The Truth About Reverse Mortgages

                                       

 

     A reverse mortgage does not sell your home to the bank. Banks are not in the business of owning homes — they want to make loans and earn interest. You will keep the title to your home in your name. However, the bank will add a lien onto the title for the amount that you borrow so that it can guarantee that it will eventually get paid back the money it lends to you.

   Your estate inherits your home as usual but there will be a lien on the title for the balance of the reverse mortgage. The balance is however much you’ve received and interest. A reverse mortgage is a “non-recourse” loan which means the only asset guaranteeing the loan is the property itself. If the property value is less than the balance of the reverse mortgage, the bank is forced to take a loss and can not request other assets from the estate.

     The FHA reverse mortgage was created specifically to allow seniors to live in their home for the rest of their lives. Because you receive payments from a reverse mortgage instead of making payments, you can never be evicted or foreclosed on for non-payment.

  The reverse mortgage becomes due when all homeowners have permanently moved out of the property or passed away. There is no time limit.

    Government entitlement programs such as Social Security and Medicare are not affected by a reverse mortgage. However, need-based programs such as Medicaid can be affected. You will need to manage how much you withdraw from the reverse mortgage in one month to remain eligible for Medicaid.

    The proceeds from a reverse mortgage are not considered income and are not taxable. Furthermore, the interest on reverse mortgage is tax deductible when it is repaid.

   Typically the only out-of-pocket expense is the cost of the appriasal. If you request it, many lenders will agree to pay that fee upfront for you and finance the cost into the loan.

 

Housing and Economic Recovery Act of 2008

H.R. 3221, the “Housing and Economic Recovery Act of 2008,”

Passed the House on July 23, 2008, by a vote 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008.

The bill includes the following provisions:

 

• GSE Reform- including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
• FHA Reform- including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reform to the HECM program, and reforms to the FHA manufactured housing program. The down payment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
• Homebuyer Tax Credit- a $7500 tax credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
• FHA foreclosure rescue- development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value rowers would have to share 50% of all appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
• Seller-funded downpayment assistance programs- codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
• VA loan limits- temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
• Risk based pricing- puts a moratorium on FHA using risk- based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
• GSE Stabilization- includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
• Mortgage Revenue Bond Authority- authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
• National Affordable Housing Trust Fund- Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
• CDBG Funding- Provides $4 billion in neighborhood revitalizing funds for communities to purchase foreclosure homes.
• LIHTC- Modernizes the Low Income Housing Tax Credit program to make it more efficient.

Loan Originator Requirements- Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

What is Homestead?

 

The Homestead Law is technical in nature and complex in its application. A Declaration of Homestead, which is not

properly prepared, may be invalid. The following is for general informational purposes only and should not be considered legal advice. We therefore suggest that you contact an attorney for any legal advice on your specific situation.

 

What is the purpose of the homestead exemption?

 

The homestead exemption gives you rights against many debts you might incur through accident, illness or misfortune. However, there are limitations and exceptions. The policy underlying homestead laws is to provide a place for the family where they may live free from the anxiety that it may be taken from them.

 

How does the homestead exemption work?

 

Example: If the market value of your home is $120,000 and you have a first mortgage or deed of trust of $65,000 and a second mortgage of $25,000, you have an equity of $30,000 in your home. The homestead exemption protects this equity against creditors.

 

What is a judgment lien?

 

When you owe someone money he is considered your creditor. If a creditor sues and wins a judgment against you, he can file a lien against your home. The homestead exemption is protection against such liens.

 

What kind of property is covered?

 

A house, a condominium, a duplex, a mobile home, a community apartment project, or a planned development.  Who is eligible for this homestead exemption? Every homeowner who resides in his or her home is entitled to this protection. A person can only have one valid homestead at a time.

 

Who may file a Declaration of Homestead?

 

Every homeowner may file. A homestead will remain in effect until the house is sold, or the homestead is abandoned by recording an Abandonment of Homestead.  Are their limits to the amount of equity protected?  Yes, for married couples, or single parents with dependents living at home the homestead exemption is $75, 000; unmarried individuals, $50,000. For persons 65 years or older, or for persons physically or mentally disabled, the exemption limit is $100,000.

 

What situations are not covered by the homestead exemption?

 

Judgment liens recorded before you have recorded your Declaration of Homestead will attach to the house. Loans or debts secured by the property (mortgages, deeds of trust, etc.) are not covered by the homestead exemption. When you voluntarily put up your home as security against a debt, a homestead will not protect it. When a contractor or laborer puts labor or materials into repairs or improvement on your property, and you do not pay him, the homestead exemption will not protect against the mechanic’s lien. Tax liens by federal, state and local governments.

 

Can I remove the homestead exemption if I want to?

 

Yes. You can remove the homestead exemption at any time by filing a form called Abandonment of Homestead. Also, if you were to record a homestead on another property, it would remove the homestead on the first property. When you sell your home, the homestead on it is automatically removed.

