• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

A Reverse Virginia Mortgage Lender! Nationwide Reverse Mortgage

  • Home
  • Refinance
    • Get Cash From Your Home
    • Lower Your Payment
    • Reverse Mortgage Loans
    • Consolidate Your Debt
    • HARP Refinance Program
    • Pay off Your Mortgage Early
  • Buying A Home
    • First Time Home Buyer
    • Making Sure You Are Prequalified
    • Vacation Homes
    • Low Down Payment Options
    • Reverse Mortgage for Purchase
    • USDA Home Loans – Rural housing loans
    • Purchase Application Checklist
    • Purchase Loan Process
  • Apply Online
  • Loan Options
    • 30 Year Fixed Rate Mortgage
    • 15 Year Fixed Rate Mortgage
    • FHA Home Loans
    • Reverse Mortgage Loans
    • Home Loans for Veterans! VA Loans
    • Jumbo Home Loans
    • Stated Income Loans
    • No Cost Loans!
    • New Construction Loans in Virginia
  • About Us
    • Blog
    • Client Testimonials
  • Contact Us
Home » Blog

Blog

September 3, 2019 By Ben Borden Leave a Comment

Kiplinger: Live Well in Retirement with the help of a Reverse Mortgage

There was a very interesting article in Kiplinger’s magazine this past week regarding retirement. The title was “Live Well Without Running Out of Money in Retirement.” Of course it had all the typical successful retirement “do’s”, manage your budget, don’t over withdraw income, watch out for healthcare expenses, guarantee your income, etc.

The fascinating part was at the very end it spoke of utilizing a Reverse Line of credit or Reverse Mortgage during retirement. Fascinating only because its something that the media has rejected for some time and has been a regular part of our planning for many years.

Reverse Lines of Credit are getting tremendous footing in the financial reverse mortgages provide security in retirementplanning community as a viable financial product for those in retirement to protect assets from market downturns and as a way to reduce the risk of a retiree draining their retirement assets throughout retirement.

Matter of fact, Eileen Ambrose and Sandra Block, two of Kiplinger’s senior editors write “Reverse mortgages have often been branded as a way for older retirees to raise money only when other sources of retirement income have dried up,”  “But a growing group of financial planners and academics say that taking out a reverse mortgage early in retirement could help protect your retirement income from stock market volatility and significantly reduce the risk that you’ll run out of money.”

A Stand By Line of Credit

The most beneficial strategy using a reverse mortgage is “the standby reverse mortgage.” Also called a Reverse Line of Credit, a retiree opens a reverse line of credit and lets it sit open. When the stock market falls, the line of credit can be utilized to pay day to day expenses until a portfolio recovers.  Retirees who follow a strategy like this should be able to “avoid the pitfalls of the Great Recession.” Ambrose and Block write, when many seniors were forced to take money out of depressed portfolios to pay their monthly bills.

It’s bad enough to suffer through a 25% – 35% decline in the stock market, but to continue to take systematic income withdrawals during that time compounds the issue. A reverse line of credit gives the retiree a “bucket” to go to during this time allowing time for the investment account to recoup the losses.

This strategy can be effective, “both from a practical and a behavioral perspective,” says Harold Evensky, a certified financial planner and chairman of Evensky and Katz/Foldes Financial to Kiplinger. “If people know they’ve got resources when the market collapses, they don’t panic and sell.”

Old Way, A Much Less Efficient Home Equity Line of Credit

Most commonly, seniors utilized a HeLOC or Home Equity Line of Credit as a source of emergency cash but you can’t count on the money being there when you need it, says Shelley Giordano, founder of the Academy for Home Equity in Financial Planning at the University of Illinois at Urbana Champaign.

During the 2008–09 financial crisis, many banks either froze or outright closed borrowers’ home-equity lines. That will not happen on a reverse mortgage line of credit, Giordano says.

