PruCalVoices

What is a reverse mortgage?

Dean Rizzi — Thu, 09 Feb 2012 02:34:53 +0000

A reverse mortgage is a special type of loan made to older homeowners to enable them to convert the equity in their home to cash to finance living expenses, home improvements, in home health care, or other needs.

With a reverse mortgage, the payment stream is “reversed.” That is, payments are made by the lender to the borrower, rather than monthly repayments by the borrower to the lender, as occurs with a regular home purchase mortgage.

A reverse mortgage is a sophisticated financial planning tool that enables seniors to stay in their home or “age in place” and maintain or improve their standard of living without taking on a monthly mortgage payment. The process of obtaining a reverse mortgage involves a number of different steps.

The first most widely available reverse mortgage in the United States was the federally insured Home Equity Conversion Mortgage (HECM), which was authorized in 1987.

A reverse mortgage is different from a home equity loan or line of credit, which many banks and thrifts offer. With a home equity loan or line of credit, an applicant must meet certain income and credit requirements, begin monthly repayments immediately, and the home can have an existing first mortgage on it. In addition, there is no restriction on the age of borrowers.

In general, reverse mortgages are limited to borrowers 62 years or older who own their home free and clear of debt or nearly so, and the home is free of tax liens.

Borrowers usually have a choice of receiving the proceeds from a reverse mortgage in the form of a lump sum payment, fixed monthly payments for life, or line of credit. Some types of reverse mortgages also allow fixed monthly payments for a finite time period, or a combination of monthly payments and line of credit. The interest rate charged on a reverse mortgage is usually an adjustable rate that changes monthly or yearly. However, the size of monthly payments received by the senior doesn’t change.

Some reverse mortgage products also involve the purchase of an annuity that can assure continued monthly income to the senior homeowner even after they sell the home.

The size of reverse mortgage that a senior homeowner can receive depends on the type of reverse mortgage, the borrower’s age and current interest rates, and the home’s property value. The older the applicant is, the larger the monthly payments or line of credit. This is because of the use of projected life expectancies in determining the size of reverse mortgages.

Seniors do not have to meet income or credit requirements to qualify for a reverse mortgage.

Unlike a home purchase mortgage or home equity loan, a reverse mortgage doesn’t require monthly repayments by the borrower to the lender. A reverse mortgage isn’t repayable until the borrower no longer occupies the home as his or her principal residence.

This can occur if the sole remaining borrower dies, the borrower sells the home, or the borrower moves out of the home, say, to a nursing home.

The repayment obligation for a reverse mortgage is equal to the principal balance of the loan, plus accrued interest, plus any finance charges paid for through the mortgage. This repayment obligation, however, can’t exceed the value of the home.

The loan may be repaid by the borrower or by the borrower’s family or estate, with or without a sale of the home. If the home is sold and the sale proceeds exceed the repayment obligation, the excess funds go to the borrower or borrower’s estate. If the sales proceeds are less than the amount owed, the shortfall is usually covered by insurance or some other party and is not the responsibility of the borrower or borrower’s estate. In general, the repayment obligation of the borrower or borrower’s estate can’t exceed the value of the property.

In general, a borrower can’t be forced to sell their home to repay a reverse mortgage as long as they occupy the home, even if the total of the monthly payments to the borrower exceeds the value of the home.

Download a Reverse Mortgage Application

Dean Rizzi
Managing Partner
Guarantee Mortgage
636 4^th Street
San Francisco, CA 94107

Direct : 415-694-5533
Fax: 415-694-5501
www.DeanRizzi.com
DRE #01125960, NMLS #237278

