In today’s world, Americans face a looming retirement crisis — one that has been well-documented over the past several years and which has created a new purpose for the reverse mortgage.
Gone are the days when reverse mortgages were considered a loan of last resort. Now, the product is gaining steam among financial planners as a retirement tool that can hedge against future costs and provide much-needed income during borrowers’ post-career days.
By using a reverse mortgage to tap into home equity and fund retirement expenses, homeowners can effectively defend against the imminent retirement crisis, research shows.
“A lot of times people have not accumulated [savings] in a disciplined way, but at the same time the value of their homes has appreciated dramatically,” said Dennis Channer, principal at Cornerstone Investment Advisors, LLC, during a recent webinar hosted by Reverse Mortgage Funding (RMF) and the Financial Experts Network. “A great deal of their wealth is tied up in that value. [Home equity] becomes another available resource in the long range forecast of being successful [in retirement].”
And that’s just what Wednesday’s webinar, “Standby Reverse Mortgages: A Portfolio Longevity Strategy,” was focused on teaching. Its purpose was to educate financial advisors on how a home equity conversion mortgage (HECM) could be used as a portfolio protection strategy.
“The ideas are endless on the different angles we can take on using the [reverse mortgage],” said Dr. John Salter, an associate professor of financial planning at Texas Tech University, who has educated financial planners on reverse mortgages for years. “There’s nothing wrong with the product.”
While the ways to use a reverse mortgage may be endless, Salter explained five strategies, in particular, for financial planners to keep in mind when clients are approaching retirement.
1. Use Reverse Mortgage Instead of HELOC
There are benefits borrowers can get from using a reverse mortgage that they can’t get from using a HELOC, Salter said. Among those benefits are line of credit growth, no monthly principle or interest payment, and the loan is not cancelable as long as requirements are met.
“If you’re looking for flexibility in repaying [the loan], you get that in a reverse mortgage; you don’t get that in a HELOC,” he added.
A HECM is also non-recourse, meaning the borrower or their estate will never owe more than the value of the home upon sale or death.
The only downside of a reverse mortgage is the age requirement, as there is no restriction on age when using a HELOC.
see more: http://reversemortgagedaily.com/2015/05/28/5-ways-reverse-mortgages-can-serve-as-retirement-planning-tool/
Friday, May 29, 2015
Friday, May 22, 2015
30-year mortgage slips to 3.84 percent
WASHINGTON — Average long-term U.S. mortgage rates edged slightly lower this week after rising for three straight weeks.
Mortgage giant Freddie Mac said the average rate on a 30-year fixed-rate mortgage ticked down to 3.84 percent this week from 3.85 percent a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.05 percent from 3.07 percent. Last week both rates reached their highest level since mid-March, rising along with the yield on 10-year Treasury notes — reflecting some signs of improvement in the U.S. economy.
read more: http://www.news-journal.com/news/2015/may/21/30-year-mortgage-slips-to-384-percent/
Mortgage giant Freddie Mac said the average rate on a 30-year fixed-rate mortgage ticked down to 3.84 percent this week from 3.85 percent a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.05 percent from 3.07 percent. Last week both rates reached their highest level since mid-March, rising along with the yield on 10-year Treasury notes — reflecting some signs of improvement in the U.S. economy.
read more: http://www.news-journal.com/news/2015/may/21/30-year-mortgage-slips-to-384-percent/
Wednesday, May 20, 2015
How Much Down Payment Do You Need to Buy a Home?
The down payment. Cue the dramatic, fear-filled suspense music. Yeah, it’s scary. Coming up with enough cash to put down when buying a house is the single biggest roadblock for most hopeful homebuyers. But how much do you really need?
A standard down payment
Most lenders are looking for 20% down payments. That’s $60,000 on a $300,000 home. (There’s that scary music again.) With 20% down, lenders will love you more. First off, you’ll have a better chance of getting approved for a loan. And you’ll earn a better mortgage interest rate. There are all sorts of other benefits too:
Lower upfront fees (we’ll talk more about that in a second)
Lower ongoing fees (more on that too)
More equity in your home right off the bat
A lower monthly payment
Of course there is one big, juicy caveat: The down payment is not the only upfront money you have to deal with. There are loan closing costs and earnest money to consider as well. Before the dramatic music returns, let’s explore some lower down payment options.
Getting in for less
You can actually buy a home with as little as 3% down. Why did we wait so long to give you that good news? Well, let’s provide the details first before we weigh the pros and cons.
