What Is The Reverse Mortgage Application Process?

The application process for a reverse mortgage loan usually takes between 30 days and 45 days from beginning to end and has five major processes involved. But, the longest part of the process is the decision making stage, which leads up to the loan application.

An average reverse mortgage applicant starts thinking of a reverse mortgage loan about six months before they complete an application. The homeowner generally researches reverse mortgage loans using various resources for several months. The next thing they do is to request information from a reverse mortgage specialist. Then he or she may invest at least one month meeting with the expert in person and checking the good faith estimate as well as the other pertinent documents for the loan.

Step 1. Initial Reverse Mortgage Loan Application

The reverse mortgage loan application will legally authorize the lender to start the application process. However, the lender can’t incure any of the cost on your behalf until counseling or step two of the process has been completed. The reverse mortgage application isn’t binding and could be cancelled at any time during the loan process. The application would determine the reverse mortgage fees, loan amounts, as well as interest rates.

Step 2. Reverse Mortgage Counseling

Although the reverse mortgage loan has been finished, the lender isn’t allowed legally to incur costs on behalf of the applicant until the latter has given an HECM Counseling Certificate that’s been signed. This will be proof that the applicant has gone through the required couseling session with a counseling agency that’s been approved by HUD. The counseling could be done before or after the initial loan application.

Step 3. Appraisal

The appraisal creates the legal value of the property of the applicant. The appraisal for the reverse mortgage loan should be performed by an appraiser that’s approved by the FHA and it should adhere to a certain FHA format. This implies that even when a homeowner already has an appraisal, it would most probably need to be reappraised at this time in the process.

Step 4. Underwriting

The lender would confirm the legal ownership of the applicant of the property by performing a title research and buying title insurance. They would also work with the applicant to clarify any concerns with bankruptcies, unpaid liens, or trust. When the lender has completed underwriting and has approved the application, the status will become clear to close. This implies it’s all finished and the closing date will then be set finally.

Step 5. Closing

The lender as well as the applicant will set a closing date wherein an attorney or a notary will meet with the applicant so they could sign the documents for the final closing. This is the opportunity of the applicant to check the closing paperwork to ensure that the fees, interest rate, as well as the loan amount are what you expected. After you sign, the application will then go into a right of rescission period which will last for three days. This implies that even if the closing has already happened, the reverse mortgage Columbia loan applicant could still decide to cancel the application without facing any penalty for three business days following the closing.

Following the waiting period, the title firm would give a check to the homeowner if the proceeds are available from the loan. In case the applicant was making use of a reverse mortgage loan to pay off a mortgage, the title firm would send the amount for the mortgage payoff to the lender.

Call Reverse Mortgage Specialist if you wish to know more about the reverse mortgage loan process.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

Understanding The Volatility of Mortgage Rates

With the economy in a mess, an increasing number of workers are being let go, and bigger parts of the country are ordered to stay at home to prevent the spread of COVID-19, record low interest rates for mortgages were one bright spot within the financial sector. But not anymore.

Both homebuyers and homeowners who are looking to refinance would be disappointed once they see the rates that have gone up and down in a wild manner during the past few days, and in some cases, even by the hour. This is an unprecedented kind of volatility, and it makes it harder for borrowers to lock in a lower rate, says the professionals. There is an upward surge on the mortgage rates even if the Federal Reserve has cut back short term interest rates.

Rates have increased from a low of 3.13% on March 2 by over a full percentage point to 4.15% on Friday. Other lenders reported the rates to be at the mid 5% range. Mortgage rates are extremely volatile, and it’s by a wide margin. At this point, borrowers who are looking for some good news would most likely be disappointed amid the coronavirus crisis.

Mortgage Rates Are On A Roller Coaster Ride

Mortgage rates tend to fall whenever the economy struggles. However, there is nothing normal about this time and there are many financial reasons why the rates are going up and down wildly.

First of all, it is the lenders’ reaction to the massive throngs of homeowners who’ve been wanting to refinance their current mortgages when the mortgage rates crashed earlier this month. The rush in gold was understandable. A few homeowners go to save hundreds or even thousands of dollars over the length of time of their 30 year loans after managing to have it refinanced at much lower rates. However, the rising number of people search to lock in these kinds of deals have turned out to be much more than a few lenders could deal with. Some have decided to increase their rates to slow down the whole process.

However, the mortgage backed securities within the secondary market are the driver of mortgage rate’s volatility. Once lenders make a mortgage, they generally do not want to keep it since it will tie up the cash they could use for new loans. So they end up selling their mortgage loans, which have been bundled into a group of mortgage backed securities like the mortgage bonds to investors who are in the secondary market.

Investors think they’re like the U.S. Treasury bonds. They are safer but these investments are less lucrative compared to the stock market. Given that the stock market is currently down, investors have conventionally turned to bonds. However, the market is now flooded with bonds because of the deluge of refis as well as the federal government giving out more bonds to fund the measures aimed to stimulate the economy. Therefore, the bond prices are currently low. Since mortgage rates are inversely proportional to bond prices, the mortgage rates are up if the prices of bonds are down.

