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