Did you hear the news?

If you have a buyer over age 55 you might qualify for a reverse mortgage up to $4,000,000 to purchase a primary residence!

• Loan to value depends on a mix of the age and property type, and price; typically 30-50%. The older the age, the more they can borrow
• It may be possible to add a line of credit for future liquidity needs
• The borrower makes zero monthly P&I payments, the interest accrues against the equity in the home.
• Upon the eventual sale if there is equity left it goes directly to the seller, if not there is no recourse against the borrower, his heirs or other assets.
• The borrower maintains full title to his home, just like a regular mortgage.

Chris Neuswanger NMLS 243369

Eagle One Financial LLC

150 E Beaver Creek Blvd. Avon CO 81620

970-748-0342

chris@mtnmortgageguy.com

The post Lower Age and Higher Loan Limits for a Reverse Mortgage appeared first on Eagle One Financial LLC.

The nature of a resort community means that we often have residential condominiums that are located in less than traditional buildings, and may have very untraditional ownership situations. Some Colorado resort properties are a challenge to mortgage, but not impossible. These properties present a unique set of challenges for any lender to finance.
The problem stems from the fact that most mortgage money is raised by lenders raising pools of money in the bond market to lend as mortgage funds. To sell these bonds the lender must generally specify what the funds will be used for, and most often it is for mortgages that are made in compliance with Fannie Mae and Freddie Mac guidelines.
This means that the properties must meet fairly stringent guidelines in terms of what type of property is involved, and properties that are located in situations such as are common here do not often meet those guidelines. This entails such situations as condominium hotels, mixed use buildings with commercial space on the ground level and residential above or associations which include both whole ownership and deeded ownership.
As we all know, these properties are often the most expensive and desirable properties in the valley, and in the event of an economic downturn would probably hold their value better than many properties in the valley, putting the lender in a fairly secure position. In addition, if a lender did end up owning such a property it would be fairly easy to resell or manage until such time it sold.

What are your options?

Recognizing this, mortgage lenders have turned to untraditional sources for such financing, generally known in the industry as portfolio investors. These firms hold mortgages in their own investment portfolio rather than funding them with the sale of securities. As a result they can set their own guidelines as to what is acceptable and what is not in terms of types of properties.
These loans are generally slightly higher in rate than a conventional mortgage, though not always. Where they often shine is if the loan amount is considered a jumbo, that being anything above $625,000. In traditional lending, jumbo loans cost more and conforming loans (those below the $625,000 mark) Portfolio loans generally have no such distinction and carry a rate that is somewhere above the average conforming and below the average jumbo rate. So if you need a large loan you may find a better deal than you thought you might, and if you need a smaller loan it might cost you slightly more than you would like.

Portfolio loans often come in attractive adjustable programs as well. Generally rates are fixed for a period of say 3 to seven years before they adjust. This gives the lender the flexibility to make sure his investment will earn a market rate of interest, without committing the money up for 30 years at a given rate. As few people ever really stay in a loan for seven years it is a win-win situation for everyone.

How do you qualify for a stated income loan?

These loans often carry features that simplify the qualification process, such as allowing for stated or non-income verified loan approval. The loan to values may be lower than average in these situations, but to many borrowers it can be a real advantage. If your finances are pretty complex and involve partnerships, corporations and numerous diversified holdings the paperwork on a traditional mortgage can be staggering.

With a stated income program you simply state the income you make and verify tot he lender a certain amount of liquid assets and if everything appears to be reasonable your loan can be approved without tax returns, P&L’s and balance sheets from all your entities.

There can be advantages and disadvantages to a portfolio loan given a particular situation. If you think you might benefit from such a situation contact me to discuss your situation and what options might be best.

The post SOME COLORADO RESORT PROPERTIES ARE A CHALLENGE TO MORTGAGE, BUT NOT IMPOSSIBLE appeared first on Eagle One Financial LLC.

Quite often of late I see advertisements for no cost mortgage loans, particularly with regards to a refinance.  Like mother always told you, if it sounds too good to be true, it might just be.

A no cost loan can either be a great deal for a borrower or a not so great deal.  And just as there must be 100 different types of first mortgages out there, there are probably as many different scenarios for no cost or reduced cost or low cost loans.

How do you decide what’s best for you?  Short of spending every waking hour worrying about what’s best I recommend finding a lender that will sit down with you and explain several different options.

What Are My No Cost Mortgage Options?

First decide if you want a fixed or adjustable, and how long you wish the loan to amortized over.  Most mortgages are for 15 or 30 years, but don’t hesitate to ask for a 10, 20 or 25 year if you think it might work for you. Once you decide on these items your lender can quote you several scenarios involving rates and closing costs.

The rule here is that the lower the closing costs, the higher the rate, but that is not always a bad thing.

Let me give you an example of a loan I am currently working on for a local couple who are refinancing their condo in Eagle-Vail.  They bought the property about a year ago, and obtained a 30-year fixed rate mortgage at 3.75%, which was a good rate at that time.  The loan amount they need is $450,000.00.  their current P&I payment is $2,020.00.

They want a new 30 year fixed rate to lower their payments, but they don’t have a lot of cash to bring to closing and they’re not sure if they will stay in the property more than a few more years, but in case they do they want a fixed rate rather than an adjustable.

I offered them three options.  The first would be a 30 year fixed rate of 2.625%; this would lower their payment from $2020.00, or $1807.00.  However to get that rate would cost them a 1% origination fee and about $3200 in closing costs.  This 7,600 total would take them about 36 months to recoup by saving $213/mo.  After that they would be doing great, but they were hesitant to invest that much in closing costs if they might sell the property in a few years.

