Understanding why our country’s appraisal system is broken and what borrowers can do to secure the highest value for their home is important for any reverse mortgage borrower.
Why it’s important to know what you home appraises for Property appraisals provide an unbiased assessment of what a home is currently worth, but when it comes to comps, appraisals simply follow the market trends. Each new appraisal is based on recent sales activity that occurred in the local area.
In other words, nearby home sales are considered by the appraiser to be a baseline value, and only then are unique features of the property considered in adding or subtracting from that initial value.
Just a few years ago, home prices were rising quickly and significantly. That meant appraisals were moving higher and higher with each new sale. Bidding wars for properties in some parts of the country drove up the appraised values of all nearby properties, creating a ripple effect throughout the fabric of the nation’s entire housing market.
Now, prices have been falling, and the trend is playing out in the other direction. Since each new mortgage requires an appraisal that supports the value of the loan, mortgages have become more difficult to obtain as appraisals have been coming in at lower and lower levels.
Many prospective home sales are being cancelled because the appraisals won’t support the mortgage the new buyer needs to complete the deal. In a recent report, the National Association of Realtors estimated that about 16% of potential home purchase contracts fail to close because of low appraisals.
What Legacy Reverse Mortgage has to say about falling appraisal values Summing up the problem and the solution in one shot, Jim Cory, CEO of Legacy Reverse Mortgage, has said, “The new regulations don’t provide for the appraiser’s competency, familiarity with the area, and attention to detail. In short, there is a lack of accountability in the quality of the appraisers and individual appraisals.”
And that’s why it’s important to work with the most qualified professionals, he says. Still, it’s these very conditions that led the Wall Street Journal to recently call our country’s appraisal system “broken”.
How Legacy appraises their borrower’s homes It’s obviously tough to find a good Appraisal Management Company (AMC) who is professional, dedicated and fair, but the team at Legacy believes they’ve done just that. The San Diego-based lender uses Landmark Reverse, one of the few AMC that gets the appraisal done right the first time.
In the past two months alone, Legacy says they’ve successfully fought three separate appraisals that came in below what both the company and the borrower would have guessed would be fair. By using some overlooked data that Legacy was able to provide to Landmark, Landmark was able to secure an increase in home value for all three, resulting in a more accurate estimation of the home’s value; a good thing for all parties involved.
Legacy Reverse Mortgage is here to help! We provide the best Reverse Mortgage service in the industry – hands on help with your reverse mortgage!
< iframe size="425" height="355" src="https://www.youtube.com/embed/ReYPjFIdQic?rel=0" frameborder="0" allowfullscreen > A training video for new reverse home mortgage sales advisors. Video clip Rating:/ 5
< iframe size=" 425" height =" 355" src=" https://www.youtube.com/embed/9UYf_oWE13o?rel=0" frameborder=" 0" allowfullscreen > http://www.nextutah.com or call 801-255-NEXT. Reverse home loans are RISK-FREE and at a 2.9 % Jan. 2009 rate of interest. Why not? Video Rating:/ 5
< iframe width="425" elevation="355" src="https://www.youtube.com/embed/KYaZbY5bBCM?rel=0" frameborder="0" allowfullscreen > Just how a Reverse Mortgage Works. http://www.reversemortgage4u.com
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“How exactly does a Reverse Mortgage Work?” is clearly and simply explained inside quick video clip. Totally understand HECM in 4 minutes.
Hi, i am Deborah Nance and after this we’re going answer comprehensively the question – “how can A Reverse home loan Work”
So right here we go. Initially the lender must figure out the mortgage quantity. They will certainly utilize a formula set-out by FHA that takes under consideration the worthiness of the house, the age of the consumers additionally the existing interest rates to determine the loan amount.
When they understand what you qualify for, then they would want to know how you would like recieve your loan funds. The closing costs of this loan are going to be rolled in to the loan it self. What this means is you should have a starting stability corresponding to those costs plus every other funds you decide to take at closing.
