Tuesday, June 28, 2016

Learning About The Reverse Mortgage Option

The term reverse mortgage is everywhere these days. It frequently appears in commercials or shows up on Internet searches. But you may not understand what it is exactly.

In short, it is a unique home loan that allows homeowners to convert some of their home's equity to cash. This equity that the homeowner has acquired throughout years of making payments on their home can now be returned to them in payment installments. In a typical mortgage situation, the borrower pays the lender and each payment reduces the amount owed and builds the borrower's equity in the home. In a reverse mortgage, the borrower receives payments from the lender, and each payment increases the loan balance and declines the amount of equity.

Who originates these loans?

Most of these loans are originated by the Federal Housing Administration (FHA) and are known as a Home Equity Conversion mortgage or HECM. An HECM is guaranteed by the FHA, so the borrower does not have to be concerned about failing to receive payments from their lender.

Who qualifies for these loans?

To qualify for this type of loan, homeowners must be age 62 or older and have significant equity in their home. In addition, to obtain an HECM, homeowners must own their homes outright or the balance they owe on their home must be low enough that it can be paid off with the proceeds from the reverse loan at closing. In addition, the borrower must reside in the home and be able to pay for recurring charges associated with the property including taxes and insurance. Finally, before getting the loan borrowers must receive information from an HECM counselor. The applicant's home must be a single-family home, an HUD-approved condominium or manufactured home that meets FHA requirements, or a two to four unit home if the borrower resides in one of the units.

How much can you borrow?

The amount a homeowner can borrow with a reverse mortgage varies depending on their age, the home's worth and the loan's interest rate. In most cases, homeowners of an older age are able to borrow more money, and the more a home is worth or the more equity the owner has in it, the more the owner is able to borrow. Lower loan interest rates also increase a homeowner's borrowing power.

How do I receive my funds?

With an HECM, borrowers have several choices of how to receive their payments. Borrowers can choose to receive a lump-sum payment at the loan closing or the borrower can take out a line of credit. This line of credit can be used as the borrower chooses and grows over time. A borrower can also choose to receive payments in the form of a monthly annuity. A tenure monthly annuity is a monthly payment that the borrower receives for the entire time they live in the home. A term monthly annuity is a monthly payment that the borrower receives for a set period of time that they choose. Borrowers can also choose to combine these options, such as by opting to receive a monthly annuity but also taking some cash at closing. By paying a small fee borrowers can also switch from one option to the other.

A reverse mortgage can be a beneficial source of income for senior citizens. By researching the pros and cons of this type of loan, homeowners can determine if it is a good fit for their financial situation.

Article Source: http://EzineArticles.com/9398480

Saturday, June 25, 2016

Money Is Flying

Through Thursday the stock market seemed to have been enjoying a great rally.  With fears of the U.K. leaving the European Union easing, markets around the world stabilized and have even been rallying.  However, as of Friday morning, everything changed.  Current indications are that the experts were wrong and that the U.K. is going to leave the European Union.  Most of the votes are in and they are pointing towards a “yes” vote for Brexit to happen.

As of early Friday morning stock markets around the world are tanking.  Money is flying out of stocks and into bonds.  The Yield on the 10 year bond is down to 1.46% as of early morning trading.  The U.S. stock market futures are down over 600 points prior to the opening of the Friday trading day.  Bottom line…buckle up and stay tuned as the markets are in for a crazy ride while investors and governments around the world sort through the what the impact of the vote to exit will ultimately be.

The housing market continues to show strength, although the numbers are not earth shattering.  Existing home sales rose 1.8 percent in May which is the strongest pace of growth since February 2007.  The increase is only modest from prior months but it continues to point to an improving housing market.  Compared to the same time last year existing homes sales are up by a narrow 4.5 percent.

Home prices are up, but only modestly at 4.7 percent for the year.  Lack of inventory continues to be the culprit for slow growth in the housing sector.  Supply of homes is very low at only 4.7 months.

The South is up 6.5 percent from the same time last year at a rate of 2.280 million.  The Northeast, which is the smallest region is up 11.6 percent for a 770,000 annualized rate. The West, usually a strong region appears to be lagging behind the country being down 1.7 percent from a year ago.