The Federal Housing Administration is a government agency charged with helping homebuyers — especially first timers — get approved. The FHA assists mortgage lenders to make loans by guaranteeing a portion of the balance. That’s how you can put less money down — in fact, as little as 3.5%.
see more: https://www.nerdwallet.com/blog/mortgages/payment-buy-home/
A standard down payment
Most lenders are looking for 20% down payments. That’s $60,000 on a $300,000 home. (There’s that scary music again.) With 20% down, lenders will love you more. First off, you’ll have a better chance of getting approved for a loan. And you’ll earn a better mortgage interest rate. There are all sorts of other benefits too:
Lower upfront fees (we’ll talk more about that in a second)
Lower ongoing fees (more on that too)
More equity in your home right off the bat
A lower monthly payment
Of course there is one big, juicy caveat: The down payment is not the only upfront money you have to deal with. There are loan closing costs and earnest money to consider as well. Before the dramatic music returns, let’s explore some lower down payment options.
Getting in for less
You can actually buy a home with as little as 3% down. Why did we wait so long to give you that good news? Well, let’s provide the details first before we weigh the pros and cons.
The Federal Housing Administration is a government agency charged with helping homebuyers — especially first timers — get approved. The FHA assists mortgage lenders to make loans by guaranteeing a portion of the balance. That’s how you can put less money down — in fact, as little as 3.5%.
see more: https://www.nerdwallet.com/blog/mortgages/payment-buy-home/
Monday, May 18, 2015
CFPB Considers Mortgage-Like Protections For Student Loan Borrowers
A federal agency that ushered in a number of reforms to fix problems with mortgage servicing after the financial crisis is now weighing similar protections for borrowers of student loans. Next to mortgages, the $1.2 trillion outstanding balance on student loans comprises the second-largest source of consumer debt in the U.S.
The Consumer Financial Protection Bureau estimates that among 40 million student loan borrowers, about 8 million people are in default on more than $100 billion worth of student loans. Student loan servicers are responsible for collecting and processing payments, and for answering borrowers' questions about how to keep up with those bills. But the agency says it is concerned that those companies are a weak link when it comes to assisting borrowers in repaying that debt.
“As a growing share of student loan borrowers reach out to their servicers for help, the problems they encounter bear an uncanny resemblance to the situation where struggling homeowners reached out to their mortgage servicers before, during, and after the financial crisis,” CFPB director Richard Cordray said, according to prepared remarks he will deliver Thursday at a field hearing on student debt in Milwaukee.
Cordray’s agency is launching a public inquiry into student loan servicing to solicit feedback on industry practices that can either help young borrowers stay on track, and build a positive credit history through on-time payments, or create frustrating hurdles that may hasten default.
“Having seen the improper and unnecessary foreclosures experienced by many homeowners, the Consumer Bureau is concerned that inadequate servicing is also contributing to America’s growing student loan default problem,” Cordray stated.
Joining Cordray in Milwaukee will be Department of Education Under Secretary Ted Mitchell. The Education Department contracts with student loan servicers to handle a direct loan portfolio in which 28.5 million borrowers owed about $744 million by the end of 2014. But the department has been criticized for lax oversight of the servicers, and for not doing enough to prevent borrowers from defaulting, including by the department’s own Office of Inspector General.
Effective student loan servicing, however, is fundamental to President Obama’s student debt agenda. Last June, he signed an executive order to expand income-based repayment options, so that more borrowers can take advantage of repayment plans that are pegged to how much they earn. Whether or not a borrower is eligibile for such programs is the type of information a student loan servicer, typically, should be able to convey.
In March, Obama signed a “Student Aid Bill of Rights,” and directed the Education Department, the Treasury Department and the CFPB to assess the need for stronger student loan servicing standards. Currently, for both private and federal student loans, there is no equivalent of uniform federal regulations that govern credit card and mortgage servicing.
see more: http://www.ibtimes.com/cfpb-considers-mortgage-protections-student-loan-borrowers-1921587
The Consumer Financial Protection Bureau estimates that among 40 million student loan borrowers, about 8 million people are in default on more than $100 billion worth of student loans. Student loan servicers are responsible for collecting and processing payments, and for answering borrowers' questions about how to keep up with those bills. But the agency says it is concerned that those companies are a weak link when it comes to assisting borrowers in repaying that debt.
“As a growing share of student loan borrowers reach out to their servicers for help, the problems they encounter bear an uncanny resemblance to the situation where struggling homeowners reached out to their mortgage servicers before, during, and after the financial crisis,” CFPB director Richard Cordray said, according to prepared remarks he will deliver Thursday at a field hearing on student debt in Milwaukee.
Cordray’s agency is launching a public inquiry into student loan servicing to solicit feedback on industry practices that can either help young borrowers stay on track, and build a positive credit history through on-time payments, or create frustrating hurdles that may hasten default.
