AMT in the News
We Contribute To
Search This Site
Reverse Mortgage Fees To Decrease Starting November 1
For seniors who are interested in getting a reverse mortgage, starting November 1 they will be able to access more money and pay lower fees thanks to housing legislation passed earlier this summer.
The vast majority of seniors age 62 or older (90%+) who get a reverse mortgage go through the FHA Home Equity Conversion Mortgage (HECM) program. Prior to November 1, seniors could borrow against the lesser of either their home’s value or a limit that ranges from $200,000 to $362,790, depending on location.
But effective November 1, the limit is slated to rise to $417,000 nationwide under the new rules which means that seniors will be able to access more of the equity in their home and turn it into cash.
Another benefit of the recent legislation changes is that seniors who borrow more than $200,000 will pay less in fees when going through the FHA HECM program. Homeowners currently pay a 2% origination fee on HECM reverse mortgages and under the new law, they will pay 2% on the first $200,000 and 1% on the rest with the total origination fees not to be more than $6,000.
Who is should consider a reverse mortgage?
According to Susan Wachter, a professor or real estate at the University of Pennsylvania’s Wharton School of Business:
“There is a niche household a reverse mortgage is exactly right for and that person knows they want to stay in their home until death, and they really need the cash to allow them to do so.”
60 Minutes: “How Much Danger Is Still Out There? We Don’t Really Know.”
60 minutes did a piece on Credit Default Swaps and explained at a high level how many of the “side bets” that happened since 2000 had a role in the financial problems of today.
Note the last part of the video when former SEC commissioner Harvey Goldschmid is asked at 12:01 of the video:
“How much danger is still out there?”
Mr. Goldschmid’s reply:
“We don’t know… We don’t really know.”
FHA Hope for Homeowners Program, Is It Real?
More and more people are contacting us asking about the newly-announced FHA Hope for Homeowners program and how to qualify, what will work and won’t work with the guidelines, etc.
The good news is that FHA has issued a few press releases about the program and we have some high-level guidelines to look at as we begin to work with people to help them get qualified.
The bad news is that many lenders and investors have not yet put their guidelines in place and so we caught in this cycle of “maybe this will work” but not knowing for sure and often times many lenders are not sure what they can and can’t do.
As a result, we have yet to *complete* an FHA Hope for Homeowners loan — although we have a few at various stages of the origination process.
Is the FHA Hope for Homeowners program real?
Yes, we think so.
Is Hope for Homeowners the right program for you?
Maybe, maybe not.
Many of the people we talk to may be able to realize more benefit from a short-refinance than they would benefit from a Hope for Homeowners loan and so we are working with lenders to do a short refinance when possible.
How does a short-refinance work?
Think short-sale except for rather than sell your home to someone else for less than you currently owe, you just refinance it and your current bank excepts less than you currently owe.
Short refinance, Hope for Homeowners, loan modification, short sales.
In today’s mortgage world, those are the three most common things that we seem to be talking with people about.
Which one is right for you?
It depends on things like whether you want to live in your home or just get rid of it. Or whether or not you are current on your house payment. Or who your current lender is. Or whether or not you currently could qualify for a new loan.
As always, we are available to share our experience and help you through the process.
New Fannie Mae Guideline: 85% Is New Maximum LTV For Cash-Out Refinances
If you are considering refinancing your primary or secondary home and turning some of your equity into cash, you want to seriously consider acting before December 13th of this year.
Why?
Because Fannie Mae has released some upcoming changes to it’s automated underwriting engine and the changes that are coming mean less cash in your pocket.
For primary residences, the new maximum loan-to-value will be reduced to 85% from 90% currently.
For second homes, the new maximum loan-to-value will be reduced to 75% - down from 80% currently.
This means if your primary home has an appraised value of $200,000 and you want to refinance it to get cash for any reason…
Before December 13 you can get up to $180,000.
After December 13, you can only get up to $170,000 — or $10,000 less than you could get if you act before the deadline.
Freddie Mac Tightens Underwriting Guidelines
Freddie Mac has announced a few changes in their underwriting standards and effective February 2, 2009 they will no longer be buying “Stated Income” mortgages at all. In addition to outlawing stated income loans, the new maximum debt-to-income ratio will be 45% and new minimum credit scores will be increased.
The bottom line of these recent changes?
- Be able to document your income.
- Plan on buying a home that you can afford.
- Pay your bills on time and keep an eye on your personal credit worthiness.
If you do these three things, you will be just fine when applying for a mortgage!
-
-
Arizona Mortgage Newsletter
