Reverse Mortgage Strategies

REVERSE MORTGAGES

Reverse Mortgages are a great way for Seniors to do one or two things.

1) Eliminate their monthly mortgage payment

2) Access Equity from their home without a payment

But what would the reasons behind this decision be.  There are a few:

Need - some seniors need to do a reverse morgage to access cash for one-time or monthly expenses or to eliminate the expense of a monthly mortgage payment.

Desire - some seniors use equity in their home via a reverse mortgage without a payment to purchase a second home or R.V., join a country club, etc.

Legacy - some seniors help children/grandchildren, churches, alma maters or other beneficiaries immediately, instead of waiting until their death.

Whatever the motivation, Reverse Mortgages are Government-backed, well-defined and available to Seniors regardless of their age, income level, credit or debt.  This is because payments are not required.   And getting one now is a great time while rates are so low.  Reverse mortgages are for owner occupied properties only and there must be equity of approximately 40% or more, depending on age.

Call me if you have questions or concerns for yourself or your parents.  Inquiries form Financial Planners, Attorneys, CPAs and other advisors are welcomed.


Brent Wood
702-629-9555
bwood@allwestern.com

Mortgage Insurance - why or why not?

Mortgage Insurance - why or why not?

Let's start by defining what Mortgage Insurance is all about.  Mortgage Insurance is charged to a borrower, so if the loan must be foreclosed, the lender will be compensated for their loss.  Only loans with a downpayment of less than 20% are required to have Mortgage Insurance.

Mortgage Insurance can vary from about 1.0% to 1.25%.  Some types of policies (i.e. FHA) have upfront mortgage insurance of about 1.75%.  Here is an example:

FHA Example

$250,000     Home Purchase
$    8,750     3.5% Down Payment
$    4,250     1.75 Up Front Mortgage Insurance
$    4,000     Closing Costs and Prepaid Finance Charges
------------
$240,000 Loan Amount

$1,044.50     30 year fixed Principal & Interest Payment @ 3.25%
$     70.00     Homeowners Insurance
$   150.00     Property Taxes
$   250.00     Morgage Insurance
------------
$1,514.50     Total


But now there are programs that build the Mortgage Insurance into the rate.

Conventional Example

$250,000       Home Purchase
$  12,500      5% Down Payment
$    4,000      Closing Costs and Prepaid Finance Charges
------------
$237,500  Loan Amount

$1,168.36     30 year fixed Principal & Interest Payment @ 4.25%
$       70.00     Homeowners Insurance
$     150.00     Property Taxes
------------ 
$1,388.36       Total

So, even with a higher rate, the payment is lower for Conventional Loans with built in Mortgage Insurance.  But, with Mortgage Insurance NOT built-in, the Mortgage Insurance can be eliminted with enough equity built from appreciation (20-25%) after five years.

There are a lot of factors to consider when choosing Mortgage Insurance products or built-in alternatives.  Please contact me anytime to discuss your particular circumstance.

Brent A. Wood
All Western Mortgage
702 629 9555
bwood@allwestern.com


   

Real Estate Bounce - as predicted?

As is typical of Real Estate and Mortgage "types" in the Las Vegas market, over the last few years I have had many conversations with colleagues about How, When and Why the Real Estate market will recover. 

Last weekend I took a couple of days to go camp on the California coastline to do some bodyboarding with my two sons and a group of friends.  I sat offshore a bit and waited for the next "Set" to roll in, hoping to be in the right position to have a great ride.  At first it was a guess, but then I got the feel.  I could see a swell on the horizon and then I could feel the water receding to meet it. 

Most of my colleagues guessed that the "recovery" would be flat for years and then take decades to recover.  Many Investors and would be homeowners waited on the sidelines.  This present boom caught all of them off-guard.  I kept saying we would have more a bounce than slow growth, probably a 25%-35% bounce over a short period (like 24-30 months).  I was alone in that prognostication, but the recent boom could go either way.   We will know soon enough who was right. 

But, why did I say that we would bounce of the bottom so far?  Well, the first reason is that rents vs. mortgage payments are far out of equilibrium.  What I mean is that in a normal market, it costs about 10% to 20% more for mortgage payments (to own a home) rather than rent it.  At this point, mortgage payments are 25% less than rent payments on a comparable home.  Additionally, investors can easily earn 10% to 20% Return on Investment based on the current rents and property values.  That is much higher than a stable market which typically earns about 8%. 

With all of this said, I feel confident in my prediction of a large housing market value "bounce." But there are foreseeable risks.  First, mortgage rates are low and could rise, putting downward pressure on home prices.  Additionally, geo-political risks could negatively impact the market. Lastly, we could see a glut of homes onto the market should the law which slowed the foreclosure market be repealed in the next State Legislative session.

For help with Real Estate financing, email brentawood@hotmail.com.  702-629-9555.

Brent Wood

Refinance Options Matrix

FHA Homeowners - You are in Luck !!!

For the past couple of years, FHA mortgage insurance has been rising as rates have come down.  What that means to FHA homeowners is that they can refinance, but their new, higher mortgage insurance rates will eat up the savings.  Well, help is finally here.  FHA homeowners who have had their mortgage for about three years or longer can now refinance to today's great rates (typically 3.25 to 4.0 %) without their mortgage insurance increasing.  Rates subject to change without notice.

Call today to refinance and lower your payment significantly!

Brent A Wood 702-629-9555  brentawood@hotmail.com

HARP 3.0

So far, HARP 2.0 has been a great success, but has been limited to Fannie Mae and Freddie Mac owned mortgages.  Many clients have portfolio, VA and other types of loans that are not included in HARP 2.0, so clients can't take advantage of this great program to save money through a refinance.  HARP 3.0 is rumored to expand the program to include most of these loans. 

TIP - If you want to stay in the loop regardin a possible HARP 3.0 refinance, please email us at brentawood@hotmail.com or kholt@awmlv.com .

HARP 2.0 - Refinances for People paying their mortgage

HARP 2.0 Refinance Program has been out for a few weeks now and it has been very well received by homeowners throughout the country.  This program was created to help homeowners who are paying their mortgage, but did not have sufficient equity to refinance through existing mortgage programs.  Rates from 3.5% up to 5.0% are available for 15, 20, 25 and 30 year mortgages for Primary Residences, 2nd Homes and Investment mortgages that are presently owned by Fannie Mae or Freddie Mac.  Rates are subject to change without notice and not guaranteed.  The shorter the term, the lower the rates.  Credit scores and other factors can impact the rate a client receives, as well. 

Tip - many mortgage bankers and brokers offer these mortgages, but many do not know how to close them in a reasonable time and even fewer offer low rates and fees. 

We would love to provide you a quote with excellent rates, low fees and the time it will take to close.

Brent Wood 702-629-9555 brentawood@hotmail.com 
Karl Holt  702-629-0716  kholt@awmlv.com