Advantages Of The Fixed Rate Reverse Mortgage Loan

If you have not yet, go back to read the Advantages Of The Variable Rate Reverse Mortgage Loan

The variable rate loan has one distinct disadvantage, the interest rate is variable over the life of the loan, but that is also the advantage as well. With the variable rate loan you have the choice of taking out a lump sum, opening a line of credit or receiving a fixed monthly payout for the rest of your life or any combination of these. With the fixed rate option the interest starts to accrue from the time you take out the loan, since it only comes as a lump sum option. On a variable rate loan, if you choose the fixed monthly payout or line of credit, the interest only accrues on the money that has been paid out to you. In the long run the interest accrues much more slowly. The variable rate reverse mortgage comes as the HECM Standard or HECM Saver.

For example, if you are 70 years old and the value of your home is $200,000 and you take out a fixed rate lump sum loan of $109,000, which is the max payout, your balance would be approximately $181,000 in 10 years. But if you were to take the fixed monthly payout option, your balance would be $110,000 in 10 years, roughly $71,000 less interest over the same period of time.

Article Source: http://EzineArticles.com/7862519

Advantages Of The Variable Rate Reverse Mortgage Loan

When comparing the Reverse Mortgage fixed rate and variable rate loans, there are a lot of factors to consider what option will be the best for you financially. The fixed rate option has been very popular over the past few years, simply because the interest rate is fixed, but there are many disadvantages of taking an interest rate that is fixed with a reverse mortgage. The variable interest rate reverse mortgage loan has a disadvantage, which you might have guessed, it is an adjustable rate product and the loan's rate can be unpredictable. But there are many advantages to the variable rate reverse mortgage that you may want to consider when looking at the best option that fits your need.

The fixed rate loan has one distinct advantage, the interest rate is fixed over the life of the loan, but that is also the disadvantage as well. If you were to choose the fixed rate loan option, you must take a lump sum payout, there are no other options with the fixed interest rate loan. The only reason you would want to use this reverse mortgage product is if you are going to use all the cash at once or paying off the mortgage currently on your home. For example, if you take out a lump sum, but don't use all the cash at once, then you are just paying interest on money that is sitting in a bank account. Unless you use all of the cash upfront, then you may want to consider the variable rate loan because it is more flexible and offers many options. The fixed rate reverse mortgage only comes with the HECM Saver product. In April of 2013, HUD stopped allowing the HECM Standard with the lump sum option.

Article Source: http://EzineArticles.com/7862519

Automated Communication In The Mortgage Industry

Modern technology has made communication easier than at any other point in human history.  Email, social media, mobile apps, these tools are amazing and many can even be automated.  So why is the mortgage industry so far behind in embracing and adopting these tools?  Title companies and Realtors have automated communication tools for their part of the process of purchasing a home, but there is typically no such system in place from the lender.

Good news, it looks like that is about to change.

This article from the National Mortgage News discusses automated communication programs with the very companies that are designing them.  They are drawing inspiration from other industries to put together the most thorough and secure platform possible.  With so much sensitive data in loan docs, this security is of the utmost importance.

So what will these look like?  I'm glad you asked. 

Mobile apps are beginning to be the preferred method of communication by the majority of consumers.  An app that sends you regular and intermittent updates on your loan, what docs are needed, what you need to sign, etc and also provide you access to your loan package on the fly are in the pipeline. 

While complex regulations have prevented such developments to this point, increased security measures are now available in other industries that can be used as a model.  The future is very exciting!

How A Reverse Mortgage Line Of Credit Works

If you are interested in how we got here, read this blog entry which is an intro to a Reverse Mortgage Line Of Credit.  And now let's get into how this works.

To illustrate the impact of this growth feature, consider an applicant that took out an adjustable reverse mortgage at 2.75 percent, and left the entire $300,000 in the Line of Credit.

Growth on a $300,000 Line of Credit, after monthly compounding, would be 2.75 percent +1.25 percent = 4.00 percent. The schedule below shows the power of the compounded growth at various times in the life of the loan. Untapped, the available equity would be as follows:

5 yrs. = $366,299
10 yrs. = $477,250
15 yrs. = $546,090
20 yrs. = $666,775
30 yrs. = $994,049

The equity line grows and is available for use by the borrower regardless of the current value of the home. This feature provides a valuable hedge against value fluctuations in our real estate market as well as economic downturns.