“As long as you meet the terms of the reverse mortgage—you must maintain your home and pay taxes and insurance—your line of credit is guaranteed,” Ambrose and Block write.

Also adding to the increased attractiveness of reverse mortgages is a currently-beneficial rate climate, the amount of housing wealth that seniors currently maintain, and the fact that an untapped credit line increases as time goes by, according to the writers and Giordano.

What about the Growth Rate Factor?

The most interesting part of the article, in our opinion, is the fact there was no mention of the Growth Rate factor. The Growth Rate Factor is the annual increase amount of the line of credit.  Typically, today that growth rate factor can be 5.5% annual growth. So simply if you start a Reverse Line of Credit at 65 for $162,796 by age 85 with no use, the original line has grown to $463,227 of available credit. Whose getting 5.5% guaranteed growth on ANYTHING?

With the looming recession on the horizon and the fact that mortgage interest rates have decreased over 20% over the last 30 days alone, now is a great time to look or re look at the reverse line of credit. Home values / home equity won’t be this high long.

Read the whole story at Kiplinger.

If you have any questions concerning how a reverse line of credit may fit into your retirement goals please give us a call we are here to help. (804) 282-8820.

Filed Under: Reverse Mortgage, Uncategorized

September 23, 2018 By Ben Borden Leave a Comment

A Reverse Mortgage can be a Retirees Saving Grace

Reverse Mortgages in Richmond VADid you catch this Reverse Mortgage article in Forbes Magazine?

It is no surprise that Social Security is the largest retirement income asset of the average American senior. As baby boomers enter retirement age, it is expected to supply more than 50% of income for about two-thirds of Americans in retirement. With such dependency on this single source of income, many Americans may be ill-equipped to handle future changes to these benefits.

While one remaining typical source of wealth includes the usual personal retirement savings, another possible income source is largely ignored, according to a recent article from Forbes.com.

The author points out that lack of focus on home equity as a retirement income planning tool is an oversight that needs to change in order to save many people from financial challenges in retirement. The article continues to describe that utilizing a reverse mortgage loan is one such strategy that deserves special consideration.

Reverse mortgages, specifically the government-insured Home Equity Conversion Mortgage (HECM), are home equity loans that help “retirement-age homeowners ‘age in place’ in a familiar setting where convenience and long-term relationships contribute to a preferable quality of life,” says ReverseVision President and CEO John Button.

The article outlines four techniques where reverse mortgages can be strategically used to improve a retirement income plan:

  1. Defer Social Security benefits to guarantee a 7-8% increase every year.
  2. Give investments time to recover after they drop in value.
  3. Allow for Roth conversions at a low tax rate by using tax-free reverse mortgage proceeds.
  4. Reduce retirement expenses and increase cash flow.

However, though experts such as Nobel Prize–winning economist and MIT professor Robert C. Merton endorse this loan, many consumers still hold reservations about them. Gaining a better understanding of how a reverse mortgage works can clear up any misconceptions the public may have, and provide a way to save America’s senior population from a potential housing crisis.

You may read the full Forbes.com article here

Learn more about what a reverse mortgage is and how it can help you by contacting a licensed Nationwide Mortgage reverse mortgage professional at 800-282-8820 or you can contact us and we will quickly get back to you.

Filed Under: Refinancing, Reverse Mortgage

January 10, 2014 By Ben Borden Leave a Comment

Mortgage Rates At The Lowest Levels Seen In A Month

Mortgage Rates DeclineMortgage rates fell to their lowest levels in a month this week due to a significantly weaker jobs report. Non farm payrolls increased just 74,000 in December, the smallest increase in three years.

The best execution by end of day Friday was 4.5%. Of course nothing goes in one direction for long so view the recent pull back as an opportunity within an increasing rate environment.

Looking into next week, Monday’s mortgage pricing well start off better then Fridays and we could see a short term flat to downward trend until the FOMC’s next meeting on January 28-29.

