Buy a Home With No Monthly Payments?

Reverse Mortgage

Reverse mortgages for purchases have been around a while but they stand to see more use as younger baby boomers hit retirement age. The mortgages are backed by FHA and they let households buy a home without having to make monthly mortgage payments. Instead, buyers put up a fairly sizable down payment and finance the rest with the reverse mortgage. The monthly payments then come out of the reverse mortgage each month, freeing up money for households to save or spend on other things. Of course, when they go to sell the house or refinance the mortgage, the funds taken out of the mortgage to make the monthly payments count as a negative against the equity in the house.

Given the possibility that older buyers could come to real estate practitioners with questions about how these work, the mortgages are explored in the latest Voice for Real Estate news video.

The video also looks at the confirmation process of Ben Carson to be secretary of the U.S. Department of Housing and Urban Development. In testimony before the Senate Financial Services Committee, Carson said he supports the opportunity of all Americans to buy a home and that preservation of the 30-year, fixed-rate mortgage should remain a part of the market. He also said he supports a federal backstop in the secondary mortgage market although he also wants to cultivate more private options.

Carson’s nomination has passed the Sensate Financial Services Committee and now awaits passage by the full Senate.

The video also looks at the 10-year high in existing-home sales markets saw last year and what stands in the way of continued strong sales: inventory shortages and rising interest rates.

Also in the video is a look at what happens next now that the Trump Administration has suspended the planned reduction in the mortgage insurance premium on FHA loans.

—Source , REALTOR® Magazine

Saving for a Down Payment? This is How Long It Will Take..

Saving for a Down Payment? This is How Long It Will Take..

Depending on where you live, saving for a down payment can take several years of financial planning. For example, in some markets, it may take the average person nearly a decade to save enough to buy a home. In California, that especially rings true.

California is home to four of the five cities on a recent list by SmartAsset of the places where it takes the longest to save for a down payment: San Francisco, Los Angeles, San Jose, and San Diego.

SmartAsset scanned the data on median home prices and median household income in the 15 largest cities in the U.S. From there, researchers calculated how long it would take for a household to save enough for a 20 percent down payment if consumers saved 20 percent of their incomes. (Note: Buyers are not required to have 20 percent down for a mortgage. It’s often recommended, but buyers can take advantage of several other low-down payment loan offerings.)

Here’s how many years buyers can expect to wait to save enough to afford a 20 percent down payment in these cities:

1. San Francisco, Calif.: 9.84 years
2. Los Angeles, Calif.: 9.38
3. New York, N.Y.: 9.27
4. San Jose, Calif.: 7.20
5. San Diego, Calif.: 7.01
6. Chicago, Ill.: 4.59
7. Austin, Texas: 4.17
8. Philadelphia, Pa.: 3.80
9. Phoenix, Ariz.: 3.45
10. Dallas, Texas: 3.09
11. Jacksonville, Fla.: 2.92
12. Houston, Texas: 2.85
13. Columbus, Ohio: 2.83
14. Indianapolis, Ind.: 2.82
15. San Antonio, Texas: 2.50

Source: “Years of Work Needed to Afford a Down Payment in 15 Cities,” SmartAsset.com (Jan. 31, 2017)

Safety Checklist for Moving Into a New Home

Safety Checklist for Moving Into a New Home

Your clients have a lot to think about on moving day, but it’s important that they have more than just organizing and unpacking on their to-do list, according to The Red Cross. The group recently featured several items home buyers should think about when settling in to a new house.

Create fire escape plans and meeting places.

The plan should include two ways to exit the home and set two different meeting places for family members. One might be a meeting area right outside of the home in case of a fire, while another would be a meeting place outside the neighborhood, in case the area is blocked in an emergency.

Create a survival kit.

Have enough food and water for each person for three days. The embedded video offers more tips on building a survival kit.

Identify your severe weather shelter.

