died. AARP filed a class-action suit against the U.S. Department of Housing and Urban Development (HUD), saying that HUD didn’t protect the women.

How the rules will help

The new HUD rules, welcomed by consumer advocates, aim to prevent this from happening to new borrowers taking out reverse mortgages, sometimes known as HECMs (Home Equity Conversion Mortgages).

Starting Aug. 4, if one spouse takes out a reverse mortgage and then dies, the survivor can continue living in the home without fear of foreclosure as long as she or he continues making the tax and insurance payments and keeps up the maintenance.

“The National Council on Aging applauds HUD for taking a leadership role so the most vulnerable seniors, including widows, are well-protected and can stay in their homes as they want,” says Ramsey Alwin, Vice President, Economic Security for the nonprofit group.

When one spouse isn’t yet 62

The new rules also say that a couple can get a reverse mortgage after Aug. 4 even if only one of the spouses is 62 or older.

Previously, says Peter Bell, president of the National Reverse Mortgage Lenders Association, every reverse-mortgage borrower had to be 62 or older. That’s why some couples with one spouse younger than that only put the older spouse’s name on the reverse mortgage.

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Thursday, July 31, 2014

Mortgage applications continue fall with 2.2% drop

 Continuing the long-term trend this year, mortgage applications decreased 2.2% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending July 25, 2014.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.2% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 2% compared with the previous week.

“Despite mortgage backed security issuance being up 38 percent from the first quarter average, the MBA index continues to show declines.  This suggests that there are fundamental shifts occurring in the market where big players (reporting to the MBA) may be giving up market share or perhaps not holding as many loans in portfolio, thereby pushing up the bond issuance,” said Quicken Loans Vice President Bill Banfield. “In either case, the current level of activity for purchases and refinances has been directional stronger in recent months based on actual security issuance.  With home prices stabilizing from a rapid level of appreciation and interest rates either falling or holding steady recently, I expect to see continued improvements in the purchase arena.”

The Refinance Index decreased 4% from the previous week.  The seasonally adjusted Purchase Index increased 0.2% from one week earlier.

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Wednesday, July 30, 2014

Rate cuts and new features on Leeds’ buy-to-let mortgages

 Leeds Building Society has relaunched its range of short-term fixed-rate buy-to-let mortgages, with rates starting from 2.65 per cent.

The society has introduced a new two-year fixed-rate buy-to-let mortgage at 2.65 per cent, available up to 60 per cent loan-to-value (LTV).

It’s also cut rates or fees on other two- and three-year fixed rate products, which come with additional benefits including a free valuation and legal services.

Highlights include:

    2.65 per cent two-year fixed-rate buy-to-let mortgage up to 60 per cent LTV with a £1,999 fee

    2.99 per cent two year fixed rate buy-to-let mortgage up to 60 per cent LTV, with a £999 fee and a free standard valuation up to £335 and free in-house legal services for remortgages

    3.19 per cent two-year fixed-rate buy-to-let mortgage up to 70 per cent LTV, with a £999 fee and a free standard valuation up to £335 and free in-house legal services for remortgages.

Leeds general manager of business development Martin Richardson comments:

“We’ve refreshed our range of short term fixed rate deals for Buy to Let mortgages.”

“As well as reducing rates, we’ve also brought down fees on some products and added benefits, such as a free valuation and legal services, to offer a choice of packages to borrowers, whatever the size of loan they’re seeking, whether for purchase or remortgage.”


Tuesday, July 29, 2014

Reverse mortgages can be costly

LAMAR, Miss. — What’s promoted as an easy way to get cash out of your home, may not be as simple as you think.

The On Your Side Investigators have a warning about reverse mortgages.

It’s hard to miss the pitches. Older celebrities like Henry Winkler and Fred Thompson are often featured in commercials about reverse mortgages.

“It’s cash you can use to pay off your credit card bills, medical expenses, actually anything,” said Winkler in one commercial WREG found on YouTube.

Joann Miller says it’s what convinced her to check into a reverse mortgage.

“The TV commercial says, you know, it’s fast, it’s easy.”

The 65-year-old wanted the extra cash to pay off her car and some other debts.

“We thought that was the easiest way to go,” said Miller.

Sapna Raj is an attorney with Memphis Area Legal Services. She explained how reverse mortgages work.

“It’s basically an equity loan, what you can do is you can take that equity out of your house, you never have to pay a mortgage, you can get that money to spend on whatever you want,” Raj said.

