New mortgage rules: the questions you will be asked, mortgage questions.#Mortgage #questions


New mortgage rules: the questions you will be asked

Mortgage questions

Mortgage questions

12:40PM BST 25 Apr 2014

Planning to buy a home or change or move your existing mortgage? If so, brace yourself for a long wait to see a mortgage adviser, three-hour interviews at the bank and forensic analysis of your daily spending habits thanks to new lending rules that come into force tomorrow.

Even after jumping through all those hoops, success is not guaranteed experts have warned thousands of buyers and home owners are likely to be rejected because they do not meet the new requirements.

The City regulator, the Financial Conduct Authority (FCA), has introduced the new rules, known as the Mortgage Market Review, to ensure borrowers are issued with mortgages they can afford both now and in the future. The FCA was concerned that lenders were making it too easy to get a mortgage before the financial crisis. Many households borrowed too much money and found they were unable to keep up their repayments when the financial crisis struck.

So-called self-cert loans, where borrowers declared their income but did not have to prove or certify it, were common and people routinely exaggerated earnings to borrow more. Interest-only loans also caused problems. Borrowers flocked to these deals because their monthly repayments were lower, but they had no way to repay the capital at the end of the loan.

To ensure safer lending in future, mortgage providers are now responsible for assessing whether customers can afford the loan in the long term. This includes buyers and those who are remortgaging and want to increase the size of the loan, vary the time frame or transfer it to a new property.

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As part of this, the vast majority of borrowers must take formal advice, either from the lender, a mortgage broker or a financial adviser.

The adviser will assess a borrower s financial situation, determine whether they can afford a loan and help decide which mortgage is best.

Banks and building societies are understaffed because advisers must have specialist qualifications. Most lenders used unqualified sales staff to sell mortgages to customers previously and are still in the process of recruiting or training qualified advisers.

Already there are long delays for appointments in some areas of the UK, particularly London and the South East where the property market is booming. Brokers and financial advisers are seeing an increase in inquiries as a result, adding to their own wait times.

Some borrowers who already know exactly which mortgage they want may be able to apply directly online or by post without taking advice; however, they must be able to provide full details of the deal without any input from an adviser. In addition high net worth borrowers , with an annual income of more than £300,000 or assets worth more than £3m, will be able to take out a loan without advice.

The 27 questions you may be asked

How much do you spend on:

-TV and Internet subscriptions

-Essential and non-essential travel

-Clothing and footwear

Do you have children?

Are you planning to start a family or have more children?

Do you have any plans to leave your job, start a business or become self-employed?

Do you expect your income to fall over the next few years?

Have you ever taken out a payday loan?

Do you ever gamble?

There are already reports that those who do need advice and secure an appointment with their lender are being grilled for up to three hours about their income and spending habits.

Santander and Nationwide said the interviews would take up to two and a half hours on average. NatWest, Lloyds Bank, Halifax and Yorkshire Building Society said they would take around two hours and HSBC said 90 minutes. More complex applications may take even longer.

Applicants will need to supply detailed proof of earnings such as wage slips and bank statements going back at least three months, but more likely six months. Self-employed and contract workers face some of the toughest questions they are being asked for earnings track records going back up to three years and evidence that they will have work in the future, such as a formal offer or contract extension.

In addition, lenders have developed intrusive affordability questionnaires that go far beyond monthly bills and essential living expenses.

Many lenders now want to know whether a borrower gambles, has taken a payday loan in the past, regularly visits restaurants or has pets or expensive hobbies.

Some are drilling down to the finest details of people s outgoings, asking how much they spend on personal grooming, haircuts, cleaning products, parking and eye care. Some may even want to know about costs that could arise in the future following major life changes such as starting a family or becoming self-employed.

Aaron Strutt, of mortgage broker Trinity Financial, said lenders had now completely ditched the old measure of affordability income multiples for lending decisions. Where lenders used to advance five or six times a borrower s annual income, they now use affordability calculators that take account of all spending, he said. The checks being applied are much more thorough.

On top of all this lenders will apply more rigorous stress tests to ensure borrowers will still be able to afford their repayments when interest rates rise.

Lenders will have to consider the effect of likely future interest rates on affordability over a minimum period of five years, and justify the method used to forecast rates.

Many lenders are being cautious with their forecasts and assuming mortgage rates will have reached between 6pc and 7pc in five years time. This will require borrowers to have a considerable cushion in their disposable income to show they will be able to meet their repayments in the future.


Staff Members Archive – Local Lenders Team Move OVM Financial, 5 Star, mortgage questions.#Mortgage #questions


Jacksonville

Phone: 910-526-0017

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Pittsboro

53 1/2 Hillsboro Street

Phone: 919-533-9120

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Sanford

129 Chatham Street

Phone: 919-777-0114

Southern Pines

230 N. Bennett Street, Suite 1A, Southern Pines, NC 28387 /

Phone: 910-418-4608

Whiteville

1424 South J.K. Powell Blvd, Suite E

Phone: 910- 418-4609

Wilmington

1430 Commonwealth Dr, Ste 202,

Phone: 910-418-4606

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Are you currently renting? Is your lease coming up for renewal? Before you extend your lease for another year or two, why not consider exploring the possibility of buying instead of continuing to pay someone else s mortgage? First of all, we are not going to say everyone should buy a house. Not everyone wants to. But there are [ ]

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Mortgage Questions – What To Ask When Applying For A Mortgage, mortgage questions.#Mortgage #questions


Applying for a mortgage? Ask these 10 important questions

Getting ready to buy a home? To avoid surprises and make sure you’re getting the best deal, ask these 10 key questions when you submit your mortgage application.

