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Reverse Mortgages Under Watch – Get the Facts Before Cashing in on Your Home’s Equity

August 14, 2012 at 1:12 pm | Posted in Real Estate In General, Uncategorized | 2 Comments

If you’re 62 or older – and looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses – you may be considering a reverse mortgage. It’s a product that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to understand how reverse mortgages work, the types of reverse mortgages available, and how to get the best deal.

In a “regular” mortgage, you make monthly payments to the lender. In a “reverse” mortgage, you receive money from the lender, and generally don’t have to pay it back for as long as you live in your home. The loan is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage generally are tax-free, and many reverse mortgages have no income restrictions.

Types of Reverse Mortgages

There are three types of reverse mortgages:

single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations
federally-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs) and backed by the U. S. Department of Housing and Urban Development (HUD)
proprietary reverse mortgages, private loans that are backed by the companies that develop them

Single-purpose reverse mortgages are the least expensive option. They are not available everywhere and can be used for only one purpose, which is specified by the government or nonprofit lender. For example, the lender might say the loan may be used only to pay for home repairs, improvements, or property taxes. Most homeowners with low or moderate income can qualify for these loans.

HECMs and proprietary reverse mortgages may be more expensive than traditional home loans, and the upfront costs can be high. That’s important to consider, especially if you plan to stay in your home for just a short time or borrow a small amount. HECM loans are widely available, have no income or medical requirements, and can be used for any purpose.

Before applying for a HECM, you must meet with a counselor from an independent government-approved housing counseling agency. Some lenders offering proprietary reverse mortgages also require counseling. The counselor is required to explain the loan’s costs and financial implications, and possible alternatives to a HECM, like government and nonprofit programs or a single-purpose or proprietary reverse mortgage. The counselor also should be able to help you compare the costs of different types of reverse mortgages and tell you how different payment options, fees, and other costs affect the total cost of the loan over time. To find a counselor, visit http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmlist or call 1-800-569-4287. Most counseling agencies charge around $125 for their services. The fee can be paid from the loan proceeds, but you cannot be turned away if you can’t afford the fee.

How much you can borrow with a HECM or proprietary reverse mortgage depends on several factors, including your age, the type of reverse mortgage you select, the appraised value of your home, and current interest rates. In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get.

The HECM lets you choose among several payment options. You can select:

a “term” option – fixed monthly cash advances for a specific time.
a “tenure” option – fixed monthly cash advances for as long as you live in your home.
a line of credit that lets you draw down the loan proceeds at any time in amounts you choose until you have used up the line of credit.
a combination of monthly payments and a line of credit.

You can change your payment option any time for about $20.

HECMs generally provide bigger loan advances at a lower total cost compared with proprietary loans. But if you own a higher-valued home, you may get a bigger loan advance from a proprietary reverse mortgage. So if your home has a higher appraised value and you have a small mortgage, you may qualify for more funds.

Loan Features

Reverse mortgage loan advances are not taxable, and generally don’t affect your Social Security or Medicare benefits. You retain the title to your home, and you don’t have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence.

In the HECM program, a borrower can live in a nursing home or other medical facility for up to 12 consecutive months before the loan must be repaid.

If you’re considering a reverse mortgage, be aware that:

Lenders generally charge an origination fee, a mortgage insurance premium (for federally-insured HECMs), and other closing costs for a reverse mortgage. Lenders also may charge servicing fees during the term of the mortgage. The lender sometimes sets these fees and costs, although origination fees for HECM reverse mortgages currently are dictated by law. Your upfront costs can be lowered if you borrow a smaller amount through a reverse mortgage product called a “HECM Saver.”
The amount you owe on a reverse mortgage grows over time. Interest is charged on the outstanding balance and added to the amount you owe each month. That means your total debt increases as the loan funds are advanced to you and interest on the loan accrues.
Although some reverse mortgages have fixed rates, most have variable rates that are tied to a financial index: they are likely to change with market conditions.
Reverse mortgages can use up all or some of the equity in your home, and leave fewer assets for you and your heirs. Most reverse mortgages have a “nonrecourse” clause, which prevents you or your estate from owing more than the value of your home when the loan becomes due and the home is sold. However, if you or your heirs want to retain ownership of the home, you usually must repay the loan in full – even if the loan balance is greater than the value of the home.
Because you retain title to your home, you are responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. If you don’t pay property taxes, carry homeowner’s insurance, or maintain the condition of your home, your loan may become due and payable.
Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.