 

info@WeSpeakRealEstate.com   for more questions?

 

 

 

Get your Free Credit Report

 

I cannot stress enough the importance of reviewing your current credit history before thinking of purchasing a home and finding derogatory information which may disqualify your purchase or be placed in a higher interest rate. Request your free annual credit report from Experian,  Equifax and Trans Union.

 

https://www.annualcreditreport.com

 

Fight identity theft by monitoring and reviewing your credit report. You may request your free credit report online, Free credit reports requested online are viewable immediately upon authentication of identity

Propostion 90 and You

What Is Proposition 90?

Under Proposition 90, California property owners who are 55 and over may qualify to transfer the assessed value of their principal residence sold in participating counties.

Qualifications for Proposition 90 are as follows:

1.  The purchaser or spouse must be 55 years of age.

2.  The replacement residence must be equal to or less than the value of the residence sold.

(3) The replacement residence must be located in the same county as the property

being sold OR must be located in one of the counties which have voted to

pass Proposition 90 in order for the real property tax base to be transferred

from the former residence to the replacement residence. Before making plans to move, call the County Assessor’s Office in the county you are moving to and request the most recent information concerning Proposition 90.

REO, Bank Own- Buy it now!

It’s here, the time to purchase a bank owned property. There are much more active buyers bidding on a home. The need to wait for a short sale or an auction sale isn’t necassary. Banks are asking for at least 10% -down payment and properties to be sold in an as is condition. Make a trip to the city, where the property is located to see what are the pending violations, if any.

 

Most loans which are 10% down payment require Private Mortgage Insurance (PMI). The lender programs may have the option of including the PMI on the rate (in the form of a higher rate), or may include a seperate monthly private mortgage insurance premium along with the mortgage payment (its about aproximates .82% of the loan amount and varies by insurer). The difference is, adding it to the rate makes the payment lower. The downside is when you do have the 20% equity you would have to refinance the loan rather than on a monthly premium you would just call the bank and ask them to remove the monthly PMI premium. It would be wise to you ask your loan officer to give you the different payments and make your decision accordingly.

 

Be prepared, by being buyer ready in these times of multiple offers we suggest the following:

Consult a loan officer to give you a “good faith estimate” (make sure you get a copy of your credit report)

A good faith estimate will show an itemized estimate of all fees involved in closing the mortgage loan

Receive a qualification letter from the loan officer.

Do not disregard an “as is” purchase. Most purchase agreements allow an inspection time frame.

Bank owned properties in many occasions just need paint, carpet, and minor maintenance.

Building sweat equity is what matters.

 

 

 

 

 

 

 

HUD PROPERTIES ARE BACK!

The U.S. Department of Housing and Urban Development (HUD) has chosen Pemco Ltd. to administrate property management and sale of all HUD Homes in the states of Georgia, California, Hawaii, Guam and the

 

This site will help with the search of HUD homes for sale. Big Blue House Real Estate Sales in Downey California www.bbhrealestate.com is an authorized agent to represent buyers of HUD homes in California. Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be an abundance of choices.  A good real estate professional can guide you through the entire process and make the experience a simple one. A real estate broker will be well-acquainted with all the important things you’ll want to know.

 

You will also find information on special programs offered by HUD, such as the Good Neighbor Next Door (GNND), Disaster Evacuee, and Non-Profit programs Marianas Islands.

 

HUD homes and is good buy. When a HUD insured mortgage becomes a lender foreclosed home; HUD pays the lender what is owed; and HUD is now the owner of the home. Then it is priced at value to move as quickly as possible. Read all about buying a HUD home on Pemco’s website. Check out listings of HUD homes and homes being sold by other federal agencies office or your county executive’s office.

 

To search for HUD properties available go to www.hudpemco.com .

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Up, Down, Up, Down Interest Rate- So. Cal.

 

Here are some key interest rate change indicators for your information. 

For current listing or current solds in your area – we invite to visit our website at

www.WeSpeakRealEstate.com. 

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Things that may raise interest rates.

 

Consumer Price Index Rises

Indicates rising inflation.

 

Durable Goods Orders Rise

Pickup in business activity usually leads to increased credit demand.

 

Housing Starts Rise

Shows growth in economy and increased credit demand. Fed tightens money supply by

raising rates.

 

Leading Indicators Up

Signals strength in the economy leading to greater credit demand.

 

Personal Income Rises

The higher one’s income, the more consumed, prompting higher prices of debt securities.

 

Producer Price Index Rises

Indicates rising inflation. Demand for, and prices of, goods rises.

 

Retail Sales Fall

Indicates stronger economic growth. Fed may tighten money supply.

 

What will lower interest rates?

hat May Raise Interest Rates

Gross National Product Falls

Reflect a slowing national economy. Fed loosens money supply by lowering rates.

 

Industrial Production Falls

Indicates slowing economic growth. Fed loosens money supply by lowering rates.

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Inventories Up

Indicates a slowing economy since sales are not keeping up with production.

