Sunday, July 27, 2008

What Is A Reverse Mortgage?

President Ronald W. Reagan signed the FHA Reverse Mortgage Legislation (S. 825) on February 5, 1988 and congress has been improving this program ever since. If you are a senior over 62 and own 35% or more of your home, you may be eligible to tap into your equity and pull funds for whatever your need is.

According to AARP 48% of all senior citizens (half!) are pulling funds from their retirement, savings, equity and other solutions to help their children during these struggling times.
The economy is in a recession, we're in a war, natural disasters, high gasoline prices etc... Most senior homeowners are looking for a solution to remedy the above problems. Fortunately, there are options. A reverse mortgage may be the right option for you. We have found that senior homeowners are using this equity strategy to utilize services such as:
Pay off existing mortgage(s)
Stop mortgage payments
Enhance lifestyle
Take a vacation(s)
Pay off credit card(s) or any debts
Repair/remodel home
Add extra monthly income
Pay for medication(s)
Stop a foreclosure
Help out a family member
Buy a recreation vehicle

Congress approved this program and it is FHA insured.

Wednesday, July 23, 2008

Fannie Mae and Freddie Mac

Mortgage rates are rising because of the troubles at loan finance giants Fannie Mae and Freddie Mac, threatening to deal another blow to the faltering housing market.
Even as policymakers rushed to support the two companies, home-loan rates approached their highest levels in five years.

The average interest rate for 30-year fixed-rate mortgages rose to 6.71 percent on Tuesday, from 6.44 percent on Friday, according to HSH Associates, a publisher of consumer rates. The average rate for so-called jumbo loans, which cannot be sold to Fannie Mae and Freddie Mac, was 7.8 percent, the highest since December 2000.

Loan rates are rising because of concern in the financial markets about the future of Fannie and Freddie, which own or guarantee nearly half of the nation's $12 trillion mortgage market.
Worried about the companies' financial health, bond investors are driving up interest rates on their debt, and the added cost is being passed on to consumers through the mortgage markets. For a $400,000 loan, the increase in 30-year rates in the last few days would add $71 to a monthly bill, or $852 a year.

The rise in rates is of greatest concern for homeowners whose mortgages require them only to pay the interest due on their loans for the first few years. If such borrowers are unable to refinance into lower-cost loans, many of them will face the prospect of having to pay both interest and principal at higher, adjustable rates. For borrowers with a $400,000 loan, such a jump could send their monthly payments to $2,338 from $1,417, estimated Louis S. Barnes, a mortgage broker at Boulder West Financial in Boulder, Colo.

While mortgage rates approached those levels earlier this year and in 2007 during times of stress in the financial markets, the latest move adds urgency to the government's efforts to restore confidence in Fannie Mae and Freddie Mac. Lawmakers this week are expected to vote on a measure that would give the Treasury Department authority to lend more money to and buy shares in the companies if they falter.

The uncertainty surrounding the two companies is the latest in a series of pressures bearing down on the housing market and the broader economy. Higher interest rates make it harder and more expensive to refinance existing debts and buy homes.

"When we get to rate levels like this, the market just shuts down," Barnes said.
While mortgage rates remain relatively low by historical standards, they are higher than what homeowners and the economy became accustomed to during the recent housing boom. Lending standards have tightened significantly in the last 12 months, and many popular loans no longer are available.

A government report based on Fannie Mae and Freddie Mac loan data said on Tuesday that home prices fell 4.8 percent in May from a year earlier. That compared to a 4.6 percent decline in April. Other home price indexes that track a broader set of loans show much bigger declines.
Analysts say the rise in rates is a result of weaker demand for securities backed by home mortgages and of rising concern about inflation, which tends to send bond prices down and bond rates up.

In a securities filing released on Friday, Freddie Mac suggested that it might have to reduce or slow the growth of its mortgage portfolio to bolster its capital.

Freddie and Fannie together own about $1.5 trillion in mortgage securities and home loans, and they guarantee another $3.7 trillion in securities held by other investors. The companies have a combined net worth of $55 billion as of March. Analysts and critics say the companies need significantly more capital to cushion the blow of growing losses on the more-risky mortgages made during the recent boom.

Saturday, July 19, 2008

Five Reasons To Hire An Agent...

Selling your home is a daunting task full of potential blunders for a novice. Here’s why an agent is worth the commission.

Judy Moore of Re/Max Landmark Realtors in Lexington, Mass., says that today's topsy-turvy housing market is just too treacherous to go it alone. She offered five reasons why homeowners are better off selling their property with an agent:

1. Employ an expert: A typical property owner does not have anywhere near the home-selling experience of a real-estate agent. Agents can recommend relatively simple improvements — painting, repairing, decluttering — that can help a home sell faster and for a better price. "The Realtor is the neighborhood expert," Moore says. "We can walk through a property and see right away what needs to be done to [get the home sold]." Independent sellers might not be aware of these tricks of the trade.

2. Use better tools: Homeowners using agents can get their property listed on Realtor.com, "which has more far-reaching access to market that property — with over 3 million properties on it — than the for-sale-by-owner sites, which have tens of thousands," Moore says. Independent sellers do not have access to this service. (Realtor.com is an MSN Real Estate partner.)

3. Sidestep lawsuits: Agents can also protect sellers from potential litigation. "There are all kinds of liability issues that a seller could potentially face when ... dealing one-on-one with a buyer," Moore says. A homeowner could, for example, tell a potential buyer that hardwood floors extend to all corners of the house underneath the wall-to-wall carpeting. But if even one room has concrete flooring, the homeowner could be sued, Moore says. Agents, who have experience dealing with these liability issues, can help homeowners dodge such scenarios.

4. Duck the riffraff: Independent sellers might not have any idea whom they are letting into their homes during open houses. These potential buyers might not have the credit to make the purchase — and would therefore be wasting the home owner's time — or could even "try to rob them later on," Moore says. "It's a very scary kind of thing." She says that homeowners working with agents will have qualified buyers visiting their properties.

5. Avoid hardball tactics: It's a buyer's market out there. And with all the information available online, today's well-informed buyers are tough negotiators. Real-estate agents have been through the home-selling process before and are trained in negotiating tactics, giving them a potential edge in hammering out a deal in the seller's best interest. "It's hard to do that with your own property, particularly if you are not a professional," Moore says.

article courtesy of msn.com