Filed Under: Federal Reserve, Uncategorized

December 30, 2013 By Ben Borden Leave a Comment

How to Submit a Down Payment Gift Letter that Won’t Get Turned Down by the Lender

How to Accept a Down Payment Gift that Wont Get Turned Down by the LenderDuring the past couple of years as mortgage guidelines have tightened, home buyers have had to come up with larger down payments when purchasing a home. Whether the application is for a conventional home loan or an FHA loan, banks want the home buyer to contribute more money to the purchase. Sad to say, not all buyers have the money.

This is one reason that more and more home buyers are requesting “down payment gifts” from family members. Many potential home buyers don’t want to miss their opportunity now that home prices have dropped, mortgage rates are low and a generous first-time home buyer tax credit is available.

But if a monetary gift will be in the mix for financing the purchase of your home, you should understand that there is a right way and a wrong way to proceed. So before you run out to your parents and say show me the money, it is just not possible to simply put the funds from your parents in your bank.

A three step process is involved when you accept cash for a down payment. If you fail to follow these steps precisely, it is quite likely that an underwriter will disallow the gift as a source of down payment potentially delaying closing or killing the deal altogether.

The first thing to do is to create and endorse an acceptable gift letter. While there are a number of variations of the “Down Payment Gift Letter,” the basic format is pretty much the same in each.

  • States the amount of the gift
  • Specifies the subject property address
  • States the gifters name, address and phone
  • Specifies the relationship of the gifter to the giftee
  • Specifies that the gift is an actual gift and not a loan
  • Endorsed and dated by all parties

If you do not have a lender gift letter I would be glad to send you one that I use for my clients. Its universal and accepted by all lenders. Just send me an email.

Once the gift letter is in place, the person making the gift should create a strong paper trail for the money that is being provided as a gift. This is one reason why it is preferable to use certified checks rather than wire transfers. While both methods are acceptable forms of gifting, a certified check provides documentation in the form of a teller receipt, making it easier to prove.

Be sure that the amount specified in the gift letter matches the amount of the actual gift.

Finally, when a giftee accepts the gift, it has to be “as is.” Make the deposit directly to a bank teller at a branch of the bank, being careful not to merge the deposit with other monies. For a gift in the amount of ten grand, for instance, you should deposit exactly that amount. That is to say, don’t add any other money to the deposit. If you follow these three steps, you should not have any problem.

In the meantime, you could face legal and tax ramifications if gifts of money are exchanged among relatives. In case you don’t know how a donation or gift receipt would affect you, remember to discuss this with your lawyer or accountant.

Filed Under: First Time Home Buyer

April 18, 2013 By Ben Borden Leave a Comment

Homebuilders Planning For Biggest New Home Sales Surge Since 2007

For the fourth straight month, the Housing Market Index (HMI) — a measure of homebuilder confidence nationwide — has dropped. Builders are citing rising costs for materials and fewer lots and laborers as reasons for the downgrade.

Yet, despite their lesser confidence levels, builder sales expectations for the upcoming 6 months is as high as its been since 2007.

Put it all together, and we see builders with bigger sales and smaller margins. The news could prove costly for today’s new construction buyers. Builders may be even less willing to negotiate with a buyer as the year progresses forward.

Filed Under: Refinancing, Uncategorized

April 18, 2013 By Ben Borden Leave a Comment

Mortgage Rates Today : Real-Time MBS Pricing, April 18, 2013

Jobless Claims Rise

 

This morning, weekly Jobless Claims rose a little to 352K, which was very close to the consensus. Philly Fed declined to 1.3, which was a little lower than expected.

Copper prices are at the lowest level in 1.5 years.

This chart shows the change in mortgage-backed securities (MBS) prices from today’s market open at 8:00 AM ET and tracks how MBS prices have changed until the time of this post. The vertical-axis reflects the change in MBS pricing as measured in 32nds. Each 32nd is equal to 3.125 basis points.