“Having seen the improper and unnecessary foreclosures experienced by many homeowners, the Consumer Bureau is concerned that inadequate servicing is also contributing to America’s growing student loan default problem,” Cordray stated.
Joining Cordray in Milwaukee will be Department of Education Under Secretary Ted Mitchell. The Education Department contracts with student loan servicers to handle a direct loan portfolio in which 28.5 million borrowers owed about $744 million by the end of 2014. But the department has been criticized for lax oversight of the servicers, and for not doing enough to prevent borrowers from defaulting, including by the department’s own Office of Inspector General.
Effective student loan servicing, however, is fundamental to President Obama’s student debt agenda. Last June, he signed an executive order to expand income-based repayment options, so that more borrowers can take advantage of repayment plans that are pegged to how much they earn. Whether or not a borrower is eligibile for such programs is the type of information a student loan servicer, typically, should be able to convey.
In March, Obama signed a “Student Aid Bill of Rights,” and directed the Education Department, the Treasury Department and the CFPB to assess the need for stronger student loan servicing standards. Currently, for both private and federal student loans, there is no equivalent of uniform federal regulations that govern credit card and mortgage servicing.
see more: http://www.ibtimes.com/cfpb-considers-mortgage-protections-student-loan-borrowers-1921587
Thursday, May 14, 2015
Mortgage Applications Fall with Rate Increases
A reduction in refinancings led to an overall fall in mortgage applications as interest rates rose across the board, according to data released Wednesday by the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey's market composite reported that the volume of mortgage loan applications plunged 3.5% on a seasonally adjusted basis from the previous week. The refinance index alone dropped by 6%, while the purchase index fell by 0.2%.
As a share of overall mortgage activity, refinance dropped to 51% from 52% a week earlier, its lowest level since May 2014. The FHA share also fell to 13.8% from 14% last week, while the VA share remained stable at 11.9%.
Additionally, the adjustable-rate mortgage and USDA shares rose to 6.3% and 0.9%, respectively. The survey also noted an uptick in loan sizes with the average size for purchase applications increasing to $298,500, a survey high.
A sweeping rise in mortgage rates to the highest levels seen since March fueled the drop in application volume.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4% from 3.93%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances jumped 8 basis points to 3.99%.
Another big increase was seen for 30-year fixed-rate mortgages backed by the FHA, which had an average contract rate jump to 3.76% from 3.7% a week earlier. The average contract interest rates for 15-year fixed-rate mortgages and 5/1 ARMs rose more modestly by 4 and 3 basis points, respectively, to 3.23% for the former and 3% for the latter.
source: http://www.nationalmortgagenews.com/news/origination/mortgage-applications-fall-with-rate-increases-1050761-1.html
The MBA's Weekly Mortgage Applications Survey's market composite reported that the volume of mortgage loan applications plunged 3.5% on a seasonally adjusted basis from the previous week. The refinance index alone dropped by 6%, while the purchase index fell by 0.2%.
As a share of overall mortgage activity, refinance dropped to 51% from 52% a week earlier, its lowest level since May 2014. The FHA share also fell to 13.8% from 14% last week, while the VA share remained stable at 11.9%.
Additionally, the adjustable-rate mortgage and USDA shares rose to 6.3% and 0.9%, respectively. The survey also noted an uptick in loan sizes with the average size for purchase applications increasing to $298,500, a survey high.
A sweeping rise in mortgage rates to the highest levels seen since March fueled the drop in application volume.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4% from 3.93%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances jumped 8 basis points to 3.99%.
Another big increase was seen for 30-year fixed-rate mortgages backed by the FHA, which had an average contract rate jump to 3.76% from 3.7% a week earlier. The average contract interest rates for 15-year fixed-rate mortgages and 5/1 ARMs rose more modestly by 4 and 3 basis points, respectively, to 3.23% for the former and 3% for the latter.
source: http://www.nationalmortgagenews.com/news/origination/mortgage-applications-fall-with-rate-increases-1050761-1.html
Tuesday, May 12, 2015
Federal judge holds 2 banks accountable for selling U.S. fraudulent mortgages
On Monday, U.S. District Judge Denise Cote ruled that two banks — Japan's Nomura Holdings and Britain's Royal Bank of Scotland — fraudulently sold faulty mortgages to Freddie Mac and Fannie Mae leading up to the 2008 housing crash. "The magnitude of falsity, conservatively measured, is enormous," Cote wrote in what The New Times calls her "scathing 361-page decision."