‘Tis the Season for Tax Breaks

Mark Hasha — Tue, 07 Feb 2012 00:06:15 +0000

     With April 15 rapidly approaching many are working hard to complete their taxes. For those who have recently bought or sold a home, there are a number of tax deductions that that may be available to them.
   Real estate broker’s commissions, title insurance, legal fees, advertising costs, administrative costs, and inspection fees are all considered selling costs and may be used to reduce one’s taxable capital gain by the amount of the selling costs. That could result in a big savings depending on the final sale price.
Interest that is paid on a mortgage is also tax-deductible, within limits. A married couple filing jointly can deduct all their interest payments on a maximum of $1 million in mortgage debt secured by a first or second home.
   Buyers may also be able to deduct some of the interest they paid on a home equity loan or similar line of credit.
    One deduction that many buyers often overlook is points. Points or origination fees on a home loan that were paid during the purchase of a home are generally tax-deductible in full for the year in which they were paid.
     Refinanced mortgage points are also deductible but only over the life of the loan – not all at once. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.
    If your lender required private mortgage insurance, the PMI premiums are tax-deductible for mortgages taken out from 2007 through 2011.
   Making improvements to property prior to the sale or once one moves in might qualify for an interest deduction on your home-improvement loan. Qualifying capital improvements are those that increase your home’s value, prolong its life, or adapt it to new uses, such as adding a porch or installing energy-efficient windows.
    Many times during a sale, the seller will send the local tax collector’s office a check for real estate taxes prior to the closing. In many circumstances, however, the buyer will pay a pro-rated portion of the taxes for the year at closing. This tax deduction also gets overlooked.
    For those working from their new home: If a room is used exclusively for business purposes, they may be able to deduct home costs related to that portion, such as a percentage of your insurance and repair costs, and depreciation.
    In some instances, if you have moved because of a new job, moving costs may be deducted. These can include travel or transportation costs, expenses for lodging, and fees for storing your household goods.
    Every year the tax laws change and certain tax deductions become available while others phase out. If you have recently bought or sold a home, it’s probably a good idea to seek out a professional tax consultant to do your taxes as missing deductions that you can legally claim can add up to quite a bit of money.

Mark Hasha
Prudential California Realty
I can be reached at (650) 799-0731 (cell/text) or email mark@markhasha.com

Top 5 Reasons to Buy a House in the Bay Area in 2012

Karin Cunningham — Mon, 30 Jan 2012 22:13:57 +0000

1. Prices are down!

2. Interest rates are a low 4% and below. With interest rates low and prices down, people who have had the same income for the past 2 years can qualify for home loans easier.

3. FHA loans requires only 3.5% down.

4. The Bay Area is the leading real estate market next to New York. There is always a demand for housing here whether it’s San Francisco, San Mateo County, Marin, or East Bay. If you buy in 2012 and hold on to your property you may prosper in the years to come!

5. It’s a great rental market! If your desire has always been to invest, you won’t have trouble finding renters in 2012.

Karin Cunningham

www.KarinCunningham.com

www.FaceBook.com/SanBrunoLife

650-438-3504

After Christmas Sale, – Bay Area Homes up to 60% off

Lee Ginsburg — Sun, 29 Jan 2012 22:15:38 +0000

That is a big statement. Macy’s, Target, Wal-Mart and all most other stores put their products on “After Christmas Sales”. Home Sellers in San Bruno, South San Francisco, and all over the San Francisco Bay Area have put their products on the “After Christmas Sale”

I have randomly selected two recently sold homes to use as an example.

3691 Exeter Dr., a 3BR/2Ba. San Bruno home just sold on Jan 18, 2012 for $452,000 it also sold on May 9 2003 for $600,000. That results into a 36% savings in monthly payments. Look at the numbers.

3875 Carter Drive, #106 a 2Br/2Ba. Condo in South San Francisco sold on Jan 4, 2012 doe $277,000 and in April 25, 2006 it sold for $550,000. A 59% savings. Look at the numbers.

As you look at the numbers please note the lower down payment required, and the lower property tax. Both due to the lower home price. You save all around. Numbers are deemed reliable but not guaranteed.

	3691	Exeter Dr.	San Bruno	3875, #106	Carter Dr	SSF
	2012	2003	Difference	2012	2006	Difference
Purchase Price	$452,000	600,000	25%	277,000	550,000	50%
Down Payment	90,400	120,000		55,400	110,000
Loan	361,600	480,000		221,600	440,000
Interest Rate	4.25	5.75		4.25	6.5
Principal and Int.	1726.	2801		1090	2781
Property Tax @1.1%	415	550		254	504
Monthly Payment	2140	3351		1344	3285	59%

I selected these properties randomly. You might find savings greater or lesser. I want to point out to you by using real numbers the “Perfect Storm” has arrived; Low interest rates and low home prices. In the past if rates went down prices would go. This is an opportunity of a lifetime. If the I Pad was on sale like homes are on sale you would be on line at 4AM. For all of the potential buyers waiting for the right time, this is your wake up call. The time is right. Ken Rosen of the Fisher Center at UC Berkeley says “This is the best time to buy a home in 30 years”

Considering buying or want to learn more call your favorite Realtor or come to my Free Home Buying Seminar. Click here for more info and registration.

“It is Better To Own Real Estate and Wait, Than Wait To Own Real Estate”

www.LeeSellsMore.com

San Bruno Eye Sore is about to Go

Lee Ginsburg — Mon, 16 Jan 2012 00:40:18 +0000

The Treetops apartments on Skyline and Sharp Park broke ground for renovation. (It’s about time)

I thought you would be interested.

7 years after being closed down, renovation will begin and is scheduled to be completed by summer of 2013.

for more information Click Here

http://www.mercurynews.com/san-mateo-county-times/ci_19731829

The San Bruno Ave. Caltrain Grade Separation Project is moving along. Can’t wait for completion.