New homes sales data is always volatile due to the small sampling used to acquire report data.  Despite the volatility, it appears that new home sales are continuing to trend higher.  Although new home sales fell a larger than expected 6.0 percent in May, the number is misleading.  The annualized sales rate of 551,000. is the second best of the housing recovery cycle.

The Federal Housing Finance Agency’s report on home prices was weaker than anticipated, but still shows home price appreciation.  Prices according to the FHFA increase a much smaller than expected 0.2 percent for the month of April.  Prices compared to the same time last year are up by 5.9 percent.

Next week’s potential market moving reports are:

·        Monday June 27th – International Trade in Goods
·        Tuesday June 28th – GDP & Case-Shiller Home Price Index
·        Wednesday June 29th - MBA Mortgage Applications and Pending Home Sales
·        Thursday June 30th - First Time Jobless Claims and New Home Sales
·        Friday July 1st - ISM Manufacturing Index & Construction Spending

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, June 22, 2016

On The Beat - Vice Unit

Chief John Carli introduces Sgt. Scott Whitehouse and the new Vacaville Police Department Vice Unit

Sunday, June 19, 2016

A Change In Perspective

As expected, the FOMC did not raise interest rates at the end of their meeting on Wednesday.  They will continue to hold the target rate at a range of 0.25 to 0.50 percent.  There is certainly a change in the Fed’s perspective on the growth of the economy.  Whereas in prior months, the Fed was very optimistic about job growth, the latest employment report has the Fed believing that employment continues to improve however at a much slower pace.  The Fed is also describing the willingness of companies to invest in their own business growth as being soft.

Some of the positives to the Fed report is that household spending has improved.  This indicator goes to the heart of the nation's economy and has now been upgraded to showing strength according to the Fed.

The quarterly forecasts released by the Fed show that they still anticipate two rate hikes this year.  The Fed did pull back on their expectation as to the pace and overall number of rate increases that will occur over the next two years.  It is very clear that the Fed is taking the increasing of interest rates at a very slow and cautionary pace.

In the housing market mortgage applications declined for both purchases and refinances despite the lowest rates since January of 2015.  According the Mortgage Bankers Association of America applications for purchases and refinances declined 5.0 percent and 1.0 percent respectively.  Many industry professionals are attributing the decline to the end of the school year and the start of summer.  Overall mortgage activity continues to remain strong at a pace of 16 percent higher than the same time last year.

In another sign of a strengthening economy, retail sales, another major indicator of economic health, jumped 0.5 percent for the month of May.  Analysts were expecting only a 0.3 percent increase.  Strength in the report is that even though auto sales, which can have a big impact on the data, increased nicely, retail sales increased a very healthy 0.4 percent without the automobile component.

One of the challenges impacting the Fed’s policy on interest rates is in trying to get a gauge on what is happening in regard to inflation.  The Fed would like to see an annualized rate of 2.0 percent inflation on the consumer level.  The challenge facing the Fed at this time is that inflationary pressure is starting to be felt on the wholesale side, however it is not making its way to the consumer side.  Wholesale inflation rose a stronger than expected 0.4 percent for the month of May.  Consumer prices are barely up 1.0 percent from the same time last year which is far below the Fed target for inflation.

Next week’s potential market moving reports are:

·        Tuesday June 21st – Janet Yellen Speaks
·        Wednesday June 22nd - MBA Mortgage Applications, FHFA House Price Index, Existing Home Sales, and EIA Petroleum Status
·        Thursday June 23rd - First Time Jobless Claims and New Home Sales
·        Friday June 24th – Durable Goods Orders and Consumer Sentiment

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Thursday, June 16, 2016

Current Home Loan File - Big Valley Mortgage

Mike at Big Valley Mortgage talks about the current documentation needed to get a home loan. Big Valley Mortgage can handle the new regulations. See more at http://www.thelendingpros.com

Monday, June 13, 2016

A Nice Boost To Housing

Mortgage rates are once again approaching the area of all-time record lows.  Although not quite there yet, the decline of rates seems to be adding a nice boost to housing.  Real estate professionals from around the country are reporting that they are super busy, and the demand for housing leading into the summer months is higher than normal.  (Does anyone really know what is “normal” anymore?)

With the decline in mortgage rates, loan applications jumped 12 percent for purchases last week and 7.0 percent for refinances.  The increase in refinances is a significant jump however not as much as many would have expected with rates where they are now.  The increase in purchase applications reported by the Mortgage Bankers Association of America is a clear indication that housing demand remains strong.

