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Three Tips to Ensure That a Reverse Mortgage Makes Sense for Your Financial Situation

April 14, 2016 by David Bailey

Three Tips to Ensure That a Reverse Mortgage Makes Sense for Your Financial SituationIf you’re having financial troubles, or if you need to free up a large sum in a short period of time, a reverse mortgage is a great way to get the money you need without having to take on new debt or make monthly payments. When you apply for a reverse mortgage – also known as a home equity conversion mortgage – you’re essentially borrowing money from the equity you’ve built up in your house. The great advantages of a reverse mortgage are that you don’t need to make any loan payments until you decide to move out of the house and that in spite of the interest rates attached, you’ll never owe more than the value of your home.

However, there are tight restrictions and requirements with respect to who can get a reverse mortgage and what needs to be done before you receive any money. In order to qualify, you must meet an age requrement and the property must be your primary residence. You also can’t owe more money on the property than it is worth.

So how can you tell if a reverse mortgage is a good solution for you? Here are three factors you’ll want to consider.

Will You Use The Money Responsibly?

In general, the high-cost, high-risk nature of a reverse mortgage makes it ideal for people who are having trouble meeting their everyday living expenses. That means you’ll need to ensure you use the money responsibly. Good uses of reverse mortgage funds include paying living expenses and medical costs when no other options are available, and paying for emergency care after a serious injury if you’re uninsured.

Have You Exhausted All Other Avenues?

A reverse mortgage can have significant upfront costs. The fees may be higher than other loans, which means even if you don’t actually use any of the credit you obtain through a reverse mortgage, you’ll still may be paying a large sum out of pocket. Furthermore, your lender has the authority to recall the loan if you let your home insurance expire, if you fall behind on your property taxes or home maintenance, or if you spend a full year in an assisted living facility.

These risk factors mean that a reverse mortgage is typically best used as a last resort. If you have other options – for instance, if you have stocks or investments you can cash out, or if you can sell your home to your children and then rent it back from them – you’re better off going down another route. But if you’ve already exhausted all other options, a reverse mortgage may make sense.

Are You Planning To Stay In Your Home For The Foreseeable Future?

A reverse mortgage generally works best for people who intend to stay in their homes for several years. When you get a reverse mortgage, you’ll need to take out insurance to protect against the possibility of your loan balance growing beyond your property value. That means you’ll need to pay monthly insurance premiums – and if you only plan to stay in your home for a short period of time before selling, it’s very unlikely that your loan balance will grow beyond the value of your home.

A reverse mortgage can be a convenient way to access emergency cash reserves – and when used responsibly, it’s a great tool that can help you to help you with otherwise unmanageable expenses. However, reverse mortgages can also be risky and complicated – and you’ll want to consult a professional before applying for one. Call your local mortgage expert to learn more about whether a reverse mortgage is right for you.

Home Mortgage Tips Tagged: Home Mortgage Tips, Mortgages, Reverse Mortgages

Selling Your Half of a Jointly-owned Home? Here’s What You Need to Know

April 13, 2016 by David Bailey

Selling Your Half of a Jointly-owned Home? Here's What You Need to Know

There are many factors to consider when it comes to selling your home, and if you own your home with someone else the details involved can be even more confusing. If you’re wading into your co-ownership options and are curious about your next steps, here’s a short list of some things to think about.

Buyout: Selling Your Half

If you own your home with a friend, family member or former partner who would like to keep the property, the first thing you’ll want to do is contact an appraiser who will provide you with the market value of your home. Once you know this amount, you can discuss it with your co-owner and decide on the amount they can pay you for a buyout. While some co-owners will decide to get a loan and pay a lump sum, they may also want to schedule monthly payments until the buyout amount is completely paid off.

Partition Sale: Leave It To Legal

In the event that both you and the co-owner of your home would like to get rid of your property without any fuss, you have the option of a partition sale which means that the court will take care of your property sale for you. Once this occurs and any fees are paid, the total purchase price that is made from the home will be divided between the co-owners and the property will no longer be an issue for either party. If one owner has invested more into the home, it’s possible that one party may benefit more than the other.