Getting a Good Deal

If you’re considering a reverse mortgage, shop around. Compare your options and the terms various lenders offer. Learn as much as you can about reverse mortgages before you talk to a counselor or lender. That can help inform the questions you ask that could lead to a better deal.

If you want to make a home repair or improvement – or you need help paying your property taxes – find out if you qualify for any low-cost single-purpose loans in your area. Area Agencies on Aging (AAAs) generally know about these programs. To find the nearest agency, visit http://www.eldercare.gov/Eldercare.NET/Public/Index.aspx or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and how to apply.
All HECM lenders must follow HUD rules. And while the mortgage insurance premium is the same from lender to lender, most loan costs, including the origination fee, interest rate, closing costs, and servicing fees vary among lenders.
If you live in a higher-valued home, you may be able to borrow more with a proprietary reverse mortgage, but the more you borrow, the higher your costs. The best way to see key differences between a HECM and a proprietary loan is to do a side-by-side comparison of costs and benefits. Many HECM counselors and lenders can give you this important information.
No matter what type of reverse mortgage you’re considering, understand all the conditions that could make the loan due and payable. Ask a counselor or lender to explain the Total Annual Loan Cost (TALC) rates: they show the projected annual average cost of a reverse mortgage, including all the itemized costs.

Be Wary of Sales Pitches

Some sellers may offer you goods or services, like home improvement services, and then suggest that a reverse mortgage would be an easy way to pay for them. If you decide you need what’s being offered, shop around before deciding on any particular seller. Keep in mind that the total cost of the product or service is the price the seller quotes plus the costs – and fees – tied to getting the reverse mortgage.

Some who offer reverse mortgages may pressure you to buy other financial products, like an annuity or long term care insurance. Resist that pressure. You don’t have to buy any products or services to get a reverse mortgage (except to maintain the adequate homeowners or hazard insurance that HUD and other lenders require). In fact, in some situations, it’s illegal to require you to buy other products to get a reverse mortgage.

The bottom line: If you don’t understand the cost or features of a reverse mortgage or any other product offered to you – or if there is pressure or urgency to complete the deal – walk away and take your business elsewhere. Consider seeking the advice of a family member, friend, or someone else you trust.

Your Right to Cancel

With most reverse mortgages, you have at least three business days after closing to cancel the deal for any reason, without penalty. To cancel, you must notify the lender in writing. Send your letter by certified mail, and ask for a return receipt. That will allow you to document what the lender received and when. Keep copies of your correspondence and any enclosures. After you cancel, the lender has 20 days to return any money you’ve paid up to then for the financing.

Reporting Possible Fraud

If you suspect that someone involved in the transaction may be violating the law, let the counselor, lender, or loan servicer know. Then, file a complaint with:

the Federal Trade Commission (FTC). You can do that online at www.ftccomplaintassistant.gov or by phone at 1-877-FTC-HELP (1-877-382-4357).
your state Attorney General’s office or state banking regulatory agency.

Whether a reverse mortgage is right for you is a big question. Consider all your options. You may qualify for less costly alternatives. The following organizations have more information:

Reverse Mortgage Education Project AARP Foundation 601 E Street, NW Washington, DC 20049 http://www.aarp.org/money/credit-loans-debt/reverse_mortgages/ 1-800-209-8085

U. S. Department of Housing and Urban Development (HUD) 451 7th Street, SW Washington, DC 20410 http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten 1-800-CALL-FHA (1-800-225-5342)

Federal Trade Commission Consumer Response Center 600 Pennsylvania Avenue, NW Washington, DC 20580 www.ftc.gov/bcp/menus/consumer/credit.shtm — Click on “Mortgages & Your Home” 1-877-FTC-HELP (1-877-382-4357)

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

From If you can pull it off, a house is a smart investment

4 Strong Reasons to Buy or Invest in Homes Now

August 13, 2012 at 9:32 pm | Posted in Present Market Thoughts | Leave a comment

“It’s hard to argue against buying a house now, assuming you can get a loan,” writes John Waggoner, a columnist with USA Today. Sure, Waggoner says that getting a credit check for approval of a mortgage can be a “only slightly less intrusive than a CIA background check,” but for those who are able to qualify, a lot of analysts say that now can be a good time to purchase a home.

1. The price is right. The median single-family home price hit its lowest in more than a decade when it reached $154,600 in January, according to the National Association of REALTORS®. That was the lowest since October 2001. During the height of the housing market in July 2006, the median home price for a single-family home was $230,900.

