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HECM Reverse Mortgage Changes 10/2 – Seniors may benefit by acting soon

Written by Clay on . Posted in FHA, HECM, Refinance, reverse mortgage, Social Security, Uncategorized

Big Changes for HECM Reverse Mortgages October 2nd: Higher UpFront Cost – Lower Limits – Lower Insurance Premiums

Seniors on the fence considering a HECM reverse mortgage line of credit with a zero or low upfront draw may want to act quickly to get their reverse mortgage started before big changes go into effect October 2, 2017.

Three changes will impact the HECM Reverse Mortgage Program for FHA case numbers assigned beginning October 2nd. Upfront Mortgage Insurance Premium paid to FHA will now be 2.0% across-the-board. Previously borrowers accessing less than 60% of the principal limit only had a 0.5% upfront mortgage insurance premium and those with mandatory obligations over the 60% were charged 2.5% for the upfront mortgage insurance. Annual Mortgage Insurance Premium accrued on an outstanding balance is reduced from 1.25% to 0.50% which will be a benefit to those borrowers that carry a balance on the reverse mortgage but negatively impact the growth factor used when borrowers obtained a line of credit reverse mortgage. Principal Limit Factors were adjusted to be more conservative reducing the amount of funds available to an average borrower by about 5%. I will be spending some time looking at the impact by age group and share that a bit later. The net impact seems intended to discourage the use of a line of credit reverse mortgage. When taken out early on the growth in the credit line if left unused was dramatic and can be an important part of a overall financial plan providing flexibility and security with access to funds well into the future. Increasing the upfront cost; decreasing the growth rate by reducing the mortgage insurance premium; and lowering the principal limit factors all reduce the benefits of a line of credit reverse mortgage. Seniors on the fence may want to consider acting sooner rather than later. An application and counseling must be completed prior to securing an FHA case number so if this makes sense it would be best to act quickly and get a case number well before September 29, 2017. 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 before these changes take place, please give me a call or send me an email: clay@104.238.124.149. I’d be happy to help!   Learn more about mortgage at mortgagebrokernearme.co.uk Clay Selland, Signet Mortgage Corporation clay signature blackcontact-block-1

Conforming Loan Limits

Conforming Loan Limits Increase for First Time Since 2007

Written by Clay on . Posted in Fannie Mae, Freddie Mac, Homebuyers, Real Estate, Realtors, Renovation Loans, reverse mortgage, Uncategorized

Major Increase in Monterey; San Diego; Sonoma; San Luis Obispo; Ventura and Yolo Counties as well as King; Pierce and Snohomish Counties in Washington Single family conforming loan limits increased to $424,100 across the nation and to $636,150 in certain high-cost areas. People who need a loan can find forbrukslån uten sikkerhet here. 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. Monterey; San Diego; Sonoma; San Luis Obispo; Ventura and Yolo Counties in California as well as King; Pierce and Snohomish Counties in Washington will now have access to conforming loan limits reflecting the current market values. Speaking of loans, I know that you are familiar with “student aid bill of rights” which was signed by President Barack Obama in 2015 aiming to help students with their student loans. It is still active now, apply! According to knowledgefirstfinancialresp.ca/, the Federal Housing Finance Agency (FHFA) announced these changes in a press release  today.  The new conforming limits will be effective for loans closed after January 1, 2017. The new limits are helpful as conforming rates generally are 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 $795,000 at 80% loan to value can be done with a conforming loan … Particularly relevant with this news announcement is the average U.S. home prices have edged slightly above pre-decline levels from 2007.  Data published in the third quarter Housing Price Index (HPI), reveal that housing prices are approximately 1.7 percent above the value for third quarter 2007. 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 2016.   The source document from FHFA is here. Certain high-cost areas have the higher limits at 150% of the base at $636,150 (150 % of $424,100).  But many counties, such as Monterey, Orange, Sacramento, San Diego, San Luis Obispo, Summit (UT), Jefferson (WA), Pierce (WA) and Snohomish (WA) saw significant bumps to its loan limits. Here are highlights of loan amounts and details for single family and up to 4 units and changes for those counties. 2016-11-23_1206           The changes do not impact FHA forward or reverse mortgages or VA loans for the moment. Those announcements should be forthcoming in the next couple of weeks.   With the 2008 economic stimulus plan FHA increased loan limits to $625,500 for reverse mortgages for one year and has extended this limit one year at a time since.  The $625k is due to expire this Dec 31. We should hear soon if it has been extended again or changed up or down. As Jonckers 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!     Clay-Selland Signet R3 280x120

How Will the Fed’s Increase of Interest Rates Affect You?

