What is a Reverse Mortgage?
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. Read more
Is a Home Warranty Beneficial?
In a Real Estate transaction quite often the buyer or seller discuss with their agent the cost, the coverage, the pros and the cons of a Home Warranty. Many people think Home Warranty is the best creation since chopped Liver. I am not a fan of the Home Warranty Companies. I have found they try to find any excuse not to pay. With a Home Warranty you must pay a service call of approximately $50.00. The cost of a home warranty from most of the major companies is about $500 with a few options. Let’s say you purchased an older home and needed service 3 times. That would be a cost of $650.00. When I have called a service technician to my home with no warranty the cost is usually $150 for a total of $450 for 3 calls vs.. the $650 with the warranty. If the buyer can negotiate for the seller to pay for it then you come out a winner but if not it is not the best financial investment although it could be very comforting. Please do not get me wrong, I have had a client get a water heater replaced so it can be beneficial.
The following article was in the San Jose Mercury News recently and I thought it had some very good ideas on the search for good Home Warranty Companies.
http://www.mercurynews.com/real-estate/ci_18060185?nclick_check=1
The following are some of the major Home Warranty Companies servicing the San Francisco Bay Area:
http://www.homewarranty.com/
http://homewarranty.ahs.com/
http://home-warranty.firstam.com/?code=BM51
http://www.orhp.com/
http://www.hiscohw.com/
http://hghw.com/
“It is Better To Own Real Estate and Wait Than Wait To Own Real Estate”
Lee Ginsburg
www.leesellsmore.com
Open House Etiquette
For the last 17+ years, I have been selling real estate and, for the first 16 of those years, have hated doing open houses. I love meeting new customers, but if it is a slow day it can be incredibly boring. Nowadays, I enjoy them a lot more, because I bring my computer and can accomplish quite a bit (well, alright, sometimes I play word games and don’t actually accomplish too much, but I’m a lot happier!)
While doing my open house yesterday, I had plenty of time to contemplate, since it was pouring down rain and absolutely no one came. Fortunately, the house I was holding open was warm and cozy, so it was pretty comfortable. Since I had so much time, I began thinking about the whole open house process.
I thought it might be helpful for all of the buyers out there if I shared a few thoughts about the etiquette of open houses. A few helpful hints are: Read more
12 Hidden Costs of Homeownership
Hi everybody! I know, it’s been awhile..but here’s an awesome article I found earlier this year that would benefit first-time home buyers especially!
-via Luke Mullins, USNews.com (April 8, 2010)
As the selling season gets underway, many Americans will be looking to take advantage of the lower real estate prices, attractive mortgage rates, and federal tax credit by purchasing a home. But remember: Not all of the costs associated with homeownership are reflected in the listed price. Indeed, many buyers — particularly first-time buyers — may be surprised by the amount of cash they’ll need to set aside for housing-related expenses that they hadn’t previously considered. These often-overlooked expenses can include everything from title insurance to lawn mowing. To give would-be home buyers a better sense of the budget they’ll need to buy and maintain a home, U.S. News spoke with a handful of real estate experts and compiled a list of 12 hidden costs of homeownership:
1. Home inspection. Since a home purchase is likely to be the largest financial investment of your life, it’s a good idea to have it professionally inspected beforehand. A home inspector can point out areas of the property that may need repairs. Buyers can use this information as leverage during home-price negotiations or simply to determine whether or not the property is worth purchasing. “It’s not required, but certainly I recommend it to buyers,” says Judy Moore of Re/Max Landmark Realtors in Lexington, Mass. “It is actually very helpful in that [buyers] learn about the property and how to maintain it and it also alerts them to any potential issues that may be coming up in the near future or need to be taken care of.” The cost of a home inspection, which can run several hundred dollars or more, is typically incurred by the buyers before they go to closing, Moore says. Read more
The Costs are Outweighing the Benefits
We’ve stated that the benefits of low interest rates have run their course. We hold to our contrary opinion that low rates are actually hindering more than helping markets these days. Consider the mortgage market: Even though mortgage rates are dwelling in the basement, fewer people are applying for mortgages. The MBA reported that purchase activity declined 1.2 percent to the second-lowest level since 1997 last week, while refinancing activity slid 7.3 percent from its May 2009 highs.
The Federal Reserve’s low-rate policy is hardly inspiring confidence. “Rates must be low because the economy is circling the drain,” so the man-on-the-street rationale goes. It’s the wrong message to send, because promoting risk aversion also means promoting inertia. Risk-averse markets are simply less willing to engage in riskier, but worthwhile, economic activity.
This risk-averse sentiment is readily reflected in the capital markets, where the relatively non-productive assets of gold and Treasury securities continue to be the investments of choice. That’s unfortunate, because we’d all be better off if there were more investment in the very productive (though riskier) assets of home purchases and renovation and mortgage lending.
An Open Letter to Potential Home Buyers and Fence Sitters
Dear Home Buyer and Fence Sitter,
The window of opportunity is closing. Let me explain my thoughts. Prices in the Bay Area are already inching up, same with interest rates. The time to receive the Federal Tax Credit of $8000 or $6500 is rapidly approaching. (Must be in contract by April 30, 2010) FHA is talking about increasing the minimum required down payment and or increasing the cost of required mortgage insurance.
You can purchase a home today and your costs will be fixed for the next 30 years. What else can you buy and maintain the same cost for the next 30 years? Rents will continually go up. You are at the Landlords mercy. It is time to get off the fence. The first step is to get pre-approved. This will tell you what the bank will loan you. There are many loan programs out there. I could refer you to someone if you would like. The pre-approval process is easy, is no cost and with no obligation. If you don’t do it now you will never know.
You do not need a large down payment. You can purchase a home with only 3.5%. Yes you need mortgage insurance. I don’t like mortgage insurance but if that is the only way to own a home, then go for it. Mortgage insurance will go away once you have 20% equity. Economists think values will increase substantially in the next 3-5 years and that will more than make up for the mortgage insurance. Some people tell me they want to save for a larger down payment. That bothers me because from my experience most people cannot save as much as prices increase. Read more
Real Estate Jargon…What Do All of These Terms Mean?
We Realtors often bandy about tons of real estate jargon. We talk to our clients and friends about short sales, REO’s, contingency periods, etc. I have come to realize, however, that just because we know what all of this stuff means, not everyone does, so I thought it would be helpful to describe some of the terms we use. Hopefully, this will give you some idea of what we’re talking about as we rattle on and on and your eyes are going bleary! Here goes:
Contingency Periods: We, generally, refer to these when doing our contracts. As an example, we tell you that you will have a 10 day period to “remove your property condition contingency” or 20 days to remove loan and appraisal contingencies. What this really boils down to, is that these are the time frames during which you will have the right to get your deposit back if you cancel the contract. Once you “remove these contingencies,” you are no longer entitled to get your deposit back, unless you can prove some sort of fraud. Read more
Questions! Why so many questions?
You’ve decided to go out and jump into the home buying process. Good for you! You think, this will be fun…driving around neighborhoods, looking for homes, thinking about all the ways you’ll redecorate. What you might not think about is all the questions you are going to be asked and all the personal information you’ll be expected to share. I’ve had one client lament it would feel less vulnerable standing in a room full of strangers with their skivs on than laying out all the details of their life. But like many things, that which isn’t pleasant may still be good for us. Read more
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