2. It’s cheaper to buy than rent. In nearly every major metro market, it is cheaper to buy a home than rent. Rents have been on the rise the last few years and are predicted to continue to rise. Meanwhile, home affordability is at record highs, which means that buying a home is more within reach to the median income family.

3. Inventories of for-sale homes are shrinking. Ned Davis Research estimates that excess inventories of homes to be eliminated by the end of next year. “When excess supply dries up, people start building more new houses, which has the virtuous effect of reducing the unemployment rate and increasing the economy generally,” according to the USA Today article.

4. Mortgage rates are at record lows. Mortgage rates have hovered near record lows for weeks, which has helped pushing housing affordability higher. For example, the average 30-year fixed-rate mortgage, which is the most popular among home buyers, is 3.59 percent, according to Freddie Mac—just above its record low set on July 26 of 3.49 percent average. “It’s conceivable that at some point in the next 30 years, your interest rate would be less than the rate of inflation,” writes Waggoner for USA Today.

Homes For Sale In The West Central Florida Gulf Area

Homes For Sale In The West Central Florida Gulf Area

CAVEAT EMPTOR Purchasing Distressed Property? BUYER BEWARE

July 20, 2012 at 6:25 pm | Posted in Uncategorized | Leave a comment

By Stephanie J. Toothaker of Tripp Scott P.A. Fort Lauderdale/Tallahassee

The familiar adage, “If it sounds too good to be true…..” is particularly applicable to distressed properties. As the real estate market improves, investors may be increasingly empted by “deals,” both residential and commercial. And while deals are certainly available, it is wise to approach them with caution.

Generally speaking, distressed properties fall into three categories:

Vacant Property

1. Land use and zoning: Check to be sure the property can be used for the purpose you intend.

2. Platting: Many jurisdictions provide exceptions from platting for single-family homes; an unplatted commercial property will require platting prior to development, which can mean required right-of-way dedications, impact fees and restrictions on access and levels of development.

Partially Completed Property

1. Lien and code enforcement issues: Code enforcement fines that have been certified and recorded will show up in a title search so you can easily determine the fines you might be liable for. However, beware of fines that may be accruing but are not readily determinable because the municipality has not yet recorded the lien. Many municipalities will work with a purchaser who was not responsible for the violations that caused the fines to negotiate the fines down. To avoid surprises, know the actual amount before taking title.

2. Approvals and/or building permits: In most municipalities, a site plan approval is valid for 18 months from the date it was granted; similarly, a building permit is valid for six months from the date of issuance and remains valid so long as work is being performed regularly. However, if a property has been sitting idle for some time, a simple reactivation is unlikely. If the permit cannot be reactivated and new approval is required, the development may be subject to new regulations, such as the recently revised Florida Building Code; modifications may be required.

Existing Development

1. Residential properties: Perform a lien and code search as described above. If the property has been vacant for some time, a professional inspection should be performed to determine if all systems/appliances are working properly and, most importantly, if mold is present; mold eradication can be difficult and costly.

2. Commercial properties: Review land use and zoning to determine that the property can be used for the purpose you intend; make no assumptions based on current use. For example, the fact that the property is currently a restaurant does not guarantee you can open a restaurant in the same location. It may have been grandfathered or “legal non-conforming” use; under new ownership, the current zoning regulations will apply.

Whether you engage a professional to assist in your purchase or decide to review the property on your own, the most important action you can take is the necessary due diligence. With facts in hand, that distressed property that only sounded like a good deal, may actually be one after all.

Homes For Sale In The West Central Florida Gulf Area

Florida property is looking to be purchased by YOU

July 19, 2012 at 6:49 pm | Posted in Real Estate In General | Leave a comment

If you’re looking for Florida property then contact us.
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Tips for Buying Distressed Real Estate

July 13, 2012 at 12:40 am | Posted in Real Estate In General | 1 Comment

By Poli Blog

What are Foreclosures, Short Sales and REO Properties

With many sales these days being “non-traditional,” meaning that instead of working directly with sellers, buyers are now dealing with sellers and the lenders of those sellers. Often the lender is the seller, and the previous owner or owners are out of the picture completely.

These non-traditional deals, commonly referred to as “Distressed Property Transactions”, are often the result of the properties being foreclosures, short sales, or REO properties. They make up a good portion of the real estate transactions these days. In this article we’ll cover what each is, and what it means to you as a buyer.

