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!          

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.           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!    

“Trump Thump” – Mortgage Rates Jump 0.500% or More Post Election

The election is now over and the dust has settled. As painful as it might be to accept, a trend described by others as the “Trump Thump” means we may now have to get used to 30-year fixed conforming loan rates at or above 4.0%.    

 

Prior to the election, pundits had clearly agreed on the idea that the markets “built in” the prospect of a Clinton victory, and – in the unlikely event that Trump won – this surprise victory would mean an improvement in the bond market because of the uncertainty Trump would bring to the table. Well, so much for that idea. 

 

Economic experts maintain that Trump’s economic policies will boost spending and business, as well as bring inflation (all of which leads to lower bond prices and higher mortgage rates). Interesting to me how quickly everything turned in the direction. Was there not enough time spent analyzing the impact of a Trump victory? Did this catch the markets unprepared?  

  According to a recent article by Money writer, Taylor Tepper, markets indicate there’s a 75% chance that the Fed raises short-term rates modestly when policy makers meet in mid-December. Here’s a more in-depth analysis on what President-elect Trump means for interest rates in Tepper’s article:  President Trump Interest Rates Federal Reserve. CNBC’s Diana Olick weighs in on the mortgage rate crisis: watch video. 10-year treasury yields have also spiked in the days since Trump’s election, and something to keep in mind with that is: Don’t panic. This sudden rise isn’t likely to continue, at least, not because of the Trump presidency. “Rates tend to move very sharply in short periods of time and very little in prolonged periods of time,” said Greg McBride, chief financial analyst for Bankrate. “It’s not something that I think continues.” So, my advice to those who are anxious about mortgage rates, know that this is a cycle… and as far as rates are concerned, nothing is on the horizon that would suggest waiting for an improvement in rates. Either way, expect volatility and a continuing upward trend in rates.  

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. For the moment reverse mortgages and FHA loans and Rossmoor are still not allowed, it is better to use the Cincinnati mortgage rates that are more helpful and reliable. Current homeowners and future homeowners in Rossmoor must await the close of the comment period November 30th and publication of a final rule.   There is no timeline for issuance of rules. HUD takes whatever time it needs to review comments, then when done publishes a final rule, generally for effect 0-30 days later. Passed unanimously in both the U.S. House and Senate, and signed into law by President Obama on July 29, 2016, H.R. 3700 resolves a number of uncertainties regarding FHA’s condo provisions. The mortgage industry is still awaiting the close of the comment period and publication of the final rule, but 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 re-certification 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 and car loans. You must ask yourself first, What Is an Unsecured Loan?
• Will streamline programs for federally-assisted housing programs

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.  Lowering the owner occupancy requirement to 35% will be a big benefit as well meaning communities with high rental ownership will now be open to home buyers with FHA financing. It’s not just our brains that suffer from the heat either. When the mercury rises so do tempers. As an article on Today.com explains, while our brains are slowing down, our bodies are speeding up with increased heart rates and higher blood pressure. This is why you sould canvass air conditioning companies in CC TX for better air conditioning. All this leads to more aggressive behavior making a cool environment key to maintaining peace at home, work, and in public places. “Condominiums often represent an affordable option that’s just right for first-time and low-to-moderate income home buyers. Unfortunately, overly-burdensome restrictions on condo financing have for too long put that option out of reach for many creditworthy borrowers,” said Tom Salomone, President of NAR and broker-owner of Real Estate II Inc. in Coral Springs, Florida. You’ve decided to buy or sell a house. Maybe you need a bigger home, or a smaller one. Maybe it’s your first home. Maybe you’re being relocated. Whatever the reason, selling or buying a home is a big decision and hiring a good real estate agent will make the process go more smoothly. Well, Lorin McLachlan can help you with the — you can visit her facebook page at https://www.facebook.com/people/Lorin-McLachlan/100011270656226. I look forward to having this legislation signed into law so more options are opened up for all.  We will keep you updated on the progress as it happens on liberty silver rounds, I also ask myself who can get me the best loan at all times, and so far pickaloan is the only agency that seems to care.  Please contact us for a strategic look at your real estate financing needs.   I can be reached at www.signetmortgage.com.