1. What is the interest rate on this mortgage?

Ask for the lender’s loan estimate, which breaks down the interest rate and fees. It will include the annual percentage rate, or APR, plus information about points, fees and other add-on charges you will pay for a mortgage.

2. What discount and origination points will I pay?

Lenders may charge discount points, origination points or both. One point is equal to 1 percent of the loan amount. For example, if you take out a $162,000 mortgage and agree to pay 1 discount point, it will amount to a fee of $1,620, because that’s 1 percent of $162,000. (Divide the loan amount by 100 to calculate 1 percent.)

  • Discount points reduce the interest rate. They are prepaid interest and are tax-deductible.
  • Origination points are fees charged by the lender to cover the costs of originating the loan.

3. What are the closing costs?

Borrowers pay fees at closing for services provided by the lender and other parties, such as title companies. Lenders are required to provide a written estimate of these closing costs within three days of receiving a loan application.

4. When can I lock the interest rate, and will it cost me?

Interest rates might fluctuate between the time you apply for your mortgage and your closing. To avoid winding up with a higher rate, you can lock the rate — and even the points — for a specified period. Fees may apply, but not always. To keep tabs on rate movements, follow Bankrate’s Rate Trend Index.

5. Is there a prepayment penalty on this loan?

Some lenders charge a penalty if you prepay on the mortgage. Some apply the penalty only when you refinance or reduce the principal balance by more than a certain percentage. Find out the penalty specifics and see if your lender will give you a lower interest rate if you choose a loan that comes with a penalty.

6. What is the minimum down payment required for this loan?

A bigger down payment might mean a lower interest rate and better loan terms. On the other hand, a down payment of less than 20 percent will likely require you to get mortgage insurance, increasing your monthly payment.

7. What are the qualifying guidelines for this loan?

Ask if there are any requirements you’ll have to meet related to your income, employment, assets, liabilities and credit history. First-time homebuyer programs, Veterans Affairs loans and other government-sponsored mortgages typically have less stringent standards.

8. What documents will I have to provide?

Lenders require proof of income and assets, including bank statements, tax returns, W-2 forms and recent pay stubs. More paperwork may be needed to show that you can make your down payment and are able to pay closing costs.

9. How long will it take to process my loan application?

Depending on how busy the lender is, it can take as little as two weeks or as long as 60 days. Be patient, and submit any requested documents quickly to speed up the process.

10. What might hold up approval of my loan?

A job change, an increase or reduction in salary, a new debt, a change in your credit history or change in marital status could delay your loan approval. The best way to avoid that is to put your financial life in a holding pattern until you reach the closing table.


Mortgage Questions, Mortgage Help, Mortgage Mistakes, mortgage questions.#Mortgage #questions


5 Newbie Mortgage Mistakes That Are Soooo Easy to Avoid

Can’t wait to cozy up in that cute Colonial, but anxious about signing up for your first mortgage?

We get it. Buying your first home is a big stinking deal. But with a little know-how, it’s easier than expected to make smart mortgage moves and save big bucks over the course of your loan.

By avoiding these mistakes, you can put your home-buying butterflies to rest.

#1 Finding Your Home Before You Find Your Mortgage

How Much It Could Cost You: Enough to send your future kid to college. Seriously, over the life of the loan, you could end up paying tens of thousands of dollars more in interest and fees than you need to.

Why People Mess This Up: If you don’t have your financing buttoned up before you find your dream home, your desire to win the bid could influence you to offer a higher price and overpay on a mortgage because you had no time to shop around. Getting your financing all set before you feel the pressure to make an offer gives you time to qualify for a more attractive loan and gives you the confidence to make a fair offer because you’re a qualified buyer.

How to Avoid It: Start talking to lenders at least three months — maybe even a year — before you start house hunting. Time-consuming tweaks like paying down debt or improving your credit score can have a dramatic effect on overall mortgage costs.

Determine how much you can actually afford. More like this.

Avoid Costly Financial Mistakes

#2 Not Comparing Loans Correctly

How Much It Could Cost You: Just like No. 1 above, you could overpay by tens of thousands over the life your loan.

Why People Mess This Up: First-time buyers often get seduced by a low interest rate and don’t take into account the cost of fees. A lower-interest loan could actually cost you more than one with a higher rate because those fees can be steep enough to outweigh the interest savings, says Matt Oliver, senior loan officer with Lund Mortgage Team in Glendale, Ariz.

How to Avoid It: Compare loans by the annual percentage rate, or APR, not just by interest rate. Each lender should give you a document aptly named “loan estimate.” The APR will be listed there (if it’s not, you don’t want that lender). The APR combines a home loan’s interest rate with closing costs and other fees like points (which is why it’s usually higher than the interest rate), then converts the overall costs to an annual percentage. This gives you an apples-to-apples comparison so you can understand what you’re paying over the life of the loan. You’re welcome!

#3 Falling for Marketing Gimmicks

How Much It Could Cost You: More than enough to buy a good used car (or at least enough to cover Uber fees for a few years).

Why People Mess This Up: ”Lenders use advertising hooks like, ‘We pay your mortgage insurance,’ or ‘You don’t pay the closing costs,’” says Casey Fleming, mortgage adviser in Silicon Valley, Calif., and author of “The Loan Guide: How to Get the Best Possible Mortgage.” Don’t be fooled. “You still pay those costs,” he says. “If you’re not paying in cash, you’re paying it in the interest rate.” Fleming estimates those costs can add a quarter point to an interest rate, which as an example, translates to $9,203 (the difference between a 4% interest rate and one that is 4.25%) for a mortgage of $176,000.

