September 2009

Should I Take Out a Reverse Mortgage?

September 29, 2009 by Jane Peters · Leave a Comment 

Here are some points to take into account when considering a Reverse Mortgage.

What is a reverse mortgage:
A reverse mortgage is a loan given to seniors on the equity in their home.  It can be in one lump sum or several payments. In a conventional loan, amortized payments are made to the lender on a monthly basis with the equity increasing as payments continue.  At the end of the payment term the property has been paid off and the lender releases the home to the owner.  In a reverse mortgage, the lender is either making no payments on the home, in which case the interest is added to the property lien, or if the lender is paying the homeowner, the equity decreases on the property.

How old do I have to be?
You need to be 62.

When do I have to pay it back?
The loan gets paid back upon your death, or if you sell the home.

How do I qualify for a reverse mortgage?

The lender will look at your age, your mortgage obligation and the equity in your home.

Are all reverse mortgages the same?
No. You need to shop around as you would for a regular mortgage.  Each lender’s programs are different. Make sure you are getting the best deal.

What if the Appraisal Comes in Lower than the Accepted Offer?

September 26, 2009 by Jane Peters · 1 Comment 

You have an accepted offer in on a house for $600,000. You have put down 25%. The appraisal comes in at $580,000.

What do you do?

• Firstly, you do not have to pay more than the house is worth, unless your would like to. Meaning you don’t want to risk losing it.  Of course this means you would have to come up with $20,000 out of pocket.
• You can walk away from the deal since Item 2 J of the California Residental Purchase Agreement makes the offer contingent upon the house appraising at the value of the offer or above – not below.
• You can present an addendum to the Purchase Contract to the Seller: stating something to the following effect:

If you back out, the Seller is going to have to accept an offer at $580,000 or less, because the house will probably appraise at that again, and no one else is going to want to pay more that the home is worth.

$20,000 is about 4 months income for the average person.  Would you work for 4 months FREE?

Today’s market is not in appreciation mode, so why would you pay more than the property is worth.  It could take years to gain back the difference.

Also, it could take several months before the Seller finds another buyer and the value of the house could drop further.  This is something the Listing Agent is well aware of, and an agent worth is salt is going to have that talk with his Seller.

Should I Refinance?

September 23, 2009 by Jane Peters · Leave a Comment 

Courtesy of Rick Pelleriti an Upfront Mortgage Broker with Clarion Mortgage Capital, below are some tips to decide whether you should refinance your California home loan.

How much will it cost to refinance?

This is based on a current rate of $729,750 financed at 5.50% with a new rate of 5.00%.

That cost, including the loan origination fee will be $6,791.

What will my monthly savings be?

Monthly savings with the lower interest rate will be $225.98.

How much will I save over 10 years?

Your savings should be $27,118 over 10 years.

The return on investment in this example is 14.85%.  However, this does not take into consideration investment of the monies saved or increase in the home equity due to lower interest rate over 10 years resulting in a lower loan balance.

So, if you are considering whether to refinance, it would be advisable to consult with a mortgage broker to see if it makes sense.

Rick will advise you at no charge.  What do you have to lose! (more…)

Annual Meeting Westside Homeowners

September 22, 2009 by Jane Peters · Leave a Comment 

There will be an Annual Meeting for West of Westwood Homeowners Association and Westside Neighborhood Council.

Tuesday, October 6th at 7:00 p.m.
Westside Pavilion Meeting Room B
Landmark Theatre side 3rd floor
Across from Barnes and Noble

Contact:

West of Westwood Homeowners Association
310-475-212

Discussion includes:  Pico/Olympic One-Way, Expo Light Rail, Marijuana Dispensaries, Crime Update and New Developments.

Guest Speakers: Councilman Paul Koretz, West L.A.P.D. Captain Evangelyn Nathan, Expo Light Rail Project Director Monica Born.

Walk Areas Command High Prices

September 11, 2009 by Jane Peters · Leave a Comment 

Especially applicable to Los Angeles, a recent study conducted by “CEOs for Cities”, found that neighborhoods with the most walkable areas, with shopping, restaurants, entertainment, command higher prices.

This can be broken down to a range of between $4,000 to $34,000 over houses with just an average attraction level and the scale was measured from 0 to 100 – car dependent to most walkable. See full story.

Smaller Down-payments May Result in Better Interest Rates – But

September 7, 2009 by Jane Peters · Leave a Comment 

Strange as it may seem, the less you put down on a house, the lower your interest rates will be.  However, this may not always be of benefit to the borrower.

For example, in late August a borrower putting $80,000 on a $400,000 purchase, with a good credit score, around 720, would have qualified for a 4.875 rate on a 30-year fixed mortgage. The same rate was offered to borrowers only putting 5% down. And those who put down 25% got an even higher rate, 5.375%.  Why? (more…)

FHA Loans

September 4, 2009 by Jane Peters · Leave a Comment 

In 1934 the Federal Housing Administration started its quest to help Americans become homeowners by offering them mortgage insurance on loans through FHA approved lenders. They wish to keep the dream alive that millions of Americans can secure a home of their own with affordable rates.

So you have a mortgage and you are interested in refinancing your home through FHA Refinancing, but there is one problem, you don’t have a FHA mortgage. It may seem like your chance has been lost, but it has not. The program FHA Secure allows those with non-FHA mortgages, current or delinquent to refinance through FHA. FHASecure makes it so the lender will not immediately disqualify you because you are delinquent on your loan, instead the lender would offer a second mortgage to make up the difference in value of your property and what you owe.

If your goal is to get lower payments, prevent foreclosure, and protect your investment without an FHA mortgage keep in mind that through FHA Secure:

• You are not automatically disqualified based on delinquency on your current loan.
• You must have a dependable income and be able to make mortgage payments.
• If you are in default, you must show delinquency of default is the result of increased interest rates and higher mortgage payments.

This program is available for single-family or multi-family homes. Starting on July 14, 2008, FHA Secure will be in affect. This second chance refinancing does not indicate relaxed requirements for credit however. Those applying for this FHASecure program are under the same requirements as those applying for an FHA loan. Borrowers should:

• Have steady income from a dependable source.
• Show a reliable payment history.
• Have debt-to-income ration below 41%.
• Have a credit score appropriate for any home loan.

FHA Secure can improve conditions of life for many by helping to reduce the number of mortgage defaults and bring more stability to local housing markets. Visit the FHA’s website for more info on FHA loans.