Monday, December 29, 2008

Reverse Mortgages

What is a reverse mortgage?

A reverse mortgage is a low-interest loan for senior homeowners that uses a home's equity as collateral. The loan amount is a percentage of the home's value determined by the age of the youngest homeowner. The loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not liable if the home sells for less than the balance of the reverse mortgage.

Eligibility for a reverse mortgage (HECM)
To be eligible for a HUD reverse mortgage, the Federal Housing Administration (FHA) requires that all homeowners be at least age 62. You must own your home or have paid off approximately half of your mortgage balance. If you do have a mortgage balance, it can be paid off completely with the proceeds of the reverse mortgage loan at the closing (the moment which you sign the legal documents). There are no income or credit requirements for a reverse mortgage.

Eligible home types
Almost all home types are eligible. However, mobile homes must be built in the last 30 years, you must own the land, it must be on a permanent foundation, and it must meet an FHA inspection.

Difference between a reverse mortgage and a home equity loan
Generally a home equity loan, a second mortgage, or a home equity line of credit have strict requirements for income and creditworthiness. Also, with other traditional loans you must still make monthly payments to repay the loans. A reverse mortgage has no income or credit requirements and instead of making monthly payments, you receive payments.
With a reverse mortgage the amount you can borrow is determined by an FHA formula that considers your age, the current interest rate, and the appraised value of your home. The older you are, the lower the interest rate. The more valuable your home (up to a certain point), the higher the loan amount will be.
As stated previously, with traditional loans you are still required to make monthly payments, but with a reverse mortgage the loan is not due as long as you live in the home. Also, with a reverse mortgage you cannot be forced to forclose or forced to vacate your home because of a missed mortgage payment. However, you are still responsible for real estate taxes, utilities, and maintenance.

Outliving the reverse mortgage
You cannot outlive a reverse mortgage. As long as at least one homeowner lives in the home (keeping taxes and insurance current) you do not need to repay the loan. Furthermore, you will never owe more than your home's value (a reverse mortgage can not become "upside down").

Estate inheritance
In the event of your death or in the event that you no longer use the home as your primary residence, your estate can choose to convert the reverse mortgage into a traditional mortgage to keep the house or else sell the home to pay the balance (the cash borrowed, interest, and fees).
If the equity in your home is worth more than the amount you owe to the lender, the remaining balance belongs to your heirs. No other assets are affected by a reverse mortgage. For example, investments, second homes, cars, and other valuable possessions cannot be taken from your estate to pay off the reverse mortgage.
If the sale of your home is not enough to pay off the reverse mortgage, the lender must take a loss and request reimbursement from the FHA.

Loan limit
The amount that is available depends on three factors: age (older is better), current interest rate, and appraised value of the home.

Distribution of money from a reverse mortgage
There are several ways to receive the proceeds of a reverse mortgage and you can mix and match as needed.
Lump sum - a lump sum of cash at closing.
Tenure - equal monthly payments as long as you live in the home.
Term - equal monthly payments for a fixed number of years.
Line of Credit - take any amount you please at any time until the line of credit is exhausted.

New guidelines will be in place for 2009 allowing Seniors to sell their current properties and downsize to a new location using a Reverse Mortgage. Call me today and I will set-up a meeting with a Loan Officer to get you started.

Tuesday, September 16, 2008

Many people have so much on their plates that is hard to think about the future. Whom will be the next President and how will they handle the economy in the U.S.? Is the government taking on too much bailing out institution after institution that have faltered with the poor real estate lending practices?

As a Realtor I do not think so. Helping these corporations to continue operating allows smaller companies to stay afloat. With the Government bailouts we are seeing a drop in interest rates which we all are hoping will stimulate the economy. I do not suggest for Americans to go further in debt, but invest wisely. One way to do this is buying your own home.

Now I know there are some out there who do not want the burden of ownership, they like to move often, not hassle with maintenance and invest in other ways, and that is okay, but for the millions of others wishing to own their own home, whether single family, condo, town home or a paired home you may be in luck. There are currently 1,465 properties for sale in Charles County, 990 properties in St. Marys County and 1058 properties in Calvert County. With over 3,500 properties listed in just Southern Maryland alone, buyers have an excellent chance of finding the perfect home to fit their needs.

What makes this even better is the dropping interest rate, which is now below 6% at this writing. We are seeing the down payment help go away, but are hoping that this will make a return in 2009. However consumers can still ask to have the seller help with closing costs. If you have been one of the many sitting on the fence trying to decide if this is the right time for you, give me a call and we can see what you qualify for and what is available in your price range.

Make the decision to be a HOME OWNER Today!!

Tuesday, June 10, 2008

Why use a Realtor?

Why it Pays to Work with a Local REALTOR®
By Rives Bailey, President Charlottesville Area Association of REALTORS®

In today's hot real estate market, some home sellers have decided they don't need a professional REALTOR® to sell their house. Most are finding out there is a lot more to selling a house than putting a sign in the yard and running an ad. If that's all there was to it, then everyone would sell their own home. Instead, a vast majority of homeowners use a professional REALTOR® when it is time to sell. Most homebuyers also use a professional REALTOR® when they want to buy a home. A typical family will purchase less than five homes in their entire life. Having a professional REALTOR® as an advisor is the best way to handle such an important and complicated transaction.

