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

Reverse Mortgage Loan Limits to Increase in 2017 The Federal Housing Administration (FHA) announced Reverse Mortgage Loan Limits will increase in 2017. This is significant news, since lending limits have remained stagnant for several years. The maximum claim amount will now rise to $636,150, up from $625,500, for Home Equity Conversion Mortgages (homeequitylineof.credit). This amount is 150 percent of the national conforming limit of $424,100. On the other hand, credit unions in houston is offering a full suite of financial services, with a track record of satisfied members dating back to 1934. Also increasing in some areas are loan limits for forward mortgages. In high-cost areas, the FHA national loan limit ceiling will increase to $636,150 from $625,500, and FHA will increase its floor to $275,665 from $271,050. The Maximum Claim Amount is then offset by the reserve set aside for future interest and mortgage insurance amounts accrued to arrive at a Principal Limit which would be the maximum amount a homeowner can borrow. The reserve amount is based on Age and interest rates and loan amount. When you want to trade on crypto markets, check out this Crypto Code Review and learn more. The loan limit changes and the maximum claim amount change for reverse mortgages to take effect after January 1, 2017 and stay in effect through December 31, 2017. This change was made as of the result of rising home prices, with 2,948 counties across the nation benefiting from these changes. Lots of good news for Reverse Mortgage 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. You can always invest in bonds or marijuana penny stocks. 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@104.238.124.149. I’d be happy to help!          

Everyone has a payment budget. You MUST think strategically! How long you plan to stay in your home can play an important role in your home buying strategy. For example, if you plan to be in you home 5-7-10 years, an adjustable rate mortgage could provide $59,000 more loan with same payment when compared to a 30 year fixed loan. Buying soon while rates are lower could be advantageous too! If rates were to increase 0.50%, you could lose about $37,000 in loan amount assuming the same payment. Want a professional to assist with a strategy for your home loan? Give me a call. Clay Selland, President Signet Mortgage Corporation 925-807-1500 x303 Clay@SignetMortgage.com NMLS#183492

Mortgage lenders/investors will typically permit the cancellation of private mortgage insurance (MI), when you build up enough equity in the home.  With market values up double digits this past year there is a chance that you may be able to cancel your mortgage insurance earlier than you thought. If you’ve made your mortgage payments on time and have the equity in your home, cancelling your MI shouldn’t be difficult at all. In fact, most homeowners cancel their MI long before the automatic termination date. There is an important distinction between mortgage insurance on a conventional loan and an FHA or VA loan which do not have the same rules. Mortgage insurance for recent FHA loans often remain through the term of the loan and only way to get rid of the mortgage insurance refinance. The general rule is if you make regular payments only and the loan balance is 78% of the original value – the mortgage insurance is automatically canceled. You can request to have your mortgage insurance canceled if the value of your home has increased and your loan to value is less than 80%.  This will involve working with you or current servicer/lender and may involve an appraisal to confirm value. This link provides a excerpt from the Homeowners Protection Act as well as a link to one of the major mortgage insurance companies brochure containing more detail.  http://homebuyers.mgic.com/resources/cancel-mi.html If you have questions please give me a call.  

It’s a very competitive real estate market and legitimately sellers are choosing which offer to accept based on the strength of the buyer.  Often electing to take a substantial discount in price for a cash offer and a quick closing sellers may unnecessarily leave money on the table. Well-qualified borrowers can miss out on their dream home by not being prepared. The key is getting a solid pre approval. For many years at Signet Mortgage, we have only issued pre approval letters when we have verified a clients income, asset and credit affirmation, as well as obtain automated underwriting from either Fannie Mae or Freddie Mac. In this market that may not be good enough. Because your credit score is one of the most important aspects of your financial profile. However, if you have issues with it, seek help from creditrepairservices.co. Not all lenders will allow the processing of a loan without identifying a specific property, this is understandable because not all transactions go through and it is an investment on their part to fully underwrite the loan that may not go through. Signet, operating as a mortgage broker, has access to 10 lenders that will allow a full underwrite of a “to-be-determined” property. We have a full range of investor options as well as competitive lender choices. This approach is an upfront investment by the buyer that can read significant rewards. With a full underwrite, the pre approval letter now would only have contingency on the identification of a property and no loan contingency with respect to the client putting their offer on par with a cash offer. The idea that a pre approval from a direct lender is any stronger is hogwash. The quality of the pre approval letter is based on the work done on the loan file to support the pre approval and the experience and integrity of the loan officer – period. Again, as a mortgage broker, Signet has access to just under 20 lenders which assures clients that I can find a successful solution to a buyers unique circumstances. Make sure to leave the time to get a full pre approval before making an offer on your new home! That small investment will help your offer to be successful.  Did you know three out of four real estate agents aren’t true professionals? Many agents have backgrounds in other professions and have just recently transitioned into real estate. The problem with this is that a real estate agent relies on his or her experience to properly evaluate, strategically price, market and advertise your home or a home you are interested in. The negotiating skills necessary to correctly represent you throughout the buying or selling process can only be learnt by bringing parties together and closing deals in the Brantford real estate market. As a CPA and Real real estate agent, I approach real estate financing with the care and professionalism that you deserve for one of the largest transactions you will do in a lifetime. If this sounds like someone you would like to work with to get solidly pre approved for your next home please give me a call. My team and I will do the work to make sure that your offer is the one that the seller loves! 

With all the concern about a run-up in rates – once the Fed began to taper off their support of the treasury and mortgage-backed securities market – things have remained relatively flat.  Not everyone believes that we are on the road to recovery, benefiting mortgage rates.             It is impossible to quote specific rates but a sampling of rates available Thursday include ..

