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Great News for Seniors Considering a Reverse Mortgage

Written by Clay on . Posted in reverse mortgage

 

Reverse Mortgage Loan Limits to Increase in 2018 The Federal Housing Administration (FHA) announced Reverse Mortgage Loan Limits will increase in 2018. This is significant news since lending limits have remained stagnant for several years. The maximum claim amount will now rise to $726,525, up from $636,150 for Home Equity Conversion Mortgages and jumbo options are now available.

The Maximum Claim Amount is either the appraised value or the loan limit and the amount a borrower can receive is reduced by the reserve set aside for future interest and mortgage insurance amounts accrued to arrive at the Principal Limit.

The reserve needed is based on the age of the youngest borrower, interest rates and loan amount. This change was made as a result of rising home prices, with almost 3,000 counties across the nation benefiting from these changes.

Lots of good news for Reverse Mortgages recently. This increase is a positive for a program that provides seniors more choices and flexibility as they consider a reverse mortgage that can help senior homeowners in many ways.  The most important would be to be able to live in their homes as long as they want or provide strategic options for taking social security and withdrawing investment funds.

To learn more about tips and strategies when applying for a reverse mortgage, I’m available to answer all of your questions.  Let’s talk about your goals and perhaps ways that you can take advantage of these loan limit increases, please give me a call or send me an email: clay@signetmortgage.com. I’d be happy to help!

Conforming Loan Limits Increase – now $726,525 in high cost areas

Written by Clay on . Posted in reverse mortgage

Major Increase in Monterey; Sonoma;  Ventura and Yolo Counties in CA; Summit County in UT as well as King; Pierce and Snohomish Counties in Washington Single family conforming loan limits increased to $484,300 across the nation and to $726,525 in certain high-cost areas. Several counties that previously were in between the base and high-cost limits saw significant increases based on rising property values in Signet Mortgage service areas. Napa, Contra Costa, Alameda, Santa Clara, Santa Cruz and Sonoma counties in California, Summit County in Utah and King, Pierce and Snohomish County in Washington will now have access to conforming loan limits reflecting the current market values. The new conforming limits will be effective for loans closed after January 1, 2019. The new limits are helpful as conforming rates can be lower than jumbo rates and underwriting more consistent and flexible so a few more transactions will get done! A purchase in the Bay Area up to $908,150 at 80% loan to value can be done with a conforming loan … Particularly relevant with this announcement is the average U.S. home prices have improved as this is the third increase in as many years after being unchanged since 2008. Here is a link to the loan limits by county for Signet Mortgage service area (CA, WA, OR, ID, UT) and for the entire country.  Included on the right of the chart are the changes from 2018. FHA forward and reverse mortgages and VA loans followed suit a few weeks later with increased limits. As a mortgage professional in business for over thirty years, I am here to consult with you and answer any questions you have about the strategic use of your mortgage. Let’s talk about your goals and perhaps ways that you can take advantage of these changes.  Call or email me – I am happy to help!

Now is the time to have “the talk” with your parents! No, not THAT talk…

Written by Clay on . Posted in reverse mortgage

“It’s the age-old question: When and how do we have “the talk?” No, not that one, but the dialogue on the other side of the lifetime spectrum, often just as difficult and delicate — the one about an aging family member’s driving abilities, housing transitions, costs of long-term care and even end-of-life instructions.

Most of us, on either side of the discussion, would rather chew on nails than delve into these subjects. Yet as more and more baby boomers step into senior citizen territory and life expectancies continue to increase, such issues loom large. Even so, these talks don’t always have to be harrowing. While each individual, each family, each situation is different, most in the field of geriatric care agree the process is easier the earlier you start — when all parties are fully engaged — and say you should “approach loved ones with respect and compassion, appreciating an individual’s need to retain independence.”

There are specialists that can help with the “Talk”.  I can put you in touch with a professional in your area.  This is a short list of topics to consider.

  • Legal Rights and Obligations
  • Financial Rights and Options
  • Care Options
  • The Cost of Long Term Care
  • The Wants and Wishes of the Family and Loved Ones
  • The Need for Family Communication
  • Final Planning and much more

If you’d like to know more about how Signet can help you have “the talk” just give us a call! 925-807-1500

Condo Communities

Condo Communities Can Look to Reverse Mortgages and FHA Loans once again …

Written by Clay on . Posted in reverse mortgage

Condo Communities Can Look to Reverse Mortgages and FHA loans again Once Regulations are Adopted The most relevant provision of the changes will emulate the FHFA’s rules regarding the transfer fees for FHA mortgages including reverse mortgages.  In July 2015 FHA began refusing to approve condominiums in higher cost communities such as Rossmoor in Walnut Creek, CA because of the Golden Rain Foundation Membership transfer fees. Here is a look at the provisions as they stand:

  • Reduces the FHA condo owner occupancy ratio to 35%
  • Gives FHA the ability to substantially reduce burdens and streamline the condo recertification process
  • Provides more flexibility for mixed use buildings.
  • Emulates the Federal Housing Finance Agency’s (FHFA) rules regarding private transfer fees for FHA condo lending.
  • Allows for approved lenders to directly endorse Rural Housing Service (RHS) loans
  • Will streamline programs for federally-assisted housing programs

Condo Communities to get Relief After Passage of HR 3700 Bill

For comprehensive details of the HR 3700 bill, click here. Condominium communities, like Rossmoor Senior Adult Community in Walnut Creek, CA are impacted. Soon, current homeowners and potential buyers of condos will once again have access to more flexible FHA financing opportunities including reverse mortgages. The changes will benefit more than just Rossmoor.