How to Avoid It: Block out the noise. Shop for your mortgage according to trusted recommendations and reliable reviews, not slick deals that sound too good to be true.

#4 Not Budgeting for Your Craft Beer and Yoga Pants

How Much It Could Cost You: Time and money for the things you love to do, like meeting friends over a pitcher of the newest session beer, then hitting the gym in the morning to work it off.

Why People Mess This Up: Lenders qualify you for what you technically can afford on a spreadsheet. They’re looking at your monthly debt-to-income ratio. They don’t look at what you spend your disposable income on: your passions and hobbies. So homebuyers often end up with a mortgage payment they can only afford by scaling back on the things they enjoy.

“One homebuyer may be a homebody, like to cook, and have no pets to pay for,” says Dave Jacobin, president of 1st Mariner Mortgage. “Meanwhile, a second buyer with the exact same income and debt situation might travel every weekend, enjoy fine dining, or shop a lot. Lenders can’t look at that.”

How to Avoid It: Track your spending monthly, so you really know how much you spend. Factor fun into your future when deciding which mortgage offer is the best fit. “Two years into your home purchase, you want to be happy you did it,” says Jacobin. “You don’t want to be mortgage poor.”

#5 Not Knowing How to Eyeball the Paperwork

How Much It Could Cost You: Thousands of dollars in surprise closing costs.

Why People Mess This Up: Because the paperwork seems so freaking daunting. But good news: As of October 2015, new mortgage rules require lenders to send you paperwork that actually makes sense.

This new paperwork comes in two different documents. It’s much easier to scan and understand than the old paperwork, which used to be the model for everything bad about tiny legal print.

1. The loan estimate will come first. Here are some key things to look for:

  • The APR (see No. 2 above)
  • The interest rate
  • The monthly payment
  • The loan terms, such as a 30-year or 15-year mortgage, adjustable rate or fixed
  • The total cost of the loan
  • Cash amount you’ll need at closing

2. The closing document will come at least three days before you close. It should look just like the first document, but instead of estimates it will have final numbers. If you see any increases or additional fees you weren’t expecting, question the lender immediately. Because if it shows even a tenth of a percent interest-rate jump you weren’t expecting (say 4.1% instead of 4%) — and you don’t question it — that could mean a difference of almost $3,700 on a $176,000 mortgage.

How to Avoid It: Watch for those docs. Review and compare them. And, most importantly, don’t be afraid to speak up if you spot a surprise. Now, how easy was that?

is a freelance writer who writes about money, home, and investing. Her work has appeared on Forbes.com, the Huffington Post, and Time.com. When she’s not writing, she’s working with her husband to slowly renovate what seems like every square inch of their home.

More in The Mistake-Proof Guide to Home Buying

Mortgage questions

Buy Your First Home in One Year: A Step-by-Step Guide

The ultimate timeline ensures the smoothest of transitions.

Mortgage questions

5 Surprising (and Useful!) Ways to Save for a Down Payment

One of the biggest misconceptions of home buying? The 20% down payment. Here s how to buy with a lot less down.


Answers to Common Reverse Mortgage Questions, mortgage questions.#Mortgage #questions


The Answers to Common Reverse Mortgage Questions

Mortgage questions

You’ve likely seen the TV commercials for reverse mortgages, with the late Fred Thompson, Henry Winkler and, lately, Tom Selleck. But just between us: Do you really understand how a reverse mortgage works? If not, don’t feel bad — in a March 2017 National Council on Aging survey, 66 percent of older homeowners said they’d need to do more research to understand a reverse mortgage line of credit.

But I can offer some assistance to help explain how reverse mortgages work and cautions about them, based on a reverse mortgage webinar I just hosted.

The one-hour Q A With Reverse Mortgage Experts — which you can download here — featured answers to questions from Next Avenue readers and others. The webinar was one of six from the National Reverse Mortgage Lenders Association (NRMLA) as part of Reverse Mortgage Education Week. The four webinar experts were: Peter Bell, president and CEO of NRMLA; Lance Canada, a Certified Reverse Mortgage Professional with First Bank; Tera Guy, vice president for operations at James B Nutter and Company, a reverse mortgage lender; and Phil Stevenson, owner and principal of the reverse mortgage lender PS Financial Services and a Certified Reverse Mortgage Professional.

Before I get to some of the Qs and As, a definition: A reverse mortgage is a loan that lets homeowners age 62 and older convert their home equity into cash. It becomes due when the borrower moves, sells, passes away or fails to pay property taxes or homeowners insurance or maintain the property. The FHA-insured reverse mortgage is known as a HECM, which stands for Home Equity Conversion Mortgage; it’s available through FHA-approved lenders. Most reverse mortgages made today are HECMs.

The maximum size of a reverse mortgage depends on your age, home value, interest rates and upfront costs. The older you are, the more you can get.

In years past, many financial advisers discouraged older homeowners from taking out reverse mortgages, because the industry was rife with unscrupulous types. These days, however, advisers often recommend reverse mortgages for older Americans with home equity who are looking to supplement their retirement income, largely because the mortgages and lenders are better regulated.

Here are some of the reverse mortgage questions and answers:

What is the difference between a reverse mortgage and a home equity loan?