Maybe you have your property reduced and never need to have every one of the loan cash today. You can elect to use the loan profits in the form of TENURE, (a monthly payment as long as you reside your home.) Inside scenario, regarding the firstly on a monthly basis you’ll recieve tax-free funds from the loan provider. Monthly might in addition recieve a mortgage statement showing you the prior thirty days’s loan balance, the total amount of the repayment for your requirements, the actual quantity of interest and insurance coverage recharged in addition to brand new loan stability.
Or simply you desire to have got all the mortgage resources prepared and available since you need them, in a credit line. Inside scenario, you would obtain a declaration monthly from the lender showing the prevailing loan stability, and the number of funds previously for sale in a line of credit. The statement would in addition show any distributions you have made from the personal credit line the last thirty days and the brand-new offered line of credit.
One of many coolest options that come with this specific situation is the fact that personal credit line on a reverse mortgage expands over time. The quantity accessible to you in a line of credit grows at a consistent level equal to the rate recharged in the loan it self, plus 1.25percent. So, a reverse mortgage credit line in the level of 0,000 today could be 4,000 plus next year. That’s a good motivation to limit your withdrawals for emergencies building up the credit line over time making sure that if you’re 70,80, or 90 and extremely require the resources for residence medical care or any other emegencies, you have even more to draw from.
Another situation is to take-all the money now. Maybe to create an important acquisition, like a second residence or financial investment residential property.
The last (and a lot of preferred) situation is combine the different payout choices. Maybe using some funds at shutting to reward various other debts and making other profits in the growing line of credit. It’s your preference. We have had clients whom choose some cash, some credit line and a tenure payment besides. It is for you to decide.
If you now have a traditional or forward mortgage, you should use the opposite home loan to cover it well. Plus its required by the loan providers that any current mortgages on property should be reduced using reverse loan proceeds..
You realize the lender will make cash on the Reverse home loan, right? They may be a bank, that’s what they are doing. After all actually!… they are in those big tall buildings downtown and they’re very happy to earn money off the scores of united states living in our small house nice houses.
Essentially, the banking institutions and investors basically extremely diligent. They wait. They hold back until you pass away, sell, or completely leave home due to medical reasons. Then all the resources which were borrowed, plus most of the accrued interest and insurance coverage arrives and payable. Usually the heirs will actually sell the house, payoff associated with reverse and maintain the change. But, in the event that home won’t have adequate price to payoff the balance, after that what? This component is pretty cool….The reverse home loan is a non-recourse loan. This means if arises from the purchase of the property are not enough to payoff the mortgage the financial institution has “NO RECOURSE” towards the debtor (or their particular heirs) for shortfall. So, the worst that will occur is that your children get nothing from home when you perish.
Really that took a little more than I was thinking, so thanks for sticking with me.i am hoping you found it to be helpful. I would appreciate you making a comment and just about every other concerns you might have in remarks part below. I’ll be responding to much more concerns when you look at the after months therefore do not forget to subscribe my YouTube Channel and start to become notified when a video clip is circulated.
Should you want to understand specifically that which you or your parents might be eligible for on a reverse mortgage, please click the website link below to provide me utilizing the basic information required for an evaluation. You will have your numbers right away after all!
The postings and opinions on this site tend to be my own and never fundamentally represent the career of my company.
Deborah Nance, NMLS#202003 Equal Housing Lender Video Rating: / 5
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Hi! I’m Deborah Nance and today I’m going to talk about the Pros & Cons of a reverse mortgage.
Which do you want to hear first?……. Okay we’ll go over the cons first… the negatives.
The first negative is the fact that when a persona with a reverse mortgage dies, the heirs will inherit a home with a lien on it. A lien that needs to paid off within 6 months! (Heirs may be able to also get two 90 day extensions to payoff) So, if it is crucially important to you to leave your kids a home that is free and clear. You will want to find another solution besides a reverse mortgage. On the other hand if you feel like you’ve provided for your kids by raising them and teaching them to be independent, honest and hardworking and they do not expect or want you to leave them your home free and clear. Then a reverse mortgage might just work for you.
The second negative is Closing costs! A reverse mortgage has closing costs and they can be more than the closing costs on a traditional mortgage. So… It is very important to compare lenders and get the best rates and fees.