Lastly, any payments, such as interest or principal, on the reverse mortgage go dollar-for-dollar to increase the available Line of Credit. Therefore, borrowers who elect to pay some or all of their annual interest expense on the mortgage will see their LOC grow by the amount of the payment as well as reduce their outstanding loan balance by that same amount.

All in all the LOC option is a great feature that can help borrowers be more secure in their financial future.

Article Source: http://EzineArticles.com/8106081

A Reverse Mortgage Line Of Credit Intro

The adjustable rate reverse mortgage (RM) has a line of credit option that may appeal to many potential borrowers. Instead of taking all the available cash out at closing as a lump sum, the borrower can leave the available funds with the lender in a Line of Credit (LOC) facility.
 
Borrowers do not need to complete a special application or jump through extra hoops to use the LOC option. The funds left in the LOC are insured by the FHA, so they are safe.

Furthermore, the reverse mortgage LOC has several features that are superior to traditional lines of credit from a bank or through a home equity line. The RM LOC is non-cancelable and non-freezable, and its terms cannot be changed. The line can be drawn upon and paid back unlimited times, without incurring a reduction or freeze in the amount of the credit. The funds in the LOC remain even if the property value declines or the borrower's credit rating erodes. These features offer a tremendous amount of security and financial flexibility as people live with investment ups and downs while needing to address financial needs that occur.

The RM LOC also has a growth feature that is highly attractive. Funds left in the LOC will grow at the same monthly compounded interest rate, which includes the 1.25% charged for FHA insurance, that the borrower is paying on the loan's principal balance outstanding.

Next week we will look at how this works.

Until then, be well.

Article Source: http://EzineArticles.com/8106081

A Reverse Mortgage Calculation

Reverse loan calculators can provide a basic estimate of the amount of equity that a borrower can access. Here are two examples of A $200,000 home value at age 62 & age 75 documenting both HECM.

• $200,000 Value /62 Borrower age
• Fixed HECM"Standard" Max Loan $123.800
• 62% of Value
• Lien Payoff $25,000
• Loan Cost $9,500
• Funds Available = $89,300
• Fixed HECM "Saver" Max Loan $104,600
• 52% of Value
• Lien Payoff $25,000
• Loan Cost $5,500

• $200,000 Value / 75 Borrower age
• Fixed HECM"Standard" Max Loan $138,600
• 69% of Value
• Lien Payoff $25,000
• Loan Cost $9,500
• Funds Available = $104,100
• Fixed HECM "Saver" Max Loan $112,400
• 56% of Value
• Lien Payoff $25,000
• Loan Cost $5,500

Article Source: http://EzineArticles.com/7592204

What Factors Are Considered For Loan-To-Value Of A Reverse Mortgage?

The answer varies for each individual and personal situation but begins with the age of the borrower more specifically the youngest borrower and the "lesser" of the FHA reverse mortgage loan limit ($625,500 in most areas) or the appraised value and the current interest rate. This starting point can provide an initial idea of what the borrower can qualify for and is referred to by HUD as the Principal Limit Formula which uses a table almost like an insurance mortality table to determine the principal limit.
 
Other factors that may play a role in the reverse loan amount include, whether there will be a payoff of an existing lien and the loan fees that are included within the loan. The loan program the borrower chooses such as the Home Equity Conversion Mortgage ( HECM) Standard or the (HECM) Saver. Each HECM offers different loan limits and fees. The HECM Saver provides lower loan limits but also lower Mortgage Insurance Fees making it an attractive option for those who have lower home values.

Borrowers who have outstanding payments due on their taxes or home owners insurance, judgments or liens against their property will also be required to pay these through the loan, additionally if the home is found to be in need of repairs that are referenced by the FHA appraiser these items will need to be repaired or replaced either in advance or with proceeds from the reverse mortgage and invoiced prior to closing.

Older Reverse Mortgage borrowers find that they qualify to access more of their reverse mortgage equity making the mid-70 age range one of the most optimal times to complete the reverse mortgage

• Affect HECM Home Equity Access
• Age of Borrower(s)
• Value of Home
• HECM Loan Program "Standard" or "Saver"

• Affect HECM Mortgage Net Proceeds
• Mortgage Lien Payoff
• Liens & Judgments
• Repairs- Required by FHA
• Loan Fee's

Article Source: http://EzineArticles.com/7592204

Mortgage Payment Options

Sierra Pacific Mortgage has multiple options available for making your mortgage payments:

Pay by Mail
Complete and detach the payment coupon at the bottom of your monthly statement and mail your payment using the pre-addressed envelope. Don’t forget to write your loan number in the memo section of your check. If you have misplaced or did not receive your statement, please call your Sierra Pacific Loan Servicing representative to obtain the correct mailing address for your payment.

