The stock market is getting hammered this morning by a much weaker than expected durable goods number. Mortgage Backed Securities and Mortgage Rates though are capped and have been for a while due to overhead resistance, those red lines at top of the graph. Since the MBS are having a tough time breaking through this dual layer of resistance there is more risk of rates rising than actually falling right now. As always I’ll keep you posted, but it makes sense to lock in at these historically low mortgage rates.
Archives for January 2015
Pros and Cons of a Reverse Mortgage
A reverse mortgage is a financial product that allows a homeowner to convert home equity into cash.
A reverse mortgage is an option available to homeowners who are at least 62 years old. A reverse mortgage offers them a good way to finance their retirement. They can use this money to cover healthcare expenses, pay for home improvement, or pay off an existing mortgage. A reverse mortgage provides a line of credit or fixed monthly payments without the need to repay a loan each month. However, before choosing this option, it is important to understand the pros and cons. What can a reverse mortgage do for you?
How a Reverse Mortgage Works
In a traditional mortgage, you borrow money from a lender and repay it in monthly payments while you gradually build up equity in your home. On the other hand, in a reverse mortgage, a lender pays you a monthly sum and gradually purchases the equity in your home. You retain the title to the property and it acts as a security for the loan. The loan is repaid when the owner passes away, sells the home, or the home is no longer the primary residence.
Pros of a Reverse Mortgage
- You choose how you receive the cash, for example, a regular monthly installment, a single lump sum, a line of credit, or a combination of any of these methods.
- Irrespective of how you receive the cash, you do not make payments as long as you live in the home as your principal residence.
- There is no minimum income to qualify.
- According to the Federal Trade Commission, if you receive more cash than what your home is actually worth, you will not owe anything more than the value of your home.
- Cash advances are non-taxable.
- You remain the owner of the home.
- Cash advances have no affect on Medicare or social security benefits.
- After lender fees are paid and the home is sold, the owner receives any equity left in the home.
Cons of a Reverse Mortgage
- You need to be 62 years or older more to qualify.
- You must go through compulsory mortgage counseling and you will have to pay for it.
- Closing costs and loan origination fees can be quite high.
- You may have to pay monthly servicing fees for the term of the loan.
- Reverse mortgages are usually variable interest rate loans.
- The debt increases with time as interest is added to the balance.
- There are limits on the amount you can borrow during the first year.
- There are limits on the mortgage you can qualify for.
- If you fail to pay homeowner’s insurance, taxes, or any other expenses, the loan can become due.
- With a reverse mortgage, you lose the equity in your home and you are left with fewer assets.
The decision on whether you should apply for a reverse mortgage should be made after considering the pros and cons carefully. The Sean Z Mortgage team can help you weigh all the factors before committing to a reverse mortgage. If the terms of a reverse mortgage does not fit with your needs, Sean Zalmanoff can help you with other options. Call Sean Z Mortgage at (314) 361-9979.
4 Things Every Home Buyer Should Be Asking Themselves
Purchasing your first home can be both an exhilarating and daunting experience.
Even though here are professionals to help you make the right decision, you will need to do some homework before you actually go house hunting. In this post, we will discuss the basics of preparing for a first-time home purchase. These tips will come in handy and will help make your life simpler when you begin the decision-making process.
What Are Your Long-Term Goals?
A first-time home buyer will need to determine their long-term goals and how owning a home fits into those plans. Some homebuyers may want to stop paying rent and instead pay a mortgage for their own home, while others may decide to buy a home for independence and enjoy becoming a property owner. Consider these questions to narrow down your homeownership goals.
What Type of Home Will Suit Your Needs the Best?
When you decide to purchase a residential property, you will have several options to choose from, such as a townhouse, a single-family home, a multi-family building, or a condo. Each of these options has its own pros and cons and a buyer can make a choice depending on their homeownership goals. A fixer-upper may be a great choice if someone wants to save money on the purchase price and has the time and money to complete the renovations to turn the house into a dream home.
What Specific Features Are You Looking for in Your Ideal Home?
Your home will be one of the biggest investments you will ever make. Make sure that you get the most out of the money you invest. Make a list of the specific features you want in a home. Include your basic desires such as the neighborhood, size, and even details such as the kitchen and bathroom layouts and appliances you would like in your home.
What Can You Afford?
Before you go searching for your new home, it is important that you have an idea of how much mortgage you qualify for. The Sean Z Mortage Team can help you decide how much you qualify for based on your income, credit history, and other factors. Your monthly installment payments are not the only cost associated with a home purchase. You will also need to include the cost for a down payment, property taxes, insurance costs, closing costs, and repair and maintenance costs.
The Sean Z mortage team looks forward to helping you own your first home. We work with top-rated real estate agents who will help you find and choose a home. Our unique “TBD Mortgage Approval Program” will help you budget for a mortage loan and complete the paperwork, even before you start shopping for your home. We will guide you through the entire process and save you from any potential pitfalls. Call us today at (314) 361-9979!
Mortgage Rates 1/5/2015 Update
Mortgage Rates are Great Today!
The chart I am showing is a 6 month view rather the typical 3 month view that I share to show a longer perspective. Mortgage Rates are starting the year at close to the best levels in the past 365 days. Oil is once again fallings, great for all of us who consume it, but it is leading stocks lower. Thus bonds, like mortgage backed securities, MBS, are benefiting from this. Last week we closed above a key level of resistance and have crossed through another this morning. This is all good news for mortgage rates, but a reversal in oil and/or a stock market rally could change this. Should this pattern hold, MBS do have some room to rally more!