Voluntary Sale: Coming To An Agreement

There are many situations involving property and personal possessions where the fence cannot be mended, but in the event that you want to sell your portion of a property it is in your best interest to sell together. While a partition sale provides the opportunity to get the property off the co-owner’s hands quickly, there’s a good chance that some of the money earned will be caught up in legal fees. If you’re able to come to an understanding, you may both reap a larger sum.

Whether you’re moving on to the next chapter of your life or experiencing a settlement, there are many available options for selling a home that is co-owned. If you’re considering options for your co-owned home, please contact one your trusted mortgage professional for more information.

Home Seller Tips Tagged: Home Seller Tips, Jointly-Owned Home Selling, Selling A Home

Key Questions to Ask Yourself Before Deciding to Refinance Your Mortgage

April 12, 2016 by David Bailey

Key Questions to Ask Yourself Before Deciding to Refinance Your MortgageIf you’re looking to reduce your interest payments or get more favorable loan terms, there are lots of ways you can change your mortgage. But one of the most effective ways to take advantage of low interest rates is with a mortgage refinance. That said, refinancing typically comes with a variety of costs and may not be a good solution or all homeowners.

So how can you tell whether it’s a good idea to refinance your home? Here are three questions you need to ask yourself if you want to find out.

How Much Equity Do I Have?

If you have less than 20 percent equity in your home, your lender can require you to get private mortgage insurance. While refinancing could get you a lower interest rate and better terms, extra PMI costs will usually devour any savings you may have had. Before you decide to refinance your mortgage, determine how much equity you have in your home and how close you are to the 20 percent mark – if you can pay down enough of the balance to drop your PMI, refinancing may be a viable option.

How Long Do I Plan To Live Here?

When you refinance your home, you’ll pay administrative costs ranging from 3 to 6 percent of the loan’s value. You’ll need to do some calculations to determine your break-even point – the point in time when the money you save from a lower interest rate is equal to the amount of money you paid in administrative costs. If you’re close to paying off your entire mortgage or if you plan to move before you hit the break-even point, a refinance will only cost you money.

Is It A Good Time To Refinance?

Refinancing creates a new loan based on your home’s current value – and if your home has increased in value since you bought it, you can cash out your equity. However, refinancing may also lose you money. For example, if you have $300,000 worth of equity in a $750,000 home, refinancing allows you to cash out your $300,000.

But if your property value has decreased in recent years – for instance, if it’s dropped to $500,000 – then a refinance can change your equity status. Equity is your home’s current value minus your remaining loan balance. If you owe $450,000 and your property value drops to $500,000, then your equity is only $50,000 instead of the $300,000 you had before.

The key lesson? Always check market conditions before refinancing a home.

Refinancing is a complex issue with a variety of nuances. That’s why it pays to consult your local mortgage professional to learn whether a refinance is right for you.

Home Mortgage Tips Tagged: Home Mortgage Tips, Mortgage Tips, Refinancing Mortgage

What’s Ahead For Mortgage Rates This Week – April 11, 2016

April 11, 2016 by David Bailey

What’s Ahead For Mortgage Rates This Week – April 11, 2016Last week’s economic news included minutes of the most recent Federal Open Market Committee (FOMC) meeting. Weekly reports on mortgage rates and new jobless claims were also released.

FOMC Minutes Indicate Fed Not Pressing Rate Increases

Minutes of the FOMC meeting held March 15 and 16 suggest that FOMC members are easing their enthusiasm for raising the target federal funds rate. In recent months, the committee has indicated that it was leaning toward raising rates on a slow but steady pace. Ongoing concerns over changing global economic and financial conditions contributed to FOMC’s decision not to raise the key federal funds rate. Low energy prices continue to cause U.S. inflation to stay below the Fed’s goal of two percent, which suggests that the economy is not recovering as fast as originally expected.

Labor markets continued to improve as the national unemployment rate held steady at 4.90 percent in February. FOMC noted that the labor force participation rate and employment to population ratio increased. The four-week moving average of new jobless claims fell in March after increasing in February. These readings support continued expansion of labor markets.