Nomura and RBS were the only two of 18 large banks that didn't settle with the Federal Housing Finance Agency; the other 16 avoided airing their presumably dirty laundry in court by collectively paying almost $18 billion in penalties. In the jury-less trial, Coat heard evidence that two-thirds of the mortgages RBS and Nomura packaged into securities had underwriting defects. The FHFA is expected to ask for $500 million in compensation. Namura says it will appeal the ruling.
In tangentially related news, The Wall Street Journal reports that top executives from seven of the largest U.S. banks met on March 31 to discuss the "anti-Wall Street rhetoric already bubbling up on the 2016 campaign trail" and brainstorm ways to "push back against the prevailing narrative that banks are bad." There won't be "a new ad campaign or lobbying blitz, people familiar with the discussions" told The Journal, in part because "many bank officials are skeptical they can do much to counteract critics without triggering more damaging backlash." Peter Weber
see more: http://theweek.com/speedreads/554539/federal-judge-holds-2-banks-accountable-selling-fraudulent-mortgages
Friday, May 8, 2015
Mortgages rates jump, Freddie Mac survey says
Mortgage rates climbed higher in the past week, with the average rate for the benchmark 30-year fixed-rate mortgage rising to 3.80% from 3.68% in the prior week, according to the latest Freddie Mac survey.
The 15-year fixed rate averaged 3.02%, up from 2.94% a week ago.
The rates rose to their highest levels since March, as a selloff in German bunds helped drive U.S. Treasury yields above 2.2%.
A year ago, the respective 30-year and 15-year rates averaged 4.21% and 3.32%.
source: http://seekingalpha.com/news/2501436-mortgages-rates-jump-freddie-mac-survey-says
Wednesday, May 6, 2015
Mortgages Coming To Google Compare, New Automotive Ads Among AdWords Announcements
Google announced a number of new search advertising format and measurement initiatives in a livestream Tuesday, hosted by Jerry Dischler, Vice President of Product Management for AdWords.
No surprise, many of the announcements focused on improving mobile experiences and giving marketers better tools for measuring what has become a complex path to purchase, what Google refers to as “micro-moments”. The updates came against the backdrop of Google’s first official announcement that smartphone searches are now outpacing those on desktop in ten countries.
Last year’s AdWords livestream focused heavily on app discovery and engagement formats. This year, Google released a study released in partnership with Ipsos that shows heavy usage of search and app stores among smartphone users looking for apps and highlighted. Dischler also mentioned the recent pilot program of showing ads in search results on Google Play, noting that the company would be talking more about ads in Google Play at Google I/O later this month.
Google Compare Expansion
Google Compare in the US will soon expand beyond auto insurance and credit cards to include mortgages, as many in that industry have been speculating. Google is short on details, but says the mortgage product will roll out in the US later this year.
The auto insurance comparison service, which launched in California earlier this year, is also expanding to new states — to Texas, Illinois, Pennsylvania — and will feature agent support. Finally, the credit card comparison product will now include cards from local issuers.
New Automotive Ad Formats
Google debuted a new ad format for automotive manufactures and ad listings for local dealers. The units are rolling out on mobile, with Chrysler as a launch partner, and will eventually be made available on all screens.
see more: http://marketingland.com/mortgages-coming-to-google-compare-new-automotive-ads-among-adwords-livestream-announcements-127561
No surprise, many of the announcements focused on improving mobile experiences and giving marketers better tools for measuring what has become a complex path to purchase, what Google refers to as “micro-moments”. The updates came against the backdrop of Google’s first official announcement that smartphone searches are now outpacing those on desktop in ten countries.
Last year’s AdWords livestream focused heavily on app discovery and engagement formats. This year, Google released a study released in partnership with Ipsos that shows heavy usage of search and app stores among smartphone users looking for apps and highlighted. Dischler also mentioned the recent pilot program of showing ads in search results on Google Play, noting that the company would be talking more about ads in Google Play at Google I/O later this month.
Google Compare Expansion
Google Compare in the US will soon expand beyond auto insurance and credit cards to include mortgages, as many in that industry have been speculating. Google is short on details, but says the mortgage product will roll out in the US later this year.
The auto insurance comparison service, which launched in California earlier this year, is also expanding to new states — to Texas, Illinois, Pennsylvania — and will feature agent support. Finally, the credit card comparison product will now include cards from local issuers.
New Automotive Ad Formats
Google debuted a new ad format for automotive manufactures and ad listings for local dealers. The units are rolling out on mobile, with Chrysler as a launch partner, and will eventually be made available on all screens.
see more: http://marketingland.com/mortgages-coming-to-google-compare-new-automotive-ads-among-adwords-livestream-announcements-127561
Tuesday, May 5, 2015
What Is a Reverse Mortgage?