 

Oil Prices Fall

Reduces upward pressure on interest rates, thereby enhancing prices of debt securities.

 

Precious Metal Prices Fall

Reflects decreased inflation. Demand for inflation hedges falls.

 

Unemployment Rises

Indicates stronger economic growth. Fed may tighten money supply.

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Buyer and Seller Who Pays What….

 

These are customary charges and in the case of FHA

(search for FHA info in our blog) loans “sellers” will have to pay

non-allowable buyer cost.  Many buyers request concessions

for closing cost.  A seller can credit a buyer with up to 3% of

purchase price for closing cost.  For FHA loan it can go up

to 6% closing cost.   In the case of seller’s competing with

bank own properties, these can be a plus for you.  Most

lender own properties and short sales will not allow for

such concessions.  

 

 

The Seller Generally Pays:

 

• Real estate commission

• Document preparation fee for deed

• Documentary transfer tax

• Any city transfer/conveyance tax (according to contract)

• Payoff of all loans in seller’s name (or existing loan balance-

  if being assumed by buyer)

• Interest accrued to lender being paid off, statement fees, -

  reconveyance fees and any preparation penalties

• Termite inspection (according to contract)

• Termite work (according to contract)

• Any judgments, tax liens, etc., against the seller

• Tax proration for any taxes unpaid at time of transfer of title

• Any unpaid homeowner’s insurance

• Recording charges to clear all documents of record against seller

• Any bonds or assessments (according to contract) Any and-

  all delinquent taxes

• Notary fees

• Escrow Fees

• Title insurance premium

 

The Buyer Generally Pays:

 

• Title insurance premium

• Escrow fee

• Document preparation (if applicable)

• Notary fees

• Recording charges for all documents in buyer’s name

• Termite inspection (according to contract)

• Tax proration (from date of acquisition)

• Homeowner’s transfer fee

• All new loan charges (except those required by lender for-

  seller to pay if applicable)

• Interest on new loan from date of funding to 30 days prior to first    payment date

• Assumption charge of records fees for takeover of existing lon

• Inspection fees (roofing, property inspection, geological, etc.)

• Home warranty (according to contract)

• City transfer/conveyance tax (according to contract)

• File insurance premium for first year

 

The distinction between personal and real property can be the source of difficulties in a real estate transaction. A purchase contract is normally written to include all real property; that is, all aspects of the property that are fastened down or an integral part of the structure. For example, this would not include potted plants, free-standing refrigerators, washer/dryers, microwaves, bookcases, swag lamps,

etc. If there is any uncertainty whether an item is included in the sale or not, it is best to be sure that the particular item is mentioned in the purchase agreement as being included or excluded.

 

We invite you to our www.infobankrepo.com 

Want a good deal?  Let us help you.

Move in condition “Sells”

 

Many buyers are taking advantage of the low rates and lower home prices.  The Lowest priced homes are usually Lender Own properties which need some repairs.  Most buyers deplete all their investment funds leaving them with no funds for repairs .  This is where home seller can take advantage in doing the following suggestions to get the most for the sale of their property.  

 

• Clean it. Home buyers, it turns out, hate dirt more than just about anything else. So, give your home a thorough cleaning from top to bottom. Wash the walls, floors and windows. Rugs should be thoroughly cleaned unless you plan to replace them. Curtains should be washed by hand or taken to a dry cleaner. If you’re not up to the task, spend  a few bucks for a professional cleaning company to do the job right.

 

• Organize it. If your home looks too small for you, prospective home buyers are going to think it’s too small for them. So, take everything off of your kitchen and bathroom countertops, half the books off your bookshelves and the past season’s clothes out of your closet and pack them away. Not only will your home seem larger, but you’ll have made a good start on packing

for your future move.

 

• Repaint it.  You will get the biggest bang for your buck by repainting the interior of your home in bright white paint. White walls help home buyers imagine how their own stuff is going to look. If you have wallpaper that’s in good shape, choose a neutral shade of white or off-white to complement it. If your wallpaper is peeling or is dated, strip it off and

start over with paint.

 

• Mow it and plant it. Most home buyers today will spend about 10 seconds looking at a digital photo of your home on the Internet. If they like what they see, they’ll do a “drive-by” showing. You have approximately 6 seconds to impress them as they drive from lot line to lot line. Make the most of what you have by giving your landscape a power-lift. Trim hedges and trees, plant

colorful flowers, mow the grass and edge your beds. If you’re not up to it, hire a professional landscaper to get the exterior of your home into shape. Then, power wash, touch-up, or repaint the exterior of your home for an irresistible package.

 

• Fix it. If it isn’t working properly, you could pay dearly when it comes time to negotiate the price of your home. Today’s home buyer just wants to move in and get on with his or her life. So oil the squeaky doors, screw in the knobs, replace the rotting wood lintels, and repair the holes in the porch screen door. The better shape your home is in, the more a home buyer will pay for it