Call Reverse Mortgage Specialist if you wish to know more about mortgage rates.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

How Much Can Retirees Spend?

With the interest rates declining and turbulent market volatility, a lot of people are thinking about their retirement plan’s viability. Will they have enough to meet their spending goals once they retire?

The 4% rule then comes into the picture. For those who don’t know, it is a basic rule that serves as a guide for retirement spending. It’s by far the highest rate of withdrawal that’s ideal with market returns in the United States for those who are modifying their spending for inflation every year and eyeing a 30-year retirement. You need to know that the 4% rule is not applicable to everybody nowadays since retirees deal with the lowest interest rate setting ever. It’s also not applicable to those who don’t want to hold 50% stocks throughout their retirement years.

Dedicated Income Sources

Dedicated income sources include setting up a bond ladder by keeping individual bonds until it matures so you can use it to support your expenses once you retire. You can also buy a basic income annuity that will transform a single premium into what they refer to as a protected lifetime income.

Can Retirees Spend More?

The first possible way for retirees to spend more is through buffer assets. These are the assets that are made available beyond the financial portfolio where you can draw from following a market downturn. The returns on such assets should not be linked with the financial portfolio because the main objective of these assets is to support the spending if the portfolio is down. Policy loans that has a cash value of entire life insurance and opening a line of credit are the two primary buffer assets that you should consider.

You can also use a variable spending strategy as a way to spend more during retirement. Spending could begin higher, but only since there’s the willingness to cut back spending as needed. There are different variable spending strategies and the most famous ones are the Guyton and Klinger decision rules. This method focuses on inflation adjusted spending, however, the inflation adjustment will be skipped during the time when the portfolio undergoes a loss, and the spending will then be reduced further by 10% permanently at any time during the first 15 years of your retirement wherein the rate of withdrawal from the assets remaining has increased by more than 20 percent beyond the initial level because of a reducing portfolio balance.

There could be a lot of these 10% permanent spending cuts especially during a bad market. Spending could also rise by 10% if the portfolio increases enough so that the existing withdrawal rate is about 10% lower from where it all began.

Insurance and Investments

If a retiree has a spending goal with 2% spending growth during his retirement. With investments only, the retiree will have a 2.88% spending rate. If he puts 30% of their assets into a SPIA, it will have a withdrawal rate of 3.8%. Adding investments and annuity, their withdrawal rate will at 3.92% from 2.88%. Since these bonds are by far the least effective way to support the retirement spending, this kind of mixed strategy may work better for those conservative retirees.

Call Reverse Mortgage Specialist now if you want to learn more about retirement planning.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

Reverse Mortgage: What Are The Requirements?

Reverse mortgage loans are a way for American seniors to have access to their home equity, which they can use as another source of income when they retire. But, strict guidelines and rules were established and they need to be followed by all those who qualify for such mortgages, and the amount this type of loan could offer.

In case you are thinking of taking out reverse mortgage loans, you should have a good understanding of the basic rules that need to be followed.

Overview of Reverse Mortgages

Reverse mortgages are loans that are made to applicants who are at least 62 years old. This type of loan lets homeowners convert their home’s equity into tax-free money without the need to pay any monthly payment.

Reverse mortgage loans are named as such because the lender pays their borrowers instead of the borrowers paying the lenders, which is how it works with a traditional loan. 

The U.S. Department of Housing and UrbanDevelopment offers the most common type of reverse mortgages called Home Equity Conversation Mortgage. It is not a government loan but it is a type of loan that is backed by a part of the HUD or the Federal Housing Administration.

Reverse mortgages let the applicant borrow cash by placing their house as collateral. A bank provides the borrower with loan payments either as ongoing payments or as a lump sum according to a percentage of how much equity they’ve piled up in their house.

Reverse Mortgage: Requirements and Eligibility Guidelines

The homeowner must be at least 62 years old

The home you want to take out the reverse mortgage on should be your main residence

You should own a house or have a low balance on an existing mortgage if you apply for reverse mortgages in Columbia.

You should not be delinquent on federal debts

You should not have any problems setting aside a part of the loan funds at closing to cover things like insurance, property taxes, repair costs, and home maintenance.

Your home should be in good shape and should undergo counseling that is offered by a counseling agency that’s been approved by HUD. Through this, your eligibility will be checked and what are the consequences if you decide to take out such a loan.

For example, applying for reverse mortgage loans before retirement runs the risk of running out of cash later in their life when they will have lower income but their medical bills are higher.

Reverse Mortgage Fees

It’s crucial to remember that fees and interest rates are going to be added to your loan balance every month as a part of reverse mortgage loans. This implies that your debt will increase when you apply for this kind of loan because this is not free money. Apart from that, the borrower needs to pay homeowners insurance and property taxes. 

Call Reverse Mortgage Specialist if you need the help of a professional to determine if you are the best candidate for this type of loan.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/