Reverse Mortgages–Pros and Cons

Posted on May 18, 2013 by Deborah

 

house with keyMore than 600,00 Reverse  Mortgages were issued between 1990 and 2010. What are they and what are the caveats?

 As of 2013 the number of seniors over 65 is 37 million and is expected to rise significantly over the next few years. Seniors 65+ will represent one fifth of the US population in 2030.

 In the past several years, many seniors have experienced erosion of their retirement portfolio, be that stocks, bonds, annuities or real estate. And for the first time in history, they are living the longest.

 WHAT is a Reverse Mortgage:

 A Reverse Mortgage is a a loan product that allows you to borrow against the equity in your home. You must be 62, and either have no mortgage ~or~ a small enough mortgage to be paid off from the proceeds of the RM. You must live in your home as your primary residence.

RM loans are available in fixed and adjustable rates. You can take proceeds from the loan, a line of credit (similar to a HELOC) to be used as necessary to pay medical bills or other emergencies, or a monthly payment. You do not have to pay a monthly mortgage payment. You can use the product as a refinance, with or without cash out, since there are no income or credit qualifications. You still retain title, and you do not have to pay the RM back until you: 

  1. sell the home
  2. pass away
  3. permanently relocate

 Property taxes and insurance still need to be paid.

 Traditionally, RM’s were prohibitively expensive but theHECM SAVER LOAN  charges only 0.01% of a home’s value up front. Borrowing limits depend upon your age, the home’s value and the interest rate.

 Caveats include:stop sign2

 Moving out of the home without the intention to return (moving into a Nursing Home or other care facility for a year or more), the loan can be called.

 A younger spouse married to an older spouse may be forced to move if the older spouse dies and the loan is not in the younger one’s name.

 Using up your equity by taking all the cash out at an early age and not having enough for your later years.

 Not preserving equity for your heirs.

These loans serve a particular niche, but may not be for everyone. But they may just help many seniors who have sufficient equity, limited options and really want to enjoy their golden years.

 

 

 

 

 

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FHA Loan Can Solve The 2 to 4 Unit “Primary Residence Mortgage Misery”.

Posted on February 22, 2013 by Deborah

Guest Blogger Financial Writer Angelina Brown from Chicago:

Nude woman screaming. 2 to 4 Unit properties basically consist of two, three or four separate residences on the same real estate lot. These 2 to 4 unit properties are very profitable for real estate investors. Not only for regular investors, but for normal home buyers also 2 to 4 unit properties can be really lucrative.

What must you maintain to get an FHA mortgage loan for a 2 to 4 unit property?

You can easily get Federal Housing Administration approved mortgage loans to obtain a 2 to 4 unit property. Only you need to meet some important criterion. They are described below:

· First of all, you have to utilize one of the units as your primary residence.

· You may use only 75% of the rental income of the property.

· Your debt-to-income ratio must be at per with the FHA requirements.

 

Why FHA loans are beneficial for 2 to 4 unit primary residence mortgage?

Following are the 3 benefits that you may enjoy by taking up an FHA mortgage loan for 2 to 4 unit primary residence:

1. The reasonable down payment: This is definitely a good news for prospective home buyers. FHA requires the borrower to pay only 3% down payment for 2 unit properties and 15% down payment for 3 and 4 unit properties. So, home buyers don’t need to worry much about the down payment.

2. Rental income can be used for qualification: Home buyers may increase their purchasing capacity by using the income they are getting from the property rent. The rent that you’ll get from the other units can be used to pay off the mortgage loan on the primary unit of residence.

3. The affordability increases for buyers: The government approved mortgage loan will not only ensure you safety but your mortgage payment also may get easy. The rules and regulations have been designed keeping home buyers demand in mind. So, there is hardly any chance of inconvenience or trouble.

The benefits you may fetch from 2 to 4 unit Primary Residences:

2 to 4 unit properties are more profitable than single family properties. You may get rental income from the units you’re not using and utilize that rent for either your monthly mortgage payments or for strong financial future. So, by obtaining a 2 to 4 unit property you can get a primary residence for yourself and ensure great investment benefits for your entire life. That’s why real estate investors find 2 to 4 unit properties so profitable.

If you’re a first time home buyer and feeling apprehensive about taking up a mortgage loan for a 2 to 4 unit property, then consult any experienced professional. With proper consultation and complete knowledge about FHA mortgage loan terms, you may go ahead for a lucrative real estate investment.

 

Angelina Brown is a professional financial writer from Chicago.She loves to contribute financial write ups to websites and blogs so that she can help people who are struggling with financial worries. She has written various articles on mortgage, refinance, real estate and so on. For more information on mortgages :http://www.mortgagefit.com

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My Last Showing Was Like a Seinfeld Episode

Posted on March 18, 2013 by Deborah

JOY wordNow I know why Lockboxes were invented.