With a regular mortgage, you pay the lender every month, with a reverse mortgage, the lender pays you.

Seniors who are 62 and older are eligible. They still own their home and don’t have to repay the money as long as they live in it.

The loan isn’t due until the person dies and the home is sold.

Raj says while reverse mortgages can be good for some consumers, like any financial product, there’s a catch.

“I don’t think that for people who are, with a limited income, I don’t think it’s a good option for them.”

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Monday, July 28, 2014

Important tips for online mortgage loan applications

Your FICO score means a lot when being considered for a mortgage loan. While each time you apply to a mortgage lender may only lower your score by about 5 points, the small difference could cause your interest rate to be a little higher.

It is usually best to let your Buyer’s Agent make a recommendation. They choose a lender for you based on their experience of service. Real estate agents cannot get a referral fee from the lender without risking their license. If you trust your agent, simply know they have your best interest at heart.

If you must shop for rates to feel comfortable, research online or call lenders directly to find out the best rate available. Keep in mind that disreputable lenders (particularly online) are known for bait-and-switch schemes. Don’t give them your social security number or authorize them to pull your credit.

Share the Basics

Everything you share on your mortgage application should be update and accurate. Once you have filled out the basics and authorized your loan officer to pull your records, most everything they need will be downloaded through their system. If you have doubt whether they need any small bit of information…wait…ask the loan officer if it should be included. Less is better. Leave it up to your lender to ask for more.

Prepare Documentation

Everything you answer on your application form will need to be sourced or verified. Here are some examples:

• Lenders no longer get verification from your bank about ability to make a down payment. Instead, you furnish each page of each bank account statement for their review. Any money showing in your bank account must come from a known source. So, if your grandmother gave you a $500 gift, you will probably need to letter from Grandma confirming the gift.

• Gifts for down payments are particularly scrutinized. In fact, for conventional loans the entire down payment must come from your own funds with verifiable tracking about the source. Government loans, like FHA and VA, allow up to 100% of funds needed for closing to be from a gift. The lender wants to know the exact source of everything.

Give Yourself Time

Pre-approval before finding a home is essential in this competitive marketplace. Still most borrowers need to allow 30 days from contract to closing. In some cases a speedier closing can happen, but it does not make sense to count on it. Loan products often use a combination of loan products. There are 1st and 2nd lien combos to avoid paying mortgage insurance premiums and improve interest rates. Other complex processes may require multiple underwriters. Even in the best cases, closings for any portion of the loan must be at least 7 days.

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Thursday, July 24, 2014

1 in 5 central Ohio mortgages remain ‘underwater’

More than 20 percent of central Ohio homeowners owe far more on their mortgage than their home is worth, according to a new report by RealtyTrac.

The real-estate information and listing service found that 21 percent of central Ohio homeowners with mortgages owed at least 25 percent more on their mortgage than the value of their home at the end of the second quarter.

That’s down from 23 percent at the end of the first quarter.

In its calculations, RealtyTrac includes any debt secured by the property, such as a mortgage or home-equity line.

Statewide, 26 percent of mortgaged homes are “underwater”; nationally, 17 percent are.


Wednesday, July 23, 2014

Housing Buoyed by 20-Year High for Vet’s Loans: Mortgages

During his third deployment in Afghanistan, Air Force Staff Sgt. Claude Hunter was so eager to return to the U.S. and buy a house that he signed a contract for a property that his agent showed him over Skype.

Hunter got back in time to close the deal, paying $219,000 in May for the four-bedroom Waldorf, Maryland, house that he financed with a U.S. Department of Veterans Affairs mortgage. It didn’t require a down payment.

“On Facebook, my friends have started posting: ‘I got my VA loan, I got my house,’” said Hunter, 31. “Everybody is just ready. A lot of them have done their jobs overseas and are coming home.”

America’s fragile housing recovery is getting a boost from military buyers using VA mortgages as the U.S. draws down troops after more than a decade of combat in Iraq and Afghanistan. About 4.7 million full-time troops and reservists served during the wars and many are now able to take advantage of one of the easiest and cheapest paths to homeownership. The program’s share of new mortgages, at a 20-year high, is also increasing as other types of government-backed loans have grown more costly.

“The reduction in uncertainty for the returning vets allows them the freedom to spend more, including buying housing,” said Sam Khater, deputy chief economist at CoreLogic Inc., an Irvine, California-based property-data firm. “VA buyers are coming into the market in higher and higher proportions and tend to be first-time buyers, one of the missing drivers in the recovery in housing demand.”

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