Falling MBS prices result in higher mortgage rates. Rising MBS prices lead mortgage rates higher. MBS pricing provided by MBSQuoteline. Daily mortgage rates are based on real-time mortgage market pricing.

Filed Under: Refinancing, Uncategorized

April 18, 2013 By Ben Borden Leave a Comment

Purchase Money Mortgages Expand “Market Share” Against Refinances

Home buyers are a growing part of the U.S. mortgage market, with purchase mortgage transactions accounting for 38% of the nation’s closed mortgages last month, the largest percentage since August 2012.

Refinance activity has grown this year, but purchase activity has grown faster.

Home Buyers Crowding The U.S. Market

According to mortgage origination software firm Ellie Mae, which handles more than 3 million mortgage applications per year, purchase home loans increased market share 6 percentage points last month as compared to refinance activity, marking the largest one-month increase since March of last year.

Not surprisingly, market conditions from last month resemble those from March 2012 :

  • Home prices were rising nationally, creating urgency among U.S. home buyers
  • U.S. mortgage rate were rising sharply, increasing the cost of homeownership
  • The FHA had a planned MIP increase, set to launch at month’s end

Buyers got busy in March, the data shows; even application volume soared. According to the Mortgage Bankers Association (MBA), purchase applications climbed last week to a near 3-year high.

Plus, for today’s home sellers, the good news is that a growing percentage of those loan applications is turning into closed loans. As compared to one year ago, the closing rate of purchase loan applications is higher by six points to 60 percent.

For buyers, it means tougher competition.

Ellie Mae : Mortgage Approval Statistics

The March 2013 Ellie Mae Origination Insight Report also provided data about recent mortgage applications, and what is required for an approval.

For example, the report showed that when home buyers attempted to buy a home using FHA-insured financing, their average offered down payment was 5 percent. However, the likelihood of gaining bank approval wasn’t linked to down payment, per se, but to debt-to-income (DTI) ratios.

Buyers whose DTI exceeded 45 percent were typically denied mortgage financing, while the average DTI of an approved FHA mortgage was 40 percent.

Other statistics from the report :

  • Average FICO for a closed conventional mortgage was 743 — an 18-month low
  • FHA mortgages accounted for 1 in 5 transactions — the highest in seven months
  • The average purchase required 44 days from application-to-closing

Also noteworthy was that the average LTV for an approved conventional mortgage jumped to 74 percent, up from 65 percent one year earlier. This is a function of the hugely popular HARP 2.0

13 percent of last month’s closed conventional loans featured LTVs of 95% or higher.

Get Today’s Mortgage Rates

With the growing share of purchase mortgage applications, the Ellie Mae report suggests that home buyers can expect more competition for homes, and, likely, more bidding wars on listings. As a buyer, consider getting pre-approved.

Pre-approvals are not required before buying a home, but they can help you plan for an upcoming purchase. You’ll have the confidence of knowing what home you can afford, and sellers will know you’re serious in your bid.

Getting pre-approved is easy, is no-cost, and starts with seeing your mortgage rates.

Filed Under: Uncategorized

Primary Sidebar

Categories

  • Federal Reserve (1)
  • First Time Home Buyer (1)
  • Refinancing (3)
  • Reverse Mortgage (2)
  • Uncategorized (5)

Fairfax Mortgage Investment

Benjamin A. Borden CMPS®
Certified Mortgage Planner
Phone: 804-282-8820
Fax: 804-282-8821
Mailing Address:
11815 Fountain Way Suite 300
Newport News VA 23606
Corporate Address:
3900 University Dr #300
Fairfax, VA 22030

Subscribe to our Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Recent Posts