Unlike a home equity loan, a reverse mortgage doesn’t require monthly principal or interest payments or have a predefined due date. It cannot be frozen or reduced. A reverse mortgage can be a line of credit or proceeds can be received as a lump sum. NRMLA discourages borrowers from taking the money as a lump sum so they will avoid the danger of spending the cash and then not having enough to pay the necessary property taxes and homeowners insurance.

How does the principal get paid back?

A borrower can repay the reverse mortgage loan balance with proceeds from the sale of the home or by using personal funds to satisfy the debt. A borrower can choose to make payments on the loan at any time.

What’s the maximum amount someone can borrow against the assessed value of a home?

The amount depends on the person’s age (or the age of the youngest spouse on the loan), the home value, interest rates and upfront costs. The older someone is, the more money he or she can get. Generally speaking, borrowers can receive between 50 percent and 70 percent of the value of the home. The maximum amount on any HECM mortgage is $636,150. You can find a ballpark estimate for the biggest reverse mortgage you can get with NRMLA’s Reverse Mortgage Calculator.

Can reverse mortgages be trusted or can they sometimes be a scam?

An HECM reverse mortgage is an FHA-insured loan and scams, fraud and financial exploitation of older adults are considered elder abuse. NRMLA lenders must abide by the group’s code of ethics. All HECM reverse mortgage loan borrowers must meet with an independent third-party counselor before applying for the loan. These counselors must complete a HUD-approved training course teaching them how to recognize when a potential borrower appears pressured to take the loan. (You can find the counselors through the HUD site or call 800-569-4287 to locate one nearby.)

Is it true that at death your house is immediately taken by the mortgage company and there’s no time for children to get things out?

No. A reverse mortgage becomes due and payable when the last surviving borrower either: sells the home; conveys title to someone else; passes away; fails to pay property taxes, insurance premiums, condo fees and other “mandatory obligations” and all options to bring the loan current have been exhausted; fails to maintain the home and allows it to fall into disrepair or resides outside of the principal residence for a period exceeding 12 consecutive months due to physical or mental illness.

The loan servicer must be notified of any of these events within 30 days. Then, the lender will send a “demand letter” explaining the process and timeline for repaying the loan. Within 30 days of receiving the demand letter, borrowers or their estate must respond with a written intent to satisfy the loan. The NRMLA online brochure, What Do I Do When My Loan is Due?, goes into details about the process for repaying the loan.

Can you get a reverse mortgage on a condo? Are there any types of homes that are ineligible for reverse mortgages?

Yes, you can get an HECM reverse mortgage on a condo as long as the condo association is FHA-approved. Ineligible properties include: investment properties, vacation homes, co-ops and bed and breakfasts.

For More Information on Reverse Mortgages:

If you’d like to learn more about reverse mortgages, here are a few suggestions:


Mortgage Questions, Mortgage Help, Mortgage Mistakes, mortgage questions.#Mortgage #questions


5 Newbie Mortgage Mistakes That Are Soooo Easy to Avoid

Can’t wait to cozy up in that cute Colonial, but anxious about signing up for your first mortgage?

We get it. Buying your first home is a big stinking deal. But with a little know-how, it’s easier than expected to make smart mortgage moves and save big bucks over the course of your loan.

By avoiding these mistakes, you can put your home-buying butterflies to rest.

#1 Finding Your Home Before You Find Your Mortgage

How Much It Could Cost You: Enough to send your future kid to college. Seriously, over the life of the loan, you could end up paying tens of thousands of dollars more in interest and fees than you need to.

Why People Mess This Up: If you don’t have your financing buttoned up before you find your dream home, your desire to win the bid could influence you to offer a higher price and overpay on a mortgage because you had no time to shop around. Getting your financing all set before you feel the pressure to make an offer gives you time to qualify for a more attractive loan and gives you the confidence to make a fair offer because you’re a qualified buyer.

How to Avoid It: Start talking to lenders at least three months — maybe even a year — before you start house hunting. Time-consuming tweaks like paying down debt or improving your credit score can have a dramatic effect on overall mortgage costs.

Determine how much you can actually afford. More like this.

Avoid Costly Financial Mistakes

#2 Not Comparing Loans Correctly

How Much It Could Cost You: Just like No. 1 above, you could overpay by tens of thousands over the life your loan.

Why People Mess This Up: First-time buyers often get seduced by a low interest rate and don’t take into account the cost of fees. A lower-interest loan could actually cost you more than one with a higher rate because those fees can be steep enough to outweigh the interest savings, says Matt Oliver, senior loan officer with Lund Mortgage Team in Glendale, Ariz.

How to Avoid It: Compare loans by the annual percentage rate, or APR, not just by interest rate. Each lender should give you a document aptly named “loan estimate.” The APR will be listed there (if it’s not, you don’t want that lender). The APR combines a home loan’s interest rate with closing costs and other fees like points (which is why it’s usually higher than the interest rate), then converts the overall costs to an annual percentage. This gives you an apples-to-apples comparison so you can understand what you’re paying over the life of the loan. You’re welcome!

#3 Falling for Marketing Gimmicks

How Much It Could Cost You: More than enough to buy a good used car (or at least enough to cover Uber fees for a few years).

Why People Mess This Up: ”Lenders use advertising hooks like, ‘We pay your mortgage insurance,’ or ‘You don’t pay the closing costs,’” says Casey Fleming, mortgage adviser in Silicon Valley, Calif., and author of “The Loan Guide: How to Get the Best Possible Mortgage.” Don’t be fooled. “You still pay those costs,” he says. “If you’re not paying in cash, you’re paying it in the interest rate.” Fleming estimates those costs can add a quarter point to an interest rate, which as an example, translates to $9,203 (the difference between a 4% interest rate and one that is 4.25%) for a mortgage of $176,000.

