Icon

Refinancing advise

Question/Scenario:

We currently have a 20/80, 30yr fixed loan. Together the rate is about 7.5%. We still owe over 270,000 on the loan. Would it be wise for us to refinance?

Continue reading Refinancing advise

When Should I Refinance?

Generally speaking, if you can earn the refinancing costs (normally 1%-3% of the loan value) back within two to three years, and it’s a home you’re prepared to stay in for much longer than that,it’s usually a good option to refinance your mortgage. From a risk perspective if you have an adjustable rate mortgage, refinancing to a low 30 year fixed rate may also be a good idea because it will ensure your repayments never skyrocket and place you under financial duress.

Also, never blindly trust mortgage brokers who will give you life-of-loan refinance savings calculations that may not factor in the taxation implications (mortgage interest is tax deductible). Also, consider the opportunity cost of refinancing.

Refinancing Home Loans

Could you make more by putting that money into other investments? You can search on-line for a number of refinancing calculators and do the numbers based on your own personal situation. So do your homework before looking to refinance and like any financial product or service always shop around to get the lowest fees and best rates. Should I Refinance My Home?

Housing Market Predictions

Are you still considering investing in real estate or are you just curious as to the state of your home’s market value in the near term? We admit that these days it’s hard to know where the market is headed. Some people will predict the value of property to go up only to see them come tumbling down again the next week. Some days we see an optimistic surge, some days we don’t. So what is really going to happen now? Continue reading Housing Market Predictions

Disadvantages of Reverse Mortgages

As defined in the previous post, reverse mortgages are loans converted from home equity that you won’t have to pay back until you die or move out. It is a means of a way out for cash-strapped seniors to get some needed cash. But with the real estate market falling, these loans are risky proposals to borrowers right now.
Continue reading Disadvantages of Reverse Mortgages

Federal Reverse Mortgages

FEDERAL REVERSE MORTGAGE:

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA’s HECM provides these benefits. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

Refinance Home Loan

2. Can I qualify for FHA’s HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are further required to receive consumer information from an approved HECM counselor prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on (800) 569-4287 for the name and telephone number of a HUD-approved counseling agency and a list of FHA-approved lenders within your area.

3. Can I apply if I didn’t buy my present house with FHA mortgage insurance?

Yes. It doesn’t matter if you didn’t buy it with an FHA-insured mortgage. Your new FHA HECM will be FHA-insured.

4. What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 1-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible. Should I Refinance My Home?

5.

What’s the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You don’t make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you “missed your mortgage payment.”

6.

Can the lender take my home away if I outlive the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.

7. Will I still have an estate that I can leave to my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

8. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

9. Should I use an estate planning service to find a reverse mortgage?

FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HUD-approved housing counseling agencies are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders.

10. How do I receive my payments?

You have five options:

  • Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
  • Term – equal monthly payments for a fixed period of months selected.
  • Line of Credit – unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
  • Modified Tenure – combination of line of credit with monthly payments for as long as you remain in the home.
  • Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Interesting bits

Latest from the News

Read the news carefully today. You never know what you're gonna get. For recommended reading materials on mortgages and refinance aspects and how to fix your deeds or just plain news on real estate, check out the new york times online. It's a very good source of information.