A reverse mortgage is a type of home loan that doesn't require any payments until after you die, as long as you continue living in your home. If you move out or decide to sell your house while still alive, the reverse mortgage comes due immediately. You can receive the loan proceeds in one lump sum or in monthly income payments.
Who Can Benefit From a Reverse Mortgage?
It's important to be aware of the age restrictions for reverse mortgages: Everyone listed on the deed of the house, even if they don't sign the loan, must be at least 62 years old for the house to qualify for a reverse mortgage. Also, reverse mortgages aren't useful if you still owe a lot on your regular mortgage. For example, if you owe $100,000 on your house, and you get a reverse mortgage for $125,000, you would only receive $25,000. The rest of the reverse mortgage proceeds would be immediately applied to your regular mortgage. Here is a more in-depth explanation of how reverse mortgages work.
The main pros and cons of reverse mortgages are:
Pros of Reverse Mortgage
One big advantage to reverse mortgages is that credit checks are minimal. Since you don't have to make loan payments during your lifetime, your credit score or monthly income are mostly irrelevant. However, new laws require lenders to set aside a certain amount of the loan funds if it looks like you won't be able to afford property taxes, home repairs or mortgage insurance premiums.
The value of your home may have risen dramatically since you bought it. Reverse mortgages give you access to this profit while allowing you to remain in your home.
If you have limited income, a reverse mortgage can provide you with greater self-sufficiency and comfort.
Cons of Reverse Mortgage
You (or your spouse, if he or she also signed the loan) must be living in your home to keep the reverse mortgage in place. You can't be absent for longer than 12 months, even if you have to go into a long-term care facility or move away to care for a family member. Longer absences result in the termination of the loan, and any money you received must be repaid immediately, with interest.
You must commit to maintaining your home and to keeping property tax and insurance payments up to date. Before the loan closes, the house is inspected, and you must sign a binding agreement to complete all recommended repairs by a specified date. The bank inspects your home to certify that you have completed these repairs as agreed.
A reverse mortgage usually makes it impossible to leave your house to your children. When all borrowers have passed away, the reverse mortgage must be repaid in full. In most cases, this requires the sale of the house. The only way to avoid this is if your heirs have enough personal wealth to pay off the reverse mortgage without needing to sell the house.
read more: http://www.huffingtonpost.com/simple-thrifty-living/what-is-a-reverse-mortgag_b_7200038.html
Who Can Benefit From a Reverse Mortgage?
It's important to be aware of the age restrictions for reverse mortgages: Everyone listed on the deed of the house, even if they don't sign the loan, must be at least 62 years old for the house to qualify for a reverse mortgage. Also, reverse mortgages aren't useful if you still owe a lot on your regular mortgage. For example, if you owe $100,000 on your house, and you get a reverse mortgage for $125,000, you would only receive $25,000. The rest of the reverse mortgage proceeds would be immediately applied to your regular mortgage. Here is a more in-depth explanation of how reverse mortgages work.
The main pros and cons of reverse mortgages are:
Pros of Reverse Mortgage
One big advantage to reverse mortgages is that credit checks are minimal. Since you don't have to make loan payments during your lifetime, your credit score or monthly income are mostly irrelevant. However, new laws require lenders to set aside a certain amount of the loan funds if it looks like you won't be able to afford property taxes, home repairs or mortgage insurance premiums.
The value of your home may have risen dramatically since you bought it. Reverse mortgages give you access to this profit while allowing you to remain in your home.
If you have limited income, a reverse mortgage can provide you with greater self-sufficiency and comfort.
Cons of Reverse Mortgage
You (or your spouse, if he or she also signed the loan) must be living in your home to keep the reverse mortgage in place. You can't be absent for longer than 12 months, even if you have to go into a long-term care facility or move away to care for a family member. Longer absences result in the termination of the loan, and any money you received must be repaid immediately, with interest.
You must commit to maintaining your home and to keeping property tax and insurance payments up to date. Before the loan closes, the house is inspected, and you must sign a binding agreement to complete all recommended repairs by a specified date. The bank inspects your home to certify that you have completed these repairs as agreed.
A reverse mortgage usually makes it impossible to leave your house to your children. When all borrowers have passed away, the reverse mortgage must be repaid in full. In most cases, this requires the sale of the house. The only way to avoid this is if your heirs have enough personal wealth to pay off the reverse mortgage without needing to sell the house.
read more: http://www.huffingtonpost.com/simple-thrifty-living/what-is-a-reverse-mortgag_b_7200038.html
Subscribe to:
Posts (Atom)