How to Avoid It: Block out the noise. Shop for your mortgage according to trusted recommendations and reliable reviews, not slick deals that sound too good to be true.

#4 Not Budgeting for Your Craft Beer and Yoga Pants

How Much It Could Cost You: Time and money for the things you love to do, like meeting friends over a pitcher of the newest session beer, then hitting the gym in the morning to work it off.

Why People Mess This Up: Lenders qualify you for what you technically can afford on a spreadsheet. They’re looking at your monthly debt-to-income ratio. They don’t look at what you spend your disposable income on: your passions and hobbies. So homebuyers often end up with a mortgage payment they can only afford by scaling back on the things they enjoy.

“One homebuyer may be a homebody, like to cook, and have no pets to pay for,” says Dave Jacobin, president of 1st Mariner Mortgage. “Meanwhile, a second buyer with the exact same income and debt situation might travel every weekend, enjoy fine dining, or shop a lot. Lenders can’t look at that.”

How to Avoid It: Track your spending monthly, so you really know how much you spend. Factor fun into your future when deciding which mortgage offer is the best fit. “Two years into your home purchase, you want to be happy you did it,” says Jacobin. “You don’t want to be mortgage poor.”

#5 Not Knowing How to Eyeball the Paperwork

How Much It Could Cost You: Thousands of dollars in surprise closing costs.

Why People Mess This Up: Because the paperwork seems so freaking daunting. But good news: As of October 2015, new mortgage rules require lenders to send you paperwork that actually makes sense.

This new paperwork comes in two different documents. It’s much easier to scan and understand than the old paperwork, which used to be the model for everything bad about tiny legal print.

1. The loan estimate will come first. Here are some key things to look for:

  • The APR (see No. 2 above)
  • The interest rate
  • The monthly payment
  • The loan terms, such as a 30-year or 15-year mortgage, adjustable rate or fixed
  • The total cost of the loan
  • Cash amount you’ll need at closing

2. The closing document will come at least three days before you close. It should look just like the first document, but instead of estimates it will have final numbers. If you see any increases or additional fees you weren’t expecting, question the lender immediately. Because if it shows even a tenth of a percent interest-rate jump you weren’t expecting (say 4.1% instead of 4%) — and you don’t question it — that could mean a difference of almost $3,700 on a $176,000 mortgage.

How to Avoid It: Watch for those docs. Review and compare them. And, most importantly, don’t be afraid to speak up if you spot a surprise. Now, how easy was that?

is a freelance writer who writes about money, home, and investing. Her work has appeared on Forbes.com, the Huffington Post, and Time.com. When she’s not writing, she’s working with her husband to slowly renovate what seems like every square inch of their home.

More in The Mistake-Proof Guide to Home Buying

Mortgage questions

Buy Your First Home in One Year: A Step-by-Step Guide

The ultimate timeline ensures the smoothest of transitions.

Mortgage questions

5 Surprising (and Useful!) Ways to Save for a Down Payment

One of the biggest misconceptions of home buying? The 20% down payment. Here s how to buy with a lot less down.


Answers to Common Reverse Mortgage Questions, mortgage questions.#Mortgage #questions


The Answers to Common Reverse Mortgage Questions

Mortgage questions

You’ve likely seen the TV commercials for reverse mortgages, with the late Fred Thompson, Henry Winkler and, lately, Tom Selleck. But just between us: Do you really understand how a reverse mortgage works? If not, don’t feel bad — in a March 2017 National Council on Aging survey, 66 percent of older homeowners said they’d need to do more research to understand a reverse mortgage line of credit.

But I can offer some assistance to help explain how reverse mortgages work and cautions about them, based on a reverse mortgage webinar I just hosted.

The one-hour Q A With Reverse Mortgage Experts — which you can download here — featured answers to questions from Next Avenue readers and others. The webinar was one of six from the National Reverse Mortgage Lenders Association (NRMLA) as part of Reverse Mortgage Education Week. The four webinar experts were: Peter Bell, president and CEO of NRMLA; Lance Canada, a Certified Reverse Mortgage Professional with First Bank; Tera Guy, vice president for operations at James B Nutter and Company, a reverse mortgage lender; and Phil Stevenson, owner and principal of the reverse mortgage lender PS Financial Services and a Certified Reverse Mortgage Professional.

Before I get to some of the Qs and As, a definition: A reverse mortgage is a loan that lets homeowners age 62 and older convert their home equity into cash. It becomes due when the borrower moves, sells, passes away or fails to pay property taxes or homeowners insurance or maintain the property. The FHA-insured reverse mortgage is known as a HECM, which stands for Home Equity Conversion Mortgage; it’s available through FHA-approved lenders. Most reverse mortgages made today are HECMs.

The maximum size of a reverse mortgage depends on your age, home value, interest rates and upfront costs. The older you are, the more you can get.

In years past, many financial advisers discouraged older homeowners from taking out reverse mortgages, because the industry was rife with unscrupulous types. These days, however, advisers often recommend reverse mortgages for older Americans with home equity who are looking to supplement their retirement income, largely because the mortgages and lenders are better regulated.

Here are some of the reverse mortgage questions and answers:

What is the difference between a reverse mortgage and a home equity loan?