Written by Clay S. on . Posted in Uncategorized

Increase-Business-Finances-300x200 There are plenty of ideas and opinions on what the Fed is going to do with interest rates Tuesday and Wednesday this week.  I think the markets have built in a 0.125% – 0.250% hike in the Fed funds rate. Any action other than that could cause some volatility in the bond market the next few days.  As always the Fed Chairman Janet Yellen’s testimony will be interesting as well. No one will know until we all know, but most analysts agree and investors are betting that the “Feds” – the Board of Governors of the Federal Reserve Bank – will raise interest rates when they meet on December 15th and 16th. How will this impact you? First, let’s talk about what interest rates they control, and just as importantly what interest rates they do not control. The Feds control only two rates: theDiscount Rate, and the Target, or Overnight Rate. The Discount Rate is the rate at which the Federal Reserve lends money to banks for short-term needs to meet liquidity requirements. Banks cannot lend out every last penny in their vault, because they would be at risk of not being able to pay depositors back if many of them wanted to withdraw money at the same time. They have to keep a certain amount of money liquid and available for depositors. According to http://www.gohenryreview.com, when a bank has a very good month lending, they might be short on reserves. If so, they can borrow money from the Feds for a very short time at the current Discount Rate in order to have the minimum required reserves available. What is that rate today? 0.00%. Is it safe to invest money in Bitcoin Exchange? Visit bitflyer.com for more information. Banks can borrow money from the Fed (if they are short on reserves) for free. The Overnight Rate is not technically set by the Feds, but the Target Rate is. The Feds establish a target interest rate for banks to lend to each other for overnight needs for the same challenge – a shortage of reserves. The target rate today is 0.25%. It is infinitely higher than the Discount Rate, but still not a bad deal. Notice that in this discussion mortgage rates are missing. These are the only two things that the Feds can directly control. Most analysts agree that in December the Feds will raise the Discount Rate, which will naturally increase the cost of short-term borrowing by banks. The projected increase is 0.25%. How will this impact you? Any interest rates that must reflect the short-term cost of funds for banks will have to increase by the same amount. The two types of loans that fall into this category would be equity lines and credit cards – both types of lending meant to be short-term. There is some banks who offer credit cards 0 interest. The most commonly-recognized index for both types of cards is the Prime Rate. This is the interest rate that banks charge their most credit-worthy corporate clients, but it is also the index that almost all equity lines (including Home Equity Lines of Credit and Business Lines) and the best credit union rates are tied to. The most immediate impact that you will see, therefore, is the Prime Rate will increase by the same amount the Feds increase the Discount Rate and the interest rate on your equity line and credit cards will increase by the same amount too. The interest rates on car loans are also likely to increase a little, because they are short-ish in term. However, if you already have one chances are it’s a fixed rate, and the interest rates for car loans written after December are likely to come back down over time due to competition. If you want a general rule of thumb to figure out whether in interest rate will increase or not, here it is: If the loan is meant to be short-term and is made from the bank’s own deposits, then the interest rate is likely to go up. Mortgage rates are not short-term, and while they are funded from the bank’s deposits (in most cases) they are immediately sold to Fannie Mae, Freddie Mac, or Wall Street investment bankers who create large funds to invest in mortgages. Since it is not their own money they are lending, the short-term cost of funds to the bank have no impact on mortgage rates. Having said that, the Feds can influence mortgage rates through the purchase of Mortgage-Backed Securities using money borrowed from the U.S. Treasury. But for now, watch for an announcement from the Feds on December 16th. Clay Selland NMLS #183492 CalBRE #01398801 925-807-1500 x303  (fax 925-807-1505) clay@104.238.124.149 Original blog post by Casey Fleming, Author of The Loan Guide; How to Get the Best Possible Mortgage (On Amazon)    