I have a new listing in a niche that I am interested in growing—needless to say I wanted to make a really good impression on my client.

We signed all the paperwork, and obtained the key to the property. Since this is probably not a property I am going to “co-broke” I decided to keep the key in my car.

When I went to the property last week to inspect the signage, I was getting out of my car with the key in hand. I turned quickly and the key dropped—–between the leather driver’s seat and the console. I tried everything to get it out—-moving the seat back, and even trying to place my hand in—-resulting in a nasty cut. I decided I had better ask the owner for another key asap, since I knew she was out of town and didn’t want to be caught “keyless” with an interested client.

Of course I immediately got a sign call and a client wanted to see the property—I told him the story about the key and he said he would come armed with flashlight and tools for a quick extraction.

It was a tough one——but finally, the client got the key with a long metal rod, and handed it to me. Of course we both had a good laugh over that one. (and I had some new ideas for Nissan’s auto interior design team!!)

 The property was not going to work for him, but he sure helped me out!

 Moral of the story: Even if a client doesn’t purchase a property, he still may be important——and oh yeah———–Lockboxes are for keys—-use them!

keys3

 

 

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Do You Have A Personality?

Posted on February 24, 2013 by Deborah

 

sad manWhat a question to ask—most RE professionals I know are “people persons” with a strong desire for social connection. Well, at least that’s what you should have to make it in this business.

 

Is this just specific to Real Estate? I don’t think it is. As we all work with many vendors, dealing with “wet blanket” or “cranky” personalities can really get you down—–and I shy away from utilizing the services of these people—no matter how great their product or service is!

 

Example: Last month I had to hire a painter for a small condo that one of my clients owned. His prices were very fair. When he came down to look at the job, he had nothing to say. Responses were “grunts” or “ok”–now I know this part of the business may be a bit tougher for some folks. But honestly, if you really dislike engagement with all types of people, you really need to find yourself another industry. (undertaker, computer programmer?)

 

I ended up hiring another painter, with a very “can do” attitude and a sharp wit. He did a great job, and even “discounted” my client 10% as an incentive to use his services again.

 

Is “wet blanket” guy the better painter? Beats me—-but I sure won’t be using his services to find out! Make sure your clients don’t do the same.

 

 

 

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A Mother’s Wisdom

Posted on January 12, 2013 by Deborah


mom 

A friend told me this over and over again: Deborah you’ve just got to write a book about all the wisdom your mother has instilled in you. Now writing any kind of a book is probably not on my “2013 to do” list but I thought, hey I could do the next best thing—write a Blog Post.

 My mother’s wisdom was unusually basic common sense, or so I thought. Then I realized many folks didn’t have the advantage of a wise mother, one who had lived through tough economic times, but yet had a loving family and a lot of emotional support.

 Some of her favorite sayings and advice can be applied to my real estate career but could probably be applied to most life situations.

“Don’t give out Bad Kharma because you can’t go through life like this—it WILL come back to you”. Now I don’t recall her ever using the word “Kharma” but it sure as heck meant the same thing in Yiddish. Don’t hurt others intentionally—-it’s bad practice.

 

“You will have enough money if you make it enough money”. She was a practical person and couldn’t understand why anyone would need more money than they could possibly spend—-of course necessities were not considered options, and we didn’t lack food or other essentials. But the “scramble after things” always confused her and she saw how it made people unhappy.

 

“Children are like sponges—they soak in everything—-so be very careful what you DO.” This was great advice for not just talking about being honest,  but by “living an honest life” to set an example for your kids.

 “If you fail, get yourself up and try again”Ok –now easy to say, right? Well her insistence to not ever give up was a real comfort to me during some very lean business years.

 “Even if you don’t have a dime in your pocket, hold your head up high and walk like a princess”. Right? I loved this advice in times of struggle—it sure helped when I “pretended” the checking account was overflowing!

 ”Don’t complain about spending money on groceries—-it’s cheaper than going to the Doctor.”  You just got to love that type of thinking—–and it’s so true.

 ~AND~

 ”Spending 2 years with the right man is better than spending an entire lifetime with the wrong one.”  I just had to throw this in for good measure.

 

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Every Referral is a Diamond

Posted on December 27, 2012 by Deborah

 

I recently got a referral from someone I didn’t know well, but we have a mutual friend who knows I specialize in income properties and niche commercial. I took the lead, followed it up and obtained a listing.

 In looking at my present clients, I realized several clients are a result of Referrals, a few from marketing, one from a sign and another from a family member.

 Each client represents a conduit to more business—think about Facebook, and how 1 friend has a multitude of connections and so on and so forth.

 Taking care of your present clients is so important. Because trying to obtain more referrals may be a result of a newsletter article or even a thoughtful birthday card.. If they are pleased with your services, then that’s easy—they will be delighted to refer you business.