Unlike a home equity loan, a reverse mortgage doesn’t require monthly principal or interest payments or have a predefined due date. It cannot be frozen or reduced. A reverse mortgage can be a line of credit or proceeds can be received as a lump sum. NRMLA discourages borrowers from taking the money as a lump sum so they will avoid the danger of spending the cash and then not having enough to pay the necessary property taxes and homeowners insurance.

How does the principal get paid back?

A borrower can repay the reverse mortgage loan balance with proceeds from the sale of the home or by using personal funds to satisfy the debt. A borrower can choose to make payments on the loan at any time.

What’s the maximum amount someone can borrow against the assessed value of a home?

The amount depends on the person’s age (or the age of the youngest spouse on the loan), the home value, interest rates and upfront costs. The older someone is, the more money he or she can get. Generally speaking, borrowers can receive between 50 percent and 70 percent of the value of the home. The maximum amount on any HECM mortgage is $636,150. You can find a ballpark estimate for the biggest reverse mortgage you can get with NRMLA’s Reverse Mortgage Calculator.

Can reverse mortgages be trusted or can they sometimes be a scam?

An HECM reverse mortgage is an FHA-insured loan and scams, fraud and financial exploitation of older adults are considered elder abuse. NRMLA lenders must abide by the group’s code of ethics. All HECM reverse mortgage loan borrowers must meet with an independent third-party counselor before applying for the loan. These counselors must complete a HUD-approved training course teaching them how to recognize when a potential borrower appears pressured to take the loan. (You can find the counselors through the HUD site or call 800-569-4287 to locate one nearby.)

Is it true that at death your house is immediately taken by the mortgage company and there’s no time for children to get things out?

No. A reverse mortgage becomes due and payable when the last surviving borrower either: sells the home; conveys title to someone else; passes away; fails to pay property taxes, insurance premiums, condo fees and other “mandatory obligations” and all options to bring the loan current have been exhausted; fails to maintain the home and allows it to fall into disrepair or resides outside of the principal residence for a period exceeding 12 consecutive months due to physical or mental illness.

The loan servicer must be notified of any of these events within 30 days. Then, the lender will send a “demand letter” explaining the process and timeline for repaying the loan. Within 30 days of receiving the demand letter, borrowers or their estate must respond with a written intent to satisfy the loan. The NRMLA online brochure, What Do I Do When My Loan is Due?, goes into details about the process for repaying the loan.

Can you get a reverse mortgage on a condo? Are there any types of homes that are ineligible for reverse mortgages?

Yes, you can get an HECM reverse mortgage on a condo as long as the condo association is FHA-approved. Ineligible properties include: investment properties, vacation homes, co-ops and bed and breakfasts.

For More Information on Reverse Mortgages:

If you’d like to learn more about reverse mortgages, here are a few suggestions:


New mortgage rules: the questions you will be asked, mortgage questions.#Mortgage #questions


New mortgage rules: the questions you will be asked

Mortgage questions

Mortgage questions

12:40PM BST 25 Apr 2014

Planning to buy a home or change or move your existing mortgage? If so, brace yourself for a long wait to see a mortgage adviser, three-hour interviews at the bank and forensic analysis of your daily spending habits thanks to new lending rules that come into force tomorrow.

Even after jumping through all those hoops, success is not guaranteed experts have warned thousands of buyers and home owners are likely to be rejected because they do not meet the new requirements.

The City regulator, the Financial Conduct Authority (FCA), has introduced the new rules, known as the Mortgage Market Review, to ensure borrowers are issued with mortgages they can afford both now and in the future. The FCA was concerned that lenders were making it too easy to get a mortgage before the financial crisis. Many households borrowed too much money and found they were unable to keep up their repayments when the financial crisis struck.

So-called self-cert loans, where borrowers declared their income but did not have to prove or certify it, were common and people routinely exaggerated earnings to borrow more. Interest-only loans also caused problems. Borrowers flocked to these deals because their monthly repayments were lower, but they had no way to repay the capital at the end of the loan.

To ensure safer lending in future, mortgage providers are now responsible for assessing whether customers can afford the loan in the long term. This includes buyers and those who are remortgaging and want to increase the size of the loan, vary the time frame or transfer it to a new property.

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As part of this, the vast majority of borrowers must take formal advice, either from the lender, a mortgage broker or a financial adviser.

The adviser will assess a borrower s financial situation, determine whether they can afford a loan and help decide which mortgage is best.

Banks and building societies are understaffed because advisers must have specialist qualifications. Most lenders used unqualified sales staff to sell mortgages to customers previously and are still in the process of recruiting or training qualified advisers.

Already there are long delays for appointments in some areas of the UK, particularly London and the South East where the property market is booming. Brokers and financial advisers are seeing an increase in inquiries as a result, adding to their own wait times.

Some borrowers who already know exactly which mortgage they want may be able to apply directly online or by post without taking advice; however, they must be able to provide full details of the deal without any input from an adviser. In addition high net worth borrowers , with an annual income of more than £300,000 or assets worth more than £3m, will be able to take out a loan without advice.

The 27 questions you may be asked

How much do you spend on:

-TV and Internet subscriptions

-Essential and non-essential travel

-Clothing and footwear

Do you have children?

Are you planning to start a family or have more children?

Do you have any plans to leave your job, start a business or become self-employed?

Do you expect your income to fall over the next few years?

Have you ever taken out a payday loan?

Do you ever gamble?

There are already reports that those who do need advice and secure an appointment with their lender are being grilled for up to three hours about their income and spending habits.

