Despite several big-name banks pulling the product from their respective home loan offerings, reverse mortgages remain a popular mortgage choice among homeowners aged 62 or over.
A reverse mortgage is exactly what it sounds like — a mortgage in reverse. Rather than borrow a fixed amount of money then pay that loan balance down to zero as with a “forward” mortgage, a reverse mortgage starts at a given loan balance and works its way up as scheduled payments are added to the existing loan balance.
This 4-minute piece from NBC’s The Today Show highlights a few pros and cons of reverse mortgages, and the reasons why you may want to consider one, including :
No mortgage payments are ever due on your home
There is no credit check required for a reverse mortgage
There is no income requirement to qualify for a reverse mortgage
There are some basic qualification standards for the reverse mortgage program including a requirement that all borrowers on title must be 62 years of age or older; and that the subject property be a primary residence. Loan fees can also be higher than with a conventional-type mortgage.
If you meet the qualification standards, though, with a reverse mortgage, you have flexibility in how your home equity is distributed to you. You can receive a lump-sum payment, elect for monthly installments over time, create a line of credit, or a combination of all three.
Like all mortgages, reverse mortgages are complex instruments. That’s one reason why all reverse mortgage borrowers are required to attend counseling — the government wants you to be certain that you understand the nuances of the reverse mortgage program.
Your lender will want you to understand the program, too.
Planning to use an FHA-backed mortgage for your next home loan? You might want to get your application in gear today.
Beginning next week, the Federal Housing Administration (FHA) is changing the way it charges mortgage insurance to U.S. homeowners. For the fourth time since 2010, FHA mortgage insurance premiums are rising for all FHA-backed homeowners.
For FHA Case Numbers assigned on, or after, Monday, April 9, 2012, there are two planned changes.
First, FHA Upfront Mortgage Insurance Premiums (UFMIP) will increase by 75 basis points to 1.75%, or $1,750 per $100,000 borrowed. Upfront Mortgage Insurance Premium is paid at closing, and typically added to an FHA borrower’s loan size.
The current UFMIP rate is 1.000 percent.
Second, annual FHA mortgage insurance premiums are rising. All new FHA-backed loans will be subject to a 10 basis point increase in annual mortgage insurance premiums, costing homeowners an (more…)
The new, revamped HARP program is now available in Worcester County area and nationwide. It was officially released Saturday, March 17, 2012 by Fannie Mae and Freddie Mac.
HARP is an acronym. It stands for Home Affordable Refinance Program. HARP is the conforming mortgage loan product meant for “underwater homeowners”. Under the HARP program, homeowners in Massachusetts can get access to today’s low mortgage rates despite having little or no equity whatsoever.
HARP is expected to reach up to 6 million U.S. homeowners who would otherwise be unable to refinance.
HARP is not a new program. It was originally launched in 2009. However, the program’s first iteration reached fewer than 1 million U.S. households because loan risks were high for banks, and loan costs were high for consumers.
With HARP’s re-release — dubbed HARP 2.0 — the government removed many of HARP’s hurdles.
In order to qualify for HARP, homeowners must first meet 3 qualifying criteria.
First, their current mortgage must be backed either Fannie Mae or Freddie Mac. Loans backed by the FHA or VA are ineligible, as are loans backed by private entities. This means jumbo loans and most loans from community banks cannot be refinanced via HARP.
To check if your loan is Fannie Mae-backed, click here.
To check if your loan is Freddie Mac-backed, click here.
The second qualification standard for HARP is that all loans to be refinanced must have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009. Mortgages securitized on, or after, June 1, 2009 are HARP-ineligible.
The FHA is making more changes to its flagship FHA Streamline Refinance program.
Beginning mid-June 2012, certain current, FHA-backed homeowners will be able to refinance their existing FHA mortgage into a new one, without having to pay the government-backed group’s new, costly mortgage insurance premium schedule.
Earlier this week, the FHA rolled out its new MIP schedule.
Beginning April 9, 2012, new FHA mortgages are subject to a 1.75% upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium of up to 1.25% for loan sizes up to, and including, $625,500; or 1.60% for loan sizes exceeding $625,500.
Upfront MIP is typically added to the loan size as a lump sum. Annual MIP is paid via 12 monthly (more…)
Beginning April 1, 2012, the FHA is once again raising mortgage insurance premiums (MIP) on its newly-insured borrowers throughout Worcester County area and the country.
It’s the FHA’s fourth such increase in the last two years.
Beginning April 1, 2012, upfront mortgage insurance premiums will be higher by 75 basis points, or 0.75%; and annual mortgage insurance premiums will be higher by 10 basis points per year, or 0.10%.
For borrowers with a loan size of $200,000, the new MIP will add $1,500 in one-time loan costs, plus an on-going, annual $200 increase in total mortgage insurance premiums paid.
All new FHA loans are subject to the increase — purchases and refinances.
Despite an improving U.S. economy, the nation’s banks remain cautious about what they will lend, and to whom.
Planning to use an FHA-backed mortgage for your next home loan? You might want to get your application in gear today.
The FHA is making more changes to its flagship FHA Streamline Refinance program.
Beginning April 1, 2012, the FHA is once again raising mortgage insurance premiums (MIP) on its newly-insured borrowers throughout Worcester County area and the country.