Foreclosures:

A foreclosure process is where the lender begins the process of taking a property back from an owner that has become delinquent on the payments.

This may work slightly different in different states, and the judicial system has different roles in the process in different states. With regard to foreclosures, states fall into two categories, judicial, and non-judicial.

Purchasing a home that is in foreclosure is more involved from a time perspective than one that isn’t in foreclosure, but if you have the patience to work through it, you may be well rewarded for your effort with a home that can be purchased well below market value.

Short Sales:

A short sale is a situation where a lender agrees to sell a property for an amount that is less than what the existing homeowner owes on it.

In other words, they sell it for an amount that is lower than the amount the owner owes on the underlying mortgage.

This may at times be a better solution for a lender, as foreclosures are costly and time consuming for lenders. It is without exception a better solution for a home owner from a credit perspective.

REO Property:

REO stands for “Real Estate Owned”. This is the end of the line for a property, meaning that it has been through the foreclosure process and ownership has been surrendered to the lender. The lender may have attempted to sell it at auction, or via other means, but regardless, there is no more mortgage on it, as financing has been written off. The lender now needs to sell it in order to recoup as much of the balance as possible.

What does all of this mean for the buyer?

When you purchase a property that has been classified as either a foreclosure, short sale, or REO, you should have slightly different expectations as far as how the process will go. While some will move quickly, many will take months to complete.

The first step in the process is to have your real estate agent place an offer on the property. This offer gets routed through the listing agent, to the lender directly, or to a law firm that is representing the lender and handling their end of the transaction. At this point most, if not all of the transaction will be handled by the attorneys.

From a consumer’s point of view, you want to make sure that your attorney is well versed in handling these non-traditional transactions, and how to keep the often slow process moving.

The reason for this is that if communications, even very basic ones come in from the lender, they may sit for days on end before your attorney sees, and is able to respond to them. Some type of admin staff on hand will help tremendously.

Buying a distressed piece of real estate can be a time consuming process however, it is the best way to buy a discount home in 2012.

Some tips for the average homeowner seeking to buy distressed real estate:

Expect the process to take 4-6 months
Expect the property to be in slightly inferior condition to traditional sales
Don’t put all your eggs in one basket, make a few offers and pay close attention to which listing agents and sellers are more proactive than others
Do your research on the neighborhood and other possible foreclosures in that neighborhood
Be absolutely positive your buyer’s agent is well versed in the process, you will need a lot of help moving through the process
Be sure you walk through the home with an experienced contractor or home inspector when possible, many offers need to be submitted “as is”. This means you can’t ask the seller to make any improvements so, you want to make sure you know any potential issues
Be patient with respect to finding and making offers on the right property. There is a lot of supply on the market and you should be able to find exactly what you would want in a traditional purchase
Be sure to make your lender aware that you are buying a distressed property, you will want to be sure that you still qualify when the bank is ready to move
As always, keep all of your financial matters in order during the process, a pre-approval today may not be valid in the future if things change.
Report back to your lender often and be sure to disclose any potential job, income or down payment changes along the way
Retain an attorney to represent you during the process, be sure that the Law Office you choose has deep experience representing Distressed Property Buyers
MOST IMPORTANTLY, understand that the bank is just as motivated to sell the property as you are to buy it. Think with your head and not your heart, act as though you are a professional real estate investor. This mindset will help you remain calm and collected throughout the process!

Be sure to follow these simple steps and your home buying process will be free of surprises AND you will find a property that meets all of your expectations, at a deep discount!

Homes For Sale In The West Central Florida Gulf Area

DO NOT Make These Home Buyers Mistakes In Today’s Market

July 8, 2012 at 1:13 pm | Posted in Real Estate In General | Leave a comment

As I am showing property to buyers I have to inform them the market is presently changing. The inventories have been reduced drastically and at least in the greater Tampa area which includes Hernando, Pasco, Hillsborough, Pinellas, Manatee and Sarasota counties, we do have a normal business in real estate. Normal meaning that the volume of homes being sold would be the equivalent to pre bubble years. The only thing not normal is the low, low prices which are starting to inch upward and the very low-interest rates.

The buyers are now being faced with multiple offers on a single property. Just this week I have had buyers learn that their offers have been part of properties that have had as many as 9 offers.

So now comes the time to educate buyers that want to purchase a home that there are 5 mistakes that can prevent them from being able to Capture The Dream of owning the home they want.

