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Category Archive : Mortgage

Las Vegas Reverse Mortgage

What exactly IS a Las Vegas Reverse Mortgage?

A reverse mortgage is a loan that enables homeowners who are 62 years of age or older to access the equity in their homes as tax free income without having to sell the home, give up title or take on a new monthly mortgage payment.

With a regular mortgage, money is borrowed to purchase the home and payments are made.  The difference between what you borrowed and the market value of the property is your equity.  As time goes on, the payments reduce the amount borrowed and hence, the equity enlarges.  A bonus is also the appreciation in value of the property over time which also contributes to your equity stake.

A reverse mortgage works in the opposite direction.  You use the equity in your home to receive cash, either as a lump sum, a line of credit, monthly amounts, or a combination of all three.  As time rolls on, the payments to you increase the loan amount and your equity in the home decreases

How do I qualify for a Reverse Mortgage?

  • You must be 62 years of age or older and have equity in your Las Vegas Home.

How is my benefit amount calculated?

  • The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

What properties qualify for Reverse Mortgages?

  • Most property types are eligible for reverse mortgages.  These would include Single Family Homes, qualified condominiums, townhouses, manufactured homes and 1 to 4 family owner occupied residences are eligible.

How do I get my money?

You have three options on how to receive your funds.

  1. Monthly Payments (made to you)
  2. Lump Sum Cash to you
  3. Line of Credit – unscheduled payments or in installments, at times and in amounts of borrower’s choosing until the line of credit is exhausted.

What are the Benefits of a Reverse Mortgage?

  • Funds from a reverse mortgage are tax free and do not effect your eligibility for regular social security and Medicare.
  • Reverse mortgages allow you to access the equity in your home while allowing you to stay in the home.
  • No monthly obligation of a mortgage payment.

A Reverse Mortgage borrower cannot be forced out of his/her home. Nor will he ever owe more than the value of his house. Reverse Mortgages are “non-recourse” loans, meaning in the rare case of drastic declines in home prices, the homeowner can never be held liable beyond the value of the subject home.

Requirements of maintaining a Reverse Mortgage

You continue to be responsible for payment of property taxes, hazard insurance and the proper upkeep of the home.  Any breach of these obligations renders the outstanding loan due and payable.

Similarly, any absence from the home of the last surviving borrower for more than twelve consecutive months terminates the agreement.  Selling or renting out all or part of the home or having liens attached to the home for whatever reason also means that all bets are off and the transaction ends.

What happens when I die?

At the time of your passing, the reverse mortgage comes due and payable in full.  At that time, your heirs have two options.  First, they can payoff the balance and keep the home.   Second, they can sell the home and they would receive any proceeds above the reverse mortgage balance.

If you are interested in receiving more information about a reverse mortgage or would like to speak to someone about a reverse mortgage, please call us at 702.376.0088.

Trouble Making Up Your Mind On Home Buying?

After many months or maybe years, you have finally decided to buy your own home. You have pinched every penny to save up a sizeable down payment. You have made open houses a weekend ritual but still can’t seem to make the leap into purchasing a home. Why not??

Maybe you’re comfortable in your current space. You have accepted the shortcomings of where you live whether it is loud neighbours or no parking readily available. Not many surprises since you have been there so long.

First time home buyers tend to freeze up when it comes time to actually picking a house. Will they be happy there? Will they like their neighbours? Will they be tied down because they are now house rich and cash poor? What happens if their financial situation changes for the worse? Basically, the fear of the unknown becomes a constant nagging in their ear and prevents them from moving on towards purchasing their dream home.

Here are some steps to try and then maybe you can take the leap to home-ownership:

