Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking your mortgage professional.
There are many great mortgage programs available and each has its own qualifying factors. Your choices in mortgages will depend several factors, including but not limited to your current financial picture, amount of down payment, if refinancing – do you want cash out, how long you intend to keep your house and if you are interested in a fixed or adjustable mortgage. We will go over your goals and provide you with the best Mortgage option available.
Generally speaking, most mortgage payments include: · Principal – amount paid towards balance borrowed · Interest – amount paid to lender as a financing charge · Taxes & Insurance – these charges can either be made in monthly payments deposited into an escrow account which is disbursed when the charges become due, or you may have the option to pay the County Tax Assessor and Hazard Insurance carrier directly.
The amount of cash that is necessary depends on the type of loan you are applying for, normally you will need: · Earnest Money – The deposit that is supplied when you make an offer on the house and goes towards your down payment at settlement · Down Payment – Percentage of cost of home depending upon your loan program; these funds are due at settlement · Closing Costs – Costs associated with processing paperwork to purchase or refinance a home
Home equity refers to the appraised value of your home minus the amount you still owe on your loan.
The value equity depends on your goal for refinancing. The more equity you have, the more money you may be able to get from a cash-out refinance. Or, it could result in a better interest rate, which may help you lower your monthly payment. Having enough equity may also help you eliminate private mortgage insurance (PMI), a monthly fee included in many mortgages with an original down payment of less than 20%.
It’s possible to add the costs associated with getting a new mortgage into the total refinance amount to avoid paying anything out of pocket at closing. However, refinancing in order to lower your payment, get cash out or consolidate your debt may result in a longer loan term or a higher rate.
Some states have limits on how soon or how often their residents can refinance a home loan; these limits are often designed to ensure that the refinance process benefits the homeowner. Regulations aside, it’s very important to make sure that refinancing helps you meet your financial goals. Deciding if it makes sense to refinance your home depends on a number of factors: Does your current lender have a prepayment penalty? Do you have enough equity built up in your home? Are interest rates lower now than they were when you first got your home loan? Do you plan to stay in your home for many years?
Talk to one of our Mortgage Loan Consultants to see if Refinance is right for you.
No, title on a reverse mortgage is no different than any other mortgage you have ever had – you are still on the title. Under normal circumstances and so long as you stay current with property taxes and homeowner’s insurance and maintenance, you retain title to your home.
While the requirement for a reverse mortgage are not as strict as a traditional mortgage, your credit and income are reviewed to ensure you are in the safest financial situation to afford your taxes, insurance and maintenance of your home.
All of our reverse mortgages are non-recourse loans, which mean the borrower can never be personally liable for more than the home’s value.
A reverse mortgage must pay off your current mortgage, eliminating any monthly mortgage payment you have now! Remember you are still responsible to remain current on taxes and insurance and keep property maintained.
It is your home, it is your money! You can spend your money from your reverse mortgage almost any way you would like.
Reverse mortgage are non-recourse loans. That means if the family or heirs wish to keep the home and the balance is more than the home’s value they would only have to pay 95% of the appraised value to keep the home. If they owe LESS than the value of the home, they would pay the full balance.
Seniors from all different income levels decide a reverse mortgage is right for them every day. For some seniors it is a way to eliminate their monthly mortgage payment and have more financial freedom. For others it is a way to have a financial cushion for those unexpected bills. Some seniors are able to live their retirement more comfortably, and with little worry about how they will make ends meet. A reverse mortgage is not designed for one particular person; it’s for any senior looking to make the most out of their retirement.
As part of the reverse mortgage process, all clients are required to complete a counseling session with an objective advisor. The counselor will explain all of your options with your HUD-approved counselor to make sure you are aware of all your choices.
Reverse mortgage lenders put no time limit on how long you can stay in your home. You still own your home, you cannot be evicted, as long as you continue to maintain your home and pay the property taxes and insurance fees.
The Home Equity Conversion Mortgage (HECM) is FHA’s reverse mortgage program, which enables you to withdraw some of the equity in your home. The HECM is safer than ever and can give older Americans greater financial security. Many seniors use it to supplement Social Security, meet unexpected medical expenses, make home improvements and more. You can receive additional free information about reverse mortgages in general by contacting the National Council on Aging at (800) 510-0301. It is smart to know more about reverse mortgages, and decide if one is right for you!
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 you built up over years of making mortgage payments can be paid to you. However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage. 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.
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, have the financial resources to pay ongoing property charges including taxes and insurance, and you must live in the home. You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan. You can find a HECM counselor online or by phoning (800) 569-4287.
Yes. You may apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage.
To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.
With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest. A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments. With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.
When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid. All proceeds beyond the amount owed belong to your spouse or estate. This means any remaining equity can be transferred to heirs. No debt is passed along to the estate or heirs.
The amount varies by borrower and depends on:
- Age of the youngest borrower or eligible non-borrowing spouse
- Current interest rate; and
- Lesser of appraised value or the HECM FHA mortgage limit of $625,500 or the sales price
Should I use an estate planning service to find a reverse mortgage lender?
FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA-approved lender. You can locate a FHA-approved lender by searching online at www.hud.gov or by contacting a HECM counselor for a listing. Services rendered by HECM counselors are free or at a low cost. To locate a HECM counselor Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you
For adjustable interest rate mortgages, you can select one of the following payment plans:
- 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 in installments, at times and in an amount of your choosing until the line of credit is exhausted.
- Modified Tenure– combination of line of credit and scheduled 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.
For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.
- Single Disbursement Lump Sum – a single lump sum disbursement at mortgage closing.
By law, you have three calendar days to change your mind and cancel the loan. This is called a three day right of rescission. The process of canceling the loan should be explained at loan closing. Be sure to ask the lender for instructions on this process. Mortgage lenders differ in the process of canceling a loan. You should ask for the names of the appropriate people, phone numbers, fax numbers, addresses, or written instructions on whatever process the company has in place. In most cases, the right of rescission will not be applicable to HECM for purchase transactions.