  • Kiplinger: Live Well in Retirement with the help of a Reverse Mortgage September 3, 2019
  • A Reverse Mortgage can be a Retirees Saving Grace September 23, 2018
  • Mortgage Rates At The Lowest Levels Seen In A Month January 10, 2014
  • How to Submit a Down Payment Gift Letter that Won’t Get Turned Down by the Lender December 30, 2013
  • Homebuilders Planning For Biggest New Home Sales Surge Since 2007 April 18, 2013

Recent Comments

    RSS Mortgage News

    • MBS Day Ahead: No Easy Victories as Bonds Keep Struggling to Break Technical Floors
      Posted To: MBS Commentary1.62% has been one of the most important technical levels for 10yr yields in the past month. After breaking above last week, we had a chance to confirm a break back below yesterday and ended up closing to close for a clear signal. Overnight weakness emphasizes the challenges facing an easy return […]
    • IT Sales, MLO, Ops Jobs; Rate Protection, Broker Products; GSE Changes; Con't Forbearance Improvement
      Posted To: Pipeline PressI just finished my weekly 3 minute “abs of steel” workout, and it’s time for a rant! A wealth tax? How does the Federal government pull that off? Is an auditor going to ask to see my baseball card collection which accounts for 50 percent of my net worth? Make me pay […]
    • MBS RECAP: Thursday Curse Continues But It Was Still a Good Day for Bonds
      Posted To: MBS CommentaryThursday Curse Continues But It Was Still a Good Day for Bonds Although bonds won't be able to say they broke 2021's perfect record of selling on Thursdays (based on the 3pm CME close... there's a bit of time left before the 5pm close), it was a decent day nonetheless. In fact, […]
    • Mortgage Rates Are Actually LOWER This Week
      Posted To: Mortgage Rate WatchIt's no secret that 2021 has been a rough year for mortgage rates so far. They've moved higher on all but a few weeks, and exclusively higher if we only count the past 8 weeks (something that hasn't happened in more than a decade , even though there are a few […]
    • MLO, Branch, Ops Jobs; Sales, POS, Warehouse Products; STRATMOR Ops Paper; Ginnie, FHA, VA, USDA Updates
      Posted To: Pipeline PressAfter spending millions of dollars studying the issue, a blue-ribbon panel found that statistics show that teen pregnancy drops dramatically after age 20 . (Need a minute to think about that?) Want some more numbers, and want to know why there are fewer home listings than there are Realtors? How about Lennar […]

    Footer

    Fairfax Mortgage Investment

    Looking for a low rate home loan? What about a Reverse Mortgage? You will find low rate home loans at FMI. We designed this mortgage site to give you all the information you need to assist you in obtaining financing for your new home or reverse mortgage.

    FMI is one of the largest mortgage brokers in Virginia. We offer low rate home loans for Home Purchase, Refinance, Reverse Mortgages and Debt Consolidation throughout all of Virginia.

    Recent Posts

    • Kiplinger: Live Well in Retirement with the help of a Reverse Mortgage
    • A Reverse Mortgage can be a Retirees Saving Grace
    • Mortgage Rates At The Lowest Levels Seen In A Month
    • How to Submit a Down Payment Gift Letter that Won’t Get Turned Down by the Lender
    • Homebuilders Planning For Biggest New Home Sales Surge Since 2007
    • Mortgage Rates Today : Real-Time MBS Pricing, April 18, 2013

    Regions

    • Northern Virginia
    • Arlington
    • Fairfax
    • Manassas
    • Alexandria
    • Fredericksburg
    • Tidewater
    • Virginia Beach
    • Newport News
    • Chesapeake
    • Williamsburg
    • Richmond
    • Roanoke
    • Charlottesville

    Copyright © 2021 · | Corporate: 3900 University Dr #300, Fairfax, VA 22030 | (804) 282-8820
    Reverse Mortgage Calculator
    | Financial Advisor Richmond | XML-SiteMap | Privacy Policy | SiteMap
    Mortgage Calculators

    Fairfax Mortgage NMLS ID# 117990 (www.nmlsconsumeraccess.org) · Log in