  • Get comfortable with your finances: Make sure you sit down and go over all of your current finances and the new ones that will occur with home ownership. Things like property taxes, home owners insurance, commuting to work and cost of utilities should be factored into your monthly expenses to make sure you are buying within your limit.
  • Partner with a Realtor: You need to pair up with a knowledgeable realtor. Even though the internet will allow you to do lots of research on your own, you can’t get the low down on a property without help from a realtor. They will be able to answer questions you will have and give you the inside scoop on the property. They will also help you write an offer and make sure you get a good deal.
  • Accept some risk: There is uncertainty in everything about life, you just need to deal with it. Learn from people you know that have purchased a home. Find out their mistakes and what to look for. Make sure you don’t drain your bank account with purchasing the home, keep a safety net in case of emergency.
  • Fine tune your “must-haves”: Make your list of “must haves” in your new home. A garage, the neighborhood, size and layout of the home, and anything else you feel is important and that you can’t live without. You may find that you are willing to sacrifice one feature, if the rest is fabulous. If you are not crazy about the house, don’t bid. It is important you love the home you are bidding on, after all you will be living there for some time.
  • Be ready to bid: Great homes and prices don’t stay around for long. If you love the home, have your realtor help you make an appropriate bid. If you are wavering, ask yourself, “How will I feel if I don’t get this house?” You might just get it, and if not, at least you’ll you know you tried.
  • Find an experienced Mortgage Professional: Sit down with an experienced mortgage professional and have them help you analyze your options for financing your new home. Finding the right mortgage can be as important as finding the right home. Make sure you clearly understand what type of mortgage you are getting. Ask as many questions as you need too until you are absolutely clear on the type of financing you are applying for. Remember, you are the one paying back the mortgage.

I hope this pushes all of you “on the fence” home buyers “off the fence” and into the home of your dreams. Happy House Hunting.

Some Answers to Credit Score Mysteries

One of the most common things said when I am talking to a potential client on the phone is “I don’t want you to run my credit because it will drop my score”.

This is one of the most annoying statements made when you are trying to qualify a client for a mortgage. You simply can’t give them proper information without reviewing their credit report. So, I decided since how credit scores are calculated are somewhat of a mystery to everyone that I would elaborate some on this topic.

Each time a consumer applies for a loan, credit card or auto loan, they are having their credit checked. These credit checks are used by lenders to determine if the consumer is able to obtain financing. Every time a lender checks a consumers credit history, it shows up on the consumers credit bureau (Experian, Trans Union and Equifax) as an inquiry. These inquires can drop the consumers credit scores if too many inquiries are made in a certain period of time.

Many lenders rely on the FICO scores they pull when running a consumers credit history. These scores are tabulated by software from Fair, Isaac and Company Inc, along with what information is on the consumers history. Due to increasing pressure on Fair, Issac and Company to release how their software works, they have released information on how their scoring model calculates a FICO score for the consumer.

Inquires on a credit report are an indicator of risk and according to Fair Isaac and Company, the more inquires made means the more likely the consumer will not be able to pay his bills. When consumers want to buy or refinance a home, they usually contact more then one mortgage company for information. In order for the consumer to get accurate information from several mortgages companies, they need to have their credit checked by each mortgage company which in turn leads to many inquiries (especially if using an online site which shops various lenders). Since too many inquiries lead to lower scores, eventually the consumer could lose out on decent financing because their scores are too low.

Now for some good news and a way to combat that dreaded statement in the beginning of the article.

There is a new policy at Fair Isaac and Company, the software will ignore all auto and mortgage related inquiries that occur in the previous 30 day period from the time the credit is checked by the lender.

These inquiries will not be used to tabulate the credit score for the consumer. For each 14 day period prior to the 30 day period, only 1 inquiry will be counted no matter how many inquires where made during a particular 2 week period.

Inquiries on a credit report carry the lowest impact on scores. Things like high balances in relation to credit limit, recent late payments, judgments, and bankruptcy carry much more weight in tabulating a score. This information should be very usual to combat the consumers resistance to pulling credit because it will effect their scores.

Real-estate agents and mortgage professionals need to remind their clients that it is critical to sit down and review credit in order to provide options on the mortgages that they qualify for. This is the only way to provide the client with accurate information.

Las Vegas Called ‘Mortgage Fraud Ground Zero’?

According to FBI Special Agent, Scott Hunter Las Vegas is called mortgage fraud ground zero.

This problem is becoming so wide spread that special task forces have been created to combat the problem.  Every week you read in the paper or view the news about another real estate industry professional being arrested for some type of real estate or mortgage fraud.  Just this month, Cindy Birkland was arrested for alleged mortgage fraud.

According to the FBI, mortgage fraud is becoming one of the fastest growing white collar crimes in the United States.

Mortgage Fraud is usually committed by several individuals who all have a certain role within the scheme.  Usually a loan officer, borrower, real estate agent and/or an appraiser.  The most common type of mortgage fraud is a “straw buyer”.  This is where the bank lends hundreds of thousands on a home that is way over inflated due to an appraiser setting an unrealistic value.  The group splits the money and never has any intention on making any payments on the home.