The next negative is that the balance on a reverse mortgage grows over time. You will owe more on the house in 10 years than you do after the first year. The only way to avoid this is to make payments on the reverse mortgage. (yes you can make payments on a reverse if you want to) though most never do.
If you spend all of the money from your reverse mortgage and the balance grows, some day when you are REALLY old, you may become sick and need money. If you have used up all of the funds in your reverse mortgage, what options will you have to get more money? You may be in a position where you have to sell and you won’t recieve as much from the sale of your home had you never done the reverse mortgage.
The pros – The biggest pro of all is the fact that you do not ever have to make mortgage payments on a reverse. You can if you wish, but it is never required. If you used the reverse mortgage to payoff your mortgage, you just increased your cash flow! Just imagine – no more mortgage payments – EVER. This “raise” will free up cash that you can put into savings for future emergencies and may also provide you with additional cash from the reverse mortgage itself in the form of a credit line or monthly payments to you.
The next positive is the Credit Line Growth. A reverse mortgage credit line grows over time! This is a great feature of the reverse mortgage. If you choose the credit line option on a reverse mortgage the lender can not cut off your credit line just because home values fall. In fact the credit line grows over time at a rate equal to the loan rate plus 1.25%. This could be a huge benefit down the road, especially if you refrain from withdrawing funds from the line of credit and just let that credit line grow and grow. Over time you would have access to much more money. If you never have and emergency and do not need to ever take the funds from the line of credit, then you haven’t borrowed those funds and your heirs would have a much lower balance to payoff when they inherit your home.
A reverse mortgage can be a great tool for retirement but it’s not for everyone. If you would like to explore the benefits and possible drawbacks to a reverse mortgage in your life please give me a call or click on the “Request a Reverse Mortgage Analysis” link below and complete the easy form – I will email you a personalized reverse mortgage quote.
The postings and opinions on this site are my own and do not necessarily represent the position of my employer.
Deborah Nance, NMLS#202003 Equal Housing Lender
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Since the financial crisis, financial markets became one of the trickiest places for investors. Reverse Mortgage Lenders on the other hand seems like an ideal alternative. However, there has been a lot of controversy surrounding this type of investment. Some of the most common questions include how do they work? How home retention works and if you have to give up anything.
This type of investment came into being around 1980s and it involved the lender paying the borrower and this is why it was called reverse mortgage. However, it has a number of drawbacks. First, when the property owner died, the bank retained the property. Another downside is that the owner could be kicked out of the home if he or she lived too long. The rate of interest would fluctuate without the option of fixed option. Around 1990s, the FHA came up with new regulations where the equity could be transferred to a heir, no more displacing and property value volatility was safeguarded.
This type of mortgage works just like a regular one; which means it is a loan secured by collateral (home). The only difference is that there are no monthly payments. The only requirement is that you must be over 62 years and you must have some equity on your property. These two factors help the firm compute the amount of equity that can be offered. Out of these calculations, the FHA is able to know how much they can lend without having to collect the mortgage payment. This means that the lender can borrow with minimum risk and wait to start charging interest until the borrower decides to move or dies.
The greatest benefit of borrowing under this method is the possibility of living in the home repayment for free, receiving money from the RM to improve your home, repay your debts and cushion from housing market volatility.
Since the financial crisis, financial markets became one of the trickiest places for investors. Reverse Mortgage Lenders on the other hand seems like an ideal alternative. However, there has been a lot of controversy surrounding this type of investment. Some of the most common questions include how do they work? How home retention works and if you have to give up anything. This type of investment came into being around 1980s and it involved the lender paying the borrower and this is why it was called reverse mortgage.http://reverse-mortgage.org However, it has a number of drawbacks. First, when the property owner died, the bank retained the property. Another downside is that the owner could be kicked out of the home if he or she lived too long. The rate of interest would fluctuate without the option of fixed option. Around 1990s, the FHA came up with new regulations where the equity could be transferred to a heir, no more displacing and property value volatility was safeguarded.