Locate the safest spot in the home and designate it as your emergency weather shelter. The basement is the best spot.  If the home doesn’t have a basement, designate an interior spot away from windows on the lowest floor of the home, such as a bathroom or closet.

Update your app alert locations.

Weather and safety apps may need to be notified of clients’ new location details. For example, the Red Cross Emergency App offers alert preferences for all the locations and types of disasters users may want to monitor.

Decorate with earthquakes in mind.

This is not just a California problem anymore. Avoid hanging heavy items above seating areas, beds, and cribs. Secure furniture that could fall in a quake, such as bookshelves and televisions.

Assess your fire risks.

As clients are unpacking, they should be placing all flammable items at least three feet away from anything that gets hot, such as space heaters. Make sure they know not to run wiring under rugs or overload outlets and extension cords. Also, don’t forget to check the smoke alarms and make sure they’re working.

Source: “Checklist for Moving into a New Home,” the American Red Cross (Jan. 26, 2017)

Items Buyers Need to Add to Their Budgets

Items Buyers Need to Add to Their Budgets

Buying a home is much more than just paying a mortgage bill. Once you factor in association fees, property taxes, utility bills, and home maintenance, owners are often facing a much steeper price that is hundreds of dollars more.

Help your buyers get an accurate estimate of how much ownership will truly cost them. Here are a few of the common expenses they’ll want to add to their budget, along with estimations of costs (note: costs can vary dramatically from region to region; prices listed are based on national averages):

1. Closing costs: Add in an estimated 2% to 5% of home price.
2. Homeowners insurance: Add $1,100-plus per year.
3. Homeowners association fees: Add $10 to $575 per month.
4. Property taxes: Add $1,000-plus per $100,000 per year.
5. Home maintenance and repairs: Add several hundred to several thousand dollars.
6. Home furnishings: Add several hundred to several thousand dollars.
7. Lawn care and outdoor maintenance: Add $100 to $200 per month.
8. Utility bills: Add $180-plus per month.

Source: “From Closing Costs to Association Dues: The True Price Tag of a New Home,” AOL Real Estate (Jan. 25, 2017)

The Best States to Raise a Family in 2017

North Dakota is the top family-friendly state for 2017, according to new findings from a WalletHub analysis. WalletHub’s research team compared the 50 states and the District of Columbia based on 40 key indicators, such as housing affordability, the unemployment rate, median family salary, education, health and safety, and more.

Here are the states that emerged on top as most family friendly for 2017:

1. North Dakota
2. New Hampshire
3. Vermont
4. Minnesota
5. Nebraska
6. Massachusetts
7. New Jersey
8. Iowa
9. Connecticut
10. South Dakota
11. Wisconsin
12. Utah

Source: “2017’s Best & Worst States to Raise a Family,” WalletHub (Jan. 18, 2017)

Mortgage Words You Should Know

The mortgage industry loves jargon and it can quickly confuse a real estate professional and all the moreso a borrower. The Fannie Mae Sellers Guide alone has 91 different acronyms and abbreviations.

The National Mortgage News recently offered up a few of the most common acronyms buyers and professionals should know while going through the home buying process.

DTI: Debt to income

• Underwriters turn to this ratio to determine if a borrower can financially meet a mortgage obligation.

UETA: Uniform Electronics Transactions Act

• One of this Act’s purposes is to help harmonize state laws with the recognition of electronic signatures on documents.

PITI: Principal and interest plus taxes and insurance

• Lenders often will break a borrower’s monthly payment down into this equation.

ATR: Ability to repay

• The Dodd-Frank Act mandates that lenders ensure borrowers have the ability to repay their debt.

HOEPA: Home Ownership Equity and Protection Act

• The law helps to determine when a loan becomes considered a high-cost mortgage.

SFHA: Special Flood Hazard Area

• Lenders must monitor flood maps to see if the property has been placed into these zones.

Test yourself on more mortgage-related acronyms at National Mortgage News.

Source: “10 Mortgage Abbreviations Everyone in the Industry Should Know,” National Mortgage News (2017)