More to follow…

The Mortgage Application: Getting Prepared Ahead of Time

The dreaded mortgage application process isn’t so scary if you know what to expect. Here is a quick breakdown of a few questions that I address during the initial  phone or office interview and mortgage application:

1.  Have you spoken with any other loan officers regarding this transaction?

I like to know what a borrower has been going through prior to speaking with me.  If there have been several credit reports pulled by other banks, I don’t want to contribute to possibly lowering their score by pulling another report.  I also ask this question because I want to know why the borrower is talking with other loan officers.  Is it a rate and closing cost thing, or did the previous banks not fulfill a certain need or expectation?  It just makes more sense to find out what people want up front, so that I can focus the rest of my time serving their specific need.

2.  Will this be a primary residence, second home, or investment property, and how long do you plan on keeping it?

These two questions usually start a conversation about the borrower’s intentions and real estate investment goals.  Buying rates down, ARMs vs. 30 yr. fixed, FHA, conventional, seller paid closing costs…..  There are several mortgage opotions to consider for each individual circumstance.  It is nearly impossible to have a productive discussion about rates, programs, and closing costs until you have clearly articulated your real estate investment goals with your loan officer.  It is absolutely acceptable to ask a loan officer what their rates are, however, be prepared to supply a little more information so that your loan officer can apply the best rate that fits your scenario.

3.  Total monthly payment and down payment you have budgeted for?

Again, back to the needs and goals of the client.  It is common for a borrower to ask a loan officer what they are approved for.  However, you may be approved for more than you actually want.

Here are a couple of easy formulas that you can apply  when calculating a monthly payment, down payment, and total purchase price:

Banks look at a borrower’s Debt to Income Ratio (DTI) as a factor for mortgage loan approval.  40% is a safe DTI to pay attention to for figuring out what you might be approved for.  This means that your total monthly minimum payments, including the new mortgage, cannot be above 40% of your total verifiable gross monthly earnings.  Credit score, down payment, and assets are compensating factors that a bank will consider for approval if your DTI is above 40%.

EX:  Total monthly gross income – $2,000

%40 DTI = $800 a month in total allowable payments

A good rule of thumb for determining a total mortgage payment is by multiplying $70 for every $10,000 loan amount.  I’ve found that this is a safe calculation which also includes taxes, insurance, and mortgage insurance.

So, for this scenario, the borrower would be approved for a loan amount of around $114,000.  If this borrower had a $200 a month car payment, then the the loan amount would drop to $85,000.

$800 a month total @ 40% DTI

– $200 a month car payment, leaving room for a $600 a month mortgage payment.

$600 divided by 70 = 85

85 x $10,000 = $85,000 total loan amount.

*Remember, that 40% is just a good starting point.  I’ve had borrowers approved up to a 65% DTI who had great credit, a significant down payment, and plenty of assets in the bank.

So, why do I ask a client what type of mortgage payment they want?  Simple, if they are approved up to $900,000, but only want a $1500 a month payment with zero down, I’m going to let their agent know to stay around the $200,000 – $230,000 purchase price range.

4.  Employment, residence history, income, and assets.

Just remember the number 2. A bank will need two year’s employment and residence history.  As far as conditions, be prepared to bring provide the most recent two bank statements, W2s, Tax Returns, and pay stubs.

If you have all of this stuff prepared ahead of time, the application should be smooth and painless.

Las Vegas Man Sues Countrywide After Adjustable Rate Mortgage Doubles

Your adjustable rate mortgage that you signed for a few years ago has just doubled, what do you do?  Well one Las Vegas man decided to sue his lender because his mortgage payment doubled when his adjustable rate mortgage adjusted.

The lawsuit claims he was talked into an adjustable rate mortgage that he could not afford and that documents were falsified by those that were involved in the transaction.

The mans attorney is claiming that Countrywide “took advantage of his lack of education, training, skill and ability”.

So let me get this straight; you sign for a loan, your payment goes up and then you sue and claim “they took advantage of your lack of education, training, skill and ability?” 

Now if loan documents were falsified in order for him to get approved then absolutely he was taking advantage of.  But if after all facts come out and there is no proof that loan documents were falsified then I just don’t see how he can sue because someone else is more educated than him.