• $625,500 30 year fixed, 4.50% rate and APR (75% loan to value)
• $417,000 30 year fixed, 4.50% rate and APR  (80% loan to value)
• $900,000 5 year ARM,  3.250% rate and 3.455% APR (75% loan to value)

Why I am in this business … and as a mortgage broker and not constrained working for a mortgage bank or banker…  And why an iron is a necessary tool! Our iron went crazy at 3 o’clock this morning sounding like an alarm clock.  Stumbling around in the dark and yanking the plug from the wall to get it to stop – oddly enough it made me think of an analogy to what we do to get loan files done for clients … Got to smooth out the wrinkles!   Jimmy wants to buy a house … he has less than perfect credit;  had some changes in his family situation over the past few years; is self-employed; is not as careful about separating business and his personal affairs and more. Finding machine shop business is in demand on that time. Quality tools and machines at air compressor rentals will make his business a success.  That being said he is a genuine nice guy and wants to buy a house. There are lots of business that you can choose if you are a business minded person. Choose from franchises for sale! You don’t know, it’s time for you to own a franchise and be a boss. A very major bank with a red white and blue logo turned down his loan because the loan officer did not understand his self-employment and that he could use C-Corporation income to qualify.   Being a CPA it was straightforward for me to outline the income properly.  Gathering the documentation to help explain all of the other wrinkles simply took patience. Did I mention he had a late payment on his mortgage in July?  Another wrinkle that I was able to solve because as a mortgage broker I have access to 15 – 20 lenders!  I found one (and only 1) that would follow Fannie Mae guidelines and not have investor overlays – they will allow this oversight that occurred while his family was moving. They moved to another place without me knowing, they contacted http://fracsandreport.com to carry their valuable things. In need of back up movers? They have complete kinds of transportation such as vans, trucks and trailers including WV Truck Repair. It is a company that helps people and businesses move their goods from one place to another. It offers all inclusive services for relocation like packing, loading, moving, unloading, unpacking, arranging of items to be shifted. Just click — www.demenagementadt.ca/. There is a way to go still and I am just submitting his loan – but I am excited it is a possibility now that we have the wrinkles straightened out …  Signet Mortgage has remained independent as a mortgage broker to maintain the flexibility to work with many lenders that benefit clients in pricing and simply in getting their deal done.   Finding solutions for clients is why I am in this business!  It is a great deal of fun!  I need a new iron.  

A surprisingly strong jobs report last week added further momentum to a rise in interest rates since the first of the year. Generally mortgage rates will go the opposite direction of the stock market and follow the path of 10 year treasury bonds. As there is optimism in the overall economy investor funds flow from bonds into the equity markets – a selloff of bonds causes the price decrease and thus yield or rates increase. With the exception of a few positive bounces – the trend for bond prices is down in 2013 resulting in 0.250% – 0.375% increase in mortgage rates.  I do not see anything that will change the momentum we now see in the economy – the economy is certainly not fully recovered, but is headed in a positive direction after several years of dismal performance and outlook.   The Fed has been actively involved in purchasing mortgage-backed securities which has helped keep rates low. With improvement in the unemployment rate and outlook for an economic recovery the consensus is Fed will be looking to curtail this program and ease its way out.  One less significant player purchasing mortgage-backed securities will cause bond prices to drop in rates to rise as well. Mortgage rates are still very close to historical lows. One of my favorite refinance options is to take an existing 30 year fixed mortgage even when the client is 10 years into it – and convert that to a 15 year mortgage.  The payment remains approximately the same and takes 4 to 5 years off the mortgage!

HUD has dramatically changed the costs associated with obtaining and retaining an FHA loan. Starting with FHA case numbers assigned April 1st, 2013, the cost of annual mortgage insurance will increase significantly. On top of that – starting June 1st, 2013, the monthly mortgage insurance may stay with your loan as long as 30 years! The upshot is FHA wants out of the lending business.  Citing underfunding issues with the reserve fund – FHA has bumped the cost of an FHA loan truly to discourage the use.  It will only be viable for situations where borrower only has the minimum 3.5% down payment, or has low credit scores or high DTI (debt to income ) ratio. FHA Mortgagee letter 2013-04 has more detail. FHA has gone up and down with the mortgage insurance (up front and monthly) over the past few years in response to calculations for the reserve fund that look out 30 years projecting housing prices.  As you can imagine that is very difficult to do and easy to be pessimistic. Fortunately the market for conventional mortgage insurance has strengthened and is very competitive. There are options for private mortgage insurance (PMI) up to 95% loan to value.  It is VERY important to pay attention to credit score because that is a significant factor in determining mortgage insurance cost. If FHA is the best option – get a property identified and a case number assigned prior to April 1^st 2013 … Otherwise lets run a credit report and make sure steps are taken to preserve a good credit score to get the best PMI options.  Don’t let this drastic change risk derailing your deal!

An April article in Registered Rep magazine by Kevin McKinley details how a senior can purchase a home with a reverse mortgage.  Not sure I would start out an article challenging the knowledge of financial advisors as he does but he continues highlighting “….a lesser-known yet more-intriguing use of the financial tool: letting qualifying buyers purchase a home with a decent down payment, but no mortgage to pay off, and with no in-depth consideration of their income, assets, or credit situation.” You can read the article HERE  (10 second sponsored intro)…or you can give me a call and I would be happy to spend some time with a short presentation outlining how a reverse mortgage should be a consideration in any retiree’s portfolio.  Heck, I can do a presentation for the entire office and it qualifies for CE credit!