Santander and Nationwide said the interviews would take up to two and a half hours on average. NatWest, Lloyds Bank, Halifax and Yorkshire Building Society said they would take around two hours and HSBC said 90 minutes. More complex applications may take even longer.

Applicants will need to supply detailed proof of earnings such as wage slips and bank statements going back at least three months, but more likely six months. Self-employed and contract workers face some of the toughest questions they are being asked for earnings track records going back up to three years and evidence that they will have work in the future, such as a formal offer or contract extension.

In addition, lenders have developed intrusive affordability questionnaires that go far beyond monthly bills and essential living expenses.

Many lenders now want to know whether a borrower gambles, has taken a payday loan in the past, regularly visits restaurants or has pets or expensive hobbies.

Some are drilling down to the finest details of people s outgoings, asking how much they spend on personal grooming, haircuts, cleaning products, parking and eye care. Some may even want to know about costs that could arise in the future following major life changes such as starting a family or becoming self-employed.

Aaron Strutt, of mortgage broker Trinity Financial, said lenders had now completely ditched the old measure of affordability income multiples for lending decisions. Where lenders used to advance five or six times a borrower s annual income, they now use affordability calculators that take account of all spending, he said. The checks being applied are much more thorough.

On top of all this lenders will apply more rigorous stress tests to ensure borrowers will still be able to afford their repayments when interest rates rise.

Lenders will have to consider the effect of likely future interest rates on affordability over a minimum period of five years, and justify the method used to forecast rates.

Many lenders are being cautious with their forecasts and assuming mortgage rates will have reached between 6pc and 7pc in five years time. This will require borrowers to have a considerable cushion in their disposable income to show they will be able to meet their repayments in the future.


Rural Housing USDA Home Loan Questions and Answers #mortgage #calculato


#rural development mortgage

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Rural Housing Service Center

RURAL LOAN PROGRAMS

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>USDA Common Questions and Answers

The USDA Rural Development Home Loan is a flexible zero down payment government guaranteed program that is growing in popularity. It is designed to promote homeownership to residents in rural communities with low to moderate incomes and who have limited savings for a down payment. A common misconception about the USDA loan program is that it is only for farmers, but you will find that just outside most metropolitan areas there are many suburban areas that qualify for this program.

The Section 502 Guaranteed Loan is the most common type of USDA rural housing loan. Amazingly, this loan will actually lend up to 103.5% of the home’s appraised value and even allow the buyer to include closing costs in the actual loan (appraisal permitting). All USDA Guaranteed Loans carry a 30 year term with a low fixed rate.

USDA Home Loan requirements are not entirely credit score driven, although RANLife Home Loans require a 640 mid-score or better, USDA Home Loan guidelines will disregard some credit derogatoriness with an acceptable explanation.

The home must be owner occupied (no investment property) and all single family, condos and planned unit developments. NO MANUFACTURED OR MOBILE HOMES.

You must be discharged from a Chapter 7 bankruptcy for at least three years. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are eligible to make an USDA loan application.

The home must be owner occupied (no investment property) and all single family, condos and planned unit developments (PUD). NO MANUFACTURED OR MOBILE HOMES.

One of the biggest advantages of a USDA RD Home Loan is a the very low mortgage insurance (MI) requirement. This alone will potentially save you $50-$250/mo depending on your loan size.

However, USDA has been recently changing the MIP requirements. Call a RANLife USDA specialist today to see how the changes might affect you.

USDA RD Home Loans have no down payment requirement. FHA requires 3.5% down and conventional loans require 3% down.

To qualify for this loan program, there are two notable requirements that differentiate this program from an FHA or VA loan program.

1. Location: The home must be located in a designated rural area.

2. Income Limits: Must meet USDA adjusted annual household income limits, a maximum 115% of the median income for your area. Meaning your total combined household income cannot be more than this amount. If your income is slightly over these amounts, there are little known deductions that can be used to reduce your qualifying gross household income and help you qualify. Such as:

  • Disabled or handicapped individuals who are not the applicant or co-applicant.
  • Documentable childcare expenses for children 12 years of age or older.
  • Documentable medical expenses for family members 62 years of age or older.
  • Attendant care expenses.
  • Deduction for each child under the age of 18 and/or full time student over 18.

Qualifying Income: It is important to note that USDA uses two types of income for qualifying.

  • Household income is the combined adjusted gross income of all people living in the home, regardless if they are applying for or will be on the mortgage. This amount cannot be higher than the county limits.
  • Repayment income is income from the actual loan applicants and determines the DTI (debt-to-income) ratio. Deduction for each child under the age of 18 and/or full time student over 18.

Rural Housing Purchase Benefits

  • 100% Financing
  • Low Monthly Mortgage Insurance
  • Using an USDA Approved Lender usually means lower closing costs
  • Low fixed monthly payments
  • Low mortgage interest rates
  • Never a pre-payment penalty

Contact a USDA Loan Specialist Online or toll free at (800) 461-4152 to learn more about how the USDA Home Purchase Programs can help you.


Mortgages Frequently Asked Questions – Santander UK #canada #mortgage #calculator


#standard mortgage

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Mortgages frequently asked questions

Order a redemption statement by calling or writing to us using the details below:

Santander Mortgages:
Santander Mortgage and Loan Operations, Bridle Road, Bootle, L30 4GB
Tel: 0800 917 5630. 8am to 7pm Monday to Friday and 9am to 1pm Saturday.