1) LOW BALL OFFERS Unreasonably low offers may have been the norm during the housing bust, but that is no longer the case. The mistake buyers are making is going so low that the offer is not even reasonable. When a seller gets that type of offer they can just walk away from the negotiating table and not even reply with a counter offer. The seller can also be the lender, as in this market due to the many short sales that are part of the market. Sellers think they have been lowballed on offers that are less than 90 percent of their asking price as long as the home has been properly priced. Buyers offering 80-85 percent of a listing price can have their offer flat-out rejected, get no counter offer or as in one case I have read about get a counter offer above the listed price. I guess the sellers were making a statement on the low ball offer they received.

2) SLEEP ON IT When an agents tells buyers not to take to long to think about it they are not being self-serving. With the reduced inventory and more buyers coming into the market including international buyers in certain markets, a SLEEP ON IT MOMENT may be too long. Inventories will increase as more bank-owned homes come on the market in months ahead per the experts. For now though the house hunter is frustrated by the lack of choices and being part of the multiple offer syndrome.

Not all homes will sell quickly depending on the condition they are in. For those do-it-yourselfer there are bargains out there that can be found, but you and your agent will; need to invest the time to find that one you’re happy with. Some homes are not priced correctly for the market they are in and it will take time to sell. Either they will sit there until the market prices increase or the seller realizes that the home is over priced and needs to do a price reduction, which by now the listing is a stale listing and they get to start their marketing over with a price reduction. For the home that is priced right for the market it is located in, you don’t want to play the low ball game, because you’ll end up without the house you want.

3) MAKE A PERSONAL IMPRESSION With homes getting multiple offers it’s not enough to offer a competitive price. Owners look at other factors to decide which offer to accept. One tactic I heard a seller doing was submitting a personal letter with the offer, describing the features they liked about the home and why buying the home was important to them. It makes the seller think about that offer and it shows you are not just a number.

4) GETTING APPROVED In today’s market the pecking order of importance to a seller is a cash buyer is the strongest offer, second would be a buyer that has been pre-approved, third would be a buyer that has been pre-qualified and last would be the buyer that needs to apply for a loan and has not been pre-qualified or better pre-approved. Buyers can jeopardize their transactions if they do not do the work upfront that is required to purchase a home. Any buyer I work with must be either a cash buyer or pre-approved especially in this market.

5) CONTINGENCIES If a buyer wants their offer to be rejected quickly or not even considered then load up your offer with a lot of contingencies. Standard contracts have the buyer qualifying for a mortgage clause and even and a 15 day inspection clause which is becoming standard in offer contracts or as an addendum. But after that asking for longer inspection times, or wanting the offer contingent upon a family member viewing the property in the next ???? days or in the case of out of towns buyers making an offer contingent upon their viewing the property next weekend when they can fly in will in my estimation kill the deal.

SO BUYERS think about what you need to do if you really are looking to CAPTURE THE DREAM of home ownership of the home you really want.

Homes For Sale In Florida

COMING SOON-REAL ESTATE IN THE UNITED STATES

July 4, 2012 at 12:34 pm | Posted in Uncategorized | Leave a comment

For a quick preview click here to see it.

CHECK OUT THE TABS AS THERE IS INFORMATION THERE

‘Silver Visa’ Would Increase Demand For Florida Real Estate

July 2, 2012 at 7:36 pm | Posted in Visa Information | Leave a comment

ORLANDO, Fla. – July 2, 2012 – The Center for Competitive Florida, a division of Florida TaxWatch that evaluates the state’s fiscal policies, performed an analysis of foreign homebuyers in Florida. It finds that approval of a Silver Visa (or Retirement Visa) by U.S. officials would not only increase demand for Florida real estate, but it would also inject up to $25 billion into the state’s economy.
According to the report’s authors, Florida far surpasses every other U.S. state in the number of foreign homebuyers. Over the past four years, the state had more than twice the market share of runner-up California.
Since Florida already commands a large share of the international buyer market, TaxWatch analysts claim that approval of a Silver Visa would have an out-sized impact on the state. Under a Silver Visa program, retirees may live in the U.S. full-time under a special immigration status for people who no longer plan to work, which a Silver Visa would not allow. Currently, the U.S. has no Silver Visa program, but many countries do, including the United Kingdom and other European countries.
According to an earlier TaxWatch analysis, approval of a Silver Visa could add more than 100,000 jobs in Florida over 10 years.

To get a copy of the report click here.