Because they had equity in their property we could have added the $7.600 onto the loan amount and they would not have had to bring the cash to close, but they were uncomfortable with this as their goal was to build equity in their home, not borrow more money against it.

The second option we looked at was a fixed 30 year rate of 2.875% with a monthly payment of $1860.00 and no 1% origination fee but with closing costs of about $3,100.00.   This would only take about 19 months to recoup by saving $160/mo on their payments.  By going with the slightly higher rate they eliminated $4,500 in closing costs, but raised their payment slightly over the loan that required higher closing costs.

The third option was a “no closing costs” loan at a rate of 3.125%.  This gave them a monthly payment of $1,927.00, which was $93/mo lower. By agreeing to the higher rate though there would be no origination fee and I would pay all their closing costs except for an appraisal and credit report.  We did not add it onto the loan amount, the closing costs of the title work, underwriting, filing and other fees were paid by the lender via a closing cost credit at the time of settlement.. This allowed them to recoup their investment almost immediately and get a lower rate.

We finally agreed on the second option, which they felt would be in their best interests, but any of the three would have been fine with me.

No Closing Cost On A No Cost Mortgage Loan?

Borrowers should beware of the lender who advertises  “no out of pocket closing costs”.  This sounds great, because after all if it’s not out of your pocket what do you care.  What these ads often refer to is that the lender will add the loan costs onto the principle  balance of the loan and you now owe the money as by means of a larger mortgage than you intended to have,(so it really does come out of your pocket eventually!

This can be okay if the costs are reasonable and the borrower wants it that way and he is aware of it.  I have heard of situations where a borrower was only informed of this at the closing table, and I personally don’t find that an ethical way to treat borrowers, and try to clearly explain their options to them.

Chris Neuswanger can be reached at Eagle One Financial  in Avon at 970-748-0342, via e-mail at mtnmortgageguy@gmail.com, or click here to contact Chris now and he welcomes mortgage-related questions

The post HOW MUCH DOES A NO COST MORTGAGE REALLY COST? appeared first on Eagle One Financial LLC.

While I have written about reverse mortgages in the past, I thought I would touch on the subject again as it seems to be a popular topic recently.

It has often been said getting a mortgage is the most complex financial decision most people make in their lives.  Actually a reverse mortgage is in many ways even a more complex decision, but one that can be hugely beneficial to many older Americans (at least one spouse must be over 62 to qualify).

A reverse mortgage is a financial tool that can be used to either purchase or refinance a home.  If you own a home you may be able to use this unique program to pay off your current mortgage and, if you have enough equity, either get a lump sum cash out or a line of credit to draw on over the years.  You might also be able to set up regular monthly payments for as long as you live in the home, or a combination of all three.

Basically how it works is you take out a new mortgage loan, which will pay off your current loan (if you have one) and the lender determines a reserve margin of equity in your home to absorb accrued interest over your projected life span using actuarial tables.

Can I refinance with a reverse mortgage?

On a refinance, let’s say you have a home valued at $750,000 and you owe $100,000 on it and you and your mate are both 70 years old.  You could get a reverse mortgage for about $355,000 of which the first $100,000 would go towards paying off the old mortgage.  If you got an adjustable rate option you could have a line of credit for the balance of the loan ( about $255,000).

The interest would start accruing on the $100,000 right away.  Interest would accrue on whatever you draw against the line of credit.  You never have to make a payment on the loan, the interest just accrues as long as you live in the home as your primary residence and are not absent for longer than 12-months (meaning for example that if you were hospitalized or in a nursing home for longer than 12-months  the loan would be due).  If you live in the house until you pass away the house will be sold by your heirs and if there is equity left in the home it will go to your estate.  If there is no equity the heirs just sign the place over to the bank and the bank deals with disposing of it.  You retain full ownership of your home always, and if the loan balance exceeds the value of the home there is no liability on behalf of you or your heirs to pay it back.

Keep in mind though that you do have to pay taxes and insurance and maintain the home, if you failed to do that you could be deemed to be in default and the home could be sold to satisfy the debt.

Can I purchase a home with a reverse mortgage?

Few people realize that a reverse mortgage can be used to purchase a home as well.   In this case, the buyer would make a substantial down payment (usually 40-50% of the purchase price) and could then live in the home for the rest of their life and never make a mortgage payment.  The interest would accrue, and when the home was sold if there was equity the homeowner or his estate would receive the proceeds.  If there was no equity the homeowner or his estate will just walk away from the property.

There are many facets to be carefully considered when deciding if a reverse mortgage is right for you or not, and quite honestly for some homeowners it would not be the right choice but for others it can be a life enhancing transaction.  It can preserve liquidity and open many options for many senior citizens and ease concerns about outliving your money.  It can also help homeowners stay in their homes years longer.

Reverse mortgages and divorce?

A  reverse mortgage used for a purchase transaction can also be a strategy for couples divorcing in that it could allow a spouse with cash but reduced cash flow income to own a home.

How this often works is the couple may sell their primary home and spit the proceeds.  Often both parties wish to continue owning a home but double payments are not affordable.  One or both parties can take their share of the proceeds and use it for a substantial down payment (usually at least half of purchase price) and take out a reverse mortgage and enjoy the benefits of home ownership without additional monthly payments.

A reverse mortgage can also be put in place on the current home and the cash out (if available) can be used to buy out the departing spouses equity and leave the remaining spouse with no house payments.  Of course the interest would continue to accrue as in a conventional reverse mortgage but the difference in cash flow requirements can be substantial.

 Contact us today to discuss if a reverse mortgage is right for you!

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