Alliance Leicester Mortgages
Santander, Image Document Centre, Carlton Park, Narborough, LE19 0AL
Tel: 0800 917 5630. 8am to 7pm Monday to Friday and 9am to 1pm Saturday.

Our tariff of mortgage charges shows our current charges. We send a copy of our current tariff of mortgage charges each year with the annual mortgage statement.

What is your account fee?
The account fee is the fee for managing your mortgage account and also includes closing your mortgage account when your mortgage ends. It only has to be paid once during the life of your mortgage on your property. You can pay it on completion, or it can be deferred until the end of your mortgage. Please note the fee won’t increase throughout the life of your mortgage on your property.

We do not currently offer new Buy to Let mortgages through the branch or over the phone however we do offer these through Independent Financial Advisers. If you have an existing Buy to Let mortgage and you have a query, please call us on 0800 917 5630. Lines are open 8am to 7pm Monday to Friday and 9am to 1pm Saturday.

The Mortgage Credit Directive (MCD) is new European legislation which must be implemented in the UK and across Europe by 21 March 2016 we ll be implementing the changes ahead of this date. Although the UK has a robust set of regulations, following the Mortgage Market Review in 2014, MCD is there to provide standardisation across the European Union.

It will affect you if you re buying your first home, moving home, remortgaging to us from another lender or taking out an additional loan with your existing lender.

There are four key changes:

1. European Standardised Information Sheet
There is a new form of illustration which is called the European Standardised Information Sheet (ESIS). It will eventually replace the Key Facts Illustration (KFI) which is currently used for all mortgages and which is like a quotation for a specific mortgage deal.
Whilst the format is different and information may be in different sections, the key points are still displayed in both the ESIS and KFI.
From 21 March, lenders have the option of using the ESIS or keeping the KFI but with the additional MCD information – we re continuing to use the KFI. All lenders must use the ESIS from March 2019.

2. Annual Percentage Rate (APR)
The APR allows you to compare the overall cost of mortgage deals from all lenders. For those lenders using the ESIS this will be called the Annual Percentage Rate of Charge (APRC). The APR and APRC costs can still be compared across lenders when comparing a KFI and the ESIS.

MCD also requires us to provide a second APR. This needs to be provided for mortgages which have a variable interest rate at some point during the mortgage term e.g. fixed rate mortgage changing to our Standard Variable Rate or a tracker rate mortgage. This second APR shows the cost of a mortgage should interest rates rise to a 20 year historic high it is purely for illustrative purposes.

3.Reflection period and binding offer
We need to provide you with a reflection period lasting at least seven days. This is to give you a chance to review your mortgage offer, make comparisons and assess the implications of accepting it and taking out a mortgage. This reflection period will begin when we issue your mortgage offer.

From 21 March, the mortgage offer you receive from a lender will be binding on the lender, meaning it cannot be withdrawn without there being a justifiable reason, for example:

  • a material change relating to your offer such as mortgage amount
  • where false and/or inaccurate information has been provided
  • if the Conveyancer is unable to confirm requirements such as a satisfactory certificate of title

4. Foreign currency mortgages
Although we only offer mortgages in pounds sterling, we do consider employed income and/or interest only repayment vehicles in a foreign currency. Where this is the case, the mortgage is classified as a foreign currency mortgage. With a foreign currency mortgage you need to be aware of the implications of exchange rate fluctuations. If the value of the foreign currency moves against you, it could become more difficult to afford your monthly mortgage payments and/or repay your interest only mortgage.

Within the KFI we show the impact of a 20% adverse movement in the foreign exchange rate. Once your mortgage has completed, we’ll monitor the exchange rate and if it moves against you by 20%, we’ll write to let you know.

If you have any questions please contact us.

You only pay back the interest with each monthly payment so at the end of your mortgage term you still owe the amount you borrowed when you took out the mortgage.

Most lenders insist you put a repayment plan in place for the original amount you borrowed an investment designed to raise the money you need to pay off the initial capital at the end of your mortgage.

With this option you’re guaranteed to pay off your entire mortgage by the end of the term, provided you don’t miss any payments.
The amount that you pay each month is made up of capital and interest and is calculated to repay all of your mortgage by the end of the term.

There are a number of options open to you. Your options could include:

1. Change your mortgage from an interest only to a repayment mortgage with, or without, changing your mortgage term.

2. Make overpayments on your interest only mortgage to reduce the capital outstanding, with the aim of paying it back by the end of the mortgage term. You can overpay up to 20% each calendar year (January to December) on any interest only fixed rate loan amount without paying an early repayment charge. This offer will be withdrawn on 31 December 2016 and will change to 10% of your loan amount. If you ve got an Alliance Leicester mortgage, you can overpay up to 20% on any interest only fixed rate loan amount in January of each year without paying an early repayment charge. This offer will be withdrawn on 31 January 2017 and will change to 10% of your loan amount.

The majority of our tracker rates and Standard Variable Rate mortgages allow you to make unlimited overpayments without paying an early repayment charge. Check your original Key Facts Illustration for more details.

3. Consider selling your property or any other assets you hold, to pay back your interest only mortgage and consider downsizing to a lower value property.

Talk to us
We can help you understand the options available to you. Call us on 0800 085 0980. Lines are open 9am to 5pm Monday to Friday.

Talk to an Independent Financial Adviser (IFA)
They may charge a fee but can help you work out the best plan for you. Find an Independent Financial Adviser in your area

When you talk to either us or an independent financial adviser, it can help to have a good idea of:

current and future expenses

the value of your home

how much you owe on your mortgage

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