1. Time is money! REALTORS® take away the time consuming burden of buying and selling homes. You have a life, REALTORS® let you live it.

2. REALTORS® are in tune with recent changes in development and zoning issues, disclosures, agency and fair housing laws, regulatory issues, financing options, and much more.

3. REALTORS® use state of the art technology to assist their clients. REALTORS® invest millions of dollars every year in high-tech tools to make the buying and selling process efficient. and empower REALTORS® and their clients to take advantage of the Internet.

4. Pricing a property correctly is the most important part of selling real estate. There is great value in a REALTOR'S® knowledge of the market and trends in the industry.

5. Professional REALTORS® are committed to ongoing education. Many REALTORS® have made the commitment to obtain professional designations to further their knowledge of the complex real estate industry.

6. It is not a good idea to let just anyone in to your home. REALTORS® know their clients and bring quality buyers to see your home.

7. Buying or selling a home is an emotional process. It is critical to have a REALTOR® coordinate the negotiations to make sure the transaction is handled professionally. When you take advantage of a REALTORS®' expertise, you can feel more confident in your decisions. Let's face it, real estate is what they do -- real estate is their life.

8. REALTORS® are specialists! There are many types of real estate - residential, commercial, land, farms, etc - and there are trained REALTORS® ready to fill every niche market.

9. REALTORS® have a strict ethical Code they must follow to ensure your interests are protected. Don't just use a real estate agent - use a REALTOR®.

10. REALTORS® have set up a secure lockbox system to protect your property while allowing other REALTORS® to show your home to potential buyers.

The term REALTOR® is a registered collective membership mark that may be used only by real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict Code of Ethics.

Thursday, June 5, 2008

Home Warranties

What is home warranty and when should I consider having one?

A home is one of the single largest investments that we make. It is similar to having insurance on your home, except that it covers the operating systems. A home warranty plan protects you against potentially huge repair bills. It covers no matter how many breakdowns occur or how much it costs to fix or replace the covered item. You can feel comfortable knowing that in most cases, you'll pay only a nominal service fee per repair call. This warranty can be purchased on all types of homes. A basic plan covers things such central air, heating, plumbing, electrical, appliances, water heaters, sump pumps and exhaust fans. Other coverages can also be purchased to cover pools, wells, septic systems.

Each company has a different fee per repair call ranging from $50-$100, some plans have deductibles. It is best to speak with agent to determine what type of policy will work best for you. When making an offer to buy a house ask that the seller pay for the warranty. If you have a home to sell, offer a warranty.

Tuesday, May 27, 2008

Memorial Day Weekend

I hope everyone enjoyed a long weekend. My question is how many of us actually celebrate this holiday for its true meaning. Being a military wife and daughter I realized at the end of the day we did not take the time to even discuss why the children were of school for the day. I assume the older ones realized it, but this gave me some food for thought. Many of us talk about celebration of other holidays such as the 4th of July, Thanksgiving, Christmas and so forth. I want to take this time to say that without all of the United States Veterans both living and dead sacrificed their lives so that we can sit here today and do whatever we want that is legal. I am proud not only to be an American, but also to be the wife and daughter of a career military person. Please whenever possible take the time to say thank you when you see someone in an uniform, whether it be military, fire or police. These men and women work hard to provide us with the security and freedoms that we have living in the US. Also please teach your children about the special holidays that we have and why they are important. I am going to speak to my children upon returning home from work. The schools teach history it is our responsibility to teach values.

Friday, May 16, 2008

Home Inspections

Why Get A Home Inspection?

A professional home inspection can be of tremendous value for both home buyers and sellers. An inspection reveals a great deal of information about a home, answers some important questions, and helps give everyone a peace of mind.

There are basically two types of inspections:

The pre-listing inspection helps a seller prepare there home for sell. They can take care of any needed repairs and maintenance prior to the home being listed with a licensed agent.

The pre-purchase inspection gives the buyer the peace of mind that they are not walking into a money trap This can detect unknown problems concerning, structural, mechanical, electric and plumbing issues. An appraiser will help determine which repairs absolutely have to be done, so you have some negotiating power with the sellers. Also if there is a list of items that need to be corrected the buyer will have the opportunity to ask for a home warranty.

There are many companies in each local area that provide inspections, make sure you are working with a licensed company. Realtors are a great source for the companies that are in your area.

Thursday, May 15, 2008

Military and Health Care

Are you stationed in the Washington D.C. or Maryland area? Did you know you have a choice about the health care you receive?

Thats right you are not limited to the base clinics. In Maryland the other choice is John Hopkins Community Physicians, US Family Health Plan. This offers the same benefits as your Tri-Care prime insurance. There are two stipulations if you decide on this option. First you must use the authorized pharmacy, in Charles County this is Rite-Aid, and pay a small co-pay. Second you will not be treated at any base clinic or hospital unless it is an emergancy. There are 16 locations to serve you. If you are interested in finding out more about this program go to the following website.