 

 It’s a “no-brainer”

 

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The Neighborhood Realtor—Viable or Extinct?

Posted on December 6, 2012 by Deborah

The Neighborhood Realtor—-this——>

 

 

 

 

 

or this—-> 

 

 

 

 

I’m not going to lie——-I’ve never been a “neighborhood realtor”—always had a “niche” and a specialty which took me way beyond just geographical bounds.

I specialize in Investment Property Sales (usually represent the Seller), and Property Management of SFR’s. I often will represent a Buyer but only with a Buyer Broker Agreement (representing an investor without a contract has proven to be a huge waste of time). I have an open market geographically, more or less, since the entire county (within a specified driving distance) is my “farm”.

In the late 90′s, I had to defend my position of not farming “geographically” and didn’t want to be a “Buyer’s Agent” in a few small blocks. I am not knocking this type of real estate, since many Agents have success with this marketing plan, but in this global market where anyone can come from anywhere and purchase anything, I found it like shooting myself in the foot—closing off opportunities in these tough times we all face.

Has the neighborhood Realtor gone the way of the dinosaur? Or is it still a viable marketing plan?

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Tiny House People—How Much Is “Enough” Space?

Posted on November 18, 2012 by Deborah

Have you ever wondered about how much space you really need to live comfortably? It seems Europeans have different ideas than Americans. Could you live in 150 s.f.? Impossible? Watch this film & see how ingenious some folks are.

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Desperate Homeowners, Bargain-Hunting Buyers and Unsavory Home Inspectors–The Perfect Storm

Posted on October 22, 2012 by Deborah
  1. Working with a few Short Sales lately, I discovered a pattern that made me take notice.

Here you have a Seller who is facing losing their home. The Lender has agreed, the SS package is in, and the Buyers are convinced they got a raging good deal. Let’s stop here and examine the particulars.


The Lender has done a BPO and come up with a figure that no one is yet privy to. The buyers have put in an offer of $410K but then decided to recant and come in lower. Why? Well, it seems that the Inspector they hired has decided there is “foundation damage” due to the hairline cracks in the plaster walls (a characteristic of every single home of this vintage). A “foundation expert” comes in and of course there are old posts and sills (house was built in the 40′s), and although there is no immediate danger he “suggests” some supports and beams be replaced for more stability….. to a tune of $8500. The owner had a thorough inspection 4 years previous and there were no foundation problems found.

The roof was older, but still serviceable, and the Buyers claimed they need a new roof. A “roofing expert” came in and declared “Oh my, this roof is older than Methusela and needs to be taken off immediately and replaced”. NO LEAKS were found anywhere. 4 years previous, the same owner had the roof inspected and was told that it was old but it still may last 5-8 more years. In other words, it is still quite serviceable.

So now Buyers feel justified to lower their offer to $380K.

The Buyers know they are purchasing an older home. They also know the owner is in financial hardship of some sort or there would be no Short Sale. The Inspectors, and Roofing and Foundation Contractors need work. Is this Buyer being demanding? Sure, I would be too—he doesn’t want to end up in the same position as the owner. Move on to another Buyer? Perhaps, but this is the only offer. And the property fell out of escrow once at $436K, because that Buyer found another home.

The point is, do you see what is happening here? It’s another perfect storm—desperate owner, demanding Buyer and unsavory inspectors/contractors bending the “truth” for the benefit of the Buyers. They see an opportunity, a ~loophole~ where they can manipulate the sales prices.

The Lender may counter-offer, but if they can’t get a Buyer to pay what THEY think the property is worth, how is foreclosing going to solve this problem? Put the house back on the market? They have the same exact Buyer issues, maybe even worse, because REO’s may fetch even less money (considering the costs of foreclosure.)

This artificial manipulation of the market is happening everywhere and I hear other agents discussing similar scenarios. My fear is that this is another Perfect Storm and is hindering recovery of the industry. Any thoughts?

 

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Do You Have ICKY Clients?

Posted on October 7, 2012 by Deborah

Do you have icky clients? The ones who second guess everything you say, call you at all hours expecting you to drop everything and listen to their woes, take eons to get signed contracts back,and generally are decent people but difficult as hell?

I have clients like that, and some days you just want to be honest and tell them that they are hugely annoying and it would be nice if they could just chill out, and let you do your job…which is REAL ESTATE agent, not marriage counselor, therapist, accountant, dog sitter, locksmith, window washer or yard maintenance.

BUT do you also have that one (or 2 if you are lucky) client who worships the ground you walk on, will make every effort to co-operate with you to make your job easier, respects your free time and sends you Starbucks gift cards “just because” and appreciates just how hard you work and will often tell you?

I DO!

I won’t mention his name, although I hope he is reading this Blog—you know who YOU are—–and I appreciate you more than words can say.

 

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