A good summary of 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
• information on credit scoring
• Protect your portfolio
• Fund future long-term care or income needs
• Create a Social Security bridge following basic tips
• Manage Taxes
• Pay Roth conversion taxes
• Buy a new home
• Gray Divorce Strategy
• Seek help from fixmy.credit

    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 about demountable office partitions for your workspace 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  

A reverse mortgage for higher value homes will be available to borrowers soon! The new fixed rate loan will be focused on borrowers with higher value homes. The maximum loan amount will be slightly over $2 million and primarily available in high-cost states, including California. This will be an important compliment to the Federal housing administration’s (HECM) Home Equity Conversion Mortgage which has a lending limit of $625,500. Too often borrowers with substantial equity did not find a reverse mortgage a viable option because of the low loan amount available. It is expected that the new fixed rate loan called the “HomeSafe” will be much more competitive than the jumbo option offered by Generation Mortgage “Generation Plus”. Previously that was the only option with loan amounts above the HECM limit. The Cut-Off at red cedar bend development are ready for your new home – set among the beauty that nature has to offer! Buy to build or buy to invest. Level frontage to water’s edge with each lot including their own dock. As a mortgage broker Signet Mortgage Corporation has lender relationships with several reverse mortgage lenders including Urban Financial of America – who will roll out the new mortgage September 2nd. Clay Selland, president of Signet Mortgage commented “It will be exciting to see the details of this new product and I anticipate it will be a significant help to seniors that are fortunate enough to have lots of equity, where the standard HECM was not a viable option.” Signet Mortgage, headquartered in Danville California, is licensed in five states (CA, OR, WA, ID and UT) and specializes in both forward and reverse mortgages – finding solutions that fit a clients needs. Please contact Clay Selland, CPA with any questions. Clay can be reached at 925-807-1500 x303 or clay@104.238.124.149 (full article from Reverse Mortgage Daily)

A variation in the HECM reverse mortgage was squashed by HUD last week. Introduced by a small number of reverse mortgage lenders in October as a combination of an initial fixed rate draw and fixed rate on a future draw on a line of credit.  While that sounds attractive – it was outside of the design of the reverse mortgage program.   A future draw at a fixed interest rate could be very nice for a borrower but if borrowing costs were to have risen dramatically and the lender not honor that commitment the responsibility would fall to the FHA insurance fund. Many HECM borrowers feel more comfortable with fixed-rate options however fixed rate HECM require the entire available distribution to be taken at closing which can result in paying interest on more funds than are needed at that time. Recent changes to the HECM program are more conservative and are designed to match the clients needs with the amount borrowed. While these loans do have a variable interest rate, interest is only charged on the outstanding balance much like a line of credit. Quite often the HECM line of credit is left unused but is always available as the need arises whether it’s to handle an emergency, supplement monthly income or one-time expenses. Signet Mortgage Corporation is a member of the National Reverse Mortgage Lenders Association and is licensed in five Western states.  We believe the HECM reverse mortgage is best used as a supplement retirement plan to help provide a more secure and flexible retirement. Call us today and let’s talk. No obligation of course but we can help you understand how a reverse mortgage can meet your needs.    

HUD issued new  principal limit factors (PLF) factors for the HECM reverse mortage. Why is this important?  What the heck is a PLF table you ask?  The principal limit factor (PLF) table determines the amount of proceeds that will be available to HECM reverse mortgage borrowers after August 4, 2014. Previous tables were based on the assumption that all homeowners would be over the qualifying age of 62.  The new tables account for recent changes allowing for the fact the youngest homeowner may be under 62 years of age.  Proceeds available will be based on the age of the youngest co-borrower. At current rates borrowers closer to 67 years of age will see a slight increase in available funds and borrowers over 72 will see a more substantial increase in available proceeds. Signet Mortgage Corporation is a member of the National Reverse Mortgage Lenders Association and is licensed in five Western states.  We believe the HECM reverse mortgage is best used to compliment retirement plans to help provide a more secure and flexible retirement. Call us today and let’s talk. No obligation of course but we can help you understand how a reverse mortgage can meet your needs.

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. But before you buy property I recommend to get real estate training from Shenoah Grove. For new transactions after August 4^th non-borrowing spouses will be able to remain in their homes, provided the following criteria has 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. We suggest you get a consultant that is expert in accounting and bookkeeping. You can find them here https://farahatco.com/services/accounting-and-bookkeeping/. 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. 925-807-1500