2016 Conforming loan limits up for San Diego, Monterey and Napa Counties

Written by Clay S. on . Posted in Uncategorized

The maximum conforming loan limit for single family properties remains at $417,000 with the maximum high-balance conforming loan limit for the San Francisco Bay Area and other high cost areas was unchanged at $625,500. Fannie Mae and Freddie Mac set loan limits based on changes in real estate values each year around December 1st. Napa joins the ranks of “high cost areas” that includes other Northern California counties of San Francisco, Alameda, Contra Costa, Santa Clara, Santa Cruz, Santa Clara, San Mateo , San Benito, and Marin. 2015-12-15_0959 2-4 unit properties have higher loan limits.  Search for your county here:  Loan Limit Lookup Table (see Resources to the left) Conforming loans provide a lower mortgage rate to the borrower and with higher limits for these counties increases the number of potential qualified buyers further supporting real estate values. Please give me a call if I can be of help in any way. Clay Selland NMLS #183492 CalBRE #01398801 925-807-1500 x303  (fax 925-807-1505) clay@104.238.124.149

HARP 2 Refinance Program Update

Written by Clay on . Posted in Uncategorized

updateImproved HARP – Home Affordability Refinance Program… something that the Government got mostly right during the effort to assist homeowners that could not take advantage of historically no credit check loans in the uk because their home values have dropped.  Recent changes mean property owners should take a second look, specifically:
  • Bankruptcy or Foreclosure seasoning requirements have been eliminated
  • Up to 60% debt-to-income ratios are now accepted on all HARP refinances, thanks to the Rhinosure programs that are being offered
  • Promissory Note date now used to determine HARP eligibility, prior to 5/31/09.  Until recently it was based on when Fannie or Freddie purchased the loan.
  • 0x30 Mortgage rating in last 6 months is required – previously it was no late payments for 12 months!
  • Loans that currently have mortgage insurance are allowed!
  • Unlimited LTV/CLTV on HARP owner occupied homes, 2nd homes and Investment properties

60% of HARP eligible borrowers have NOT refinanced yet, probably because they were turned down. Now is the time for a second chance!

Available for INVESTMENT properties TOO!

making-home-affordableThe HARP 2.0 Home Affordable Refinance Program is designed to allow a refinance of properties that no longer have 20% equity and benefit from historically low rates.  In short, no late payments last 6 months, and your loan has to be owned by Fannie Mae or Freddie Mac (not the same as who services your loan or where you make your payments).  Generally conforming loans (below $625,500).   Promissory note must be dated on or prior to 6/1/2009. If you are in debt then first take a look at trust deeds for debt in Scotland. Existing 2nd loans are allowed – unlimited combined loan to value. Rates are fabulous so it’s worth checking if you would benefit from a refinance to record low rates. Multi-family properties up to four units can be refinanced at similar rates as there are caps on the adjustments for loan to value, credit score, occupancy and number of units! The main requirements are that the loan be owned by Fannie Mae or Freddie Mac.  Remember, a loan can be serviced by any of the major services and still could be owned by Fannie or Freddie.  The best way to tell is to provide a current mortgage statement and the last four digits of borrowers social.  We can do the rest. No requirement (or benefit) to refinance with your existing lender as they may have overlays that restrict benefit. Fannie Mae and Freddie Mac will likely assign an automated valuation of the property thus eliminating the need for an appraisal. Primary residence or second home.  With a primary residence there is a cap to the “adds” so rates are very competitive.

Send us your mortgage statement and note the last four digits of your social security number – and your email address – we can do the rest!    No obligation at all – you might as well find out if you could lower your payment or take years off your mortgage.

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Loan Fee Increase to be Delayed – A Bit of Holiday Cheer!