Many areas of the country, especially the Pacific Northwest, continue to struggle with anemic inventory availability.  These days when a house goes on the market, within 1 -3 days the house is sold and usually for full price, or even higher.

The stock market has been inching higher day by day.  The DOW Jones Industrial Average is floating near record territory and actually crossed over the 18000 mark this week.  With little negative domestic or international economic news, investors are feeling more confident in the markets.

Although, Fed Chair Janet Yellen has indicated a little bit of concern about the slowdown in hiring for May, she is not taking an alarmist position.  Yellen alluded to the idea that the Fed may have to rethink the planned increase in the Fed Funds Rate they were hoping to announce at next week’s meeting.  Investors are keeping an eye on the FOMC announcement along with the accompanying economic forecasts.  THE FOMC will release their announcement at 2:00PM on Wednesday June 15th.

On the heels of last week’s dismal employment report of the addition of only 38,000 jobs for the month of May, the claims for first time jobless claims have continued their decline from the prior weeks.  Not too long ago we were hovering around the benchmark 300,000 lever for claims.  In the last few weeks we have seen the number drop down to a much healthier 260k range.

Next week Wednesday with the Fed rate announcement along with all of the other economic reports being released that day, it can quite possibly be a volatile trading session in the markets.  Lately we have been fortunate not experience too much craziness in the trading arena.  Surprisingly there has been some stability.  Stay tuned.

Next week’s potential market moving reports are:

·        Tuesday June 14th – Retail Sales
·        Wednesday June 15th - MBA Mortgage Applications, EIA Petroleum Status, Industrial Production, FOMC Meeting Announcement, FOMC Forecasts, & Producer Price Index
·        Thursday June 16th - First Time Jobless Claims, Consumer Price Index, & Housing Market Index
·        Friday June 17th – Housing Starts

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Tuesday, June 7, 2016

Saturday, June 4, 2016

Improving Housing Data, Unchanged Growth

Housing data continues to improve with the latest Case-Shiller's 20-city index reporting a jump of 0.9 percent for the month of March.  This is the strongest report since last November. Nineteen of the 20 cities measured by the index showed increases.

Despite the monthly gain, the growth from the same time last year remains unchanged at 5.4 percent.  This index appears to be running behind the Federal Housing Finance Agency’s measurement of a 6.0 percent increase from a year ago.

Construction spending seems to be telling a little bit of a different story.  Spending declined 1.8 percent in April for the worst reading since January 2011.  There does not appear to be any recognizable factors that caused the downturn other than the fact that the previous month had a major upward revision of 1.5 percent.  Given the huge increase last month, a reversal was not completely unexpected.  February figures were also revised higher so this month’s decline follows two very strong months of gains.

The highlight of the construction spending report comes from the residential side.  Even though the latest report shows a decline of 1.5 percent, this follows two upward revisions of 3.2 percent and 2.6 percent in the prior two months. Even better is the year-on-year rate for residential spending which is now up a very strong 8.0 percent. Multi-family units, up from the same time last year by 21.4 percent.

It seems like mortgage activity may be slowing slightly.  Purchase applications for home mortgages fell 5 percent while refinancing declined 4 percent. There is some thought that buyers may be waiting for even lower rates as mortgage rates continue a slow decline toward the area of historical lows.  Although we are not there yet, some analysts believe that if other areas of the economy continue to slow, mortgage rates will continue lower.

Compared to the same time last year, the purchase index is higher by 28 percent.  Mortgage rates sitting below 4.0 percent is certainly a contributing factor.  The housing market is doing very well.  Many reports show continuing strength.  Last week new home sales showed an increase of 16.6 percent and existing home sales were higher by 5.1 percent.

Finally, even the manufacturing sector is showing signs of growth.  The ISM Manufacturing Index showed an increase of 0.5 percent.  This appears to be due to a slowing in delivery times which is typically caused by an increase in orders.

Next week’s potential market moving reports are:

·        Tuesday June 7th - Productivity and Costs
·        Wednesday June 8th - MBA Mortgage Applications & EIA Petroleum Status
·        Thursday June 9th - First Time Jobless Claims
·        Friday June 10th – Consumer Sentiment

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.