Completion is scheduled for the end of this year. We’ll see.

for more information Click Here

http://sanbruno.ca.gov/pw_proj_current.html#streets

I will be hosting a Home Buying Seminar. If you are in thinking about buying I think you will find it quite helpful.

for more information Click Here

http://leesellsmore.com/RealtorWebPage?custompage_id=1567686030

Lee Ginsburg
Prudential California Real Estate
www.LeeSellsMore.com

What If My Offer Is Rejected?

Bernadette Ramirez — Wed, 11 Jan 2012 01:18:10 +0000

Oddly enough, I get asked this question most often before clients write offers. This usually goes along with the fear of commitment or loss. Either way, clients are usually inquisitive of this before even writing an offer or deciding on what terms to offer.

If your inquiring about rejection before you write your offer, you should ask yourself how that would make you feel? Is this property your dream home, starter home, vacation home, investment? I think depending on where your interest lies with investing in that particular property will then come the answer to your question, “what next”?

If the outcome is not what you predicted or wanted then maybe you should ask your realtor why; what was the seller looking for in an offer? How can I learn from this to increase my chances of acquiring my next property of choice? Of course the best advice comes from those with their hands in the market every day so to speak! So….. don’t be afraid to ask your favorite realtor here at Prudential in San Bruno, ” WHAT SHOULD I DO?”

Lets get your best offer in first, then and only if we have to, will we deal with rejection TOGETHER:) Otherwise, BEST OF LUCK with your offer!

Bernadette Ramirez
Prudential California Realty
I WORK FOR YOU!
You can reach me @ 650-871-3639

It’s a Buyers’ Market for Real Estate Investors, too

Mark Hasha — Wed, 04 Jan 2012 01:51:36 +0000

Turn on any financial news program and at some point you’ll hear the experts extolling the virtues of diversification. Real estate, even through the market downturn, has long been considered a conservative, long-term strategy to growing wealth.
In fact, that very downturn has created a historic buying opportunity for potential homebuyers and investors alike. The combination of lower home prices across American and historically low mortgage rates, two essential factors that usually don’t trend in the same direction, have triggered a buyer’s market in many areas of the country. For real estate investors who want to rent their properties, this can make the difference in achieving positive cash flow sooner or right off the bat.
While some seasoned real estate investors make it look easy, to be successful, beginners should follow some basic principles.
• Learn all you can. Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments. Barring exceptional circumstances, real estate does not sell at a moment’s notice. It could take days or months to sell a property, depending on the strength of the market in a particular region.
• Consider cash flow. You’ll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants.
• Start small. Look into buying a condominium, single-family home or a duplex. Leave large apartment buildings and commercial properties to the pros.
• Inquire at the local Chamber of Commerce about companies relocating into or out of the area. Company movement is one indicator of demand for rental and/or office space.
• Find a property that will be in demand. Look for a moderately priced home with three or four bedrooms, two bathrooms, and a garage that sits on a quiet street.
• Research the property. The most common way first-time investors lose is by failing to investigate a property thoroughly. Look beyond the front door. Investigate the reputation of the school district, the crime rate, and plans for expanding a nearby highway or developing vacant land. Ask a local real estate professional about the area, its history, and how fast (or slow) properties are moving.
• Inspect the home you’re considering for signs of water damage, such as stains on the ceiling and crinkling or gathering wallpaper; open and close every door and window; and check all electrical sockets by plugging in an appliance. Get an independent home inspection, roof inspection and termite inspection. Unexpected repair costs can eat away your cash flow. Because even the best inspection can’t always predict problems, try to set aside some of the rental income for unexpected repairs.
• Spend time driving the streets of the neighborhood noting the condition of other properties. Are lawns maintained? Are roofs in good shape? Are homes kept up?
• Be ready to make fixes quickly and respond to the renter’s needs. If you’re not prepared to be a hands-on landlord, consider hiring a property management firm.
• See your tax advisor for related planning and laws that can affect your investment decisions.
Remember, investing in a property is much different than living in one, and while emotion and attachment can be prime motivators when it comes to homes, it is return on investment that counts when investing in real estate.

Mark Hasha
Prudential California Realty
I can be reached at (650) 799-0731 (cell/text) or email mark@markhasha.com

How to choose the “Best” real estate home loan.

Lee Ginsburg — Thu, 22 Dec 2011 23:20:12 +0000

Lee Ginsburg, top real estate agent with Prudential California Realty, shares his experince on how to choose the right real estate lender.

Lee Ginsburg
Your satisfaction is my success!

www.LeeSellsMore.com

http://youtu.be/DLiDviKZgl0