Written by Clay on . Posted in events, Fannie Mae, Freddie Mac, Homebuyers, Uncategorized

  Fannimgresie Mae and Freddie Mac guaranteed fee increase will not go into effect in April as previously announced.  Rep. Mel Watt, the incoming director of FHFA, said late last week that he would delay an increase in mortgage fees announced in early December.  In a prepared statement, Mr. Watt indicated the delay of the loan fee increases “until such time I have had the opportunity to evaluate fully the rationale for the plan.” The planned increases included a sharp rise in fees from Fannie Mae and Freddie Mac for borrowers who do not have at least 20% down payments and credit scores between 680 and 760. This is good news coming at a time when rates have already seen an increase after the Fed announcement to taper off the purchase of mortgage-backed securities. We will keep a sharp eye on these developments after Mr. Watt is sworn in early January.

Hybrid Reverse Mortgages?

Written by Clay S. on . Posted in Uncategorized

Hybrid reverse mortgages could be on the horizon – providing a solid alternative to the fixed rate option that was suspended April 1. HUD dropped the standard fixed reverse mortgage  because of unanticipated demands on FHA reserve funds.  While boomers prefer the idea of a fixed rate reverse mortgage – the requirement to draw all funds up front to put a strain on the reserve funds given the length of time the full draw is outstanding.  Further changes are anticipated over the next few months to ensure the long-term viability of the reserve fund. I had the opportunity to ask Karin Hill , Director, Single-family Program Development, US Department of Housing and Urban Development in Washington D.C.,  about the possibility of a hybrid program.  A hybrid reverse mortgage would allow the initial draw to be a fixed-rate and then remaining available funds left in a credit line that could potentially grow over time and future draws would have a variable interest rate much like a home equity line of credit. Karin commented it would likely be a good option and is under consideration.  Work is in progress to try and project the anticipated impact on the reserve fund and other details.  No timeline was indicated given that there are a lot of issues her office is working on ahead of the October 1st fiscal year.

Fixed Reverse Mortgages going away..

Written by Clay S. on . Posted in Uncategorized

adjustablefixed

..Not a bad thing

FHA has eliminated the standard fixed-rate HECM reverse mortgage, but older homeowners who use these mortgages – and the advisors and family members who assist them – will still have quality options to structure a reverse mortgage to fit their needs. A client I sat down with yesterday simply needed between $1,300 and $1,500 additional cash flow to supplement their monthly income.  The standard adjustable rate (HECM) reverse mortgage fit their needs perfectly.  The remaining funds remain in a credit line to be accessed only as future needs dictate. Rather than taking a lump sum, paying interest and mortgage insurance on the entire amount and then struggling to match that expense by investing the funds – they were able to meet their needs with the standard adjustable HECM. FHA and HUD have struggled with the projections of the FHA reserve fund for years in response to calculations in the fund that look out 30 years projecting home prices. As you can imagine that is very difficult to do and easy to be pessimistic in this market. The standard fixed-rate HECM puts a greater strain on the reserve fund because all funds were taken up front.  That creates the possibility not enough funds are set aside or available to meet future obligations, including homeowners insurance and property taxes. More changes are on the way making it important to discuss your needs and how those future changes may impact you. A reverse mortgage is not for everyone but can be a significant blessing when used properly.  Let’s talk.

Treasure Hunt! Part One

Written by Clay on . Posted in Uncategorized

Locating and being able to shut off utilities that are damaged in the event of an earthquake is important for the safety of your family.  This week I’ll show you how to  shut off your gas. Gas Meter – only shut off if you smell leaking natural gas … How to Shut Gas Off in an emergency Natural gas leaks and explosions are responsible for a significant number of fires following disasters. It is vital that all household members know how to shut off natural gas. If it is not clear to you how to shut off your gas at the meter, it is important to contact PG&E for guidance. Share the information with everyone in your household. Be sure not to actually turn off the gas when practicing the proper gas shut-off procedure. If you smell gas or hear a blowing or hissing noise, open a window and get everyone out quickly. Turn off the gas, using the outside main valve if you can, and call PG&E from a neighbor’s home. CAUTION – If you turn off the gas for any reason, a qualified professional must turn it back on. NEVER attempt to turn the gas back on yourself.