 Please contact us for a strategic look at your real estate financing needs. I can be reached at www.signetmortgage.com.

9 Ways to Use a Reverse Mortgage

Written by Clay on . Posted in reverse mortgage

A good summary of the 9 ways to use a reverse mortgage was published by Mary Beth Franklin – in Investment News June 2016.  Investment News is a leading reference source for Financial Planners. Titled “9 surprising ways to use a reverse mortgage” is an excellent summary of how a reverse mortgage can compliment a solid financial plan.  
  • Pay off an existing mortgage
  • Replace a home equity line of credit
  • Protect your portfolio
  • Fund future long-term care or income needs
  • Create a Social Security bridge following basic
  • Manage Taxes
  • Pay Roth conversion taxes
  • Buy a new home
Working with an experienced reverse mortgage loan officer is the key to make sure the guidance and education shared with a client is on point and considers the overall financial plan of the senior.  Clay Selland is a CPA and the owner/broker of Signet Mortgage Corporation. Clay is uniquely qualified to assist as they consider financing of their home including conventional and reverse mortgage financing and how it fits with their financial plans now and going forward. Contact me today to find out if a Reverse Mortgage is the best option for you!        Clay Selland, President Signet Mortgage Corporation 925-807-1500 x303 Clay@SignetMortgage.com NMLS#183492  

Veteran can purchase a home with little or no down payment … and no monthly mortgage insurance

Written by Clay S. on . Posted in reverse mortgage

Veteran BootsDid you know a veteran can purchase a home in the Bay Area with 100% financing up to $625,500 and with 90% financing to over $1 million?  VA loans do not have any monthly mortgage insurance and rates are around 4% within the lender credit to cover the funding fee.

What a wonderful option to put a veteran in a home with little or no cash to close. We recently completed a transaction in Tracy where our client got into their $417,000 home for $137 … It happened that the borrower had a service related disability which reduced the funding fee, and the lender credit was sufficient to cover impounds.

Too often VA loans are lumped in with FHA loans as expensive and thinking there are restrictive property requirements. That is not the case and properly utilized can really be a benefit to our veterans.

Clay Selland

NMLS #183492 CalBRE #01398801

925-807-1500 x303  (fax 925-807-1505)

clay@104.238.124.149

FHA Accommodates Younger Spouses for Reverse Mortgages

Written by Clay on . Posted in reverse mortgage

FHA will be accommodating younger spouses under the age of 62 this August. Situations where a couple would benefit from a reverse mortgage but one spouse does not happen to be 62 can now be accommodated and allow the non-borrowing spouse to stay in the home, even if the borrower passes away or moves from the home.  This is a significant change and will remove a big obstacle preventing some couples from considering a reverse mortgage. For new transactions after August 4th non-borrowing spouses will be able to remain in their homes, provided the following criteria have been met:
  • Have been the spouse of a HECM mortgagor at the time of loan closing and have remained the spouse of such HECM mortgagor for the duration of the HECM mortgagor’s lifetime
  • Have been properly disclosed to the mortgagee at origination and specifically named as a Non-Borrowing Spouse in the HECM documents
  • Have occupied, and continue to occupy, the property securing the HECM as the Principal Residence of the Non-Borrowing Spouse
  • Within ninety days from the death of the last surviving HECM mortgagor, establish legal ownership or other ongoing legal right to remain (e.g., executed lease, court order, etc.) in the property securing the HECM
  • After the death of the last surviving mortgagor, ensure all other obligations of the HECM mortgagor(s) contained in the loan documents continue to be satisfied; After the death of the last surviving mortgagor, ensure that the HECM does not become eligible to be called due and payable for any other reason.)
The principal limit tables which determine how much a borrower will receive from a reverse mortgage based on age, interest rate and type of reverse mortgage will be updated to reflect the impact of a younger spouse.  USA Today had a good article in their “Mortgage and Real Estate” insert last month profiling very happy reverse mortgage borrowers – an “up” story on the proper use of a reverse mortgage. A reverse mortgage is just one “tool” in a retirement plan.  Strategically used it can be a blessing. Improperly used it will result in unintended outcomes.  Knowing the difference is where I can help. Five highlights to get you thinking.
  1. Optimize Social Security by being able to defer benefits until age 70.
  2. Help kids buy a home close – secure a reverse mortgage for the down payment. The kids are going to get the “estate” anyhow and why not now when you can enjoy it.
  3. Replace the loss of income when one spouse passes away –  expenses do not go down.
  4. The family home is a bit like a “piggy bank” having paid into it for years and years. Maybe it is time for a withdrawal to allow you to live just a little bit more comfortably.
  5. Reserve funds are hard to come by when you need them.  
A reverse mortgage can be completed, proceeds held in reserve and only used if needed.  You will be comfortable knowing it is there just in case. I work hard to understand the proper use of a reverse mortgage and would appreciate the opportunity to talk through your situation.  Please give me a call. 925-807-1503 clay signature black

How to Pay for Home Renovations

Written by Clay S. on . Posted in Current Events, HECM, Retirement, reverse mortgage

ReVisions Resources posted this article of mine on their blog this morning. ReVision Resources is dedicated to helping seniors by connecting them with ideas and resources to stay independent.