Housing markets and household spending improved. Committee members characterized developments in labor and housing markets as “broadly consistent” with earlier expectations. Some housing markets connected with energy production weakened. FOMC members elected to maintain the target federal funds rate at a range of 0.25 to 0.50 percent. Global financial and economic developments were cited as contributing to the Committee’s decision not to raise its target rate.

Mortgage Rates, Weekly Jobless Claims Lower

Mortgage rates fell across the board last week. According to Freddie Mac’s weekly survey of mortgage rates, the average rate for a 30-year fixed rate mortgage dropped to 3.59 percent from the previous week’s reading of 3.71 percent. The average rate for a 15-year fixed rate mortgage dropped 10 basis points to 2.88 percent; the average rate for a 5/1 adjustable rate mortgage dropped to 2.82 percent from 2.90 percent. Average discount points held steady at 0.50, 0.40 and 0.50 percent respectively. Last week’s mortgage rates were the lowest in 14 months.

Analysts said this news was positive in the sense that lower rates make mortgages more affordable, but more home buyers entering the market would further increase demand for homes. Low inventories of homes and high demand have fueled higher home prices in many areas.

Weekly jobless claims fell to 267,000 new claims against expectations of 268,000 new claims and the prior week’s reading of 276,000 new jobless claims. New jobless claims remained below the benchmark of 300,000 new claims for the 57th consecutive week.

What’s Ahead This Week

This week’s scheduled economic news releases include retail sales, the Fed’s Beige Book report, the consumer price index and core consumer price index. Weekly jobless claims and Freddie Mac’s mortgage rates report will be released as usual on Thursday.

Financial Reports Tagged: Financial Reports, Mortgage Rates, Unemployment

Can You Refinance into a VA Mortgage from Another Type of Mortgage? Yes, If You Qualify

April 8, 2016 by David Bailey

Can You Refinance into a VA Mortgage from Another Type of Mortgage? Yes - if You Qualify VA mortgages stand out as one of the biggest benefits to men and women serving in the military. Although private lenders make the loan, the Department of Veterans Affairs guarantees all VA mortgages, which is why these loans come with favorable terms and benefits not found with other mortgage types.

The Benefits Of Refinancing To A VA Mortgage

A VA loan may very well be the borrower’s only option for putting no money down, as many lenders will cover 100% of the value of the home, thanks to the backing of Veterans Affairs. There is a ceiling on the amount covered depending on the area of the country, so contacting a qualified VA mortgage professional is the preferred way to discover limits locally.

VA loans also require no mortgage insurance, cover many of the costs associated with closing or refinancing and, in many cases, have lower mortgage rates than comparable loans.

Veterans who had never considered a VA mortgage may wish to take advantage of the flexible terms and the favorable market to refinance their current mortgage into one that offers tremendous benefits.

Qualifying For A VA Mortgage

Veterans Affairs mortgages are limited to service men and women and their spouses, a benefit for serving their country. After a set amount of service time veterans are able to apply for a certificate of eligibility that will allow them to apply for the loan.

Those who are eligible include most military members in active duty, members of the National Guard, veterans both discharged and retired, military academy cadets as well as any spouse of a deceased serviceperson.

Eligible Homeowners Can Refinance Through Cash-Out Refinancing

The Department of Veterans Affairs considers a conventional mortgage to VA mortgage refinancing to be the same as cash-out refinancing and treats it accordingly.

This process is as intensive as an initial mortgage because it will replace the current mortgage altogether, so all applicants are expected to go through the standard credit and underwriting process.

VA loans are incredibly beneficial to current military members as well as retired veterans who may have never considered taking advantage of the program. Although the mortgage can cover 100% of the value of a home, the actual amount varies depending on the area. The only way to know for sure how much will be covered and whether it’s the right time to refinance is to contact a mortgage professional who has experience with VA mortgages.

Home Mortgage Tips Tagged: Home Mortgage Tips, Mortgage Refinancing, Mortgages

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