Check by Phone
Sierra Pacific Mortgage does have the ability to accept mortgage payments over the telephone. Please be prepared with your bank account and loan number and contact the Loan Servicing Department during normal business hours at 1-888-560-2280. There is a $10 handling charge for this option.

Other Payment Options
For the Initial servicing period, only the Pay by Mail and Check by Phone options are available. Approximately 60 days after your initial payments, you will be notified of additional payment options as they are made available.

Do I have the option to make additional Principal payments?
Yes, you have the option to make extra principal payments. Clearly detail the amount of the extra principal payment on your payment coupon. Your loan must be current with no outstanding fees before an extra principal payment will be applied. If the additional Principal payment exceeds $5,000, payments must be made by Cashier's Check, Money Order or Certified Funds.



Read more at www.SierraPacificMortgage.com

Women's Council of Realtors Spring Fling Fashion Show

One of my favorite events of the year, this year named Divas and Dudes, is a charity fabulous event put on by the Women's Council of Realtors.  In fact, I love it so much, I am a sponsor of the event.

All proceeds go to Barrett House Foundation.  The mission of Barrett Foundation is to provide housing and supportive services to women and children who are striving to break the cycle of homelessness. Every day, homeless women and children turn to us for help. Most of them are here because of poverty and have sought temporary housing with family, in apartments, in motels, and in their cars. Other causes of homelessness include personal tragedy, trauma, mental illness, and substance abuse. Today’s economy, particularly housing foreclosures, has had large effect on women and their children.

This year we will be at the Albuquerque Marriott Pyramid.  The event will be hosted by Donnie Chase from 100.3 The Peak.  The live auction will be presented by Steve Stucker of KOB-TV.  But of course the Celebrity Models will be the highlight :)

Come join us for this amazing day of fun and philanthropy!

www.2014WCRFashionShow.org

The Move to Sierra Pacific Mortgage

I recently made the move  to Sierra Pacific Mortgage.  Sierra Pacific supports real estate agents with their “Close on Time Culture”, and their ongoing support of the Greater Albuquerque Association of Realtors and the Santa Fe Board of Realtors.  I am very excited to be working with this great company.  So, let's take a look at Sierra Pacific.


The Company

Headquartered in Folsom, California, Sierra Pacific Mortgage Company, Inc., provides quality mortgage lending services throughout the United States. Incorporated in 1986, we are a privately held company and have originated and purchased billions in residential loans. Our high company production levels and sophisticated capital markets access allows us to deliver competitively priced products to brokers, retail originators and consumers.

Sierra Pacific currently operates 12 Regional Fulfillment Centers and is licensed in 47 states. We are a nationwide direct lender for HUD (United States Department of Housing and Urban Development), Fannie Mae, Freddie Mac, and an approved Seller with FHA, VA and USDA. We originate loans through our Retail, Wholesale and Correspondent business channels.

Steering the company's vision and success since inception in 1986, President, Jim Coffrini, has led the company and our growing team of dedicated mortgage professionals into one of the most profitable mortgage banking firms in the industry. Goal-oriented and committed to the future of Sierra Pacific, Mr. Coffrini has built the Company upon the foundation of quality lending practices, unparalleled service, integrity and industry knowledge.

Our Vision

To be the premier lender of choice in the nation.

Our Mission

We are committed to providing the American Dream through exceptional service while treating our customers and team members with unyielding integrity and care.

Our Core Value

We are a dedicated team of professionals. We respect each other. We encourage self-improvement. We strive for excellence. We embody integrity and ethics. We embrace change. We value our customers. We support our local real estate and lending communities.

Accolades

Sierra Pacific is recognized as a Top 10 (2013-Q1) Residential Lender ranked by Wholesale Volume; and a Top 30 (2013-Q1) Residential Lender ranked by Total Number of Loans. Additionally, Sierra Pacific has been recognized by Mortgage Technology Magazine as a "Top 25 Tech-Savvy Lender" for four consecutive years (2010-2013). 


Visit www.SierraPacificMortgage.com for more info