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Ahome remodel can arise out of need or desire – either way figuring out how to pay for it is likely the biggest barrier homeowners face when considering a remodel for their home. Your home should be comfortable and safe. If updates are needed to make your home more functional, it will allow you to enjoy your home more too! There are many options to financing home improvements and these may be more affordable and flexible than you think.

Renovation Loan

A Renovation loan (FHA 203(k)) or the Fannie Mae Homestyle renovation loan is designed to finance home improvements and work best when refinancing or purchasing a home. Estimates to complete the work must be obtained prior to loan approval and the cost of those improvements can be rolled into the loan amount. Generally the work must be completed in the next six months and are paid through proceeds of the loan.

The ideal situation could be the purchase of a home that is not exactly the way you want it. It may need carpet, paint, new windows and perhaps a new bathroom or kitchen to make the home perfect. The FHA 203(k) loan has two levels. A streamlined loan for improvements costing less than $35,000 is relatively straightforward and is ideal for cosmetic upgrades. A standard FHA 203(k) loan can finance major renovations including adding a room or remodeling a kitchen or a new roof.

This is one loan with one payment. It is important to note the FHA loan will have attractive interest rates but will have the added expense of mortgage insurance.

Home Equity Line of Credit

A Home Equity Line of Credit (HELOC) is best used when you already own a home with a current first mortgage on the home at market interest rates. You may simply need funds for a renovation or repair. With sufficient equity in your home you can set up a line of credit that you can access as needed in your project. HELOC’s will have a variable interest rate generally at prime +1.5% – 2.5%. Currently the prime rate is very low so this option can be very attractive and best used if you are in a position to pay it off in the next five years or so.

Reverse Mortgage

A federally insured reverse mortgage or Home Equity Conversion Mortgage (HECM) can be a valuable tool in financing home renovations. In this case all borrowers on the loan would need to be 62 years of age or older, and have the ability to pay property taxes, HOA and insurance. The unique benefit of a reverse mortgage is that there are no required monthly payments. Instead, interest and the mortgage insurance costs are added to the outstanding loan balance. Functioning much like a HELOC, funds are accessed only when needed.

Available funds can be used for renovations to make the home safe such as remodeling a downstairs bathroom and converting a bedroom, avoiding the need to use stairs every day. Available funds can remain parked for use in an emergency somewhere down the road.

If you would like to explore what might be the best options for you, feel free to give me a call.  Clay Selland, President, Signet Mortgage Corporation 877-877-8420 x303 or Clay@SignetMortgage.com

http://revisionsresources.org/how-to-pay-for-home-renovations/

Reverse Mortgages Can Benefit Retirees, Both Wealthy and Not…

Written by Clay S. on . Posted in reverse mortgage

Can Help Retirees Keep Investments Until Right Time to Sell

No longer viewed as a last resort, a reverse mortgage is an important financial tool that can be used as a strategic piece of your financial plan.  A reverse mortgage can be used to avoid selling depressed investments or to provide cash flow at important times rather than taking taxable withdrawals from retirement accounts. The referenced article in the Wall Street Journal brings up a number of good points particularly in reference to the kids and “the family home”.  It has been my experience, and repeated in the article, that the kids really do not want the house and they are eager for their parents to use resources for a better life.  I love Mr. Salters solution to talking with their kids about a potential reverse mortgage … “my first answer, when people ask how to approach the kids, is asked them if they have an extra room in their house for their parents”  I am going to use that! If you would like to talk with a mortgage advisor who thinks long-term and strategically about your financial investments including your liabilities – please give me a call at 925-807-1500 x303

Financial Assessment coming to Reverse Mortgage Requirements

Written by Clay S. on . Posted in FHA, HECM, reverse mortgage

Financial assessment will become an integral part of the requirements for reverse mortgages in the future, according to a NY Times report Friday. This follows a change in April that suspended the standard fixed Home Equity Conversion Mortgage (HECM). Both of these changes were made to ensure the long-term viability of the program. Homeowners 62 years and older can use the HECM reverse mortgage to access their home equity for retirement or other needs, or even purchase a home.  The program is a priority for HUD and FHA and carries significant benefits for baby boomers wanting to include the equity in their home as part of their retirement plan. Financial assessment will require specific documentation that the homeowner is able to make future property tax, insurance, and HOA payments. Given these are basic requirements of any mortgage loan, the change should not have much impact. These will simply formalize the kind of considerations and due diligence a professional advisor would make before recommending a reverse mortgage.

See the full article here.